Summary
- Reservoir Minerals has found some mineralization at Nikolicevo but the results aren’t impressive.
- This wasn’t unexpected, as it’s only in a few rare cases the first drill holes hit economic mineralization.
- The investment thesis doesn’t change, as the Timok Joint Venture with Freeport McMoRan will be the main driver of the share price.
Shortly after releasing an excellent exploration update on its Bobija project, Reservoir Minerals (OTCPK:RVRLF) has released an exploration update on theNikolicevo prospect. This project is part of the Timok Magmatic Complex where and is just three miles from the Cukaru Peki discovery where Reservoir is involved in a 25/75 joint venture with copper giant Freeport McMoRan (NYSE:FCX). Today's results are based on a very early stage exploration program which was focused on sampling the most prospective zones of the project. In a 40 meter long trench, the company has found some interesting precursors as it sampled 26 meters of 0.33% copper and 0.13 g/t gold. There was also one higher-grade assay of 2 meters at 1.57% copper and 0.11 g/t gold.
As said, a sampling and trenching program on an exploration project is just a 'first pass' and it's encouraging to see obvious signs of mineralization this early in the program. Unfortunately the assay results for the first two drill holes on the project were low and absolutely insignificant, even though rock alteration was intercepted. Three drill holes have been completed and two drill rigs are still on site, as Reservoir will be planning a larger drill program consisting of 10,000 meters. It's the company's intention to also drill a few really deep holes (1000 meters and deeper) to drill-test for higher-grade mineralization at depth.
The fact that a trenching program found decent copper and gold grade is good, but it's understandable why Reservoir wanted to release the Nikolicevo results apart from the Bobija drill results. There isn't really anything in this press release which will excite investors, but it's important to focus on what really matters, and that's the property which is part of a joint venture agreement with Freeport. That project has the potential to be humongous, and it's the only driver for Reservoir's current valuation on the market. Smaller exploration projects like Bobija and Nikolicevo are nice, but the real value will come from the Timok joint venture with Freeport.