Lithium has gone from an obscure mineral to a household word as the world adapts to a new environmentally aware paradigm with the production of electric vehicles and the exploding energy-storage market. Lithium’s surge in popularity is so dramatic that global lithium demand is expected to more than double from 2012 to 2017. Durango Resources (TSX: V.DGO, Forum), an exploration and development junior based out of Vancouver, is building a solid portfolio to match this amazing trend toward greener energy as well as establishing a robust diversity with prospective gold, silver, limestone and graphite holdings. The company has been making some serious exploration headway and with the recent JV announcement, it has added some nitrous to the gas driving Durango forward. It was for this reason that Stockhouse writers sat down with company President, Marcy Kiesman, to get the full picture on Durango and what the future holds for both the company and its investors.
So Marcy, for those who haven’t had the pleasure, would you please briefly describe Durango Resources?
We are a junior exploration company with a wide range of projects, including gold, silver, limestone and lithium. We have a very tight shareholder base with just over 20 million shares outstanding, and have recently seen an appreciation in our share price and a spike in interest in our company. One other noteworthy factor for Durango is the fact that our entire board and management team is made up of women – although we also have some help from the men on the geological side.
Durango has made some choice acquisitions with projects such as NMX East lithium project, located in the province of Quebec. What attracted you to NMX East?
I have been watching the Tesla electric car movement and their storage ideas for a few years and knew it was only a matter of time before they would catch fire with society and create a demand for lithium, among a few other essential elements. In addition, I liked the results I was seeing from Nemaska Lithium back in 2014, so I decided to stake some claims beside them for Durango in hopes that they would have some market success to match their geological success. Back then Nemaska Lithium was trading around the $0.08-$0.10 level, but Quebec has always been a great jurisdiction to work in and we have a solid exploration team there so it seemed like a good idea to stake some ground. Durango has held the claims for almost two years, but recently these claims have attracted some market attention. We found during research of public documents that Nemaska Lithium was contracted to do work for a junior mining company in 2011 where by they found and mapped pegmatites on the ground we currently own and some which is under a joint venture agreement.
Durango just announced a transformative JV deal with BC Anthracite Inc. regarding NMX East and the Buckshot Graphite Project. Would you give us the details of this JV and what it means for Durango and its shareholders?
The JV’s prove that Durango holds great properties with potential value. We cannot feasibly work all the properties in our portfolio to the fullest, so we have partnered and will continue to partner with prospective groups who can advance the properties while reducing our cash outlay and the dilution risk to Durango shareholders. We have structured this first JV with an aim to provide Durango shareholders to share in the upside and success of the properties where $2 million exploration dollars will be spent on the projects with no cost to Durango. The areas are very under explored so a joint venture is expected to help Durango’s exploration team gain essential insights to the regional geology of the area with minimal cost to our current shareholders. If BC Anthracite is successful and their stock price increases, Durango will hold one million common shares which will hopefully provide additional upside for our shareholders.
Excluding the NMX East joint venture property, Durango holds over 2,300 hectares of land surrounding the Whabouchi property which hosts historical lithium numbers and mapped pegmatites. The Buckshot graphite property under the JV agreement is 300 hectares and Durango will continue to hold an additional 400 hectares in the area. Our team is confident that we are in a great position to continue to explore these properties on our own or enter into further JV arrangements.
Durango’s interests go beyond lithium and graphite with its 100% owned Whitney Northwest Gold Project located in Ontario, the 100% wholly owned Dianna Lake Silver project in northern Saskatchewan, the wholly-owned Trove property located in Quebec and the Decouverte property also in Quebec. What was it about these projects that attracted Durango’s attention?
Our Trove property is located in the Windfall Lake area of Quebec and is now surrounded by Oban Mining. Oban is currently undergoing a 60,000m drill program in the area surrounding the Trove and announced on April 26, 2016, they had intersected gold values of 41.8 g.t over 2.5m. As Oban continues to drill closer to our Trove property boundary and if they continue to get positive gold results the Trove value will increase substantially.
We have just purchased a silver asset in Saskatchewan which hosts a non 43-101 compliant resource of 2 million ounces of silver, but as it is a pre 43-101 standard we are not relying on these numbers nor should the public while making an investment decision. Silver is another element which I think will perform well over the next few years and has already increased over 10% in price since January this year. We are working to verify and update the historical numbers on the Dianna Lake project and then complete a 43-101 report.
The Whitney NW gold project is located about 10km north east of Timmins, Ontario adjacent to NYSE-TAHO, Tahoe Resources, which recently acquired Lake Shore Gold for $900M in a merger deal. Lake Shore Gold announced in February 2016 additional information on its step out holes expanding its recently discovered Whitney Gold Deposit which occurs around several historic and open pit and underground mines. It is unique because the size of the mining operations was quite significant surrounding it and the mines were in operation for years so it seems astonishing that gold could have been found so close to modern mining operations. For Tahoe to find gold right beside the mining operations made me think that additional gold might be nearby.
Durango re-evaluated this Timmins area and were presented with the Whitney NW project which is located northwest and approximately 5km away from the Whitney Gold Discovery which was reported in February 2016 to be open to the west and the north. The ground was acquired as speculative ground adjacent to Lake Shore Gold due to its close proximity to the Whitney Gold Deposit and since Lake Shore Gold found new gold it seemed reasonable that Durango could also find some with the new exploration techniques, methods and theories. Surprisingly, upon further research it was discovered that work had been completed by Moneta Porcupine Mines on the property in the late 1980’s because it appeared that several faults may be present in the area. Upon further work, they identified several VLF conductors and then proceeded to drill 34 percussion holes for till sampling and had a value of 15,000ppb reported in the till sediments. We believe there is opportunity here as new gold has been found where many people discounted the possibility of its existence.
Lithium has definitely taken the spotlight. News of Tesla’s gigafactory in Nevada has caused the market to salivate as global demand for lithium is expected to double by 2020. This has resulted in many juniors to scramble about, snatching up property just so they can say they’ve entered the lithium game. What sets Durango apart from these sometimes less-than-ethical area plays?
To start with, Nemaska Lithium was under pressure in 2014 when we staked our property in that area. The ground surrounding Nemaska was previously owned by junior mining companies and was wide open for staking when we staked in 2014 and in early 2016. The size of the Nemaska Lithium Whabouchi project is approximately 3km by 3.5km and the common assumption is that they hold all the lithium that is in the area. However, government papers on lithium bearing pegmatites prove this theory to be flawed. The United States Geological Society (USGS) open file report 2013-1008 outlines that these lithium bearing pegmatites occur in groups around the source granite. So for NMX to be the only company with these lithium pegmatites in the region seems to be statistically impossible if the studies are true. I am one who always like to play the odds and using this logic we carefully reviewed all available reports and found mapped pegmatites throughout the area over sizable distances and the report states only seven samples were taken. So, my question would be what are the odds that DGO stakes ground so close to NMX’s open pit and find out that mapped pegmatites are on the ground? We do know that not all pegmatites carry lithium but one would expect that the odds would continue to be in favour of finding lithium. We intend to continue to explore and plan to sample the pegmatites to see if they do or do not carry lithium.
What can investors expect from Durango in terms of milestones in 2016?
We plan to:
We may drill one or more of the projects based on the odds of success, timing and financing. We also have ground to the south and tied onto to Metanor Resources but we have not had time to do the research on it yet.
How healthy is Durango when it comes to its books? Will there be another financing in the near term?
Like many Canadian juniors, we were running on fumes over the past year or so. As mentioned earlier, we had a recent spike in our share price which led to several million warrants being exercised and put us back in a stable financial position. In addition, we recently announced that we are undertaking a $1-million-dollar financing at 20 cents per unit. We announced the closing of the first tranche of this financing today and are in discussions with a number of potential investors who are interested in participating.
What would you say to investors who might be considering Durango Resources as an addition to their portfolio?
We are a junior exploration company positioning for discovery. As stated by Rick Rule, the best place to find a mine is in the headframe of an existing mine. In the Timmins area there has been over 70 million ounces of gold discovered, and the Whabouchi project has open-pit proven reserves of 20 million tonnes Li2O at 1.53% and underground mine proven reserves of 7.3 million tonnes Li2O at 1.28%.
Our share structure is favourable and our management team treats our shareholders’ money as our own because we participate in each financing. We use our funds to the maximum efficiency as we know that every dollar we raise may be the last dollar we raise.
While risk is always at the forefront of junior mining companies, we have hedged the risk with a wide range of properties and commodities across the country. I am proud of our portfolio of projects and am confident they will serve the shareholders well. I am working to position Durango for discovery so it will bring value for all of us and am determined to succeed. I believe Durango is in the top tier of mining juniors in terms of opportunity for investors who want to participate on finding the next big discovery by playing the odds.
FULL DISLCOSURE: Durango Resources is a Stockhouse Publishing client.