What sets certain companies apart from most others in the early-stage exploration space? A lot of the time it’s simply thinking outside of the box.
In the case of Vancouver, BC-based junior exploration and development company
Avrupa Minerals Ltd. (AVU) (
TSX-V.AVU,
OTCMKTS: AVPMF,
Forum) it’s their “Hybrid Opportunity Generator” construct. And few mineral exploration companies are as progressive thinking in developing its unique business model as AVU.
Here’s how it works:
Avrupa’s prospect generator model is designed to create shareholder value by building an extensive portfolio of projects suitable for joint venture or sale to larger mining companies. The company routinely leverages new techniques and technologies in order to improve exploration efforts and facilitate new discoveries. In certain cases, companies following the prospect generator model have become royalty companies by allowing partners to dilute them to a valuable royalty, and Avrupa has significant exposure to this route to liquidity.
The term “Hybrid Opportunity Generator” is most often used to describe a junior mining exploration company that employs a particular business model to
de-risk the exploration approach. A Prospect Generator will stake and/or acquire prospective mineral rights to an area that they believe has significant ore-bearing potential.
As an early-stage exploration company, prospect or project generators like Avrupa work to find and develop sound economic base and precious metal deposits. As part of the Hybrid Model, AVU also pursues its own self-funded exploration programs on projects which do not have a partner yet, like the company’s flagship Avalade VMS project. This gives its shareholders and investors
maximum exposure to potential exploration success.
The Company’s area of attention is Europe in historic mineral belts such as the Iberian Pyrite Belt in Portugal and the Vardar Trend in Kosovo, where they have made recent discoveries, while continuing to generate prospects and expand its portfolio.
Avrupa owns self-funded flagship projects including its Alvalade Project in Portugal and Slivovo Gold Project in Kosovo. It focuses its project generation work in politically stable and prospective regions of Europe, including Portugal and Kosovo.
At the Company’s helm is President & CEO, Paul Kuhn. Mr. Kuhn has more than 40 years of experience in the minerals’ exploration business in North America, Central Asia, and Europe along with managing successful exploration programs in the US, Portugal, Kosovo, and Turkey.
Stockhouse Editorial recently reached out to the CEO to check in on the latest company happenings and what’s in store for Avrupa and its shareholders moving forward.
SH: To start off, Paul, can you update our investor audience and your Avrupa shareholders on any new company developments, especially in the wake of COVID-19?
PK: Well, the biggest development, of course, was the issuance of a new permit to allow us to continue to explore at our Alvalade Copper-Zinc Massive Project located in the Pyrite Belt of Portugal. With the new permit in place, we have finally been able to start advancing the Project with our new partner, Minas de Aguas Teñidas, S.A. (MATSA). We spent the past couple of months working with MATSA in preparation for the initiation of a new drilling program.
So far, we have been able to move ahead relatively unimpeded vis a vis COVID-19. The area where we work in southern Portugal has not yet been strongly affected with the virus. We are taking all reasonable health and safety precautions amongst ourselves and our contractors in order to maintain an ongoing program in a very difficult situation.
SH: What initially drew you to Avrupa?
PK: Avrupa was formed in 2010 on the basis of a number of properties in Portugal and Kosovo held by a Norwegian exploration company. The Norwegian firm was experiencing financial difficulties and needed to pay debts to stay out of bankruptcy. As exploration VP of that company, and later designated CEO, I led the engineering of sales of the company’s assets to several entities, including the shell company that became Avrupa Minerals. Avrupa asked me to come along with the assets, and we moved from Norway to Portugal. The Norwegian company avoided bankruptcy, distributed a dividend to shareholders, and I was able to continue the work in Portugal and Kosovo, leading to mineral discoveries in both countries.
SH: We briefly explained your “Hybrid Opportunity Generator” in the introduction to the article. Can you explain what makes Avrupa’s model different from others in the space and, if so, what are its advantages?
PK: Well, the most important thing is that we have a strong technical and financial group, with contacts all over the globe. This has allowed us to get into some good projects from the beginning and find good partners to support our projects. Having said that, we also have recognized that with the right project, we can raise funds to advance and upgrade it ourselves, and this is the “hybrid” part. While going has been tough for the past couple of years, it really looks like we are turning the corner with a successful start-up at Alvalade. This only came about because we risked our own funds to advance the project successfully at the end of 2018 and beginning of 2019. This led directly to the present JV with MATSA. And because they are fully funding the Project, we are now able to start onto other ideas to advance the Company. I am looking at new generative ideas in Scandinavia, Central and Eastern Europe, Turkey, and Portugal.
SH: In recent news, the Company just announced the closing of a half-million-dollar-plus private placement to “provide working capital for exploration programs in Portugal, Kosovo, potential new acquisitions, and for general corporate purposes.” Can you walk us through the raise and what this means for shareholders and potential investors?
PK: Use of a portion of the funds, so far, has been limited to paying off one receivable. Another portion of the funds is being held in temporary reserve to assist in the re-acquisition of our Slivovo Gold Project in Kosovo. We are waiting for the government of Kosovo to complete organization of their parliament and then appoint a new board of directors of the mining bureau. We presume that the directors, once in place, will issue us a new exploration license for the Slivovo Project. We are also reviewing a number of attractive base metal and gold opportunities around Europe, and may use a portion of the raise proceeds to enter into new exploration programs. Some of the areas we are reviewing are located in well-established, long-lived mining districts around western and central Europe and Scandinavia. And we continue to evaluate possibilities in Portugal where there is open exploration ground in areas of high interest.
This is important for shareholders and potential investors, as we are looking forward to re-invigorating the Company with new projects in the exploration pipeline. We have been relatively dormant for the past couple of years, but now see some really great opportunities to get back into the project opportunity generation business. Getting a really great partner for the Alvalade Project has allowed us to spend time for looking at other possibilities around Europe, which in turn will fuel new growth for Avrupa.
SH: You’ve also recently announced the commencement of 7,000 to 8,000 meter diamond drilling program at the Alvalade Project. Can you update us on any assays or drill results here, yet?
PK: Bringing in a new partner for Alvalade has been super positive, but it has taken time to get everyone up to speed. We have a whole new team of geologists and technicians, and they have all had to take time to review historic core, come up with some of their own drilling ideas, and generally re-fire the Project. Given the more advanced exploration/pre-exploitation level for the license, there is also more government scrutiny of our plans, and more detailed social and environmental engineering to facilitate. We have had some land access and water permitting difficulties to overcome, and that has taken up more time than originally envisioned.
Having said all that, the drill rig is in-country and actually drilling at MATSA targets on their adjacent license, close to some of our Alvalade targets. We are working together on this, and once the second MATSA hole is completed, we expect the rig to move over to the Alvalade license. Initially, we are planning to commence drilling to extend our Sesmarias discovery and evaluate nearby related targets. Following work at Sesmarias, we plan to follow-up previous drilling at our Monte da Bela Vista discovery located less than 10 kilometers north of Sesmarias. The historic Lousal Mine lies between Sesmarias and Monte da Bela Vista, and is probably part of the whole massive sulfide system. We expect to drill around Lousal, as well, where we expect to find extensions of known (and still in place) massive sulfide mineralization in the mine area.
Drilling should start before the end of November, and we would expect results sometime in the early new year!!
Note: Drilling has, indeed, started!!
SH: Can you also walk us through your licensing agreement for the Alvalade Project and the benefits of partnering with Spanish mining company MATSA to direct your exploration program there?
PK: The Alvalade license was issued by the Portuguese mining bureau. It is a 5-year contract consisting of an initial 3-year period, followed by a 2-year renewal period. The license classification (in English) is “Experimental Exploitation” which means we can continue exploration around the license, but we also must upgrade the existing deposit to a point where we can consider a feasibility study and an application for a mining license. This includes baseline environmental and social studies, and much more coordination with the government than with a basic exploration permit.
Our deal with MATSA provides for full funding to get through the work commitment associated with the experimental exploitation license for 51% of the Project, and then completion of a full feasibility study and application for a mining license, along with honoring several expense commitments to an earlier partner for 85% of the Project. MATSA is the premier miner in the Pyrite Belt with three operating mines in Spain and several new discoveries, as well. They really know the rocks, and they know how to build a mine. The owners are big-time financial entities: Trafigura (one of the world’s leading commodity trading houses) and Mubadala Investment Company (government of Abu Dhabi). This is a great partner for us!
SH: A CEO often wears many hats. What’s been your primary role with the Company since you started and your corporate vision moving forward?
PK: My main job has been to run the technical end of things. Mark Brown wears the financial hat. We teach each other a lot, and this works well to move the company forward. We’ve had a tough couple of years, but look to move ahead now that the Alvalade JV is progressing. Good results at Alvalade will lead to a better share price which will, of course, help us to finance properly again and help the shareholders to regain confidence in the Company and take advantage of the share price. Despite the terrible share price for a long time, we have kept the Company going which will allow for real success again in 2021. Discovery of new ore deposits is something that we do well, and will do again as we get into our new projects.
SH: Your company boasts significant C-suite management experience which a lot of other juniors can’t match. Can you expand on the pieces that really set you apart for investors?
PK: Continued exploration success, ability to raise funds even in tough times, wide range of contacts leading to potential joint ventures. We have raised C$15 million through equity funding over the years, but also close to C$25 million in direct partner funding to support our programs.
SH: And lastly, Paul, what can you tell our investor audience regarding the current valuation of your stock and why you believe it’s a good value buy right now?
PK: The current price absolutely stinks!! Even with only one active project right now, the market cap is barely more than the value of the initial joint venture. With drilling success we should be able to upgrade the share price. With the advent of a new project or two, especially a gold project, we should be able to push the share price. Provided we continue to avoid pandemic shutdowns in Spain/Portugal, all these things are coming in early 2021. Good for all of us!
(Click image to enlarge)
For more information, visit
avrupaminerals.com.
FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.