Monday, March 6, 2017

A Waking Giant: One of the Largest Undeveloped Gold-Copper Deposits Left on Earth

At the PDAC, I checked in on Exeter Resources Corp. (NYSEMkt: XRA). It owns one of the largest undeveloped gold/copper deposits in the world. That deposit is in Chile in the rich Maricunga gold district. The project is called Caspiche, and I've visited it before.

The company has done a lot of work since then, defining options for development, securing water rights and more. And now, Exeter is ready to take Caspiche to the next level. CEO Wendell Zerb gives me the scoop:

I want to highlight two important things about Exeter. 

The first is a slide I inserted in the video showing the development options for Caspiche.

So there's different ways to skin this cat, as the saying goes. The oxide cap, which is easy to mine, will probably go first. Then, whoever Exeter sells this to -- because that's the company's probable game plan -- will likely go after the higher grade core. That's 23.5 million ounces of gold equivalent.

The other chart is also provided by Exeter, but is not included in the video.

It shows the value of known gold assets you get for every dollar you invest in Exeter Resources Corp., compared to other companies. Naturally, you'd expect companies like Goldcorp and Yamana to give you less gold per dollar because they're producing miners. But International Tower Hill Mines? Chesapeake Gold? Seabridge Gold? Gabriel Resources? Nope, they're explorers/developers, too.

A few more points:

A number of directors of Exeter accumulated shares over the past 6 months. The latest was an acquisition of 21,400 shares.

The company has C$15 million (US$11.9 million) cash on hand. It will have to raise more cash at some point. It has a strong circle of friends for a private placement, if that's how it goes.

One thing that big companies may not like is there is no blue sky at Caspiche. They know how many ounces there are. Most of the acquisitions I see, where big miners snap up a little fish, involves the potential for the resource to expand.

However, that doesn't mean this project won't be bought. So much work has been done, it may be a refreshing change for big miners still nursing burned fingers from other projects.

One more thing: Exeter's share price has been very resilient during the recent correction. Here's a performance chart of the four juniors with the biggest deposits on the chart above ...

Since the bottom in December, all four stocks went higher. Three of them rocketed (better luck next time, Chesapeake). Since the recent peak in February, the gold and silver industry generally has been in a correction. Not Exeter. Exeter has traded sideways.

What's that mean? That means this stock isn't just being supported by directors buying the shares. Others see value in the stock as well.

Just something to keep in mind. And Exeter is a fascinating find from PDAC 2017.

Do your own due diligence. I'm not your investment advisor.

No comments:

Post a Comment