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Canadian exploration outfit American Pacific Mining (CSE: USGD; US-OTC: USGDF) on May 2 agreed to buy privately held Clearview Gold, thus adding a third well-heeled joint venture (JV) partner to its fold.
The deal hands American Pacific control over three gold properties in Nevada, including the Ziggurat project on the northern end of the Round Mountain trend — close to other million-ounce-plus deposits.
The Ziggurat project was under an existing JV between Clearview and Canadian mid-tier Centerra Gold (TSX: CG; NYSE: CGAU), which is planning an active second season on the property this summer.
Under an option agreement, Centerra can earn 70% in Ziggurat by spending $6 million over five years.
American Pacific also holds a JV partnership with Rio Tinto’s (NYSE: RIO; LSE: RIO; ASX: RIO) Kennecott Exploration on the Madison copper-gold project in Montana. Including its more recent deal with Japan-based Dowa Metals and Mining (DOWA) on the Palmer zinc-copper-gold-silver volcanic massive sulphide project north of Haines in Alaska, American Pacific expects upwards of $37 million in partner-funded exploration spending on its assets this year. That leaves it free to work on its own grassroots Gooseberry gold project in Nevada.
CEO Warwick Smith says the company is replicating a proven model that drives shareholder value. “The key difference being that two of our three core assets are in the advanced category, whereas usually the business model is seen commonly with early-stage exploration assets,” he told The Northern Miner in an interview.
The model had worked well in the past, such as when Nevsun Resources bought Reservoir Minerals in 2016 following the two companies cooperating on an exploration partnership for several years. The consolidation of the two Vancouver-based firms created a 100% ownership in the upper zone of the Timok Copper project in Serbia, which had previously been owned by Reservoir and Freeport McMoRan (NYSE: FPX).
“Reservoir sold their remaining 30% stake for about $365 million, and it’s a great analogue for our Madison JV with Rio because that was an epithermal system at the surface but which vectors down to a porphyry. We have all those epithermal veins at Madison, and there’s growing excitement about the skarn and then the porphyry below. So, it dovetails nicely with that analogue,” he says.
For American Pacific, which has a C$65-million market cap, to have a C$37-million exploration budget this season is unique. By comparison, Smith says Hecla Mining (NYSE: HL) spent about $29 million in the U.S. last year, and Coeur Mining (NYSE: CDE) spent $23 million. “Those are $3.5 billion and a $1 billion market caps, respectively, compared to ours,” Smith says.
Smith says Centerra has outlined 16 priority targets at Ziggurat this summer, and they’ll spend about $1.3 million.
At the Palmer project, which the company acquired in August last year through its acquisition of Constantine Metal Resources, Smith expects DOWA to spend about C$25.5 million. He also hinted that news is coming from the advanced Madison project, where Kennecott has been involved since 2019.
As part of the transaction, Anglo Pacific will get the Danny Boy property on the northern extension of the Carlin trend, next to American Pacific’s Tuscarora property, where Clearview has been exploring for epithermal and Carlin-type gold.
The Alpha project is part of the parcel close to the Carlin and Battle Mountain-Eureka trends, and previous exploration has targeted near-surface Carlin-type oxide gold.
Smith underlined that the transaction adds scale to the company, diversifies the asset base, provides exceptionally efficient capital allocation, and lifts the corporate profile.
At the early stage 100%-owned Gooseberry project, American Pacific has started a $500,000 drilling campaign for about 3,000 metres. Smith explains that American Pacific identified a second unmined vein last year, with evidence pointing towards the potential for two more. The single-veined Gooseberry deposit had previously produced 1 million oz. gold.
Like most gold juniors, American Pacific’s shares have been under pressure over the past year. The company’s stock last traded at C38.5¢, down 42% over the past 12 months after touching a high at C87¢ and a low at C27¢, giving it a current market capitalization of C$68 million ($49.8m).
