Although Alianza
Minerals Ltd. (ANZ:TSX.V) had to wait for better weather until
exploration programs could kick off in the Yukon, the company hasn't been
sitting on its hands in the meantime. Very recently, it signed a LOI with a
subsidiary of Coeur
Mining Inc. (CDE:NYSE) to explore the high-grade silver/lead/zinc Tim
project in the Yukon, it raised C$750k on June 25, 2019, and a bit further
back it also arranged a JV with Hochschild
Mining Plc (HOC:LSE) about three Nevada projects, and started field work
on all three, funded by Hochschild. As sentiment in metals and mining turned
slightly more negative after PDAC in March, Alianza was testing the 5-6c
support (which I mentioned in my first article around that time) earlier than
I thought:
Share price; 2 year time frame
Fortunately, sentiment turned positive after gold started a strong upward
move, even to the tune of a breakout, after it breached a longstanding resistance
(US$1360–1380/oz), causing everybody to have a more positive stance. As
silver didn't follow gold as aggressively, the Alianza share price didn't
react, but this changed quickly after the financing and the Coeur LOI were
announced.
Let's have a closer look at Alianza's activities.
The financing is a combination of flow through (4,166,666 shares @6c) and
non-flow through (10,000,000 units @5c including a 3 year full warrant
exercisable at 10c), adding C$500k for exploration and working capital and
C$250k for Yukon exploration. The financing is expected to close within two
weeks, and finder's fees of 7.5% in cash/warrants will be paid to eligible
parties. These terms indicate the harshness of the current investment climate
in mining, as in better times just 5% in cash is normal.
8% is about the highest I have come across in 2015, so Alianza management
did good to raise some cash at all nowadays. It is not that it really needed
the fresh cash for exploration, but it is working on six projects now, four of
them being funded by JV partners, so it wanted to expand on its own
exploration program for Haldane, and expand on investor relation programs to
increase investor awareness further, with news flow incoming.
On June 20, 2019, Alianza signed a Letter of Intent (LOI) with Coeur
Explorations, a wholly owned subsidiary of Coeur Mining, to explore the
road-accessible Tim Property in southern Yukon Territory. Exploration at the
Tim Property is targeting high-grade silver-lead-zinc mineralization similar
to that being currently mined by Coeur at its Silvertip mine located 12 km to
the south of the Tim Property. Coeur was a logical suitor for an eventual JV,
as there were apparently so many similarities between Tim and Silvertip that
the owners at the time literally rolled the dice when to decide which
property to drill first. Alianza and Coeur are obviously hoping for Tim to
become another orebody for feed at Silvertip. Let's wait and see.
Tim project; Yukon
Coeur can earn a 51% interest in the property by funding C$3.5 million in
exploration over five years and making staged cash payments totaling
C$275,000. Coeur can elect to complete the option to earn 80% in the property
by funding a positive feasibility study in the following three years and
making annual payments of C$100,000. Coeur is the operator here. I estimate
the budget of a FS for this project in the range of $5-8 million, so it is an
interesting JV for Alianza.
Exploration for Tim is targeting high-grade silver-lead-zinc Carbonate
Replacement Mineralization (CRM), similar in style to that found at Coeur
Mining's Silvertip Mine, located 12 km to the south. Alianza also received a
small YMEP (Yukon Mining Exploration Program) grant for the Tim project.
Under this program, the Yukon government provides funding to support mineral
exploration activities for 50% of eligible expenditures to a maximum of
$40,000.
Haldane project; exploration camp
For Haldane, the 2018 field program identified a new silver vein target at
the Bighorn Anomaly, 2.5 km from known mineralization at the MHVS (Mount
Haldane Vein System) targets where work extended the potential strike length
to over 3.5 km. Trenching and/or drilling are planned for these targets, and
good results will upgrade the project for further work which may be funded by
a partner. I contacted CEO Jason Weber about the program, and he provided me
with this map with additional comments in green:
According to Jason Weber, this is setting up and refining the drill hole
locations for phase II (later in August). Alianza has planned detailed
mapping and trenching at the Bighorn anomaly to define potential mineralized
structures and controls. Also, additional soil sampling will be completed to
the west of the Bighorn anomaly.
Besides this, detailed mapping at the Ross anomaly is planned in order to
define controlling structures and refine the location of the offset fault on
the Robert Service Thrust (see low right on map). This too will aid in the
location of drillholes for the phase II drill program. Additional detailed
mapping and sampling will be done in the MHVS main area. This includes old
trenches, where again, structural mapping will be stressed.
As management doesn't expect veins to outcrop at surface (although they
hope to get lucky), they are looking for signs of faults (that if having the
right orientation, may host target veins) and any altered float material that
may be weathered from vein structures. These may manifest themselves as
breaks in slope, linear gullies (TCI: large ditches), etc. Any information
the geologists can gather in this way can be compiled to infer structure
location and therefore to help refine drill hole locations.
Another interesting development was the JV with Hochschild from March 4,
2019. They have optioned three Nevada sediment-hosted gold properties from
Alianza. The BP and Bellview properties are located in the southern extension
of the Carlin Trend, while the Horsethief property represents an off-trend
gold target located 26 km east of Pioche, Nev. The Horsethief property is
considered the most prospective by Alianza, and already was the focus of
attention. Hochschild seems to think in the same direction. It can earn a 60%
interest in each property by making the following exploration expenditures:
- over 4.5 years totalling US$2.5 million at BP and
totalling US$3.5 million at Bellview and
- over 5.5 years totaling US$5 million at Horsethief.
Under these agreements, the 2019 exploration programs will total at least
US$700,000 as a firm commitment from Hochschild and will include drilling at
Horsethief and drill target identification and definition at BP and Bellview.
Here are the full terms of the option agreements of the Hochschild JV, per
the news release:
- Horsethief Property
Hochschild can earn a 60% interest in the
Horsethief Property by conducting US$5 million in exploration on the property
over a 5.5 year period, with a committed minimum expenditure of US$500,000 in
the first 18 months and a minimum US$500,000 in each subsequent year. Within
60 days of acceptance of the first option, Hochschild may elect to undertake
a second option to earn an additional 10% (total 70%) in the property by
funding a further US$5 million in exploration over 3 years (minimum
US$500,000 in exploration per year).
- Bellview Property
Hochschild can earn a 60% interest in the
Bellview Property by conducting US$3.5 million in exploration on the property
over a 4.5 year period, with a committed minimum expenditure of US$100,000 in
the first 18 months and a minimum US$500,000 in each subsequent year. Within
60 days of acceptance of the first option, Hochschild may elect to undertake
a second option to earn an additional 10% (total 70%) in the property by
funding a further US$3.5 million in exploration over 3 years (minimum
US$500,000 in exploration per year).
- BP Property
Hochschild can earn a 60% interest in the BP
Property by conducting US$2.5 million in exploration on the property over a
4.5 year period, with a committed minimum expenditure of US$100,000 in the
first 18 months and a minimum US$500,000 in each subsequent year. Within 60
days of acceptance of the first option, Hochschild may elect to undertake a
second option to earn an additional 10% (total 70%) in the property by
funding a further US$2.5 million in exploration over 3 years (minimum
US$500,000 in exploration per year).
Alianza will be the operator. Hochschild will reimburse Alianza for 2018
property taxes and permit costs, totalling approximately US$41,600.
Conclusion
Alianza Minerals is successful so far in following the hybrid prospect
generator model, as it raised over C$1.5M since December 2018, and signed two
deals with Hochschild and Coeur, two household silver names in the space. The
foundation seems to be solid; now it is time to build on it by own and JV
exploration work, preferably drilling as soon as possible. After target
refining, drilling at Haldane will finally start in August of this year, and
I am looking forward to it. According to Jason Weber, drilling funded by
Hochschild could start in Q4 2019, Coeur is defining targets this year and
will look into drilling next year.
As a reminder, I view the 100% earn-in flagship project Haldane as a
prospective high-grade silver exploration opportunity, and I'm very
interested if it can hit some really high-grade intercepts, as has happened
in many places at and around Haldane in the past. The projects funded by
Hochschild and Coeur should generate news flow as well this year, so it will
be a busy year for Alianza Minerals, hopefully with good news for investors.
I hope you will find this article interesting and useful, and will have
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