A Win-Win Christmas for Two Up-and-coming Silver Explorers
As the bullish aura continues to build around many commodities this festive season, miners and producers have begun their efforts to attract the investment community. Having a near-term project with proven reserves is the best way to secure attention of a senior company at times of high prices and increased demand. And to this end, Nubian Resources Ltd. (TSXV: NBR) (“Nubian”) has just completed its due diligence on the Esquilache silver-lead-zinc project in Peru, expecting that the definitive purchase agreement with Zinc One Resources Inc. (TSXV: Z) will complete on December 22nd of this year, freshening up the plumage of both companies and bringing some serious focus to their operations.
Originally announced in September, Nubian signed a binding letter of intent (LOI) with Zinc One to acquire the historic underground Silver Mine and adjacent Virgen de Chapi prospect. Securing 100% ownership of the Esquilache Project in Southern Peru will give Nubian immediate exposure to a near term gold/silver development opportunity, according to Martin Walter, Nubian’s chief executive.
“The acquisition represents a decent leap forward for Nubian, but was essentially an unnecessary asset for Zinc One as the company stands to benefit far more from its flagship operation.”
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Zinc One let the Esquilache project go to a good home in order to focus more fully on bringing its high-grade Peruvian Bongara zinc project to fruition. The mine has previously been fully operational, yielding 358 tonnes per day and producing a 60 to 65 percent zinc end product using only a simple Waelz kiln process. The mine became unsustainable in late 2008 due to collapsing commodity markets, but looking at the London Metal Exchange today, zinc recently hit a 10-year high of US$3,308/tonne (US$1.50 per pound), and stockpiles on both the LME and SHFE are at some of their lowest levels since the financial crisis.
Nubian being a gold and silver player, it makes complete sense for the team to captain the Esquilache deposit, which contains strong silver, lead and zinc mineralisation as well as a number of ready-to-go drill targets. Nubian’s initial work programs will focus on calculating a firm resource estimate along with updating various past metallurgical and engineering studies. The company has already advanced a deposit of C$25,000, reducing the cash amount owing on closing from $125,000 to $100,000.
This will be in addition to the C$475,000 in company shares calculated on the volume weighted average price (VWAP) for the 60 calendar days prior to the signing of the letter of intent as well as four annual advanced Net Smelter Royalty (NSR) payments of $162,500. The project is also subject to a 2% NSR (net smelter return) of which Nubian will have the right to purchase 1% for $500,000 at any time, until the third anniversary of the first sale of gold, silver or concentrate.
Only 28 km south of, and directly adjacent to, Buenaventura’s Chucapaca gold/silver deposit, Esquilache boasts recent 2015 drilling results of 24.2 metres of 131 g/t Ag, 0.4 g/t Au including 8.1 metres of 292 g/t Ag, 0.73 g/t Au; a worthwhile addition to Nubian’s growing gold and silver portfolio in the Americas. The company holds a further four deposits (three in Nevada and one in New Mexico), but Esquilache being a near-term prospect gives the company a solid shot at assembling something attractive to a big-dog or two.
The recent turnaround in commodity spaces is a welcome relief for those of us involved in the sector, and the activity that has resulted is widespread. Juniors and seniors alike are positioning themselves to take advantage of the next high-point, and when they money’s flowing, major acquisitions increase proportionally. The next couple of years will be interesting indeed in both the zinc and precious metals sectors, and these two companies are making the best of it this December.
A Sr. Editor and Analyst for InvestorIntel and Managing Director and Founder of Core Consultants, Lara is an internationally recognized expert in the field of ... <Read more about Lara Smith>