The gold price topped $2,000/oz. on March 20th and again on March 24th and is now at $1,963/oz., up +8% in the past two weeks. The current level is within 5% of the nominal all-time high of $2,073/oz.
Adjusted for inflation, gold hit $3,260/oz. in early 1980, a time when inflation was running rampant — sound familiar? If one thinks $3,260/oz. was an outlier, the inflation-adj. price averaged $2,221/oz. that entire year.
The 2020s will be remembered for COVID, inflation & COMMODITIES
In a bull market a great place to place bets is on junior miners, especially those exploring in prolific & safe jurisdictions, capable of making exciting new discoveries.
Readers know that Nevada is one of the best places on earth to pursue gold, a jurisdiction ranked #3 globally in the latest annual Fraser Institute Survey of Mining Companies. Going forward advancing projects in the U.S. will be hugely important. Why?
In 2022 the single largest gold producer was China. The “West” is increasingly at odds with China in the areas of politics, trade and even militarily. Tied for second place with Australia was Russia… need I say more?
Given the growing geopolitical divide, a staggering 33.13M troy ounces of gold was bought by central banks in 2022, the most since 1950. In light of persistent inflation & new financial system concerns, central banks will likely stacking even more gold.
There are dozens of juniors in Nevada that have been toiling away for years looking for a big score. Zacapa Resources (TSX-v: ZACA) is a fairly new company, but CEO Ian Slater, a highly successful metals/mining entrepreneur, grabbed my attention.
With 2 Gold + 2 Copper projects, Zacapa offers multiple ways to win
Mr. Slater has founded numerous companies in his 25+ year career. He was Managing Partner of both Ernst & Young’s Canadian & Arthur Andersen’s Central Asian Mining Practices and is a Chartered Accountant. After buying 5.6M shares in November, he now owns 10.0M shares of Zacapa.
The Company has four assets, two gold & two copper, all in the western U.S. The primary focus is the 100%-owned South Bullfrog project in the Beatty district of the Walker gold trend which will be drilled for the first time this Spring. The Miller Mountain gold property in Idaho is promising as well — more on that later.
CEO Slater stepped in as CEO this month to become more actively involved in Zacapa during a critical stage of its development. He’s surrounded by an experienced team with big & small company experience around the world in precious & base metals.
Zacapa’s VP Exportation, Dr. Timothy Macintyre, PhD., is an economic geologist with 15+ years’ experience in copper. Prior to Zacapa he worked for Ivanhoe Mines at its world class Kamoa deposit, and First Quantum Minerals at Africa’s largest copper mine. He was also a senior consulting geologist for Rio Tinto.
“After nearly two years of systematic geophysics, geochemistry & detailed mapping, Zacapa’s technical team has identified targets at South Bullfrog that are analogous to some of the largest discoveries in the Beatty district. These targets have now been fully drill permitted and a drill contractor has been selected.”
Teamed with Dr. Macintyre is another PhD., Dr. Alan Wainwright with 20+ years’ experience as an economic geologist in both precious & base metals. Alan is a P.Geo and co-recipient of the H.H. Spud Huestis award.
Director Marc Boissonneault has 30+ years under his belt and was formerly Head of Global Nickel Assets for Glencore. He has won multiple John T. Ryan awards in Canada.
Although a high risk / high return play, several crucial investment boxes have been ticked. Great jurisdiction, check. Rising gold price, check. Expert team, check. Near-term discovery potential, check. And, here’s where things get really interesting.
South Bullfrog gold project surrounded by AngloGold Ashanti, Kinross & Augusta Gold
In looking at map above, readers should note that a single company wraps around Zacapa’s South Bullfrog project (in green). That company is Major global gold producer AngloGold Ashanti ($13B valuation). AngloGold is serious about turning this corner of Nevada into a world-class mining camp.
Here’s what AngloGold said on its earnings call last month about the Beatty district of Nevada,
“Our aim is to establish a meaningful, low cost, long-life production base with the potential for significant synergies & integrated infrastructure, including water rights, adjacent concessions & processing facilities. Our conceptual development plan envisions N. Bullfrog being developed first with initial production in three years, followed by Silicon, which is at 4.2M ounces, but primed to grow.
We see these deposits initially mined as open pits & processed using heap leach & gravity recovery. This suggests low capital intensity in a district expected to yield upwards of 300,000 ounces/yr. over 15 years at a Tier 1 cost structure.”
AngloGold acquired Corvus Gold for $495M and also property held by Coeur Mining. It expects to be in production at its 4.2M ounce Silicon project in 2026. Notice the size of South Bullfrog vs. the Silicon project’s resource area. It doesn’t require a lot of land to host millions of ounces.
In my view, the Beatty district is of keen interest to AngloGold because other highly prolific, world-famous gold trends like Carlin & Battle Mountain are already dominated by Barrick & Newmont. However, AngloGold isn’t the only significant player in the immediate area.
Kinross operates two gold operations in Nevada and is aggressively drilling to extend mine lives at both. It announced the, “Kinross Nevada Model” in January to streamline operations at its Bald Mountain & Round Mountain mines.
The light red shading delineates Kinross’ holdings in the Beatty district. It would greatly benefit from acquiring Augusta Gold & Zacapa, making it a meaningful player in Nevada. Of course, AngloGold might have something to say about that.
A slide from AngloGold Ashanti’s Corp. Presentation…
Augusta has two projects totaling 1.9M ounces, valued at ~$145M. These are low-risk ounces due to the dozens of similar projects, mines & historical production that precedes it. It’s valued at a healthy ~$75/oz. in the ground, pre-PEA.
CEO Slater points out that at least three mines are starting up in the district in the next several years, mines located within 10 km of South Bullfrog.
Leading up to drilling this Spring, management did geophysics, geochemistry & detailed mapping to develop drill targets believed to be very similar to the mineralization at Silicon.
Other notable companies with assets in Nevada include; First Majestic, McEwen Mining, SSR Mining, Hecla, I-80 Gold, Fortitude Gold, & privately-held Elko Mining Group (Watertown).
If management finds success with the drill bit, all of the names I shamelessly dropped will know about it. Make no mistake, Zacapa is in no rush to sell or farm out South Bullfrog, but if/when it does that will be great news for shareholders.
As exciting as South Bullfrog is, the 4,920 acre Miller Mountain project is compelling as well. Historic drilling at the Idaho project included 21 shallow holes along a 1.9 km strike length with multiple high-grade rock samples up to 27 g/t gold and a drill intercept of 7.3 m at 21.5 g/t gold.
A small (50 t/day) open pit test mining operation in 1989 averaged 2.64 g/t gold at the Specimen mine. This project has 7.5 km of strike length and a minimum of six exploration targets.
Drilling at Miller Mtn. is planned for this Summer, but all eyes are on South Bullfrog’s initial 3,000 m drill program (subject to funding). Upon initial drilling success, the drill program would be expanded.
Spinout of two promising copper projects later this year
Management plans to spin out its two copper projects and is in active discussions with strategic partners to do so later this year. I believe the copper projects alone are worth as much, or more, as Zacapa’s EV of $8M.
With the right partners, these projects could deliver long-term rewards for shareholders.
The 8,387 acre Red Top project is a porphyry copper play just eight km north of Rio Tinto’s & BHP’s Resolution project. Management completed 5,165 m of drilling in 2021-22. Red Top is within 30 km of several Rio-BHP giant mines and Freeport McMoran’s Miami-Inspiration mine.
The 4,983 acre Pearl copper project is immediately north of BHP’s past producing San Manuel-Kalamazoo mining complex. Production totaled over 9.3B pounds copper & 146M pounds molybdenum.
Soil geochemical surveys at Pearl have identified widespread areas of elevated copper and rock grab samples of up to 7.3% copper. Other metals that have been mined nearby the Pearl project include gold, silver, lead & zinc.
With a tiny valuation and near-term discovery potential, and the gold price poised to (potentially) move above $2,000/oz., drilling 3,000 meters this Spring in safe, prolific Nevada — on a project surrounded by AngloGold Ashanti, Kinross & Augusta Gold — could generate some BIG news.
In addition, spinning out the Red Top & Pearl copper projects will reward shareholders with shares in both gold-focused & copper-focused companies with projects across the western states of Nevada, Arizona & Idaho.
Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Zacapa Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Zacapa Resources are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making investment decisions.
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