Evrim sees opportunity amid struggling markets

VANCOUVER — For project generator Evrim Resources (TSXV: EVM; US-OTC: EMRRF) the ongoing down swing in commodity markets provides an opportunity to pick up previously unobtainable projects with promising exploration histories.

According to president and CEO Paddy Nicol, the company has shifted gears into acquisition mode, and it has started off the year off with a pair of North American deals it hopes can attract big-time mining partners.

Evrim began by picking up the Ardmore copper project in Pinal County, Ariz., which covers 9 sq. km at the intersection of two prolific porphyry copper belts, 60 kmnorth of Tucson. The property has seen limited historic work, but Evrim kept its eye on the situation over the past few years.

Ardmore is thought to lie along the east–northeast mineralizing trend that hosts Freeport-McMoRan’s (NYSE: FCX) Safford and Morenci open-pit copper mines.

“We have a data package that covers most of Sonora and Durango, as well as several other states in Mexico,” Nicol said during an interview. “That package also extends into areas of Arizona and Nevada, however, and this is the first time we’ve really used that side of our database. The project was dropped by previous land owners, which allowed us to pick up a large portion of what we were after through staking.”

Ardmore consists of porphyritic Proterozoic monzogranite to granite and Laramide porphyritic dykes, with zones of quartz-sericite alteration. Alteration is truncated by Tertiary andesites and conglomerates of an upper detachment plate, which has been mapped as a shallow thrust. Gold mineralization coincides with steep and flat-lying structures along the thrust front.

“There’s been drilling at the project in the past, but it has focused on shallow, gold-related targets. There’s a detachment fault, and off to the west side of that fault, you’re seeing what we think could be porphyry-style alteration,” vice-president of exploration Howard Davies said.

“Our recent work has involved mapping and geochemical work in an attempt to really understand the nature of that alteration, and system generally. We’ve had interested parties at Ardmore already, but it will really be result-dependent,” he added.

Evrim followed up with acquiring the Ball Creek project in the prolific Golden Triangle region of northwest B.C. On April 27 the company announced a deal with beleaguered junior Paget Minerals (TSXV: PGS; US-OTC: PGTMF), wherein it will pick up the 52 sq. km package for $150,000 plus future considerations consisting of cash or shares based on certain exploration or joint-venture milestones.

“We started looking at diversifying the portfolio back in 2014, and we’ve always had our eyes open in a bid to get into jurisdictions where our team has expertise. I think the biggest thing that held us back was the cost of entry, and as we all know the costs of projects have really come down last year,” Nicol said.

“Ball Creek was one of those instances where a project had a lot of work done on it previously, and we believe it’s a really good asset with lots of potential. Clearly the value is there now, with projects essentially on sale,” he continued.

The project had been optioned to Mark O’Dea’s Blue Gold vehicle in 2011, before it merged with Riverstone Resources to form True Gold Mining (TSXV: TGM) and advance the Karma gold project in Burkina Faso, West Africa.

Ball Creek straddles sections of the Jurassic Eskay rift, and holds several separate porphyry copper-gold-molybdenum and epithermal gold-silver systems associated with the Jurassic intrusives of the Texas Creek plutonic suite.

The Ball Creek porphyry system has at least four mineralized zones with extensive potassic, phyllic and propylitic alteration. Previous drilling in the Main zone intersected 231 metres grading 0.2% copper and 0.54 gram gold per tonne in hole 7-12, which included 15.2 metres grading 0.4% copper and 1.11 grams gold.

The zones are open in several directions and at depth, with potential to expand mineralization south at the Cliff, Goat and ME zones, which haven’t seen much exploration.

“Previous operators had really been looking for an analog of Imperial Metals’ (TSX: III) nearby Red Chris deposit, and Blue Gold got a certain distance along toward that objective,” Davies elaborated. “It’s a really fertile piece of ground for discovery that hasn’t had much exploration done on the greater property package. From a fundamental point of view, you’re in the right belt, the right area, and you have evidence of mineralization and alteration out there.”

Though Evrim has expanded into new jurisdictions, it hasn’t abandoned its core land and partner positions in Mexico. The company has focused on copper exploration in prospective regions in the states of Durango and Sonora, and it will have active exploration programs under two Mexico-focused partnerships this year.

First, Evrim has an option on its Ermitano and Cumobabi gold-silver properties with producer Silvercrest Mines (TSXV: SVL; NYSE-MKT: SVLC). The companies drilled 2,600 metres at Ermitano last year, and reported mineralization at the El Durazno target. Silvercrest hopes to find satellite deposits to feed its Santa Elena milling complex, 8 km away from the exploration site.

Drill highlights from El Drazno were reported in mid-February, and include: 4.6 metres averaging 2.1 grams gold and 35.5 grams silver from 193 metres deep in hole 14-5; and 2.5 metres of 1.58 grams gold and 59 grams silver from 189 metres deep in hole 14-8.

Silvercrest’s annual budget for Ermitano and Cumobabi this year is $2.3 million, and the companies hope to drill 6,000 metres at the targets.

Silvercrest can earn a 100% interest in Ermitano by paying US$75,000 upon signing and US$50,000 each anniversary thereafter, completing a minimum of US$500,000 in exploration expenditures in the first year, and delivering mine plans with accompanying permits. Evirm will retain a 2% net smelter return royalty (NSR) on the project. The conditions on the Cumobabi agreement are identical, but Evrim will keep a 1.5% NSR on production.

Evrim’s other major asset is a five-year exploration agreement signed with multinational steel giant ArcelorMittal (NYSE: MT) in February 2014. The companies are jointly funding exploration programs within a 100 km radius of ArcelorMittal’s El Volcan mine in Sonora in search of new iron-ore deposits.

The partners spent the past year flying generative airborne geophysics over broad areas, though they soon expect to start $500,000 worth of proof-of-concept drilling into the Santa Juliana magnetic anomaly. 

ArcelorMittal will fund the program and kick-in another $500,000 for ongoing regional exploration.

Evrim has traded within a 52-week window of 16¢ to 44¢, and closed at 19.5¢ per share at press time. The company reported $2.7 million in working capital at the end of March, and has 38 million shares outstanding for a $7.4-million market capitalization.

“When it comes to new exploration techniques and discoveries, it’s all about subtlety in your geochemical and geophysical work. We have to recognize more subtle expressions of mineralized systems,” Davies commented.

“We have to look at some of the really good work that’s been done by the University of British Columbia’s Mineral Deposit Research Unit, for ex
ample, that focuses on alteration-footprint geochemistry and indicator minerals. We’re big supporters of strong science, and by always staying on the cutting edge you speak the same language as the major companies. I believe if you’re going to buy into a company like Evrim, you’re buying into our brain trust.”