Cayden advances with three North American projects

Vancouver – The team behind Ghana-focused Keegan Resources (KGN-T, KGN-X) has set its sights on advancing several North American prospects though relatively new entrant Cayden Resources (CYD-V).

Keegan financier and co-founder Ivan Bebek is leading Cayden as president and CEO, his Keegan co-founder Shawn Wallace is now chairman of both companies, and former president of Keegan Daniel McCoy is now chief exploration geologist for Cayden. Together the three represent a significant part of the team that led Keegan to establish almost 5 million indicated and inferred ounces at its Esaase project.

The group launched Cayden last September out of a capital pool company after optioning into the Wildcat property near Thompson Creek Metals‘ (TCM-T, TC-N) Mt. Milligan mine in British Columbia.

Soon after, Cayden announced it had secured the right to option into the Morelos Sur project in Mexico’s Guerrero state. The roughly 170-sq.-km property is located in the currently quite active Nukay mining district where Torex Gold Resources (TXG-T) and Newstrike Capital (NES-V) are also exploring, and Goldcorp (G-T, GG-N) is producing roughly 300,000 oz. gold a year from its Los Filos mine.

More recently, the company optioned into two property blocks in Nevada where it sees big silver and gold potential. Cayden is now preparing to launch exploration programs on all three properties this year.

“The idea with Cayden is to take advantage of the tremendous deal flow that we’ve been fortunate to receive and go after advanced-stage exploration projects that could potentially develop into another Keegan,” said Cayden CEO Bebek in a phone interview.

He noted the company looked at 60 projects before settling on the Morelos Sur expansion, where it sees significant potential in the Nukay district.

“We think that this belt is definitely underexplored,” said Bebek, “”We feel it’s like Ghana in the early days.”

Cayden secured the project by acquiring the local subsidiary of private Ontario firm La Camera Mining, which held the option rights to the property. To gain the option, Cayden issued $11.55 million worth of common share units to La Camera, while to gain full control of the property itself, it will pay roughly $14.3 million in three stages by October, plus a $1.15 million finders fee.

Morelos Sur hosts a modest 1.7 million tonne inferred resource grading 1.49 grams gold, but Bebek said the company was investing in the project’s future potential.

“What you largely have to look at is the opportunity via real estate,” said Bebek. “It’s a very strategic land package for great mineral trends.”

The company has five exploration targets at Morelos Sur, but the Las Calles target stands out for sitting in a narrow strip of land just south of Goldcorp’s Los Filos deposit and just north of its El Bermejal deposit.

“We’re speculating that their deposit plunges into our property,” said Bebek, “the pits may possibly connect.”

To test the theory the company is getting ready to drill 62 holes with tight 35-metre spacing on the target.

Cayden has already drilled on the Mina Verde target that sits just west of Goldcorp’s Los Filos deposit. Confirmation drilling hit 15.3 metres grading 7.3 grams gold per tonne from 6 metres depth and 20 metres grading 3.3 grams gold from 8 metres down, while step-out holes returned 9.6 metres grading 5.8 grams gold from 194 metres downhole and 6 metres grading 2.3 grams gold from 29 metres depth.

With several targets quite near Goldcorp’s operations, Bebek sees significant possible cost savings at the development stage.

“If you find anything within a reasonable distance, you can assume there’d be no capex, although you’d have to arrange terms with Goldcorp,” said Bebek. “If you don’t have to spend half a billion or a billion dollars to build a mill and a plant it makes whatever you find quite fortuitous.”

The company is already benefitting from Goldcorp’s presence in terms of security. Torex Gold was forced to suspend exploration at its nearby Morelos gold project in late March after criminals stole several trucks from staff at gunpoint, with the company only recently starting exploration again. Bebek said that Goldcorp’s nearby presence has so far provided enough.

“We don’t have security ourselves right now, and the large reason for that is because basically we fall under the umbrella of Goldcorp security,” said Bebek, noting that Goldcorp accesses its project through Cayden property.

Security aside, the district is quickly heating up with Torex advancing its Morelos project and recent entrant Newstrike pulling hits like 231 metres grading 7.51 grams gold from its Ana Paula project, while Goldcorp only declared commercial production in 2008.

Bebek sees the recent increase in investment at Nukay as somewhat coincidental, but not surprising.

“It’s a trend that was underexplored that’s finally getting more exploration attention, and we’re going to be a large part of that going forward,” said Bebek.

Overall this year Cayden expects to spend about $6 million on exploration at Morelos Sur, using between two and four drill rigs.

Meanwhile in Nevada, Cayden has signed on to spend $20 million over three years to earn 50% of two silver-gold properties from private Vancouver-based Railhead Resources, which holds option agreements on the properties.

The schedule calls for $2 million of exploration spending in the first year, $6 million in the second, $12 million in the third, and to earn an additional 10% it must spend $10 million in the fourth year.

Bebek said the price was justified, and that if the results do not materialize the company could pull out of the agreement.

“It’s reasonable in our opinion, because of the amount of drilling that we believe we’ll be getting done on the project,” said Bebek.

The company’s first drill program, pending permitting, calls for 300 drill holes, while Bebek said the company was looking at two more similar-sized programs to test three large areas.

The properties have historic drill results, two old deposits and hundreds of old surface workings, but little recent work. Still, Bebek sees strong potential, especially in the deeper sulphides.

“We believe its going to be a very large high grade silver-gold district,” said Bebek.

Back on its original Wildcat project in B.C., the company is just waiting for the snow to melt to drill 11 holes as it looks for a similar system to Mt. Milligan, 12 km away.

After listing in September, Cayden’s stock price climbed steeply from 40¢ and hit almost $12 before the company split its shares 1 for 3 in November.

On the day the Nevada deal was announced, Cayden’s share price climbed 40¢ to $3.90. The company has 32.4 million shares outstanding.