Corex gets vote 
of confidence 
from Alamos

Corex Gold (TSXV: CGE) has finalized a strategic investment from Alamos Gold (TSX: AGI; NYSE:  AGI). Corex’s flagship wholly owned Santana gold property sits 50 km southeast of Alamos’ Mulatos gold mine in Mexico’s Sonora state.

On Oct. 21, Alamos bought 25.3 million Corex shares at 10¢ apiece, representing 19.1% of the junior.

In a release, Alamos’ CEO John McCluskey describes Corex as an “attractive exploration opportunity,” given its “favourable geology and proximity to the Mulatos mine.” He adds the company made the purchase for investment purposes and may adjust it based on market conditions.

In an interview, Corex’s CEO Craig Snider says Alamos has “knowledgeable people and key individuals that have had a ton of success in Mexico over a number of decades that see this as a large opportunity.” Alamos also operates the El Chanate gold mine in Sonora and the Young-Davidson gold mine in Ontario.

He speculates that if the near-production Santana project generates positive cash flow, it could lead to a takeover.

A haul road under development at Corex Gold’s Santana gold project. Credit: Corex Gold.

In early September, Corex received its final permit at Santana to build a heap leach gold operation and pilot plant. It is planning small-scale production in the “next few months” so that it can produce cash flow for exploration and operation ramp-up. It has already prepaid most of the construction, Snider says.

The project has an internal resource estimate that Snider hasn’t disclosed, since it’s not National Instrument 43-101 compliant. However, he reveals that the property has seen more than $10 million of exploration and 32,000 metres of drilling since Corex acquired it in 2008.

After buying the untested property, the junior discovered the Benjamin, Nicho and Nicho North zones. Open-pit heap-leach production will start at Nicho North.

Vale (NYSE: VALE) also drilled a bit on the property under an option agreement that it ended in early 2014.

Undeterred by Vale’s departure, Corex continued exploring the 7.7 sq. km property. “The potential size and nature of the property could host considerable ounces of gold near-surface,” Snider says.

He recalls that he met Chester Millar — an advisor to Santana’s current operator, H Morgan & Co. (HMC) — in 2008. Millar, who founded Alamos and several other gold firms, expressed interest in financing and managing Santana. But those talks stalled with the market downturn, before resuming in 2014. HMC formed a partnership with Corex in June that year.

A leach pad under construction at Corex Gold’s Santana gold project in Mexico. Credit: Corex Gold.

As part of the recent equity raise, Corex issued 3 million shares to certain members of its management and 6.1 million shares to HMC, all priced at 10¢ per share. As a result, it raised a total $3.4 million, including Alamos’ portion. Management owns 8% of Corex, while HMC holds a 17.8% interest.

The junior plans to spend most of the money on exploring Santana. It is also using the funds to pay off its $300,000 debt.

Meanwhile, Goldcorp (TSX: G; NYSE: GG) is exploring Corex’s Zuloaga property in Mexico’s Zacatecas state under an option agreement.