Reservoir, Freeport hit high-grade copper at Timok

VANCOUVER — Vancouver-based explorer Reservoir Minerals (RMC-V) is seeing its 2012 exploration program at its Timok copper-gold property in eastern Serbia pay-off in a big way, and major producer Freeport-McMoRan Copper & Gold (FCX-N) has taken notice. The world’s largest publicly-traded copper miner has opted to exercise an option agreement that could grant it as much as a 75% stake in the project.

Reservoir acquired the Jasikovo-Durlan and Brestovac-Metovnica exploration permits in 2010, which cover an area totalling 184 sq.km on the Timok Magmatic complex in eastern Serbia. The company’s property sits in the prolific Bor-Majdanpek copper-gold district, which has produced 7 million tonnes of copper and 9.7 million oz. of gold historically.

Reservoir established copper-gold porphyry targets during a 2011 field campaign that featured controlled-source audio-magnetotelluric and induced polarization geophysical ground surveys, as well as traditional rock and soil geochemistry sampling. According to a statement, Reservoir has identified at least five separate copper-gold porphyry systems — including VelikiKrivelj, Cementation/Cerova, BorskaReka, and Borski Potok — associated with high-sulphidation epithermal deposits.

Under terms of the Rakita earn-in agreement Freeport can acquire a 55% stake in the project by spending US$3 million by March 2014, after which Timok will operate as a joint-venture with Freeport as operator. The Phoenix-based major can then earn an additional 20% by taking the project through the feasibility stage.

Freeport initially intended to contribute US$1.2 million to Reservoir’s exploration program during 2012, which included additional geophysics work and drilling. Things begin to pick up speed, however; following the announcement of a major copper cut in hole FMTC-1210 in mid-July on the Brestovac-Metovnica permit license. Reservoir hit 266 metres averaging 1.07% copper, and 0.28 grams gold per tonne for 1.23% copper equivalent when it drilled vertically to target blind porphyry copper-gold mineralization beneath the post-mineralization Miocene cover sediments.

“[We] believe this drill hole represents the possible discovery of a potentially large blind copper-gold epithermal and porphyry mineralized system,” commented Reservoir president and CEO Dr. Simon Ingram following the discovery. “[It] may be consistent with historical grades reported from other high-sulphidation systems in this world-class copper mining district.”

The results had a predictable effect on Reservoir’s share price, which shot up 58%, or 37¢, to a high of $1.14 per share during the July 16 trading session. As it turns out that was just the beginning of the good news for Reservoir’s shareholders.

The company continued to run four drills at Timok, and just one month later on Aug. 16 Freeport announced it intended to exercise its earn-in option for 55% of the project and would be taking Timok through feasibility. In the four weeks between the discovery at Timok and Freeport’s announcement, Reservoir’s shares skyrocketed 200% or $1.30.

The deal clincher came two weeks later, when Reservoir reported a massive copper equivalent cut at Timok on Sept. 4. The company announced high-grade copper and gold mineralization in hole FMTC-1213, where it intersected 160 metres grading 6.92% copper and 5.6 grams gold for 10.16% copper equivalent. The hole was collared at the Cukaru Peki target, and was drilled vertically with a focus on a blind porphyry and epithermal copper-gold zone identified during surface exploration.

“We believe that [Timok] is entering a very exciting stage,” stated Ingram. “The results to date from wide-spaced drill holes provide confirmation of the project’s potential.”

The high-grade results at Timok further boosted Reservoir’s shares as the company jumped 47% or $1.01 on Sept. 4 en route to a $3.18 press-time close. Reservoir has 26 million shares outstanding and an $83 million market capitalization. Overall the company has leapt 489% or $2.64 since early July.

Reservoir reported US$14 million in treasury at the beginning of Sept., and maintains a portfolio of early-stage properties in Eastern Europe and central Africa.