Reservoir, Freeport hit high-grade copper at Timok

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 exercised an option agreement that could earn it up to 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 copper and 9.7 million oz. 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 Veliki Krivelj, Cementation-Cerova, Borska Reka 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 earn an extra 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. But things picked up speed after a monster copper intercept was announced in hole 1210 in mid-July on the Brestovac-Metovnica permit licence.

Reservoir hit 266 metres averaging 1.07% copper and 0.28 gram gold per tonne for 1.23% copper equivalent, when it drilled vertically to target blind copper-gold porphyry 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,” Reservoir president and CEO Simon Ingram commented after 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 salutary 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 shareholders.

The company continued running 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 take 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, on Sept. 4, when Reservoir reported an eye-popping drill result at Timok, with hole 1213 intersecting 160 metres grading 6.92% copper and 5.6 grams gold per tonne for 10.16% copper equivalent.

The hole was collared at the Cukaru Peki target, and drilled vertically with a focus on a blind porphyry and epithermal copper-gold zone identified during surface exploration.

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

The high-grade results at Timok boosted Reservoir’s shares, and 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. The company has leapt 489%, or $2.64, since early July.

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