Reservoir Minerals raising $33 million in double financing

VANCOUVER — Investment dollars may be hard to rustle up these days, but Reservoir Minerals (TSXV: RMC; US-OTC: RVRLF) has a recipe for a raise: release an initial resource estimate for a flagship project containing 3.8 billion lb. copper and 3.1 million oz. gold, then demonstrate the potential to expand that resource by announcing a stepout drill result of 4.81% copper and 2.88 grams gold per tonne over 205.6 metres.

With those aces in the hole, it seems private placements totalling $33 million become available. 

Reservoir is raising that much in two deals. The first is a non-brokered offering of up to 4 million shares at $5.75 apiece, which could raise $23 million. The second raise is a bought-deal placement of 1.74 million shares at the same price, to raise $10 million.

The beauty of Reservoir’s business model, which finds partners to advance its major projects, is that Reservoir does not need to spend these new funds at its flagship project. That project is Timok, the copper–gold property in eastern Serbia that Reservoir joint-ventured to Freeport-McMoRan Copper & Gold (NYSE: FCX).

Freeport owns 55% of Timok, but the major has elected to sole fund project expenditures until a feasibility study boosts its stake to 75%. 

Timok has seen over 45,000 metres of drilling, but a feasibility study is still some ways off. In January the partners published the project’s first resource estimate, which rang in at 65.3 million inferred tonnes grading 2.6% copper and 1.5 grams gold per tonne. The resource includes the high-grade HSE massive sulphide zone, containing 6.8 million inferred tonnes averaging 9.6% copper and 5.9 grams gold.

The resource is in an area known as Cukaru Peki, where the partners are drilling. In their latest results, Reservoir and Freeport announced new intercepts through the high-grade massive sulphide zone, including 205.6 metres grading 4.81% copper and 2.88 grams gold starting 554 metres down hole 1338. The intercept included 114.5 metres of 7.77% copper and 4.14 grams gold. 

Two other holes confirmed the high grades of the massive sulphide zone: hole 1345 cut 253.8 metres grading 1.68% copper and 0.95 gram gold, while hole 1348 returned 237 metres of 1.98% copper and 0.72 gram gold.

Reservoir and Freeport have drilled several holes into a porphyry body that seems to lie east, north and below the main body of mineralization at Cukaru Peki. The resource estimate did not include any of the porphyry zone, as there had been insufficient drilling to inform a calculation. 

The partners are addressing the lack. Recent results into the porphyry zone include 902 metres grading 0.65% copper and 0.14 gram gold starting 766 metres down hole 1328, and 807 metres grading 0.59% copper and 0.22 gram gold from 1,146 metres down hole 1327.

“These new drill hole intercepts through porphyry mineralization, together with previously reported intercepts, suggest that the porphyry-style mineralization extends from under the HSE zone of the Cukaru Peki deposit to the north for at least 500 metres and northeast for at least 900 metres, and the limits . . . have yet to be defined, except to the south,” Reservoir said. 

The mineralization at Timok is deep, but that was part of the plan. Reservoir went to Serbia knowing that higher copper prices and advances in underground block-caving mining technologies meant deep, high-grade targets could be mineable. As such the company used modern geophysical techniques and looked for mineralization 500 metres deeper than anyone had looked before. 

The exploration permits at Timok cover 245 sq. km of the Timok magmatic complex in eastern Serbia, which is already home to the Bor–Majdanpek mining and smelting complex. Bor–Majdanpek has produced over 13 billion lb. copper and almost 10 million oz. gold historically, and a new flash smelter is under construction.

Reservoir owns four more projects in Serbia that cover 300 sq. km. One is south of Timok, a second is in the north of the country, a third is in western Serbia and the fourth is near the centre of the country. The company plans to use the funds raised in its current financings to advance the projects.

Reservoir announced the latest Timok drill results and its financing deals two days apart, and the news added 50¢ to RMC’s share price, lifting it to $6.70. The gain represents the latest jump a six-month ascent. Last July RMC shares were worth only $3. Reservoir has 42 million shares outstanding.