Riverside and partners busy drilling four properties at once

Prospect generator Riverside Resources (RRI-V) is hoping its “shared-risk business model” will finally return dividends to shareholders this year in the form of a significant mineral discovery. The company has four drill programs running at the same time in two countries, all of which are fully funded by joint-venture partners.

Launched in mid-2007 by an experienced geological group with several big-name financial backers, Riverside has since acquired or staked nine gold and silver projects, as well as formed two strategic exploration alliances. The company is also a darling of the newsletter circuit, with Jay Taylor, Brent Cook, John Kaiser, Lawrence Roulston, Dave Forest, James West and Victor Goncalves all recommending the stock. Their colleague Rick Rule owns over two million Riverside shares, while Kinross Gold (K-T, KGC-N), Cliffs Natural Resources (CLF-N) and the renowned Lundin family are all large shareholders.

Riverside will see a combined 10,200 metres of drilling during the remainder of 2011. 

The latest property to see advanced exploration is Riverside’s early stage Penoles gold-silver project in Durango, Mexico. Earlier this year, Riverside optioned a 51% interest in the project to Sierra Madre Developments (SMG-V), in return for its commitment to spend $4.5 million on exploration, make cash payments of $2.85 million and issue 4.5 million shares to Riverside over two years. 

In early September, the partners began an initial 2,000-metre diamond drill program at the 350-sq.-km property. Targets include step-out holes to test the grade and size potential of the main oxidized El Capitan epithermal gold system, as well as the nearby San Rafael silver vein system and the Jesus Maria lead-zinc-copper vein target. 

Riverside’s Sugarloaf Peak gold project in Arizona will see the most drilling this year, however, under a joint venture with Choice Gold (CHF-V). Choice is earning a 100% interest in the property under a February 2011 agreement whereby it must issue Riverside 13.6 million shares, make cash payments of $1.75 million and spend $5.5 million on exploration, all in stages over three years. 

Choice started a 5,000-metre drill program at Sugarloaf in July to test the property’s shallow, open-pit deposit already hosting a 1.2-million-oz. non-National Instrument 43-101-compliant historical gold resource. Near-surface targets include auriferous alteration zones and major structures recognized during a recent surface sampling program, while deeper holes will also test a 2.5-km-long chargeability anomaly identified during a recent Titan 24 ground survey.

At Riverside’s Libertad gold-silver project in Mexico’s Sonora state, joint-venture partner Geologix Explorations (GIX-T) started a second-phase diamond drill program in July comprising five holes totalling 1,200 metres. Geologix is earning up to an 85% interest in the project by spending US$5 million on exploration and US$900,000 in cash payments over six years.

The five holes will test an unexplored central portion of Libertad’s gold-silver mineralized structure. Geologix’s 2010 exploration program saw the partners complete 2,213 metres of drilling in 10 holes, with the best result returning 26 metres grading 1.02 grams gold per tonne and 65.1 grams silver per tonne. 

In Sinaloa, Mexico, Guerrero Exploration (GEX-T, GEX-V) is completing 2,000 metres of core drilling this year at Riverside’s Chapalota gold-copper project. The companies signed a definitive option agreement in June whereby Guerrero must spend $4 million on exploration, make cash payments of $200,000 and issue 1.25 million shares to Riverside over three years, in return for a 60% interest in the project.

Roughly 10 drill holes will probe several geochemical and geophysical anomalies spanning a broad target area of 5 by 3 km. Chapalota is located just east of Primero Mining‘s (P-T, PPP-N) San Dimas gold-silver mines, formerly owned by Goldcorp (G-t, GG-N). 

As for Riverside’s two strategic exploration alliances, the company is on the lookout for additional early stage exploration projects under deals with Cliffs and major Chilean copper miner Antofagasta Minerals SA. Using money from the majors as well as geological information from its proprietary database – Riverside calls it a “vast treasury of field knowledge spanning decades of research” – the company is focused on generating iron-oxide-copper-gold prospects in Mexico for Cliffs and large-scale copper prospects for Antofagasta.

Should either of the majors like the look of a project and wish to explore it further, they can fund the program while taking a 65% to 70% interest in the property.

Riverside’s lower-risk prospector generator model has meant the company has only seldom had to go to market hat in hand. It has come out of a volatile third quarter with $10 million in its treasury and 32 million shares outstanding, 43 million if fully diluted. 

On Sept. 7, the Riverside shares closed down 1¢ to 94¢ on 134,000 shares traded, within a 52-week range of 78¢-$1.33.