Riverside, Cliffs test IOCG targets in Mexico

At a time when many juniors are feeling a cash crunch and throttling back spending, Vancouver-based Riverside Resources (RRI-V) is notably busy as a project generator and early stage explorer. Focused on Mexico, the company believes its exploration model may lead to a new generation of discoveries in one of the world’s most active mining jurisdictions.

Perhaps the biggest advantage Riverside enjoys is an alliance with iron ore major Cliffs Natural Resources (CLF-N), which allows Riverside access to exploration funding in pursuit of iron oxide copper-gold (IOCG) deposits throughout Mexico’s western states. Riverside announced on July 31 that Cliffs has agreed to extend the agreement by another year — including a funding contribution of $750,000.

“We’re doing generative exploration under the Cliffs alliance in Baja at the moment,” Riverside’s vice-president of exploration Howard Davies explains during an interview. This work extends through the majority of the state of Baja California. Davies says that before Riverside stakes, his team will identify multiple opportunities and present them to Cliffs before deciding whether they’ll become “designated properties,” at which point Riverside looks at exploration budgets.

Davies is a relatively new addition to Riverside’s team, having joined the company in May 2011 after moving back into the junior realm following terms with major companies AngloGold Ashanti, Teck Resources and Falconbridge.

Riverside’s early stage activities include mapping, stream sediment sampling and airborne geophysics typical amongst junior explorers. The partnership with Cliffs comes into play once the company finds a promising drill target.

Davies uses the La Huerta IOCG target in Jalisco province, Mexico, as an example. After La Huerta was identified as a potential project, Cliffs supplied Riverside with US$330,000 to complete a five-hole drill program over 1,100 metres.

“The results were not spectacular, so we turned it over,” Davies comments. “For us it’s a process and a long-term commitment. It’s that procedure where if you get it running smoothly, and we have, you’ll turn it over and find those successes eventually. We don’t live or fall on one project.”

Under the alliance agreement Cliffs has an option to label a “designated property” with Riverside, wherein Cliffs can earn up to a 70% interest by spending US$4 million in exploration and completing 3,000 metres of drilling over four years. Cliffs can boost its interest to 90% by bringing the project to the bankable feasibility stage within another four years. Assuming Cliffs advances the project to the 70% level and later opts out of the agreement, it would owe Riverside a one-time payment of US$2 million.

“We’re hoping to have another presentation for Cliffs in October,” Davies continues. “We’re looking at setting up a constant pipeline of prospective projects we can get to them. The benefit for us is that we’re running a business development and geographic information system analysis in both our Vancouver and Mexican offices, so those complement each other and support our results.”

Next in the pipeline is the Naranjo IOCG target, which is close to La Huerta along the same IOCG belt. Davies says Riverside is aiming at a drill campaign at Naranjo by the fourth quarter, targetting a series of discrete, airborne anomalies.

Riverside’s strategy is to move away from outcrop-based exploration and look more closely at anomalies that lie under surface cover. According to Davies, Mexico’s extensive exploration history means a lot of the surface mineralization has already been identified, though that leaves opportunity to look at less obvious targets that previous exploration campaigns may have overlooked due to costs or technology restraints.

“We view the ground cover as a positive for us,” Davies says. “The benefit of working with a major company is that they have the funds and the vision to look at larger targets under cover, whereas that can be difficult for juniors. We can find these good magnetic targets under cover and drill them, with the pipeline continuing to feed in potential projects.”

And that exploration strategy carries over to Riverside’s own portfolio of gold prospects in Mexico’s northern Sonora province. The company is assembling a land package with a different outlook than some of its peers, focusing on areas of strong mineralization and structure that may have been overlooked due to a lack of outcropping. The goal is to develop a system of low-cost techniques that allow for exploration despite any overburden. Davies says he believes there may be a “second generation of deposits in Sonora that are just waiting for discovery.”

Riverside is developing drill targets at its Tajitos gold property along the Mohave-Sonora megashear, where it has identified alterations and anomalous geochemistry. Magnetics have shown major intersections of northwest trends and subsidiary trends heading northeast. The company is aiming to have a drill turning on the property by early 2013.

Farther southeast sits Riverside’s Sierra Salada gold property, which is close to a number of historic placer mining operations.

“It is a nice package that is hosting known historic workings,” Davies comments. “The targets we have are developing well. We’ve had some good grab-sample numbers around there that lead us to believe we might be looking at a source for the placer activity. Other companies have mapped east–west shear zones that extend onto our property as well, both on surface and under cover.”

Riverside has US$9 million in the bank, and Davies says the climate for early stage project acquisitions is promising, as other juniors run low on funds. The company has 35 million shares outstanding, and has traded in the 60¢–70¢ range over the second quarter on average daily trade volumes of 20,000 shares.