US Snapshot: Seven juniors of interest

The uptick in metal prices has coupled with optimism that the Trump administration’s business-friendly approach to taxes and regulations will boost early stage mineral exploration and mine development by juniors across the United States. The following are seven such juniors with active precious and base metal projects.

AMERICAS SILVER

Toronto-based Americas Silver (TSX: USA; NYSE-MKT: USAS) has a memorable ticker symbol and two operating silver mines: the Galena complex in Wallace, Idaho; and the Cosala operations in Mexico’s Sinaloa state. The company also speaks of zinc and lead exposure at existing operations and brownfield development properties.

Americas Silver produced 2.4 million oz. silver (4.75 million equivalent oz. silver) at the two mines in 2016, at cash costs of US$10 per oz. silver.

The high-grade Galena complex has over 250 million historical oz. silver production, and Americas Silver says there are at least 10 more years of mine life, plus expansion opportunities.

In 2016, the mine produced 1.4 million oz. silver and 24 million lb. lead. The mine has undergone a three-year changeover from operating as a silver-copper mine,  which has resulted in costs dropping by half over the past five years.

Americas Silver shares are up 23% so far this year, and last traded at $4.29 for a $167-million market capitalization. Share hit a 52-week high of $5.76 in mid-2016. At last count the company had a strong balance sheet, with $24.1 million in cash and only $3.1 million in long-term debt.

Major shareholders include M&G, Ingallas & Snyder, Eric Sprott, Sprott Resources and CQS.

GOLDEN QUEEN MINING

Golden Queen Mining (TSX: GQM; US-OTC: GQMNF) has joined the ranks of producers with its newly operating Soledad Mountain gold-silver mine, outside the town of Mojave in southern California. The 50%-owned, open-pit mine uses cyanide heap-leach processing and Merrill-Crowe recovery.

Between pouring first gold on March 1, 2016, and declaring commercial production on Dec. 19, the company shipped 17,800 oz. gold and 185,000 oz. silver. In October and November, Golden Queen achieved operating rates of 10,500 tons per operating day.

In a February operational update, Golden Queen noted several highlights from 2016: 8.9 million tons of ore and waste mined in 2016, including 2.6 million tons of ore; 2.7 million tons of ore processed grading 0.014 oz. gold per ton (0.48 gram gold per tonne) and 0.33 oz. silver per ton (11.3 grams silver per tonne); 2016 production of 19,030 oz. gold and 195,000 oz. silver; and US$13.02-per-ton site-operating costs in 2016.

Golden Queen expects to increase gold production and decrease unit costs throughout 2017 and 2018, as mining transitions to the East pit.

Some US$20 million of sustaining capital investment is budgeted for 2017, which will go primarily towards a second-phase heap-leach facility, and additions to the company’s mining fleet.

The mine is also selling waste rock into the regional landscaping market, and looks to scale up this side business.

By the end of 2017, Golden Queen says it anticipates finalizing a long-term mine plan to support an application for extending the mine life of the Soledad Mountain project beyond the first 11 years contemplated in a 2015 feasibility study.

AQUILA RESOURCES

Aquila Resources (TSX: AQA ; US-OTC: AQARF) is one of the most active junior mining companies in Michigan’s Upper Peninsula, advancing its 100%-owned Back Forty gold-zinc project, where the company and its past partners — including Hudbay Minerals — have spent in excess of US$70 million on exploration and development.

Back Forty is a volcanogenic massive sulphide deposit located along the mineral-rich Penokean volcanic belt. It boasts measured and indicated resources of 15.1 million tonnes grading 2.03 grams gold per tonne, 24.48 grams silver per tonne, 0.3% copper, 0.2% lead and 3.1% zinc for 985,000 contained oz. gold and 1 million contained lb. zinc. Another 2.3 million tonnes lie in the inferred category at similar grades.

In July 2014, Aquila completed a preliminary economic assessment (PEA) at Back Forty that envisioned mining 16.1 million tonnes of mineralized material over a 16-year mine life, with 12.5 million tonnes coming from an open-pit and the rest from underground.

The study calculated an after-tax net present value of US$211 million, a 32% internal rate of return and a 1.8-year payback. Initial capital cost would be US$261 million.

At an initial throughput rate of 5,350 tonnes per day, the expected total payable production would be 532,000 oz. gold, 721 million lb. zinc, 74 million lb. copper, 4.6 million oz. silver and 21 million lb. lead.

Aquila started the year by closing an oversubscribed financing that brought in $7.9 million. It will use the funds to finish a feasibility study at Back Forty; strengthen and expand its management team as it prepares for construction at Back Forty; and for general working capital purposes.

ATLANTA GOLD

Junior gold explorer and developer Atlanta Gold (TSXV: ATG; US-OTC: ATLDF) is active in the historic Middle Boise mining district northeast of Boise, Idaho. Its eponymous Atlanta gold project sits on Atlanta Hill (a mountain by eastern U.S. standards) on an 8.74 sq. km site that has hosted many past-producing mines since the 1860s, with historic production of 344,000 equivalent oz. gold.

In many other jurisdictions, the Atlanta property would be a candidate for bulk, open-pit mining with cyanide heap-leaching, but environmental sensitivities in the region made the company change its mining strategy in 2008 to a combined shallow open-pit and underground operation, with an on-site milling facility but no cyanide circuit.

This approach would: produce a gravity concentrate, plus a precious metal-rich sulphide concentrate to be custom smelted; raise recovery rates from 63% to 90%; and shrink the environmental footprint by 85%.

Despite these efforts, Atlanta Gold received notice in November 2016 that the Idaho Conservation League and Northwest Environmental Defense Center submitted pleadings to reopen a closed case in the U.S. District Court in Idaho in which Atlanta was the defendant. Atlanta says these parties filed a Motion to Hold Defendant in Civil Contempt, and Impose Additional Penalties and Enforcement Remedies, which alleges that Atlanta violated its National Pollutant Discharge Elimination System permit, and did not make all payments when due to the U.S. Treasury for an earlier imposed fine.

In October, Atlanta borrowed US$750,000 from Jipangu on an unsecured basis at an 8% per year interest rate, repayable on demand at any time after March 31, 2017, or in some instances sooner, if the company completes a significant equity financing before March 31, 2017.

CALIFORNIA GOLD MINING

If you think of the phrase “mother lode,” think of California Gold Mining (TSXV: CGM; US-OTC: CFGMF). The Toronto-based junior is developing its 100%-owned flagship Fremont high-grade gold project in central California’s pro-development Mariposa County, on 13.56 sq. km of patented land in the prolific Mother Lode gold belt that has historically produced over 50 million oz. gold.

The property is only 150 km east of San Francisco, and has excellent infrastructure.

Total open-pit resources revealed in a November maiden estimate are 17.2 million indicated and inferred tonnes grading 1.60 grams gold per tonne for 879,000 contained oz. gold. The resource was calculated by Tudorel Ciuculescu of Roscoe Postle Associates, and is to National Instrument 43-101 standards.

Since acquiring the property in 2013, the Vishal Gupta-led junior has carried out three phases of drilling totalling 15,100 metres, and preliminary metallurgical testing showing 93% recoveries from an oxide cap and 86% from sulphide zones.

The company started a property-wide soil geochemistry survey in late 2016, and plans to carry out a geophysical survey and $5-million worth of drilling in 2017.

Shares last traded at 46¢, generating a $15-million market capitalization with 32.2 million shares outstanding (56.4 million fully diluted).

PANCONTINENTAL GOLD

Newcomer Pancontinental Gold (TSXV: PUC), or “Pancon Gold,” is drilling its flagship, wholly owned Jefferson gold project in the Carolina mineral trend, only six miles northeast of OceanaGold’s (TSX: OGC) new Haile gold mine, with an aim to establish a maiden resource estimate.

The company spent a decade exploring for uranium and rare earth elements in Australia under the moniker Pancontinental Uranium, but in 2016 changed its name and started hunting gold in the Carolinas.

Pancon’s board is comprised of chairman Donald Whalen, David Mosher, David Petroff, and president and CEO Rick Mark. Laurence Curtis serves as an advisor to the board. Other management include chief financial officer Mark McMurdie; vice-president of exploration Dennis LaPoint; and vice-president of corporate development Layton Croft.

An initial 1,500 drilling campaign got underway at Jefferson in late 2016 into a target named Anomaly A, stepping out from drilling carried out by a previous operator in 2011.

The best of four holes from 2011 cut 1.27 grams of gold per tonne over 164 metres, with the true width unknown.

QUATERRA RESOURCES

Vancouver-based Quaterra Resources (TSXV: QTA; QTRRF), through its wholly owned subsidiary Singatse Peak Services (SPS), is drilling the Bear porphyry copper system, which is one of its assets in a 132.09 sq. km land position in Nevada’s historic Yerington copper district, south of Reno.

Freeport-McMoRan (NYSE: FCX) subsidiary Freeport Nevada has an option to earn a 55% interest in SPS by providing $40 million in option payments, or 75% by providing $138 million.

Quaterra describes its land position as containing the Bear, Yerington pit and MacArthur copper deposits, plus untested exploration targets and valuable water rights already permitted for mining.

In January Quaterra said it would drill at least 15 drill holes in 2017 to test targets throughout its land package, using funds from Freeport, which agreed to make accelerated option payments of up to $1.5 million.

Quaterra will focus on “locating and drilling both potential open-pitable and higher-grade porphyry and skarn mineralization in a number of prospective areas that we have identified across our district-scale property.”

Drilling will include reverse-circulation and core drilling in and around the Yerington pit, at the MacArthur deposit five miles north of the Yerington pit, and on other targets.

Quaterra notes it has spent $36 million in the Yerington District since 2006, and has released National Instrument 43-101 compliant oxide and sulphide resources at both the MacArthur and Yerington deposits, and a PEA at MacArthur.