The first mover advantage that Altamira Gold Corp (CVE:ALTA) enjoyed for a time in central Brazil, in the regions in Para and Mato Grosso, looks like it won’t be long in paying huge dividends.
The company has been on the ground in one incarnation or other for some years now in a territory bordered in the north by the south-eastern extreme of Para state, and comprising a large swathe of the central north of Mato Grosso.
For years, this area was closed off to international exploration as garimpeiros were granted first dibs, but now that most of the easy gold ounces at surface have gone – and there were a lot of them – more sophisticated mining companies have been allowed in.
Altamira was among the first, spurred by the long-standing Brazilian experience of its management team, and by the scale of the opportunity that appeared to be on offer.
Licences took time to be awarded, and governments changed, but now, some years down the line, things are really starting to move.
Two things happened. The first was that licensing and permitting became easier. The second was that a major porphyry project was discovered by Anglo American (LON:AAL) at Jaca, south and east of Altamira’s landholdings.
That sparked a staking rush in the area, as majors moved in.
But although much of the available land was snapped up, much of it was already in the hands of guess who? – that’s right, Altamira. And the long game that Altamira’s directors had been playing suddenly began to make a lot of sense to a lot of people.
For now, the company is content to run its own projects in its own way. These consist principally of the Cajueiro project, the Apiacas project and the Santa Helena project, which isn’t far from Jaca. There’s also a portfolio of second tier projects for when the value gets crystallised on those more advanced.
Already Altamira has a resource base of 85,000 ounces of oxides and over 600,000 ounces of sulphides at Cajueiro, and this is likely to be the first project into production.
The plan, says chief executive Michael Bennett, is to work the oxides down to 25 metres on a short-term basis.
“We plan to build a small plant under a bulk sampling licence and we’ll probably produce for around three-to-four years with that.”
Near-term production with the prospect of early cashflow is always a boon to markets, especially ones as skittish as they are now.
But actually, this early work is likely just to be scratching at the surface of a much larger and more meaningful opportunity.
Bennett build the Altamira portfolio on the basis of some long-term and highly strategic thinking, that looks backwards as well as forwards for its rationale.
“Across the region,” he says, “the garampeiros have done something like a very large geochemical survey for us. They must have taken out around 10mln ounces of gold along a hundred kilometre strike. That helped identify our major projects. To find big projects you need a big surface area.”
It’s certainly a promising position. The company holds a very large position in a camp where significant amounts of gold were previously produced, and in which the majors are now sniffing around in earnest.
“We’ve got a really good chance of taking this into the multi-million ounce realm,” says Bennett.
“The short-term mining at Cajueiro will be a great showpiece for us. We’ll be opening up the mineralisation and we’ll be able to see the way these structures coalesce.”
Funding will come initially from a US$6mln forward purchase agreement with Metalstream Ltd, which in turn will be entitled to receive 10,000 ounces of gold for its cash. That puts Altamira in a strong position to get things up and running at Cajueiro once the remainder of the coronavirus crisis has blown itself out.
Two environmental permits are already in place, along with one bulk sampling licence, and there are more on the way.
“We would expect production to start in the first half of 2021,” says Bennett.
“We will be working from a small number of open pits, taking out ore and blending it.”
Looking into the middle distance, the company is likely to drill at Apiacas at the end of this year or the beginning of next year, and has every expectation of eventually zeroing in on a one million ounce-plus target. And, at Santa Helena, there’ll also be drilling.
For the time being Altamira is fending off major companies interested in the porphyry potential at Santa Helena, but the recent sale of a property for cash and a chunky NSR shows that this is a company with a commercial as well as a geological bent that’s perfectly willing to deals at the right price and at the right time.
For now though, the focus will be on Cajueiro, on the idea that production isn’t too far away and that the exploration upside is likely to be hugely signficant.
Altamira Gold Corp (CVE:ALTA)