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viewEssex Minerals Inc.

Essex Minerals looking to provide project finance for “mid-tier producer sweet spot”

Snapshot

The company’s management has more than 35 years of experience in mining corporate finance structuring and arrangement

Mining professionals

Quick facts: Essex Minerals Inc.

Price: 0.31 CAD

TSX-V:ESX
Market: TSX-V
Market Cap: $8.97 m
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  • Focused on opportunities where it can adopt an option earn-in and joint venture model
  • Management has more than 35 years of experience in mining corporate finance
  • Joint venture deal with private royalty group Zola Minerals Inc, giving it the option to participate in gold streams

What Essex Minerals does:

Essex Minerals Inc. (CVE:ESX) is a mineral exploration and development company focused on opportunities where it can adopt an option earn-in and joint venture model, with a particular emphasis gold projects in Tier 1 jurisdictions.

The company’s management has more than 35 years of experience in mining corporate finance structuring and arrangement.

Management’s time is shared across a number of different projects, as the geological teams already in place manage the approved exploration and development programs.

The group feels this strategy has the potential to accelerate the growth in shareholder value for Essex by earning an interest in a range of projects of merit in a much shorter time frame than would otherwise be possible.

How is it doing:

At the end of July, Essex Minerals said it had started an initial four-hole diamond drilling program at the Cumberland property, 30 kilometres southwest of Georgetown, in North Queensland in Australia, a joint venture with KNX.

Cumberland has four granted exploration permits covering 25,024 hectares, 70 kilometres northwest of the former 3.5-million-ounce Kidston gold mine.

The company said the property has the potential to “host high-grade epithermal gold-silver mineralization,” and is currently held 80% by KNX and 20% by AMD Resources Limited.

Under the terms of the venture, Essex has the right to an initial first-stage earn-in of 50% of KNX's interest in three properties — Cumberland, Compass Creek and Mt. Turner ­ — by spending $1 million on exploration by May 2021.

At the end of the first stage earn-in, Essex may elect to acquire all the shares in KNX, or earn an additional 25% interest in Mt. Turner and 20% interest in Cumberland and Compass Creek by financing a further $3 million on exploration.

On August 19, the company provided a further update on the drilling progress at Cumberland, revealing that it had completed three holes on the property, with another two holes to be drilled – one more than originally planned.

The first three holes drilled were logged and sent for analysis at a laboratory in Townsville, Queensland. Early indicators from some of the holes show prospective mineralization, including high-temperature quartz and base metal sulphides, according to the firm.

Holes 4 and 5 will be drilled on the RBX North target, which hosts multiple intrusives with outcropping hydrothermal breccias associated with a large soil anomaly that indicates silver and gold zones.

The phase 1 drill program is expected to continue for another few weeks.

Meanwhile, on July 13, Essex Minerals struck a joint venture deal with private royalty group Zola Minerals Inc, giving it the option to participate in gold streams.

Zola has the right to provide stream finance on a number of previously mined gold heap leach projects, with the potential to provide near term stream income.

Under the deal, Essex can participate for a 50% interest in any gold streams on project by paying Zola C$300,000 in cash and financing the upfront payment of up to US$4.5 million on the first project.

The group said gross profits generated will be shared 50:50 with Zola, subject to a minimum internal rate of return (IRR) to Essex of 15% on funds invested.

Final engineering studies are already underway on the first project, with a decision to proceed expected to be made before the end of 2020, Essex said.

The company noted that it also has the option to acquire Zola, its subsidiaries or its business based on an independent valuation should the directors of Zola decide to sell any time before July 9, 2021. This option remains in place, even if no gold streams on initial projects go ahead.

On the financing front, at the start of July, Essex Minerals closed the final tranche of a non-brokered private placement, raising $1,310,000 in gross proceeds through the issuance of 5,240,000 shares at a price of $0.25 each. The company had previously announced on June 25, 2020 that it had closed previous tranches of the offering of 5,160,000 shares for gross proceeds of $1,290,000. The final tranche of the offering closed on June 30, 2020, with the issuance of a further 80,000 shares for additional gross proceeds of $20,000.

The company said the net proceeds from the offering will be used for general working capital purposes, its mineral project generative activities and exploration expenditures on its existing mineral projects.

At the start of April 2020, the company had closed another non-brokered private placement offering which saw the issue of an aggregate of 15,000,000 shares at a price of $0.10 each for total gross proceeds of $1,500,000.

Essex also unveiled a boardroom addition in July, with mining analyst and finance executive Meghan Lewis appointed an independent director of the company. Lewis has strong links into the Canadian mining corporate finance sector and was previously vice president of corporate development for Aura Minerals Inc. Prior to that, she was a senior mining analyst for eight years with the Dundee Group of Toronto.

Inflection points:

  • More news on drilling at the Cumberland property in North Queensland
  • A decision on whether to proceed with first Zola project before end of 2020

What the boss says:

Essex Minerals CEO Paul Loudon recently told Proactive’s Alastair Ford in an interview: “We want to be part of the project finance for a company, but not to be competing with the big guys on US$500mln capex deals. Our level is the mid-tier producer sweet spot.”

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Essex Minerals first drill hole at Cumberland Gold project returns...

Essex Minerals (CVE: ESX) CEO Paul Loudon joined Steve Darling from Proactive Vancouver to bring news the company has released the result of their first drill holes from the Cumberland gold and silver project in Queensland, Australia. Loudon discusses the strong results they have seen so far,...

on 2/9/20

5 min read