The Next Major Gold District?
If you’ve been around the resource space for any amount of time you’ve likely heard that all the easy gold deposits have been found.
While mid-tiers and majors have decimated exploration budgets after years of misallocating shareholder capital, one company has been quietly putting together district-scale land packages in the middle of a modern-day gold rush.
The Palamina (TSX-V: PA)(OTC: PLMNF) story is a fascinating one.
The company is led by CEO Andrew Thomson. Mr. Thomson has actively been exploring in Mexico, Honduras, and Panama since 1993, and was the former President and Chief Executive Officer of Soltoro Ltd., which defined a significant silver resource on the El Rayo silver project in southwestern Mexico.
That project was eventually acquired by Agnico Eagle in June of 2015.
After the sale of Soltoro, Andrew set out on a mission to find the most prospective land packages that could be consolidated under one roof, preferably in world-class gold belts.
The goal? To make multiple million-ounce-plus gold discoveries.
Palamina has now acquired the application and mining rights to five projects — Gaban, Coasa, Cori, Bendi, and Orco — in the Puno gold belt and one project in the coastal I.O.C.G. Tinka belt in southern Peru.
The Puno Orogenic Gold Belt (“POGB”) is one of the least explored known orogenic gold belts.
Palamina’s projects in the POGB now cover over 77,000 hectares.
All projects have been vetted by artisanal, small-scale, and informal miners who are generally limited to mining gold from the top 100 meters below surface.
No previous systematic exploration programs have been carried out on Palamina’s gold projects. That will change soon, as the company is already using geochemical and prospecting results to direct staking over potential extensions to existing gold mineralized zones.
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The focus is to discover orogenic gold sources.
Known Puno orogenic gold deposits extend to depths greater than 1,000 meters with over 5 km. of mineralized structures.
The orogenic gold belt extends for over 3,400 kilometers from northern Peru through Bolivia to northern Argentina.
Peru has two significant gold districts, with the Puno gold belt being the southernmost of the two.
There literally is a modern-day gold rush going on, as it is estimated there are over 30,000 informal alluvial and artisanal miners mining orogenic and alluvial gold at La Rinconada.
Infrastructure challenges in the past limited the potential, but new roads and power, along with over 650 square kilometers of jungle deforestation from informal alluvial gold mining at Madre de Dios, will lead to multiple new discoveries and new investment in the area.
The areas are so prospective that mining giant Fresnillo recently won a portion of the Orco property at a recent auction and Peñoles has already defined a significant gold resource nearby.
The team in place at Palamina is excellent.
Share structure is tight. Palamina currently has approximately 29.7 million shares outstanding and approximately 39.1 million fully diluted.
The company recently raised C$2.1 million in an oversubscribed financing priced at C$0.30.
Full disclosure: I participated in that financing. As I’ve said before, I eat my own cooking.
Shares currently trade at C$0.37, giving the company a market cap of approximately C$11.1 million and C$14.4 million fully diluted.
I believe that Palamina will be able to drill at least one of these projects before year's end while bringing in mid-tiers and majors to joint-venture some of the projects.
The bottom line is that although gold looks weak to me in the near-term, Palamina has managed to put together some of the most prospective land packages in the entire junior mining space.
Land packages that could yield the next crop of million-ounce-plus gold discoveries and the emergence of new gold districts.
To your wealth,
For the past decade, Gerardo Del Real has worked behind-the-scenes providing research, due diligence and advice to large institutional players, fund managers, newsletter writers and some of the most active high net worth investors in the resource space. Now, he is bringing his extensive experience to the public through Outsider Club, Junior Mining Monthly, and Junior Mining Trader. For more about Gerardo, check out his editor page.
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