More 652,000 shares changed hands on Feb. 22 as Vancouver-based
copper and gold exploration company Zacapa Resources Ltd. (ZACA:TSX.V) closed almost 11% higher to CA$0.77 on news that the plucky copper and gold explorer had added 239 mining claims at its Red Top copper project north of Superior, AZ, after the first drill hole on Red Top hit “extensive” porphyry-style mineralization well below surface.
In January, drill hole RT-21-001 finished at a depth of 1,042 meters below the 800m planned end of hole and subsequent analysis showed significant signs of porphyry-style alteration — a geological setting known for large, low-grade copper deposits.
That sent Zacapa management quickly into action to secure as much additional land around Red Top as it could.
Those efforts more than doubled the land position to 431 unpatented claims covering roughly 34 square kilometers (34 sq. km). Now, further drilling is underway.
"The remarkable success of our early drilling at the Red Top porphyry copper project has generated considerable interest, and our team acted quickly to secure additional prospective ground in the area," says CEO and Director, Adam Melnik. “Our land position provides ample room for our current and future exploration plans, and the major mining companies exploring next door are a testament to the highly prospective ground.”
The Red Top porphyry copper project is located in Arizona’s Superior Mining District, about 8 km northwest of Resolution Copper, a joint venture co-owned by London-based mining titans Rio Tinto Plc (RIO:NYSE; RIO:ASX; RIO:LSE; RTPPF:OTCPK) and BHP Billiton Ltd. (BHP:NYSE; BHPLF:OTCPK).
Resolution Copper is attempting to develop one of the largest porphyry copper deposits in North America — a resource of over 50 billion pounds of copper.
Zacapa recently executed a similar staking strategy in Nevada where management added 136 mining claims covering about 11 sq. km at its wholly owned South Bullfrog gold project in the Beatty District of Nevada’s Walker Lane Trend, home to some of America’s most prolific gold mines.
In fact, more gold is mined in the state of Nevada than in all but a handful of countries.
The junior’s claims add to its considerable land package at South Bullfrog, and those claims also have well-heeled neighbors: AngloGold Ashanti Ltd. (AU:NYSE; ANG:JSE; AGG:ASX; AGD:LSE) to the north and east, Augusta Gold Corp. (AUGG:OTCPK) to the west, and Coeur Mining Inc. (CDE:NYSE) to the southeast.
Apart from adding claims at South Bullfrog, Zacapa also conducted an induced polarization (IP) geophysical survey, stream sediment sampling, as well as soil sampling.
The information from these programs, essentially the first steps of the exploration work, will be used to define the highest-probability targets for a drill program starting in Q2 2022.
"We have accumulated a significant land position in the Beatty District positioning us well for our current and future exploration programs at South Bullfrog," Melnik says.
South Bullfrog and Red Top are among six wholly owned exploration projects being advanced by Zacapa. The others are: Pearl, a porphyry copper play south of Red Top in Arizona; Tomichi in Colorado, which already has a large porphyry copper moly resource; Dewdrop Moon, a porphyry copper property in the Yerington District of Nevada; and Miller Mountain, a gold project in Idaho.
A Calculated Plan Paired With 'Healthy Commodity Prices'
Despite having its hands full with six projects in four states that Canada’s Fraser Institute ranked in the top 13 of global mining jurisdictions, Melnik says it’s all by design.
“What was important for us was that we saw the opportunity to acquire these fantastic projects prior to the bull market, and it just made the company so much more investible. Because in reality we're an exploration company, and, statistically, all of these projects can't work. But I guarantee you at least one or two of them will,” Melnik told Streetwise.
Zacapa’s success will likely be underpinned by healthy commodity prices.
In a copper market outlook published in October 2021, Goldman Sachs forecasted that copper will reach US$6.80/lb by 2025 (it’s around US$4.50/lb now) and move even higher by 2030 as demand exceeds supply by as much as 25%, or some 8 million tonnes.
Melnik says the increasing demand for copper is all part of the “new energy economy,” which includes the scaling up and adoption of electric vehicles, renewable energy, and the related energy infrastructure — especially in China, where more than 50% of all mined commodities are consumed.
“The new energy economy is very much framing the next supercycle, and there'll be a lot of volatility, you know, around the supply side,” commented Melnik, who once was a research analyst with Canaccord Genuity in Toronto. “That's a lot of new copper that needs to come from somewhere.”
Zacapa did a lot of boots-on-the-ground exploration work before going public in late January. That meant it could augment its listing momentum with steady news flow (Zacapa has put out seven news releases since its IPO January 26), which helps keep its daily volume at around 500,000 shares.
Young Management Team Belies Its Trove of Experience
The management team is driven, well-educated, and, perhaps most notably, young. The entire group is under 45 — in an industry known for its grey beards.
But Zacapa has experience.
Vice President of Exploration, Dr. Tim McIntyre, joined Zacapa last year at almost the same time as Melnik.
Before that he spent five years working for Robert Friedland’s Ivanhoe Mines Ltd. (IVN:TSX; IVPAF:OTCQX) in the Democratic Republic of the Congo.
Most of that time included exploration and development of the world-class Kamoa-Kakula copper deposit.
McIntyre also worked as a consultant for Rio Tinto at its copper projects in Zambia.
He was rather familiar with the country’s copper deposits after completing his PhD while completing his thesis on First Quantum Minerals Ltd. (FM:TSX; FQM:LSE)’s Kansanshi copper-gold mine near Solwezi, which produces more copper than any other mine in Africa.
Technical Advisor Dr. Alain Wainwright also worked with Friedland at Ivanhoe’s legendary Oyu Tolgoi copper project in Mongolia.
The Oyu Tolgoi copper project is said to be the largest financial project in all of Mongolian history.
In addition, Wainwright is a co-recipient of British Columbia’s Association for Mineral Exploration’s H.H. Spud Huestis Award for his role in the five-million-ounce Coffee gold discovery in Yukon.
Meanwhile, Dan MacNeil staked Zacapa’s South Bullfrog and Pearl projects.
He is also the company’s qualified person under National Instrument 43-101.
“We are a young management team. We've been empowered by the Board to go out there and do our best work and really own these workstreams, and invest in these projects like owners,” explains Melnik. “It makes it really exciting, really dynamic; we're able to use a lot of new technology and move very quickly, which has been super important in trying to run exploration programs during the pandemic.”
Zacapa’s Board boasts experience, too. Director Marc Boissonneault was the former Head of Global Nickel Assets for global commodities trader Glencore International Plc (GLNCY:OTCMKTS); while chairman Ian Slater, a chartered accountant, was the Managing Partner of both Ernst & Young’s Canadian and Arthur Andersen’s Central Asian mining practices.
Zacapa has about 50 million shares outstanding with no outstanding warrants and $5 million in cash — enough to last a year or so at its current burn rate. It hit a high of CA$0.77 on Feb. 22, after it listed at CA$0.50 less than a month earlier.
“We've got the team, the capital, and the momentum to go out and accomplish our goals and our plan, which we committed to investors to deliver on last year,” Melnik told Streetwise.
Read more about ZACA here:
1) Brian Sylvester compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He and members of his household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
2) As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Zacapa Resources Ltd. Please click here for more information. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Zacapa Resources Ltd., Rio Tinto Plc, Barrick Gold Corp., and Coeur Mining Inc., companies mentioned in this article.