Zacapa Resources Ltd. (ZACA:TSX.V) is a Canada-based mineral exploration company holding a portfolio of porphyry copper and epithermal gold projects in the U.S. states of Nevada, Arizona, California and Idaho.
The company's Pearl project is located immediately northwest of the past-producing San Manuel Porphyry copper mine (owned by BHP) and consists of 241 lode mining claims.
Meanwhile, its South Bullfrog project is located in the Walker Lane trend of western Nevada in an increasingly active Bullfrog gold district near Beatty. Its Miller Mountain project is located in west-central Idaho.
Additionally, on May 1, Zacapa announced its acquisition of the highly-regarded Kramer Hills project.
Why This Sector? The Ultimate Hedge
Gold mining is traditionally a powerful hedge against both inflation and equities recessions. With that in mind, and the economy in the state that it's currently in, it's no surprise that CNBC is highly bullish on the yellow metal, reporting in January that experts expect record price highs this year.
"In general, we are looking for a price friendly 2023 supported by recession and stock market valuation risks — an eventual peak in central bank rates combined with the prospect of a weaker dollar and inflation not returning to the expected sub-3% level by year-end — all adding support," Ole Hansen, head of commodity strategy at Saxo Bank, told CNBC reporter Elliot Smith.
Smith continues, "In addition, the de-dollarization seen by several central banks last year when a record amount of gold was bought look set to continue, thereby providing a soft floor under the market."
Why This Company? Three Rich Projects Ready to Drill
Although he founded Zacapa several years ago, this is Slater's first opportunity to run the company directly, and he seems quite pleased with its current positioning.
"Early in my career, I thought you really had to go overseas to find great geology that wasn't picked over, but it's just not true," he explained in our recent interview. " There is lots of opportunity in the southwest U.S. to find new discoveries or historical projects that have been looked over. There's amazing opportunities right here."
"You don't need to go to dangerous or risky jurisdictions — there are huge opportunities right in the U.S. And also, as the world is changing now, there's going to be a deglobalization, and there's going to be nationalist sentiment toward having a supply of resources within countries or allied countries."
"We, therefore, stay long — our losses could quite quickly be made good — and Zacapa is rated an immediate strong speculative Buy here, as close to the open as possible," said technical analyst Clive Maund.
He explained that the company had spent the past two years advancing its Bullfrog property in Nevada, which is now fully drill permitted, and shallow targets analogous to Anglo Gold’s discoveries to the east.
"Bullfrog is still our flagship project," he continues, "and the project we're going to drill first because it's so exciting to be in that camp where we're surrounded by Anglo Gold. They have 15 drill rigs going on multiple deposits there, and it's going to be one of the largest mining complexes in the U.S. — it's definitely the hottest district in the U.S. right now — so that's still our focus."
However, it's only one site of interest to the company. "We added Kramer Hills because Bullfrog and Miller Mountain are both still grassroots exploration projects, they look really exciting, but they are exploration projects, where Kramer is a discovery, it's a brownfield mine, so there's already almost 400,000 ounces of historical resource near 2 g/t (grams per tonne) oxide gold, 200,000 tons of it was already mined, and it's on private ground, which is a big difference in the U.S.," he contends.
"There were hundreds of drill holes already, and we discovered 54 shafts, so there's lots and lots of historical work there, and data, and all of that was only to 30 meters deep. There has been no exploration of the sulfide mineralization below 30 meters. We've seen gold occurrences along a 7.5-by-8.5-kilometer area."
The Kramer site exhibits at least 1.6 g/t at ground, whereas for U.S. mine viability, one generally only needs 0.5 g/t oxide gold.
Slater is excited about what the remainder of the year might hold. "We've got a great team," he says, "we've got a great share structure and we are drilling three very exciting gold projects in great jurisdictions this year."
Why Now? Tech Analyst Rates Co. An Immediate Buy
Recent reporting from technical analyst Clive Maund is equally bullish on the company's prospects now that management has seen a bit of a shakeup. On May 1, he wrote, "We are showing a quite serious paper loss on this, having bought it toward the end of March in the belief that it was advancing out of a Double Bottom. What happened since is that the market got wind of an impending sizable acquisition by the company, that has been announced this morning, of the Kramer Hills Oxide Gold Project, and technically it can be said that the stock was forced back down toward the lows by the still falling 200-day moving average."
"However, while the acquisition obviously costs, the flip side is that the company has acquired a very worthwhile asset, and now, with the 'bad' news out, the stock should be free to advance anew, especially as the company is now chaired by its founder, the legendary Ian Slater, who with his track record, is hardly likely to have 'put his foot in it' with this acquisition."
"On the latest 6-month chart, we can see where we bought toward the end of March at about 12 cents, having figured that it had reacted back far enough to a point above its rising 50-day moving average, but the impending acquisition forced it lower and lower in the nasty steep downtrend shown until by last week it had arrived back at the quite strong support at its earlier lows, thus forming a Triple Bottom instead of the Double Bottom that we had supposed had completed. This is clearly a good point for it to turn higher again now that the news about the acquisition is out."
"We, therefore, stay long — our losses could quite quickly be made good — and Zacapa is rated an immediate strong speculative Buy here, as close to the open as possible."
Streetwise Ownership Overview*Ownership and Share Structure
Reuters reports that 16.78% of the company is held by management and insiders. As Slater explained, he remains the company's largest shareholder, with very few warrants out. He holds 15%, with 10 million shares. Former Glencore executive, Director Marc Boissonneault, has 1.09%, with 730,000.
0.03% is with institutional investors, per Reuters. This is held by Crescat Capital LLC., with 200,000 million shares.
The rest is in retail.
The company has a CA$4.72 million market cap with 67.3 million outstanding shares.
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- 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., a company mentioned in this article.
- Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor/employee.
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