Power Metal Resources (LON:POW | FRA: 2M5) on Thursday revealed it has signed an agreement to acquire two new exploration properties, building an exciting group of interests in Nevada.

The firm is acquiring 100% of the Garfield copper-gold and Stonewall gold projects outright from Sunrise Resources (LON:SRES).

Garfield is around 10km east of Hawthorne, a town in Nevada’s Mineral County. The project is located in a “prolific” mineral belt, Walker Lane, hosting several “world-class” deposits. Initial rock sampling returned results of up to 6% copper and 3.5 grams per ton (“g/t”) gold and 124g/t silver.

One 26m trench at Garfield in 2016 returned a 22m 0.33% copper interval, including 2m sub-interval grading of 2.18% copper and a separate 2m sub-interval grading 1.2g/t gold. That trench is still open along strike, having ended in mineralisation, with no follow-up work since then,

Power Metal is planning a phase 1 work programme at Garfield, including a “systematic soil geochemical survey” across the property to test mineralisation continuity between historic sampling. After that will come a trenching programme. The 2016 trench will re-open and will be extended.

Stonewall, meanwhile, is about 15km to the south of the town of Goldfield in Nye County. Like Garfield, Stonewall is also situated in the Walker Lake belt. Not only that, but the project is under 60km from Tonopah’s silver deposits, which produced more than 138 million ounces of silver from 1900 to 1921.

The project is centered on a milky-white quartz vein, around 1.2km in length and open along strike. Rock sampling at Stonewall returned anomalous gold-silver values, with up to 1.17g/t gold and 161g/t silver.

Sampling there also found elevated mercury, “characteristic of the shallow parts of a low-sulphidation epithermal system”. Other evidence for a sizeable buried system include quartz vein widths, the mapped strike length, and “well-developed boiling textures found at surface”.

To this end, Power Metal plans to conduct a diamond drilling programme at Stonewall, testing both the eastern extent and the broader system at depth.

A new Nevada limited liability company will own the properties. It will be the local operating company for Power Metal’s wholly-owned Golden Metal Resources private UK subsidiary.

Chief executive Paul Johnson said the buy increases the company’s metals exposure in Nevada, complementing the Golconda Summit gold property option announced on June 1.

Golden Metal, as Johnson put it, “now has a trio of gold - silver - copper exploration projects, targeting major metal discoveries in Nevada USA”.

The transaction’s terms include payment of £20,000 cash and £61,875 in shares to the vendors, with a price per share of 2.75p. Power Metal will also issue 2.25 million warrants to Sunrise with a 3.75p exercise price, with a two-year life to expiry.

If Power Metal’s share price meets or exceeds 10p for five trading days, then the firm can give notice to exercise and pay for warrants or else they will be cancelled.

In addition, the vendors retain a 2% net smelter return royalty over both properties, though Golden Metal can at any time repurchase 1% of the net smelter return royalty for each project for $1 million.

Johnson said the company is set to shortly launch its Nevada ground exploration, “initially targeting near surface significant gold mineralisation at the Golconda Summit gold property”. After that, Power Metal will move onto initial mineral work programmes at Garfield and Stonewall.

“Further updates to the market in this regard are expected in the near term,” Johnson concluded.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Power Metal Resources (LON:POW | FRA: 2M5) announced Tuesday it has executed an agreement and can now earn a100% interest in central Nevada’s Golconda Summit Gold Property.

Golconda Summit is an early-stage exploration project comprising 44 Bureau of Land Management Lode Claims. The project is ideally located only 15 kilometres east of the town of Winnemucca.

Additionally, Golconda Summit is approximately 35 km southwest from the open-pit and underground mines of the Turquoise Ridge Complex, a joint venture between Barrick Gold (NYSE: GOLD) and Newmont (NYSE: NEM). These mines have compliant resources of 130 million tonnes at 4.30 grams per ton (“g/t”) of gold, including total reserves of 83 million tons at 5.02g/t gold.

Other nearby mines include Nevada Gold’s Phoenix Operation Lone Tree open pit, which reportedly produced 4.2 million ounces of gold at 2.06g/t until its 2006 closure, and SSR Mining’s Marigold open-pit project, which has a current total compliant resource of 5.11 million ounces. On top of that, the gold mineralisation on the Golconda Summit Property is found within the same host rocks of these nearby gold deposits.

Encouraging for Power Metal, historical work on the Property has already identified “significant gold mineralisation”. Trenching in 1989 returned extremely impressive assay results of 7.6 metres at 24.0 g/t gold and 15.2 metres at 8.6g/t gold.

Power Metal chief executive Paul Johnson described Golconda Summit as “an exciting Carlin-type gold project”. Carlin-type gold deposits contain so-called ‘invisible gold’ – which is fine-grained gold hosted in sedimentary rocks that eluded early prospectors.

The firstCarlin deposit was found in Nevada in 1961. These deposits can be huge and are often able to be mined using open-pit methods instead of more expensive underground mining.

Golconda is well situated, as Johnson noted, “in the highly gold endowed Great Basin district at the confluence of the prolific Battle Mountain-Eureka and Getchell gold trends”.

In addition to the impressive historic results, and proximity to other successful multi-million-ounce projects, the Property also benefits from Nevada’s favourable jurisdiction and great nearby mining infrastructure. The project is also large, spanning 10,000 acres.

The assignment and assumption agreement on Golconda Summit gives Golden Metal, a wholly-owned Power Metal subsidiary, an option to earn in to 100% of the US project.

The deal was signed by Golden Metal and GR Silver Mining. The agreement signing fee will be satisfied through a $60,000 cash payment to GR Silver using Power Metal’s existing cash resources.

GR Silver has had an option agreement with private Nevada-based firm Eureka Resources Conversion for 100% of Golconda Summit since August 2017. This is the underlying option agreement, which Golden Metal assumes unchanged.

GR Silver has already paid $10,000 on the execution of the underlying option, along with two $15,000 payments due on or before the second and third anniversaries of the effective date. Still to come are $20,000 due on or before the fourth anniversary, $25,000 due on or before the fifth anniversary, and another $50,000 due and payable on or before the sixth, seventh, eighth, ninth, and tenth anniversaries.

Once the earn-in is complete, Eureka will be granted a 1% net smelter return royalty. This can be brought back for $1 million within a year after the production of any materials from the property begins.

“I look forward to updating the market with further information on the Property in the coming weeks,” Johnson concluded.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, does not own a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has not been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Power Metal Resources (LON: POW | FRA:2M5) unveiled its brand new ‘incubator’ business on Monday, aiming to support small find ventures in the junior resource space. This could well bring even more value and compelling projects down the line.

The subsidiary is named Power Capital Investments and is to be fully funded, initially, by Power Metal. This incubator business will actively seek out “small, entrepreneurial business ventures” with major growth potential.

Power Capital will then support these junior resource businesses. This includes through business management, as well as corporate and project development. The goal of this is to help such businesses “scale rapidly and realise their potential”.

Alongside all of this, the incubator business may offer financial support. The subsidiary will develop these ventures until they are sold, publicly listed, or incorporated within the firm’s own portfolio. Though, this does depend on “key performance indicators” that will be established later.

Power Capital, and therefore Power Metal, will be a major shareholder in the ventures it develops. This means the company could see “significant capital appreciation” as a result of successful ventures.

Not only that, but the firm will also then have a new resource project pipeline for potential operational development.

The company described Power Capital as “the next step” in its plans for “a strong, diversified and successful company” and creating significant shareholder value.

Chief executive Paul Johnson highlighted the plethora of opportunities around the world that have “huge potential for discovery” but cannot always get off the ground as a result of funding restrictions and insufficient managerial resources for corporate development.

Johnson explained that Power Metal will choose “only the very best of these opportunities” to nurture “in exchange for equity”.

This is a natural extension of Power Metal’s dual model approach, in which the firm not only develops projects for internal development but also with the goal of spinning out some projects into their own vehicles, typically to be listed.

The company then hands over responsibility for these projects, receiving shares and warrants in exchange. These can then be sold for additional working capital and mean that the company does not need to engage in continuous fundraising.

An example of this would be the company’s Australian gold joint venture with Red Rock Resources (LON: RRR). Power Metal has a 49/9% stake in the joint venture, named Red Rock Australasia, with plans underway to list core Red Rock Australasia assets via a Canadian IPO.

As with these spin-offs, the incubator business is another way to bring in additional working capital without the need to fundraise.

Shares in Power Metal were up 3% on Tuesday morning in recognition of the incubator business’ potential. On a one-year basis, the firm’s shares are up close to 700%.

“It is expected that over time, Power Capital will further strengthen Power Metal’s portfolio of projects and create further value for our shareholders, as successful ventures are either incorporated into our portfolio, sold, or listed publicly,”  Johnson concluded.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance

Power Metal Resources’ (LSE:POW | FRA:2M5) business model may have been overlooked before, but now is the time to sit up and take notice of its impressive potential.

Speaking last week, chief executive Paul Johnson walked Mining Maven through the firm’s “dual model approach”, which involves using spin-offs to help fund other projects and increase working capital.

Right now, Power Metal has nine projects in its portfolio, with plans to spin out some and develop others internally.

In a glowing research note, First Equity analyst Jason Robertson recently gave the firm a buy rating, highlighting that there was “enough quality of prospective projects and assets within the group to form the basis for at least five or six separately listed companies”.

This echoes Johnson’s comment that, when looking at Power Metal, “you're effectively buying five or six exploration companies in one wrapper”.

Johnson explained that the firm’s approach, which involves handing over project responsibility in exchange for shares and warrants, is “designed to generate its own working capital”. Power Metal can then sell shares in spin-offs in order to bring in more funds for the projects it develops internally.

And Power Metal has some seriously high-calibre projects in its war chest.

For example, it has a 49.9% stake in a JV, known as Red Rock Australasia, which is focused on Australia’s sought-after Victoria goldfields. Gold projects in Victoria are attracting sizeable interest at the moment after the “remarkable discoveries” made at depth in the state’s Fosterville mine. The JV partners plan to list core Red Rock Australasia assets through a Canadian IPO.

Elsewhere, Power Metal has also earned a 35% interest in the Haneti project in Tanzania. This is prospective for nickel, platinum-group-elements (“PGE”), cobalt, copper, gold, and lithium, and drilling is already underway.

Meanwhile, another powerful asset for the firm is the Molopo Farms Complex (“MFC”) project in southwest Botswana, where it is targeting nickel, copper, and PGEs. Power Metal has secured a 40% direct interest in the MFC project by spending $500,000. It also holds an 18% stake in the company that owns the MFC, Kalahari Key Mineral Exploration. Combined, these give Power Metal a 50.8% effective economic interest in the project.

Johnson explained that, when it comes to choosing projects, Power Metal focuses on “great diversification across commodities, jurisdictions and types of geology”. Spreading operations across North America, Africa, Australia, offers “inherent protection against geopolitical risk, operation risk, and financing risk,” he added.

Johnson also stressed the importance of “large-scale” projects, with the scale being Power Metal’s “predominant focus” when it comes to new project acquisitions. That can be from a corporation or an exploration perspective.

The chief executive has also made a unique vow not to conduct heavily discounted financing, a commitment that is made possible thanks to funds from spin-offs.

“Yes, we’re on a public market and we can raise money if required, but I’ve given a commitment that we will not do heavily discounted financing,” Johnson promised.

The company’s share price is down 15% year-to-date, but up more than an incredible 850% on a one-year basis at 2.49p.

This only adds to Power Metal’s appeal, as the current dip is likely to be temporary given the company’s strong and diverse project interests.

Moreover, Johnson’s pledge on financing gives shares an edge in the small-cap mining space, where heavily discounted placings are par for the course.

He pointed out that investors are often frustrated when they buy a share at 3p on the market, only for a company to turn around the next day and announce a 2p financing. Thanks to its dual-model approach, Power Metal avoids this and helps shares keep hold of their value.

When factoring in this aspect, as well as potential upsides from its projects, it’s hard to argue that Power Metal’s £28.5 million market cap is an accurate reflection of value.

Not only does Power Metal have gold investments at a time of high prices and strong safe-haven demand, but it also has investments in battery metals like nickel, cobalt, and lithium during a worldwide electrification boom. In the US alone, the Biden administration is rolling out a $174 billion plan to drive electric vehicle adoption and development.

On top of that, the company is focusing on scale, meaning that newer projects are likely to get bigger and more impressive over time. This can only spur Power Metal on to greater heights.

Author: Anna Farley

The Author does not hold any position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, owns a position in the stock(s) and/or financial instrument(s) mentioned in the piece.

MiningMaven Ltd, the owner of MiningMaven.com, has been paid for the production of this piece by the company or companies mentioned above.

MiningMaven.com and MiningMaven Ltd are not responsible for the article's content or accuracy and do not share the views of the author. News and research are not recommendations to deal, and investments may fall in value so that you could lose some or all of your investment. Past performance is not an indicator of future performance