Equitas eyes gold production with blue sky expansion upside in Brazil
Throughout history, gold has been considered a safe-haven and a store of value. And as global uncertainties rise, the price of gold goes up. With confidence in paper currencies waning, gold is poised for a long run.
Billionaire investors such as George Soros, Stanley Druckenmiller, Rob McEwen, David Einhorn, Frank Giustra, Paul Singer, John Paulson, Ross Beaty, Ray Dalio and Marc Faber have begun taking notice and making massive bets on the world’s most seductive metal.
Gold prices have rallied over 30% in 2016 to now trade just above US $1,350 per ounce. These billionaire betters believe this is just the start of a massive gold bull market.
Legendary gold investor Pierre Lassonde, Co-Founder of Franco-Nevada Mining told BNN, “The five-year bear market for gold is over and we are at the beginning of a new bull market.” He mentioned that gold could surge to US $8,000 an ounce.
Fast-to-production gold juniors with low all-in sustaining costs that are within mature mining jurisdictions commonly perform well during difficult times.
Equitas Resources Corp. (TSX.V: EQT) (USA: EQTRF) is the sole owner of a land package that consists of over 184,000 hectares, plus six gold properties and four mining licenses within central Brazil. The main project that they are drilling is the Cajueiro Project, which encompasses 39,053 hectares, with four identified target zones, and is located 95 kilometers north of the city of Alta Floresta. They have a stepped development to open pit high-grade production plan with a near-term “fast track” growth strategy.
Brazil is an excellent mining jurisdiction to work in, and Equitas’ operating subsidiary, Alta Floresta Mineracao, knows this best. With its technical team having decades of experience within the country, EQT is primed to take advantage of Brazil’s rich mineral endowment.
“The main advantage of operating in Brazil is cost compression,” stated Equitas President and CEO, Chris Harris, in an exclusive interview. “Capital costs in Brazil have come down dramatically in the last year, which has created an immediate opportunity to develop a junior explorer into a producer at a very reasonable cost.”
EQT released its initial NI 43-101 Technical Report that gave the project an Indicated Mineral Resource in the sulphide bedrock domain of 214,000 ounces of gold, and an Inferred Mineral Resource of 203,500 ounces of gold. From the oxide saprolite domain (from surface down to approximately 60 meters), there is also an Inferred Mineral Resource of 78,400 ounces of gold. The company’s main focus, and what makes sense, is going to fast track production with the saprolite part of the project. They have recently done exploratory work to increase the resources and they believe the saprolite oxides go to depths of around 40–50 metres.
In May, the company commenced a drilling program to focus on defining additional gold resources in the near-surface saprolite oxide domain. The target is the Baldo Zone, identified as containing wide spread gold mineralization — one of four mineralized zones drilled thus far. The program has been designed to increase resources at Cajueiro and provide further information to support open pit development.
Equitas recently announced that they have identified intersections of high grade gold mineralization with their initial trenching assays. The results ranged from 1.16 g/t gold to a high of 24.26 g/t gold. These early results are a great indicator of Equitas being on the right track of increasing the close to surface ore for easy low cost open pit mining in its upcoming production plan.
Assay results from a final trench, and 31 drill holes from the first program, are outstanding and are expected to be released shortly. Due to the high grade assay results of the trenching, EQT has expanded the drilling program.
EQT recently entered into a binding term sheet for up to a US $6 million dollar finance package with a subsidiary of the Cartesian Capital Group. Cartesian is a multi-billion dollar private equity fund that shares a similar philosophy to Equitas in developing highly scalable gold assets with near-term production and low all-in sustaining costs. The finance package consists of an up to US $5 million revolving gold prepayment loan facility and US $1 million in equity.
“With this partnership, we will be fully funded to achieve our short term goals,” stated Harris. “First, to execute a drill and trenching program to further define and expand the resources at the Cajueiro. Secondly, to build a processing plant to commence initial production. From the production, we anticipate producing over 15,000 ounces of gold for the first full year. That proves our model and gives us substantial cash flow to manage our balance sheet and advance the project.” This funding also provides the ability to carry out significant further expansion of plant capacity at Cajueiro and other locations in the EQT portfolio.
By going about this development as a series of stepped increases in gold production, EQT believes they are de-risking the company and providing a lot of blue sky potential for investors looking to acquire a potentially low-cost, low-risk gold junior with near-term production goals.
“Equitas will undergo a real transformation in the next 6–12 months, as the company converts itself from a Canadian explorer to become a Brazilian gold producer,” stated Thibault Lepouttre of The Caesars Report.
The gold market is attracting bullish bets and if it’s the start of a potentially prolonged gold rush, you might want to start to take notice before it’s too late.
With a market capitalization of around $20 million, Equitas may, too, be just in the very beginning of its new bull market. EQT has goals to become a profitable, cash-flow generating, self-sustaining, mid-tier gold producer in Brazil. With a potentially significant gold project portfolio and an innovative financing package through Cartesian, Equitas can provide an opportunity to not only capture this expected gold price rise through actual production, but also the blue sky upside of having potential fully funded further resource and production growth, as well as acquisitions within Brazil. With the wealth of experience within Brazil, and the capital and capabilities within the team, look for Equitas to be making some moves very soon.