General Market Commentary
General Market Commentary
Large-Scale Copper-Gold Discovery in Argentina
by Mike Fagan
Aldebaran Resources (TSX-V: ALDE)(OTC: ADBRF) – currently trading below C$0.45 per share – has announced an exploration update on its very large, copper-gold Altar project in the mining-friendly San Juan Province of Argentina.
Aldebaran has now completed an extensive re-logging of over 115,000 meters of historical drill core from the Altar project with plans to follow up on higher-grade intercepts encountered in recent drilling and to test newly-defined targets that have yet to be drilled.
The company expects to complete the geologic model at Altar, followed by the release of a new resource estimate, sometime in Q1 2021.
Aldebaran Resources: Aerial view of Altar project;
multiple copper-gold porphyry intrusions spread across 6km of strike length.
Dr. Kevin B. Heather, chief geological officer of Aldebaran, commented via press release:
We have been extremely busy over the past year building up important technical information and data that are critical to move the Altar project forward. The project is now positioned to be shown in a different light than the historical perceptions in the marketplace. We strongly believe we can add significant value by highlighting the existing zones of higher-grade copper-gold mineralization, as well as testing multiple new drill targets to either extend those higher-grade zones or discover completely new zones/deposits. The 2021 field season should be an exciting time for Aldebaran.”
Aldebaran’s Altar project boasts a large, low-grade copper-gold resource containing:
- 2,057 million tonnes of Measured & Indicated (M&I) resources at 0.3% copper and 0.1 grams per tonne (g/t) gold, representing:
- 14.5 billion pounds of copper and 5.2 million ounces of gold M&I, plus;
- 557 million tonnes of Inferred resources at 0.3% copper and 0.1 g/t gold, representing:
- 3.4 billion pounds of copper and 1.1 million ounces of gold Inferred
The company believes the resources at Altar are open to expansion with significant potential for the discovery of higher-grade zones within the porphyry copper-gold system — and you’ll be hearing more on that in just a moment from Aldebaran CEO John Black.
Also important, in 2011, the Altar project was sold to Stillwater Mining – now Sibanye-Stillwater (NYSE: SBSW) – for nearly half a billion dollars US. Aldebaran, on the other hand, has a market cap that’s only a small fraction of that — currently around US$30 million.
Hence, you can immediately get a sense of the immense potential upside the Altar project presents to ALDE/ADBRF shareholders… and that’s just one of the company’s copper-gold projects in Argentina.
Our own Gerardo Del Real of Junior Resource Monthly sat down with Aldebaran CEO, John Black, to talk about the project, the team, the mining climate in Argentina, and the company’s additional precious-base-metals projects in the Jujuy and Salta provinces of Argentina.
Yours In Profits,
Editor, Resource Stock Digest
Aldebaran Resources (TSX-V: ALDE)(OTC: ADBRF) CEO John Black
Discusses the Altar Copper-Gold Porphyry Project, San Juan Province, Argentina
Gerardo Del Real: This is Gerardo Del Real with Resource Stock Digest. Joining me today is the CEO of Aldebaran Resources, Mr. John Black. How are you?
John Black: Doing well, Gerardo, how are you doing?
Gerardo Del Real: I am excellent. Thank you so much for asking. We have copper right at the $3.50 level. I want to talk about the massive project you have at Altar. I want to talk about the team at Aldebaran and the share structure, your partners. But first and foremost, I have to ask about the name. It's one of my favorite names. How did the name come about, John?
John Black: A bit of an interesting history. Aldebaran is really the third company we've had under our same management team. Our first company was called Antares Minerals. Our second company is Regulus. When we had the opportunity to put our hands on an option to earn into the pretty exciting Altar copper-gold system in Argentina, it made sense for us to spin some assets out of Regulus to form this and we needed to come up with a name.
Both Antares and Regulus are large stars. And as we looked around for a name, we came up with Aldebaran. A bit of a tongue twister, but it's actually the third of the four Persian Royal Stars. So, that's the pattern. We're not necessarily astronomical buffs. To be really honest, the name Antares came from a wine in Chile, so that is where it started. Then we fell into the pattern of recognizing the star theme.
Gerardo Del Real: Let's talk Aldebaran. The project is located in a very mining-friendly area of Argentina. A lot of people when they hear Argentina, they think twice about allocating capital. If you're not familiar with the region, I could understand why. You are obviously very familiar and the team is very experienced in the region. Can you provide just a brief overview and some context as to where the project stands?
John Black: Absolutely. And maybe I'll start first just by describing a little bit of what type of a company we run and what type of an opportunity we look for. We're a seasoned team of explorationists. We all have had a lot of experience with major mining companies before moving into the junior world.
And what we specialize in is identifying very large copper or copper-gold deposits, capturing those opportunities, drilling them out, showing their full size and de-risking them through about a pre-feasibility stage, demonstrating that they're an economically robust opportunity. And then ideally we monetize those by selling them to a major mining company.
We had very good success with our first company, Antares, and the Haquira discovery in Peru. With Regulus, we're onto a great project called the AntaKori project in Northern Peru, and the opportunity came up for us to put our hands on the Altar copper-gold project in Argentina.
To do that, we spun Aldebaran out of Regulus. The Altar project is a bit different than some of our previous opportunities. Often we identify a project that has some drilling to it, has some interest and we see potential for it to grow into a very large project that would be of interest to a major company. Altar actually already had quite a bit of work done, but for various reasons, it had fallen off the map and was forgotten in many ways.
The project is located in the Central Argentinean Andes. It's in the province of San Juan, and as you mentioned, in Argentina, it's very important which Province you're in. There are Provinces that are very pro-mining and there are other provinces that are almost anti-mining; Argentina is a Federation of States and it's not a consistent mining philosophy or regulatory environment across the country.
San Juan is one of the best provinces to be in as there are large operating mines like Barrick's Veladero mine, not far from us, and a number of other interesting development projects and mines operating there right now. So it's a great place to be,
Altar itself is already known as a very large porphyry system. It was discovered by Rio Tinto in the late 1990s; they put the first few holes into it and then they optioned it off to a junior company called Peregrine Metals. Peregrine drilled the project out and showed most of the size of the project and successfully sold it to Stillwater Mining in 2011 for about US$487 million. So a fairly good business result for them and a similar approach to how we operate in terms of putting our hands on these, showing the size and selling the project.
However, the project never really fit very well in Stillwater. Stillwater advanced the project for a number of years quietly off the market, continued to do drilling, but it wasn't reported publicly. Stillwater was a platinum producing company with a mine in the US. They weren't a copper miner at all, and it just never really fit and it got stalled there. We look for situations like that.
The Altar project already had a fairly large investment into it, and it was known as a very large deposit, but the opportunity opened up when Sibanye purchased Stillwater. Sibanye, also a large, predominantly PGM and gold miner, realized that the project didn't really fit with them and they were looking for an opportunity to either sell the project or perhaps partner with a group that could take the project forward for them. So we struck a nice agreement with them whereby we have an option to earn in to 80% of the project.
Sibanye retains 20% of the project but they also have 20% of Aldebaran as part of the agreement. We have access to earn in for a relatively low cost up front. The idea is that we work to recast this project, bringing it back to life, to show the full potential of the project and to move it forward.
One of the challenges on this project is, despite it being known as an extremely large deposit, there's over 2.5 Billion tons of mineralization identified on the project; it's been bulked out and shown as a very low-grade deposit. So it's certainly of the size of interest to say a major mining company but the grade, when it's averaged out in bulk, looks intuitively like it's a bit low-grade to be a profitable mine.
What caught our eye is that within this big sea of low grade copper, we see distinct zones of notably higher grade and we believe that the project can be re-presented to demonstrate these higher-grade zones, which are still quite sizeable, and that those will be economically more attractive as the starting point on the project.
We view this as a re-exploration story. In many ways, we see there's potential to demonstrate that there are very attractive portions of this deposit buried within this big sea of lower grade. As we begin to tear it apart, we also see that there's actually potential for continued discovery of new zones, including zones that have high-grade.
Another important thing about this project to note is that it's unusually rich in gold for where it is. In this stretch of the Andes, deposits tend to be almost all copper or copper-molybdenum. This project, for geologic reasons that we're beginning to understand, has an unusually high gold content with it. So it's dominantly a copper deposit but with a nice gold kicker to it.
Gerardo Del Real: And so the way that I understand the project, it's a system of porphyry intrusions, is that correct? And that's copper-gold, rich porphyry intrusions, right?
John Black: That's correct. The deposit is known right now principally as three zones of mineralization, two of which, Altar Central and Altar East, are fairly well drilled out but have potential for expansion at depth and towards higher-grade material. And then, QDM/Radio is off to the west, and that has less drilling in it but some of the more exciting numbers. We see potential for more drilling in that area.
So it's a series of big porphyry systems, probably potential for more of those within a cluster and then within the cores of some of these, we see distinct intrusive events that bring higher grade and then there's just a big sea of lower grade material around those.
Gerardo Del Real: 2021 is going to be a critical year for the company and for the project in large part because of the news that you recently announced detailing and outlining the massive exploration program that you just completed. I mean... I think you re-logged over 115,000 meters of historical core; is that accurate?
John Black: That is accurate. And it's been an effort that's been completed pretty quietly from our standpoint. When we acquired the option to earn into the project, there was this tremendous amount of data that was already there and what we really needed to do was to go through and get our heads around all of that information - review that information ourselves.
What we discovered is that there was a tremendous amount of drilling data but relatively little surface geologic data and some of the datasets that we like to acquire on a project did not exist. The previous operators had done a good job of drilling it out but they hadn't really done all of the extra work that needs to be done to fully understand the opportunity.
So we've spent most of the last two years re-logging over 115,000 meters of core, completing the first geologic map of the surface, completing more extensive soil geochem and geophysical data sets.
It's gathering a lot of background work; the type of work that a major company likes to see on a project. It'd be more the way a major company would explore the project. And it's the kind of quiet work which doesn't lead to headlines that gather a lot of interest. We quietly do it in the background, but with all of that data in hand, we're now in a position to re-estimate the resource and emphasize those higher-grade zones.
We're in the process of completing the geologic model and starting the new resource estimate. We anticipate that the resource estimate will be out in Q1 next year. It's not based on a tremendous amount of more drilling but it's based on a much better geologic understanding of the system. So we believe that we'll be able to recast this so that people can see the zones of higher grade that we're very excited about.
Gerardo Del Real: You currently have, I believe, it's over 6 million ounces of gold. And I want to say it’s something like 18 billion or close to 18 billion pounds of copper. The two knocks, if I'm playing devil's advocate here on the project; one, you've already mentioned the fact that it's a massive project but the grade has always been challenged.
And so it's clear that you're looking to prioritize how the project is viewed and really highlight the high grade nature of the copper and the gold that currently exists.
The second part that we haven't addressed yet, where I'll play devil's advocate on, is the arsenic content that’s spread throughout the model. Now, the way that I understand it, but I'd love for you to explain it to me in detail, is that the arsenic is isolated to certain zones. Can you speak to the arsenic issue?
John Black: Yes, that’s a really good point to bring up. There was also a perception that there was a challenge with arsenic on the project. When we look closely, there is arsenic in a portion of the deposit, which isn’t uncommon when we see these copper systems with a little bit more gold associated with them, but it's only in a portion and, by not having a lot of geologic context to understand where the arsenic is and how you model that, the previous modeling tended to just blow that arsenic out throughout the whole project and characterize the whole thing as arsenic rich.
Whereas, we see that much of the higher-arsenic material is actually in an overlying oxide cap that doesn't contain copper at all. So that arsenic rich portion would be waste material and wouldn't be exploited. The arsenic is also focused in an area of secondary enrichment and there are potential ways to process that mineralization with SX-EW heap leaching or other methods that wouldn't involve production of a higher-arsenic concentrate.
Copper concentrates throughout the world are increasing in arsenic content and many companies are facing the challenge of how to handle arsenical material in these deposits.
Early next year, when we come out with a resource, we believe that we'll be able to show that the arsenic is really isolated only to portions of the deposit and much more manageable. But to do that, you have to invest the time and experience it takes to better cast this in a properly constrained geologic model. That's the work we've done over the last two years to have that context.
Gerardo Del Real: The market is currently assigning the company a market cap below C$40 million. I believe this project was sold to Stillwater Mining in 2011 for nearly US$500 million. Is that correct?
John Black: That is correct. The market doesn’t always properly assign value either at a sale point or the current market valuation point, but you can see the upside potential between those two numbers.
But to be able to get this project back on the map and realize what we think is a more appropriate value for it, we need to begin to roll it out. Much of our work has been done quietly up to now, but you'll see over the next few weeks and months that this project will be much more visible to the market as we begin to roll out the results of all that hard work we've put into collecting a database.
The new resource estimate will come out in the first part of next year and that'll lead into a fairly extensive drill program that will both be further characterizing these better zones of known mineralization as well as testing ideas we have where there's potential for additional higher-grade zones.
Gerardo Del Real: Excellent. Can you talk a bit about the team before I let you go, John? It's an impressive team. Obviously, you have a history of success for a reason. I mentioned the market cap; it's below C$40 million; very good share structure. But I think it's important for people to realize the caliber of talent and expertise that worked and is working on this project.
John Black: Yes, absolutely. Very pleased to. The core of our team is really myself, Kevin Heather, who's our Chief Geological Officer, and Mark Wayne, who's our CFO.
We've been together for all three of the companies that we've put together. Kevin and I are exploration geologists by background. We both worked for major companies, and Kevin also worked for Canadian Geological Surveys for quite a bit of time. Kevin has a lot of experience in gold and structural geology. My experience leans more towards the copper environment, and, between us, we've spent a lot of time in South America. I lived in South America for 10 years. Kevin has lived there for the past 17 or 18 years and still lives there.
So we have a lot of familiarity with the Andean Cordillera in South America and the environment we're in and how you work in those environments. And we have contacts to get our hands on these types of projects.
We've also been fortunate in putting together very good local teams. Our local team in Argentina, for example, is led by Javier Robeto, who's our country manager and has been with us since 2004 when we first set up Antares Minerals. We've got great teams on the ground, both with Aldebaran in Argentina and Regulus in Peru. And because we spread our management over two companies, we've been able to add key additional people to our company like Adam Greening who is our VP of Corporate Development and Laura Brangwin who runs our IR efforts.
And this allows us to have a really strong team that's balanced between good technical capability, which is what we pride ourselves in, and also business experience on how to move these projects forward. We can't underestimate the importance of having a real strong team. We also have a really nice link in this team and that's Stan Foy who worked for many years with Stillwater on the project. He is a Geological Engineer and came over to us as our VP Project Development from Sibanye when we made the agreement. Thus, we have that link back to the history of the project as well.
Overall an excellent strong team. Everybody is motivated to move these opportunities forward and it's a fun environment to work in.
Gerardo Del Real: Altar is clearly the flagship and for good reason, but you have a pretty impressive portfolio of very prospective projects. Is there any discussion in potentially joint venturing or optioning some of these projects?
John Black: I'm glad you brought that up. When we originally spun Regulus out from Antares, we had some projects in Argentina. As Regulus focused on the AntaKori project in northern Peru, those were kind of parked. We saw an opportunity to capture Altar by spinning the assets in Argentina that we had out into Aldebaran, and then making the agreement to have the option to earn into the majority interest in Altar. Those original assets are in northern Argentina, and several of those are quite interesting.
Of the package of additional assets we have, two really stand out right now. One is the Rio Grande copper-gold porphyry system. It's a system where we do have a near surface resource now, but we believe there's potential for a much more significant resource at depth. However, the upper portion might have some synergies with a nearby heap-leach gold operation that's just entering into operation. So that project is one that we'll keep as an asset of our own and see how we move it forward, perhaps in synergy with the neighbors.
Aguas Calientes is another project that's quite interesting. It has the potential to be a high-grade gold-silver epithermal vein system. We've done a little bit of work with some encouraging results. It's a hidden target where we have a large number of mineralized float blocks on the surface, and we believe we’ve chased that back to source.
We're currently evaluating whether we move that project forward ourselves or whether we entertain entering into a joint venture. It's a different style target than our normal business objective, but our geo's don't want to give it up because it looks pretty interesting.
And then there are a handful of other earlier stage projects that are currently not the primary focus of what we're doing. It's interesting we've had quite a bit of interest in those projects from parties that want to get involved in Argentina. Most of those projects are located in Salta in the northern part of the country, which is another very pro-mining province.
So there is a lot of interest from new players coming into the country and looking for opportunities, and we just happened to have our hands on some projects that are drawing attention.
Gerardo Del Real: A lot to be excited about. That was very, very thorough. I want to thank you for your time, John. Is there anything else that you'd like to add?
John Black: No. Just keep your eyes on us. Altar is a project that is already quite large and it probably has some really interesting starting points buried within it. It's fallen out of sight for a while but there is no better time to be bringing interesting copper projects back to life than when we have the current price run for copper.
I think there are a lot of people who are looking for opportunities in copper, and this is one where you really already have a lot of the work done. It's just a question of how we reveal the project and get it back out to the market. This one could move pretty quickly.
Gerardo Del Real: Excellent. John, one last thing, I know I said that twice already, but the cash position; what does that look like?
John Black: We're at about C$4 million right now. So we're in a pretty good position to be able to get the new resource out and initiate our drilling program. We'd like to get that information out and be fair to our shareholders who paid for it to allow them to see some of the benefits from that work.
Then, as we move forward, there will be opportunities for private placements in the future but just not right now.
Gerardo Del Real: Fantastic. John, thank you so much.
John Black: Okay, great. Thank you, Gerardo.