Financing and drill permit before year end
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The company has completed 8,000m of a 25,000m drilling programme with the aim to continue to grow the deposit, and with C$5 million in the bank and four drill rigs turning at a $20 million annual burn-rate, will look to finance before year end. "We are evaluating different pathways such as a strategic investor, which could come in at a premium without paying financing fees," Black said.
Regulus expects to receive a new drilling permit before year end to enable it to develop another 40 drilling pads which will let it to continue drilling to the north and follow up from the notable intercept in the recently published hole 34.
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"We want to make the deposit bigger and have more of it on out ground. We will finish the phase II program in early 2020 and will then complete a resource, but we will probably hold off on doing a preliminary economic assessment until we have an idea of the full size of the system," said Black.
The company also plans to drill on the Colquirrumi claims to the north where it has an agreement with Buenaventura to earn a 70% interest by drilling 7,500m. "Some of our long drill holes are starting to get into that ground. When we announce we want the 70% Buenaventura has a one-time clawback opportunity for 60 days by paying us US$9 million, in which case we would end with a 30% interest," said Black.
Regulus has beefed up his corporate development team through the addition of Adam Greening, who formerly worked with Yamana Gold, as the company looks at bringing in a strategic investor, as well as interacting with the other miners in the region who may be eyeing the company and AntaKori.
"There are three or four players in the area including our joint venture partner Coimolache [which is a JV between Peru's Buenaventura and Southern Copper], Cerro Corona [Goldfields] and Yanacocha [Newmont Goldcorp and Buenaventura]. The mine life of all these operations is only a few years," Black said.
Buenaventura operates the Coimalache JV which exploits the Tantahatay mine adjacent to AntaKori, and has a considerable capital investment programme on the horizon due to its extensive portfolio of projects. This, and the fact that Tantahatay will transition from a gold-rich oxide deposit to a copper-rich sulphide deposit, may result in Southern Copper becoming the operator of Coimalache.
With Yanacocha having five or so years of life left, it faces a US$2 billion expansion project to develop its sulphides project and so may be interested in AntaKori's potential to feed its existing plant.
Shares in Regulus Resources are trading at C$1.50, valuing the company at $136 million.