-- Published: Monday, 12 September 2016 | Print | Disqus
Brazil Resources has added another sizable gold project to its growing portfolio after acquiring Sunward Investments Ltd. and its Titiribi project in Colombia making Brazil one of the most leveraged gold stocks.
In the deal that closed in early Sept., Brazil Resources (TSX-V:BRI, OTCQX:BRIZF) issued Sunward’s parent company, NovaCopper Inc., five million shares, plus one million warrants at $3.50 – above the market price. In return, Brazil Resources gained control of a nearly 40-sq.-km land package in the highlands of central Colombia and significantly increases the company’s gold holdings, likely by several million ounces.
Brazil Resources already has millions of ounces in the ground thanks to bargain acquisitions in Alaska as well as its core holdings in Brazil, but Titiribi is well on its way to adding millions more.
The previous owners raised over $80 million between 2010 and 2014 from blue chip investors such as Paulson, Electrum and Tocquville and drilled 145,000 metres of core in 270 holes. Through the exploration Sunward established several near-surface bulk tonnage gold-copper porphyry and associated epithermal gold systems, sitting in nine mineralized areas.
Brazil Resources says it’s going to put the extensive drill data to work quickly, with plans for follow-up exploration and an independent resource estimate for the project.
With paved road access, high power electrical lines passing within 3 km of the project, and the regional hub of Medellin only 70 km northeast, the project already has its advantages.
The company joins a roster of companies developing gold projects in the area, including Red Eagle that is actively constructing its San Ramon gold mine, Continental Gold’s flagship Buriticá project currently waiting for environmental approval, and Gran Colombia’s producing Marmato gold project.
Amir Adnani, chairman of Brazil Resources, said that with the Titiribi acquisition “we take a major step towards realizing our vision of consolidating quality gold assets and maximizing gold leverage for our shareholders.”
That vision led Brazil Resources to snap up the Whistler project in August 2015 from Kiska Metals Corp. for 3.5 million shares. By May this year the company had announced new resource estimates on the three main deposits totalling 2.8 million indicated gold eq. ounces, plus 6.7 million inferred gold eq. ounces.
Meanwhile in Brazil the company’s Sao Jorge project contains 715,000 indicated oz gold and a million inferred ounces, while its Cachoeira project has 692,000 indicated oz. gold and 538,000 inferred oz. gold.
The company has accumulated these assets while keeping total shares outstanding at a reasonable 103 million shares.
The latest Titiribi deal added less than 4.6 per cent dilution, in a deal worth about C$12 million based on Brazil Resource’s 20-day average price before the deal closed.
Just years ago with the gold price around $1,600 an ounce in 2012, the market was valuing Sunward and its Titiribi asset at C$320 million! The Titiribi asset in Sunward attracted elite investors in the gold world, such as John Paulson and Thomas Kaplan’s Electrum fund, which are likely to take notice of the asset now in Brazil’s gold portfolio.
With renewed activity in the gold sector, investors are taking note of how much Brazil Resources, with its extensive gold resource, is leveraged to the gold price.
The company’s share price has shot up from barely $0.40 in January when I made my initial recommendation to peak at $3.00 in July and is trading only about a quarter short of that today, giving the company a roughly $273 million market cap.
Before this latest acquisition, Brazil was being valued in the market at around $15 per gold ounce. Now with millions of ounces being added by this acquisition with minimal dilution to Brazil Resources’ shareholders, this is another big win! In near-term Brazil should update shareholders with a new NI 43-101 on Titiribi, which based off historical data, should bring in millions more ounces plunging the per share valuation to likely the single digits per ounce.
With a pipeline of established gold resources and more on the way, Brazil Resources continues to build itself to be one of the go-to gold stocks for those looking for leverage to the precious metal. The company continues to attract larger investors as it reaches a critical mass of gold projects and ounces compared to other companies looking to replicate this business model.
Brazil Resources’ success has brought in many investors in the prior months and now they can include Nova Copper as a shareholder with the latest huge gold project acquisition, one which puts it in an elite grouping of gold properties with the elusive multi-million+ ounce deposit size. I believe that even though Brazil Resources has had outstanding success in 2016, the latest deal is a game changer and makes a very compelling investment opportunity for the coming phase in the gold bull market. The latest acquisition will receive significant notice in the coming weeks, months and likely attracts significant more investment interest in the months ahead as investors realize the value of their Titiribi copper-gold project.
- Peter Spina, President of GoldSeek.com
TSX-V: BRI | OTCQX: BRIZF
More information on Brazil Resources.
Peter Spina's experience with the precious metal markets started back in the mid-1990s, which led to the creation of GoldSeek.com back in 1995. Today GoldSeek.com ranks in the top three most popular global gold websites and its sister site, SilverSeek.com ranks as the most visited silver website in the world. Back at the start of the new secular precious metals bull market, Peter established the technically-focused subscription newsletter, which at the start of 2005 was merged into the more comprehensive Gold Forecaster (goldforecaster.com) service. In addition to the newsletter and websites, Peter frequently appears in the media including MarketWatch, Reuters, and Investors Business Daily.
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-- Published: Monday, 12 September 2016 | E-Mail | Print | Source: GoldSeek.com