Golden Phoenix advancing multiple projects in Panama, Peru and Nevada - Analyst Blog

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Golden Phoenix advancing multiple projects in Panama, Peru and Nevada

Steven Ralston, CFA

Golden Phoenix Minerals ( GPXM ) formed a joint venture operating company (Golden Phoenix Panama S.A.) with Silver Global to advance the Santa Rosa mine in Panama. The Santa Rosa mine will be held, operated and mined by the JV, in which Golden Phoenix can earn up to a 60% interest through the advancement of the property through the completion of the Environmental Impact Study, a NI-43-101 compliant technical report with a measured and indicated resource estimate and a bankable feasibility study. An additional 20% interest can be acquired upon meeting certain other milestones. Golden Phoenix Minerals has already engaged SRK Consulting (SRK) to prepare a resource estimate and a NI-43-101 compliant technical report.

In addition, the Mineral Ridge property in Nevada continues to be explored by Scorpio Gold in an effort to bolster reserves. Not only does Golden Phoenix own a 30% interest in Mineral Ridge, but also has option agreements to earn an 80% interest in the Vanderbilt mine and the Coyote Fault properties, both of which are contiguous to the Mineral Ridge property. Reverse circulation ( RC ) drilling results from the Brodie zone at the Mineral Ridge gold project appear to have defined a mineralized trend over an 850 meter strike length, open in both directions. In particular, drill hole MR11252 intersected a high-grade zone grading 5.19 g/t gold over 24.39 meters. MR11252 was the drill hole far most to the northwest and is on trend with the Bluelite zone located 1,370 meters to the northwest.

Lastly, Golden Phoenix is in the process of acquiring a 100% interest (up from 80%) in five properties located in Peru due to two amendments to the original definitive agreement. In June, Golden Phoenix Minerals entered into the definitive agreement with Sala-Valc S.A.C., a Peruvian corporation, to acquire an 80% interest in the five Peruvian properties; however, subsequently, the agreement has been amended twice such that Golden Phoenix will be acquiring a 100% interest in the Peruvian properties for $37,500 in cash and 10,132,228 shares through two non-interest bearing convertible note issues due on September 30, 2012 plus a perpetual 3% net smelter return royalty ( NSR ) granted to Sala-Valc S.A.C.

Management of Golden Phoenix Minerals is pursuing multiple projects in various stages of development throughout North, Central and South America, with a preference for advanced stage projects that can brought to production within two years. After the projects are developed to a certain stage, mine operations are outsourced to motivated partners, who incur the costs of bringing each property to production in exchange for a majority interest. Golden Phoenix seeks to retain a minority ownership position, which preferably will be converted into a royalty after a property reaches commercial production. Management is pursuing this royalty strategy with a sense of urgency.

We maintain our Outperform rating on Golden Phoenix.
 

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Stocks

Referenced Stocks: GPXM , NSR , RC

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