This story is the stuff of myth. It will be retold, inflated, and gilded…especially if there's a discovery.
It's a story about gold, a historical mining district, seizing opportunity and psychedelic mushrooms.
I heard about it from a good friend. It was so far-fetched, I reached out to Warwick Smith, CEO of American Pacific Mining Corp. (USGD:CSE; USGDF:OTC), a tiny, C$16 million Canadian junior, to get the truth.
You see, Warwick's company bought the Madison Project for just 20 million of its shares—worth roughly C$7.6 million today.
And the Madison Project is special.
With the acquisition, came a built in partner. Rio Tinto has a joint venture agreement on the project. It will spend $30 million to acquire 70% of the project. American Pacific gets a "carried interest." That means it doesn't have to pay another cent and it still owns 30% of whatever Rio Tinto finds.
And the potential at Madison is enormous.
This is a past producing mine in a historical mining district in Montana. Between 2005 and 2011, the mine produced 7,570 ounces of gold and 3 million pounds of copper from rocks that averaged half an ounce of gold and 25% copper per ton.
That's outrageous grade. And it justifies Rio Tinto's interest. But that isn't all. Madison is in the Butte Mining District in western Montana. It sits at the southern point of a triangle formed from the giant Anaconda mine and Barrick's Golden Sunlight mine.
This is a region steeped in mining history. The rocks here have a rich mineral endowment. Historical drilling results at Madison included 30 meters of rock that ran 24.5 grams per ton gold and another that hit 11 meters of core with 41.7 grams per ton gold.
That's the kind of grade and length that make me sit up and take notice. These aren't narrow little shoots of high grade. If Rio Tinto's geologists can repeat that success, this project has enormous potential.
But Madison's ownership tells another interesting story.
In 2019, Broadway Gold owned the Madison Project. The company had over 12 miles of drill core. All the data went into a Vulcan 3D model. The high grade gold and copper numbers pushed the market cap of the company over C$75 million.
Suddenly, Broadway made a radical change in direction. In April 2019, they brought in Rio Tinto as a partner.
And then in June 2019, Broadway Gold made a crazy announcement. It became Mind Medicine, a "neuro-pharmaceutical company" developing psychedelic medicines.
I couldn't make this story up…
Mind Medicine spun out the Madison project and American Pacific snapped it up. In January 2020, American Pacific announced the signed agreement, which just closed in June 2020.
That's how we got here…with a tiny junior miner holding a 30% carried interest in a project that Rio Tinto is drilling right now.
Rio Tinto already spent $2 million in geophysics and drilling in 2019. And the drilling program is underway in 2020.
With the drills turning and metal prices soaring, the American Pacific Mining's Madison Project is one to watch.
Reach Matt Badiali at www.mattbadiali.net.
Matt Badiali is a geologist and independent financial analyst. He spent fifteen years researching and writing about great investments inside the natural resources sectors. He can be reached at www.mattbadiali.net.[NLINSERT]
Streetwise Reports Disclosure:
1) Matt Badiali: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: None. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in the article are sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of American Pacific Mining, a company mentioned in this article.