Explorer Launches High-Grade Copper-Gold Drilling in Montana

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American Pacific Mining Corp. (USGD:CSE; USGDF:OTC) just started a 3,000-meter drilling program at its 100%-owned Madison Copper-Gold Project in Montana, has CA$15 million in the bank, and is looking to sell one of its major projects for even more cash, Chief Executive Officer Warwick Smith told a group of experts gathered on video on Doug Casey's Experts Roundtable on April 28.

The CEO said the company planned to sell its Palmer VMS project in Southeastern Alaska and is open to new deals involving its other projects — Ziggurat, Tuscarora, and Gooseberry in Nevada.

"We like all of these projects, if we had all of the capital in the world, we would drill them all," Smith told the group, part of Casey's due diligence series featuring experienced investors like Casey, Mickey Fulp, Adrian Day, and Brent Cook. "But we want to be smart with what we're doing. So, we're actually looking at" turning them into joint ventures.

The Palmer VMS Project is a significant copper-zinc-gold-silver exploration project located 60 kilometers from the Haines deep seaport. It includes defined NI 43-101 mineral resources and has seen over US$116 million in investments to date.

Madison is also 100%-owned by the company and is permitted for exploration. It produced 2.7 million pounds of copper with grades ranging from 20% to more than 35% copper (Cu) and 7,570 ounces of gold (Au) at 16.1 grams per tonne (g/t). It's also 48 kilometers from the Butte mine, which produced 21 billion pounds Cu, 715 million ounces (Moz) silver (Ag), and 2.9 Moz Au.

Smith started his presentation by noting that American Pacific is focused on high-grade assets in the western United States, another reason for the company to look at transacting on the Palmer project in Alaska.

"We think it's the smartest move for us that this ends up with an Alaska-based company and has the opportunity to stand on its own," Smith told the experts. He said the company is the midst of having conversations with possible new owners. Smith said it was probable that a transaction could happen in the next 12 months.

"We're in the midst of having those conversations to move that asset to a new home," Smith said.

'Huge Catalysts' in 2025

American Pacific started its drilling campaign earlier this month. It is designed to test five priority target areas identified through extensive analysis, the company said. These targets include porphyry concepts and multiple skarn extensions both laterally and down plunge of known mineralization.

The 17-hole program will also focus on near-mine extension drilling at the Broadway mine area, where historic production totaled 144,000 ounces Au from surface oxide mineralization between 1880 and 1950.

"No drilling has been done in the area since mining operations concluded and sulfide mineralization, which was not considered economic during the historical mining period, has never been tested," the company said in a release on April 22.

Between those results coming this summer and the possible sale of Palmer and the company's other JV options, Smith said he believes there will be "huge catalysts" for the company this year.

"I think we'd be hard pressed to drill 17 into this area and not get some joy," he said.

Smith said even after the possible sale of Palmer, the company could possibly still find itself in the M&A game.

We're always kind of looking; we've been successful on the M&A front for the most part," he said. "We'll continue to review projects, and if something makes sense, we're not afraid to go and snap something up."

He also noted that American Pacific and its stock have received some acknowledgement, including being ranked the No. 1 performing stock globally in 2021 by The Wall Street Journal; being nominated by S&P Global Platts for Rising Star Company, CEO of the Year, and Deal of the Year; and being nominated by Mines and Money for Collaboration of the Year.

Juniors Will Soon Get 'Terrific Run'

Nick Giambruno of Financial Underground asked Smith about rising gold prices that haven't filtered down to many of the junior explorer stocks.

"We're starting to see it at the majors," Smith noted, but he said the juniors will soon "get a terrific run."

"It's been a frustrating time for sure, but what we've done is kept our head down corporately, to make sure that we have cash, and that we have significant assets," Smith said. "When the time is ready and the markets are better, we can strike."

Fulp of the Mercenary Geologist asked about environmental concerns with the Madison project since it is close to the Jefferson River and fly-fishing grounds in Montana.

"You can't throw a rock across a valley without hitting three (rivers)" in that area, Director and Managing Director of Exploration Eric Saderholm said. "It's something that has been baked into the cake a little bit, sure it will take some due diligence, some effort to get it into production, but I don't see that it will be a real big problem."

But Smith told the panel that American Pacific was committed to its new direction with Madison and finding a new home for the Palmer project.

We really like this Madison asset, and we're going to let this drill program show us what's there," he said.

Byron King said it seemed like American Pacific really has "this thing wrapped up."

"I'm frankly intrigued by what you're doing out there," King said. "With the right couple of drill holes, you could really explode this thing in a good way."

Moderator Matt Smith said that with all the catalysts, it seemed like there were a lot of things that could make or break the company this year.

The Catalyst: Conductor of the Energy Transition

According to a report by Sayantan Sarkar for Invezz on May 6, signs of a deepening copper supply crunch outside the United States, especially in China, spurred a rapid recovery in prices this week, erasing losses from the prior week.

"Beyond the noteworthy surge in copper stockpiles observed on the COMEX, supplementary information released by the data provider Markit on the preceding Friday also indicated robust demand originating from the US," Sarkar wrote. "This confluence of factors, a substantial increase in available copper alongside evidence of strong consumption within a major economy, presents a potentially complex scenario for market analysts." 

The rising inventory levels on the COMEX could typically suggest a cooling of demand or an oversupply situation, potentially leading to downward pressure on copper prices, according to the report.

Much of the energy transition depends on copper and its importance as an electrical conductor, and the hunt for the red metal "has been accelerating, as companies involved in all parts of the copper supply chain realize the structural supply deficit," wrote Rick Mills, author of the newsletter Ahead of the Herd.

"They understand the need to find sources — existing mines, expansions, brownfield projects, greenfield projects, etc. — and are making deals to acquire the base metal, which is not only essential to electrification and decarbonization but industry in general," Mills wrote.

The Swiss bank UBS estimates that the copper supply deficit will exceed 200,000 tons by 2025, she wrote. The International Energy Forum adds that, to meet the growing demand, more than a billion tons of new copper mining capacity will be needed annually until 2050.

Ownership and Share Structure

According to the company, strategic junior mining investor Michael Gentile owns approximately 14% of the company, and about 8% is owned by insiders and management. About 15% is with institutions, the company has said. The rest is retail.

Refinitiv noted that major shareholders include Merk Investments LLC with 1.37%, Chief Executive Officer and Director Warwick Smith with 0.46%, Managing Director of Exploration and Director Eric Saderholm with 0.24%, and Palos Management Inc. with 0.23%.

The company's market capitalization is CA$48.2 million, based on 219.09 million shares outstanding. Its 52-week trading range spans from CA$0.11 to CA$0.28