Reading Tea Leaves: Here’s What Altius Minerals Paying $10 Million For A 2% Royalty On Curipamba Means To Salazar Resources (SRL, TSX-V)

You don’t need a high IQ to be a smart speculator.  I talk about that point quite frequently.

However, to be a smart speculator you do need to know how to read the tea leaves.  You must know how to connect the dots.  You’ve got to skate to where the puck is going!

So when one of the most sophisticated groups in the industry, Altius Minerals (ALS, TSX), pays $10 million for a 2% royalty on Curipamba (aka. the El Domo deposit), DOUBLE what it was worth a few years ago, what does that tell you?  How should you be interpreting that new bit of information?

It should be telling you the updated 1) economic and 2) resource estimates scheduled to be published during Q1 2019 are going to be good, perhaps far gooder than they already are.  By paying DOUBLE for this royalty, Altius is tipping its hand in advance of the official news.  Keep in mind that Brian Dalton, Adventus Zinc (ADZN, TSX-V) Chairman, is the co-founder of Altius.

ADZN has moved up smartly, by roughly 28%, from its February lows and the tip from Altius.

Meanwhile, Salazar Resources (SRL, TSX-V) is flat.  It has been range bound for better than 6 months now, between 11 cents and 13 cents.  Trading activity that doesn’t exactly add up, considering Salazar’s 25% interest in Curipamba is now worth approximately $41.7 million (DOUBLE its worth prior to Altius upping the ante for a 2% NSR).

I see an initial breakout for SRL toward 16 cents any week now.  This should be an exciting year for the Salazar-Adventus partnership starting with a new PEA and Resource estimate coming in Q1.  I’m expecting stellar economics thanks to a high-grade starter pit possibly grading 5% CuEq (or better) and vastly improved metallurgical recovery rates (my NPV estimate is $200 million).

Working into Q2 and Q3 news flow shifts to drilling results.  I’m going to stick my neck out right here and now by saying: “2019 is the year of renewed discovery for Salazar-Adventus.”  Within the 22,000 hectare property, hosting one of the world’s highest grade VMS deposits, vast exploration potential remains. +10,000 m of regional drilling will be conducted this year with an aim toward making a new discovery at Curipamba.

Via the Exploration Alliance an additional +5,000 m will be drilled across Santiago and Pijili, properties with known porphyry-style Copper-Gold mineralization and/or high-grade epithermal systems.

Prior to Salazar staking the property and optioning it to Adventus, artisanals built a road to Pijili and mined (from relatively large pits down to a depth of what looked to be +50 m in photos) what is interpreted to be a leach cap sitting atop what could become a large porphyry deposit.

In Santiago, something like 3 km of exposed veins have been mapped from surface.  To date, chip sampling from the Espanola vein has returned 2 m of 28 g/t Au plus 231 g/t Ag, and 1 m of 26 g/t Au plus 242 g/t Ag.  Drilling to the south of these vein swarms has yielded fairly impressive results, such as 323 m of 0.47% CuEq, from surface, and 171 m of 0.66% CuEq.

Thanks to the historical work done on the properties I think it’s safe to assume Salazar-Adventus will be able to hit nice numbers relatively close to known mineralization (yet Mr. Market may perceive this information to be “new”, considering how many years have past).  Additionally, within the +5,000 m of drilling they’ll be room for testing truly grassroots targets.  For instance, several +300 m holes directly below the large leach cap at Pijili.

Don’t doubt me on this – Altius paying DOUBLE, or $10 million, for the 2% NSR on Curipamba bodes very well for the PEA and Resource Estimate to be published during Q1.  Smart speculators should interpret that tip to mean higher stock prices are ahead for SRL and ADZN, up to and following the news perhaps.  Following those important updates our attention shifts to exploration drilling programs across 3 projects (fully funded by Adventus).

So I like ADZN and I like SRL even more.  Salazar is the premier project generator in Ecuador, a country most investors are afraid of even though major miners like Codelco and BHP are embracing it as one of the world’s last great exploration destinations.  Salazar’s 25% stake in Curipamba (arguably valued near $41 million) and a portfolio of exploration projects are also backed by approximately $5.8 million worth of cash and securities (at 13 cents SRL has a market cap of $16.4 million).

At 95 cents per share Adventus has a market cap of $68 million.  With approximately $10 million cash in the bank Adventus is ready and able to accomplish its goals, advance Curipamba toward a construction decision and make at least 1 new economic discovery.