A junior mining company traditionally progresses a single project or handful of projects by issuing a stake in their company to investors who provide the required financing for exploration and development while diluting shareholder equity.
Transition Metals Corp (TSX-V:XTM) has taken a different approach which relies on strategic alliances and joint venture partner funding to advance its multi-commodity portfolio of 24 projects located across Canada.
The company’s project generator model leverages partner funding to finance exploration in exchange for an interest in the property, providing investors with maximum exposure at the discovery stage with the greatest opportunity for share price growth.
READ: Transition Metals reports impressive channel sampling results and kicks off diamond drilling at its Maude Lake project in Ontario
Transition Metals CEO and president Scott McLean told Proactive that this approach allowed the company to mitigate risks in the early exploration stage while having more irons in the fire.
“We bring in partners to advance these projects and by doing that we’re able to keep our shareholder equity dilution low and bring money into the company through option payments and stock instead,” he said. “Our $6 million portfolio of marketable securities accumulated to date demonstrates the merits of the business model.”
Transition Metals’ multi-commodity portfolio — which includes gold, nickel, copper, and uranium assets — has also de-risked the company because it is positioned to withstand commodity market swings. McLean highlighted the company’s nickel and copper offerings, metals he believes will be strong going forward. “Gold is a little lazy, with respect to world economic uncertainty and the risk of inflation,” he commented.
The ideal project and partner
Transition Metals only adds projects to its portfolio that have significant potential. “We don’t like to auction off projects we don’t believe in,” McLean said.
The projects the company develops can either be at the concept stage or have achieved significant results that Transition Metals wants to advance on.
McLean explained that the company looks at three key areas when considering a project: the economics of the opportunity; political and security instabilities of the jurisdiction; and the technical geoscience around the target. “The technical part is always constant, but those other two variables can change over time, so we’re always cognizant of wanting to review any projects that come our way,” McLean said.
READ: Transition Metals starts drilling large breccia system on its Aylmer project in Ontario
In terms of the ideal partner, McLean told Proactive that the company preferred to work with established businesses with the right resources. “Ideally we’d like to have a robust enough project and concept that we’re able to attract a larger company that has deeper pockets and more resources at its fingertips to advance the project,” he said.
Transition's long-standing strategic alliance with Impala Platinum Holdings Limited (Implats), one of the world’s leading producers of platinum group metals (PGM), resulted in a significant discovery at its Sunday Lake project. McLean cited the Implats relationship as an example of an ideal partner. “We were able to benefit from the deep pockets that they have, but also the diversity of voices within that organization which were very helpful for us in being successful,” he said.
But this doesn’t mean the company shies away from adding projects more suitable for junior companies to its portfolio. “There are junior companies that are looking for good qualifying projects that have decent mineralization and an opportunity for a discovery, so we do bring those projects into our portfolio at times and can attract earlier stage, junior companies,” McLean said. “It often comes down to the type of project that we’re working on that will attract a certain partner.”
Transition Metals also invests internally in key projects of high significance.
Portfolio highlights
In focus this year for Transition Metals is its Maude Lake nickel-copper-cobalt-PGM project located near Schreiber, Ontario, which is currently available for partnership. “This is a historic massive sulphide nickel deposit and it has a significant untested conductor that we plan to drill,” McLean said. No meaningful exploration has been carried out at the site since 2004, but historic surface sampling returned 6.23% nickel, 0.15% copper, 0.12% cobalt, and 0.43 grams per tonne (g/t) PGM, according to Transition Metals.
The company is also progressing with drilling at its Aylmer copper-gold project near Sudbury, Ontario, which is also available for partnership. The 3,131-hectare site encompasses 119 mining claims in a competitive region currently being explored by other miners, including Inventus Mining Corp, MacDonald Mines Exploration Ltd, and North American Nickel.
McLean highlighted the company’s Sunday Lake PGM project as the site of the greatest interest to potential shareholders. As part of a joint venture with Implats and Impala Canada Ltd, Transition Metals holds a 25% interest in the project carried to feasibility.
The project is being advanced by Impala Canada, the operator of the nearby Lac Des Iles Mine and mill PGM complex near Thunder Bay, Ontario. Recent drilling highlights include 41.2 m grading 5.11 g/t combined PGMs, including 15.8 m grading 9.11 g/t PGMs, which Transition Metals said represented some of the best grades and thickness for a deposit of this type in the world. “There are some highly significant intersections there, and that will be put together into a resource estimate at some point in the near future,” McLean said.
READ: Transition Metals looks ahead to summer 2022 exploration at three of its Ontario properties
Over the coming months, Transition Metals is set to receive assays from a number of its drill programs, with McLean particularly excited about the Maude Lake drill program where commenced drilling in the second week of September.“You’ll see the results of a fairly robust summer field season,” he said.
The company continues to expand its property portfolio, with recent additions including projects in the Yukon and British Columbia with opportunities for copper porphyry. All of the company’s current projects are located across Canada in mining-friendly jurisdictions, although the company has previously stepped out into the United States. “We’re comfortable doing that again if the right project presents itself, but in terms of generating projects we’ve got a significant advantage in Canada where we’ve worked all our careers,” McLean noted. “It also brings some focus to a rather broad spectrum of projects because at least they are all in one jurisdiction.”
Contact the author at emily.jarvie@proactiveinvestors.com
Follow her on Twitter @emilyjjarvie