Source: Matt Badiali for Streetwise Reports 08/06/2020
Independent financial analyst Matt Badiali tells a mind-bending tale about a gold project in Montana.
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.
Regards,
Matt Badiali
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.
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