Proactiveinvestors speaks to David MacMillan, director of Deveron Resources (CVE:DVR), about the company’s plans for the coming months at its new Rockstone property, which is prospective for zinc and graphite, and what makes Deveron stand out from other Canadian juniors. The Toronto-based junior explorer last month agreed to option up to a 100% stake in Greencastle Resources’ (CVE:VGN) Rockstone property in Ontario, located some 40 km west of Thunder Bay.
Deveron recently signed an option agreement for up to a 100% stake in the Rockstone property in northwest Ontario. What’s behind this deal and how do you think it will benefit the company?
Deveron has been looking for a property with a focus on acquisition and discovering new resources. The Rockstone property has some highly prospective zinc and graphite mineralization that got us excited about its potential. We have an intercept of 25% graphite, 1% Zinc + Copper over 24m that highlights the property’s mineralization potential. Other mineralization in the area (some 5km from our concession) has reported better grade zinc with intercepts up to 11.8% Zinc over 2.8 m, which also supports our thesis that the property has great potential.
What is it about the graphite and zinc markets that attracted Deveron to this deal?
First and foremost, Deveron is focused on Zinc and other base metals. The short to medium term outlook for zinc is encouraging and we also believe in the macro idea of supply constraints, with some of the world’s largest zinc mines ceasing production soon. Not many exploration companies are looking for zinc so we feel that Deveron is a great vehicle for investors looking to get some zinc exposure.
Graphite is another interesting commodity that has had a positive run this year. We feel that there is definitely economic value in a graphite deposit with higher grades that is also located close to infrastructure. It is early days and further follow up testing will be required to determine the type of graphite that we have, but advanced stage companies have been rewarded with significant market capitalizations for their graphite deposits. Given our intercept of 25% graphite over 24 m, we felt it necessary to start looking at the graphite potential.
What is the current plan for advancing the Rockstone property?
Our current plan for the Rockstone property would include further geophysical data analysis and detailed ground geophysical surveys. There are a number of conductive anomalies for which we would love to prioritize a drill campaign. Drilling costs in Ontario are reasonable and this property is easily accessible throughout the winter for a drill campaign that could have a significant impact, with minimal cost.
What is Deveron’s business strategy and how does it differ from other junior explorers in Canada?
Deveron is one of the best structured exploration vehicles on the TSX-V. We only have 11.8 million shares outstanding and 65% are owned by Greencastle Resources (TSX-V: VGN – currently has $5 million in cash). The public float is extremely small with only 3 million shares. Our strategy is to take advantage of the fact resource companies are out of flavour, look at further acquisitions and focus on making discoveries. Our tight share structure and supporting shareholder in Greencastle makes the company a unique junior exploration vehicle here in Canada.
Why does the company believe this is a good time to invest in resource exploration opportunities given the current state of markets?
The world will never stop needing commodities and ultimately, new resource discoveries will continue to be valuable in the future. The name of the game is buy low and sell high. When all other asset classes are making all-time highs, it seems like a perfect time to be acquiring distressed mining assets and investing in companies that will allow investors to profit from the inevitable cyclical turnaround.
Are there any other option or joint venture agreements on the horizon in the near term? What regions/countries are you focused on?
For the moment, we are focused on Zinc and Graphite and our project in Ontario. Deveron believes that these are two commodities that will offer significant returns to investors if a significant discovery is made and that is what we are trying to make.
How is Deveron’s management team equipped to bring value to shareholders?
Deveron’s team has been involved in over $1 billion in resource transactions. We understand how to structure a company to reward early stage investors and with a little geological success, we will be able to follow up on our initial promising results.