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PolarX lines up porphyry majors to replace Lundin on Stellar copper-gold claims

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PolarX lines up porphyry majors to replace Lundin on Stellar copper-gold claims

SNL Image
Exploration camp for 25 people at PolarX's Stellar copper-gold project in Alaska.
Source: PolarX Ltd.

PolarX Ltd. has identified 15 midtier and major operators of large base and precious metals mines to potentially replace Lundin Mining Corp. as its partner for the Stellar copper-gold project in Alaska.

PolarX was left with 100% of the Stellar claims within the broader Alaska Range project, after having announced Jan. 2 that Lundin would forgo its right to earn in, but would remain the ASX junior's largest shareholder with a 12.8% stake.

Lundin acquired 14.3% of PolarX in June 2019 when it agreed to a deal with an option to earn 51% in select porphyry copper-gold targets in the Stellar claims by paying US$20 million and spending US$24 million on exploration within three years.

PolarX Managing Director Frazer Tabeart believes the enticements for a partner are stronger now than when Lundin first signed on, as the project is more derisked following the six drill holes which Lundin funded.

The first diamond drill hole at the Mars prospect revealed a 102-meter wide intersection at 0.22% copper and 0.1 g/t gold with higher‐grade intervals, which Tabeart called a "discovery hole of the porphyry system."

"What we drilled at Mars is, we believe, right on the edge of a porphyry, easily within tens to a few hundred meters," he said.

Not only did Mars' copper-gold-molybdenum mineralization reaffirm the prospectivity of the Mars‐Zackly‐Saturn corridor's entire 12-kilometer length for porphyry deposits, PolarX also believes that hole was not in the "hot core" of the system where the highest grades are often located.

A gravity survey at the Saturn prospect also validated a target immediately south of two of the five drill holes Lundin funded at that prospect.

With that additional knowledge, PolarX now has an even more attractive package for a potential partner to fund, and knows from LinkedIn analytics after having broadcast technical data on the platform that many major and midtier porphyry operators are interested.

Over the next month, PolarX will narrow down its "shopping list" of about 15 such miners to genuine contenders, get them into its data room and start conversations.

PolarX will also follow up with several companies that showed interest during discussions before Lundin signed up in 2019.

The junior wants a similar deal structure in place by the second quarter to that which Lundin agreed to — a company-level equity stake to fund exploration, staged over a few years.

However, Taberat said PolarX will not "give the project away for a few million dollars." "If someone wants to come in, we want to see tens of millions of dollars spent on it for just over 50% position, because we think the prize is worth it," he said. "Any serious porphyry explorers will know it takes those serious kinds of dollars to do it properly, so that will weed out those who are serious and those who are tire kickers."

He said the US$24 million Lundin would have spent on exploration at Stellar, plus the US$10 million in cash payments had it agreed to the option, was significant for the company whose 2019 exploration spend was US$70 million.

Rising interest

He said some legacy perception issues remain for Alaska stemming from Northern Dynasty Minerals Ltd.'s Pebble project, which suffered from community concerns due to salmon in rivers around the deposit, and was pre-emptively blocked in 2014 by a U.S. EPA ruling.

However, Tabeart said perceptions around Alaska's permitting are now much improved and locals now say more exploration activity has occurred there in the past two years than "in living memory."

Alaska is also on Australian investors' radars a lot more thanks to Northern Star Resources Ltd.'s acquisition of the Pogo gold mine in 2018 and South32 Ltd. forming a copper joint venture in December 2019 with Trilogy Metals Inc.

Sandfire Resources NL also secured an option in March 2019 to earn up to 90% in White Rock Minerals Ltd.'s Red Mountain zinc-silver-lead-gold-copper project near Stellar.

Australian broker Hartleys' Resource Analyst John Macdonald said Newcrest Mining Ltd.'s acquisition of the Red Chris copper-gold project in British Columbia also supported the investment case, given the geological belt that runs through that province to Alaska.

He said the success and improved technology regarding block caving both in Australia and North America has led to increased interest in such porphyry deposits, and Newcrest intends to leverage such expertise at Red Chris.