The road to profitability is paved with milestones for junior explorers and their shareholders, but none is probably bigger than production from a property. In some cases, striking a deal with a bigger miner and collecting royalty payments from a newly producing mine can help reach that milestone in an osmosis-type of way.
This is the case as reported Tuesday for junior mineral explorer Bearing Resources Ltd. (TSX-Venture:BRZ) of Vancouver. Bearing said today that an inaugural royalty payment of $4,140 has been received from Imperial Metals Corporation (TSX:III) as a result of Bearing holding a royalty on a portion of the Boundary deposit at Imperial's Mt. Polly mine in the Cariboo region of British Columbia.
The payment is just a sliver of the potential future payments to Bearing by Imperial as milling has just begun from open pit mining by Imperial while underground exploration is ongoing on the property. The latest results from the underground drilling reported by Imperial show strong reserve potential included a cut of 35.0 metres of breccia hosting mineralization grading 4.80% copper, 2.76 grams per ton (g/t) gold and 39.17 g/t silver, including 9.1 metres of 7.97% copper, 3.45 g/t gold and 71.06 g/t silver.
The initial payment from Imperial to Bearing only relates to 1,656 tonnes mined and milled in August 2011. Per the agreement, the royalty is $2.50 per tonne for the first 400,000 tonnes of material milled and then $1.25 per tonne for all tonnes milled in excess of 400,000 tonnes.
Imperial can shave the royalty for tonnes milled over 400,000 to 62 cents per tonne by making a payment of $1,000,000 to Bearing. Bearing is entitled to 90% of the royalty payments.
This is all very good news for Bearing shareholders as too many juniors do not have the capital to push forth with developmental efforts on properties and are forced into dilutive practices to generate cash. Bearing has other promising properties in British Columbia and in Mexico that it is currently developing. Sampling from its Parrandera gold-copper prospect in Durango, Mexico recently showed a 20 metre weighted average interval grading 2.58 g/t gold and 0.33% copper.
Grab samples from its portfolio of properties located in the Upper Hyland River Gold Belt in the Watson Lake Mining District in the Yukon returned assay results of 6.06 g/t gold, 14.6 g/t gold, 47.0 g/t gold, 19.9 g/t gold and 6.24 g/t gold.
Additionally, Bearing has an option to earn up to a 65% interest in the 12,113 hectare Zymo copper-gold project in British Columbia. In the Yukon, Ryan Gold Corp. (TSX-Venture:RYG) has been granted a right to earn up to 75% interest in Bearing's Flume property located within the White Gold District. Bearing is also conducting generative exploration in Mexico and early stage exploration at the 26,849 hectares Parrandera copper-gold project located in the Mapimi region of eastern Durango, Mexico.
Suffice it to say, Bearing has a lot of balls in the air with their aggressive growth strategies. By optioning rights to properties and collecting royalties, the company is able to do something that few developmental miners make happen: generate revenue.
The company is the product of a Plan of Arrangement forged last year between Valley High Ventures Ltd. and Levon Resources Ltd. (TSX:LVN) under which Levon acquired 100% of the outstanding common shares of Valley High with Valley shareholders receiving one share of Levon and 0.125 of a share in a new company (Bearing) for each share of Valley. Looking to grow, this still relatively fresh issue could be one to keep an eye on in the future. Proper due diligence is encouraged.
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