Like many other small mining companies that don’t have a lot of funding, Everton Resources had always focused on finding projects, bringing them out, packaging them, and profiting from spinning them off. Now the company wants to try something different.
“Over the last six months to a year, our strategy has changed from being an accumulator of projects to divesting these projects and being totally focused in one area,” said Gary Economo, corporate communications manager for Everton Resources.
Economo said it was a choice based on drilling results, which were showing “terrific promise.”
“We want to focus all our energy and all our attention, and place all our money in drilling in the Dominican Republic,” said Economo. “We think our chance of hitting something big is far greater in the DR than anywhere else this time. ”
If we are going to start a drill program, we want the drill program to be in places where our money is going to go further.
The company has properties in Quebec, British Columbia and Dominican Republic, where one of its properties, Ampliacion Pueblo Viejo (APV), is adjacent to a $2.7-billion project operated by the world’s largest gold mining company, Barrick Gold Corp. Everton earned a 50 per cent interest in the APV concession in 2007, one year after Barrick announced the discovery of a mineralized trend, which may extend onto the APV concession.
After three years of drilling, on August 12 Everton decided to increase its interest by 20 per cent to 70 per cent by putting an additional US $2.5 million in exploration work by April 10, 2012.
It means the company needed to raise more money. During the six-month period from May to November 2010, Everton successfully raised more than two million dollars through three private placements. Meanwhile, from May to the end of September 2010, Everton agreed to sell two properties, and optioned out another two projects, all of which are located in Quebec.
The two projects that were optioned were Opinaca and Wildcat, the former being one of Everton’s oldest properties, where the discovery of a gold bearing trend in 2006 pushed Everton’s shares to a record high price of $1.71. Wildcat is also among Everton’s earliest projects, and also adjacent to the gold discovery. Economo said the decision to option those two projects should have been difficult, but it was “relatively an easy one.”
“The reason is we are a small company, relatively speaking. We only have a limited amount of funds and in order to be successful, you need to focus,” said Economo. “So if we are going to start a drill program, we want the drill program to be in places where our money is going to go further.”
“If you start to get good results, you may want to focus on the properties that you have in a given area,” said Normand Champigny, a senior mining consultant for PricewaterhouseCoopers. “And the other ones, although they have some potential, they are less viable from a marketing perspective, so you may want to set them aside.”
The company’s sale of the Labrador Trough properties, completed in May, valued the property at $360,000. Everton also signed an agreement in mid September to sell the Shoal Lake properties for a total consideration of approximately $7.6 million.
FOCUS ON MARKETING
In addition to concentrating on one site, the company is also stepping up its marketing efforts.
Thirteen years after the Bre-X scandal that shook the mining sector and left a long-lasting distrust of the industry among investors, Everton wants people to see their Dominican Republic mining sites.
“So we bring people down to the DR where they can actually see the sites we are drilling, see the proximity to where the Pueblo Viejo mine (the gold discovery of Barrick) is, and see for themselves the mineralization zones that give people a huge amount of confidence,” said Economo.
If you want to raise money for projects, you have to present the type of properties that are the most attractive for investors.
In the quarter ending July 31 of this year, Everton increased travel and promotion spending considerably in an aggressive marketing campaign that cost $62,073, compared to almost nothing in 2009. Economo said the money was well spent.
“In order to be able to raise some money, you need to spend some money in the marketing and promotional activities that make people aware,” said Economo. “If people don’t know what you are doing there, you won’t be able to reach them. ”
An exploration stage company, Everton suffered a net loss of $475,824 for the quarter, as compared to a $549,701 net loss for the same period a year ago. The decrease was resulted from several factors, including a lack of write down and deferred exploration costs, as well as a one-time gain from selling shares of NQ Exploration Inc.
Everton is planning to increase its exploration budget in the near future, says Economo.
Economo said the recent sharp rise in price of gold tremendously helped Everton and other junior mining companies, an observation shared by Saley Lawton, communication director of Prospectors and Developers Association of Canada.
“While nobody can possibly predict what the price of gold will be into the future, it really is one of only a few commodities which our society regards as valuable on a personal level,” said Lawton. “The high price, of course, makes mining gold more profitable for the producers and spurs on exploration.”
The mining industry was hit hard by the economic recession in 2008, when most of the companies suspended their projects due to the lack of funds. The market has not totally recovered yet, but thanks to the gold price, the sector is now looking up, and gold mining companies will reap the benefits.
“If you look at what most companies are projecting, a broad range of $1,200 to $1,600 is not unreasonable for the next two years,” said Champigny. “If you have a favourable price environment, that will help to great conditions, you get financing, and it helps those companies to create value by spending millions of dollars on exploration projects.”
While Everton has a history of mining for other precious metals, its focus is now on gold. Champigny said this is the right thing to do in the current market situation.
“Nowadays, for many expedition companies at the early stage, it’s still tougher to raise money than [before],” said Champigny. “If you want to raise money for projects, you have to present the type of properties that are the most attractive for investors.”
Everton’s stock currently fluctuates around $0.30, boasting a two-year high of $0.39 at the end of November.