Precipitate Gold (TSX-V: PRG) – Dominican Gold Exploration, Partnered with Barrick Gold

Precipitate Gold Corp.
  • TSX-V: PRG
  • Shares Outstanding: 106M
  • Share price C$0.16 (04.06.2020)
  • Market Cap: C$16M

Interview with Jeffrey Wilson, President & CEO of Precipitate Gold Corp. (TSX-V:PRG).

Precipitate Gold Corporation is gold developer with 3 gold assets in the Dominican Republic:

The Juan de Herrera Project, adjacent to the Romero/Tireo project operated by GoldQuest, which has currently been parked up due to licencing issues. The company has conducted fairly extensive geophysics on the property, and there are drill permits for “up to 100 different drill pads” on the project. However, with neighbours GoldQuest struggling to obtain an exploitation permit, Wilson decided, although they like what they see, it was best if the project took the back seat for now.

The second project is the flagship: Pueblo Grande. It is located adjacently to the ‘world-class’ Puebla Viejo mine (operated by Barrick Gold Corp.) Precipitate Gold has recently reached an earn-in agreement with Barrick Gold, whereby Barrick can earn 70% by investing US$10M and delivering a PFS before the 6th anniversary of the agreement. Barrick will invest the US$10M within 6-years, and has paid an additional C$1.4M in up-front cash. Interestingly, Barrick has agreed to arrange the funding for Precipitate Gold’s 30% carry. Smart move.

The third and final project is the Ponton Project, c. 30km east of Pueblo Viejo and ‘hosted in the same Los Ranchos Formation geological terrain.’ The project is extremely early-stage exploration, but Precipitate Gold claims the deposit hosts a ‘significant, untested multi-element epithermal gold anomaly.’ All of the company’s gold assets are currently 100% owned by the company with no underlying vendor payments or work commitments.

Matthew Gordon interviews Jeffrey Wilson, 4th June 2020

Precipitate Gold’s aim appears to be to consolidate district-scale strategic land positions in the Dominican Republic’s two ‘most prospective and active’ copper-gold mining and exploration camps.

Why invest in the Dominican Republic? Wilson argues that while there is some obvious geological value to being in the region, the real benefit comes from a Dominican policy: within the Republic, there was a policy that restricted any single mining company to just 30,000 ha of land. At the time of GoldQuest’s Romero/Tireo discovery, the company was maxed-out on its 30,000 ha land package. Therefore, this gave an unlikely opportunity for a junior like Precipitate Gold to disrupt a potential regional monopoly by claiming highly-prospective land that in any other jurisdiction would have already been gone. This is a compelling argument. When we interview juniors who have acquired assets from majors, a common red flag during my analysis is that if this asset was really as valuable as the interviewee claims, why did the major let it go in the first place? We don’t have this problem here.

Precipitate Gold’s business model is not necessarily to become the next junior mining company. The company wants to identify mineralisation that mid-tier and major gold mining companies will want to acquire. Wilson intends to astutely develop and de-risk the projects for potential buyers. He is also clear that Precipitate Gold is not a project generator either. The company is inclined to put its own money into the ground.

Obtaining the licencing for a mining project in the Dominican Republic, on the whole, appears to be unproblematic. Wilson argues that GoldQuest’s trouble is a specific, regional, political issue, because Romero/Tireo is located in an area without any active mining operations or existing mining infrastructure.

The team at Precipitate Gold seems to be a healthy mixture of financial experts and geologists. Michael Moore, P.Geo, is the company’s VP Exploration. He speaks Spanish, and Wilson claims has the experience and expertise to lead Precipitate Gold to success. Dr Quinton Hennigh of gold explorer Novo Resources (TSX-V: NVO), who we interviewed several months ago, provides Precipitate Gold with macro geology expertise. The management doesn’t appear to have a huge amount of skin in the game, and Wilson was unclear about how much of his own money he has actually invested. He and his wife have around 2M shares; however, Wilson states he is not a founder of the company, which could explain this. He also claims his average purchasing cost for shares is higher than the value today, which could motivate him. The rest of the management team has a similar degree of shareholding.

The focus right now is on Pueblo Grande, but after revisiting Ponton recently, the company has realised it had overlooked certain historical data regarding potential anomalies. A magnetic geophysics survey was carried out at the project in the past. Ponton is still taking a back seat, but Precipitate Gold has now made it more of a priority.

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Precipitate Gold currently has c. US$2.3M in the treasury. The G&A is also very light, and Precipitate Gold should be able to continue developing Pueblo Grande while keeping Ponton as a side-project. The company has recently acquired its own drilling equipment, which can sometimes be a cash drain for inexperienced junior miners. However, some issues with the contractor for drilling at Pueblo Grande meant Precipitate had few other choices. Wilson thinks he and his team can make it work; he’ll have to prove it to the market.

What did you make of Jeffrey Wilson and Precipitate Gold? Would you invest? Comment your thoughts below and we’ll get back to you.

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