Prospectiva Resources’ flagship is the São Francisco copper-gold project in Pernambuco state, northeastern Brazil, part of a 335 km² package in the Borborema belt that also holds the Tabira, Pico do Jabre and Desterro gold targets in neighbouring Paraíba. In this interview, I asked about the ongoing 2,500 m drill program, the new VMS and fold-hinge geological model that Yamana never applied, how the project was acquired from Pan American Silver, and what it will cost to get to a first resource.
TL;DR
They own 100% of São Francisco from day one, bought out of Pan American Silver for US$500,000 on signing, with US$350,000 due January 2028, a US$3 million payment only if they define a million ounces gold equivalent, and a 1% royalty back to Pan American. No back-in, no ROFR, no change of control fees. Yamana drilled about 5,900 m and hit high grade near surface, including intervals around 6.% copper over 7.5 m and 7.5 m at roughly 4% copper, but never called it a VMS and never ran EM before drilling. Prospectiva’s differentiator is a fixed-loop EM survey that has outlined a roughly 3 km conductor corridor between the western high-grade zone (SF1) and the eastern disseminated zone (SF2), plus oriented core and downhole EM to build a structural model. The current 10-hole, 2,500 m program is fully funded and will not answer everything. James was upfront that a second phase of about 5,000 m is what he wants next, that direct drilling costs are around C$300 per metre, and that they will need to raise north of C$3 million to fund it. Grade and continuity are the two unknowns he flagged himself, and he said geology risk is what keeps him up at night.
What have they done for shareholders lately?
They listed on the TSXV this summer via a qualifying transaction, closed a financing, and got a rig turning in August. Drilling started the day the go-live transaction closed and they were about to finish the third hole when we spoke. The program is 10 diamond holes for 2,500 m, roughly split between infilling gaps of about 100 m around the known high-grade mineralisation at the western end and testing the eastern end, including a fold-nose target and previously undrilled EM conductors. Every hole is oriented core, and they run downhole EM at the end of each hole with a contractor in Australia turning around a preliminary interpretation the next day. No assays yet. On the gold side they have had a lineament analysis done by a UK consultant to work out structural controls, and they have some early thin-section work on mineralogy.
How much money do they have and what are they spending it on?
I asked how much cash is left and did not get a number. What we do know from the intro is that they closed roughly C$3.7 million in July at 81 cents with a full two-year warrant attached, ahead of drilling, through Paradigm. Market cap was about C$16 million on roughly 26 million shares, with about 6 million options and warrants taking fully diluted to around 32 million. Insiders, founders and directors hold about 50 to 51%, with roughly a quarter each retail and institutional and nobody above 9.9%. Founder stock is escrowed over 36 months. James takes about C$100,000 a year and said he does not think a big salary is justified at this stage. Money is going into drilling first, with direct drill costs around C$300 per metre, plus geophysics, some early work on the gold targets, and tens of thousands of Canadian dollars into IR and conferences. He said G&A is light and that he and co-founder Jeremy Martin are effectively operational rather than pure overhead.
Upcoming catalysts
Technical: first assays from the maiden program expected early Q4, released as they come back from the lab, followed by results from the eastern step-out holes into the EM conductors, downhole EM interpretations that could generate offhole targets, preliminary mineralogy work later this year on where the gold sits, and structural and lineament work on the Tabira, Pico do Jabre and Desterro gold targets.
Operational: completion of the 2,500 m program on one rig, then a planned follow-up phase of roughly 5,000 m, with the stated aim of pulling together a first mineral resource estimate at São Francisco early next year.
Corporate: a financing they acknowledge will be needed before an MRE, and conference appearances at Red Cloud in October, a London one-on-one in November, and PDAC in March.
Risks
James named geology as the main risk, specifically whether grade and continuity hold up between SF1 and SF2, and he conceded the EM conductor may not be mineralisation at all since something else could be creating the response. He also flagged “boudinage”, meaning thickness will vary hole to hole. Capital markets risk is the other one he named, since they have to raise again and dilution comes with that, especially if results are mixed and the stock does not cooperate. Assay lab turnaround is outside their control. The 2,500 m will not close out the target, so expect an incomplete picture even on good results. Smaller items we talked about were a 24-month payment of US$350,000 due January 2028, exploration licences that run on hard 3 plus 3 year terms and need an indication of resources to convert, drill permits and landholder consent required for each program, and the recent reduction of the land package from about 530 km² to 335 km² because of a newly designated protected area and its buffer zone.
Prospectiva Resources CEO Interview
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