Wealth Minerals (WML.V) has provided several updates in the past few weeks and is quickly expanding its project portfolio in the Americas. First of all, the company has renegotiated the option agreement to acquire the Valsequillo project in Mexico’s Chihuahua state. The updated agreement includes lower option payments spread out over a longer period of time to make the financial lifting bearable for a small company like Wealth Minerals. Even more importantly, the payments (totaling $6M over a 7.5 year period) are tied to both the dates whereafter the agreement has been signed as well as the date from when Wealth Minerals has secured the surface access rights.
Being granted the surface access rights will be very important for Wealth Minerals, and the company has given itself six months to negotiate a deal with the surface rights owner before it will hand over the matter to the Director General of Mines in Mexico to enforce an easement. Connecting 97.5% of the option payments to the surface access date is a great move by Wealth Minerals as it mitigates the timing risk. As long as the company is unable to access the property, the option payments are limited to just $150,000.
We like the potential of the Valsequillo project and the company believes there might be a relatively sizeable poly-metallic mineralized area on this property which contains almost 3,000 hectares. The existing infrastructure is excellent and according to Wealth, it can have immediate access to water, and those are two very important features in Mexico.
Chihuahua could become an exploration hub for Wealth Minerals considering it also owns 100% of the Coronado project in the same state. This project is located just 25 kilometers away from the Valsequillo project. Coronado stretches out over almost 10,000 hectares where Wealth will be targeting a gold-silver breccia type deposit (much like the mineralization at Penasquito) after discovering a ‘knoll’ with several artisanal pits. Wealth has sampled both the old workings as well as the waste dumps and discovered decent grades of gold (0.5-4.6 g/t) and copper (1-7%) and this was sufficient to cover the company’s interest to pursue a more detailed exploration program at this property.
We have met CEO Henk van Alphen and other Wealth-representatives several times in the past few months and think this company has some very interesting exploration properties, as well as an extremely promising near-term development project in Peru, which we will discuss in another blog post.
Disclosure: The author holds a long position in Wealth Minerals. Please see our disclaimer for current positions.