In a world with thousands of potential gold projects you could invest in, location is an important, first-cut filter to use.
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A three-million-ounce gold resource is tantalizing, but if it’s in some far-flung locale, far from any population center or significant mining infrastructure, it can be hard for an explorer to get potential suitors interested in that deposit.
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Southern Empire Resources (SMP.V; SMPEF.OTC) has no such problem with its Oro Cruz project in Southeast California.
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This collection of past-producing, open-pit and underground gold mines sits just 14 miles from the Mesquite mine, which produced 140,000 ounces of gold — last year alone.
Both Oro Cruz and Mesquite sit along the very same “Caborca” gold trend, home to multiple gold deposits, including Fresnillo plc’s La Herradura mine. That mine generated 425,000 ounces of gold last year.
Again...location, location, location.
But it gets better: The past operators at Oro Cruz left behind a wealth of data and more than three kilometers of pristine underground infrastructure.
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Southern Empire’s goal here is simple: Breathe new life into the project by following up on historical, high-grade intersections and outlining a million ounces of gold.
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If the company is successful, the project’s decided location advantages should make it a plum target for a deep-pocketed producer.
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Taking A Fresh Look At A Past Producer
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Oro Cruz lies in the Cargo Muchacho mountains in the southeast corner of California, a short drive from Yuma, Arizona.
Its land position encompasses no less than three past-producing mines, all of which were last operated by the American Girl Mining Joint Venture, a partnership that included Hecla Mining.
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| Southern Empire’s Oro Cruz project sits 15 miles northwest of Yuma, Arizona and 14 miles southeast of the Mesquite mine. |
With gold never trading much above $250 in the 1990s, the partnership eventually shuttered these mines…but not before they had built a significant amount of underground infrastructure and punched quite a few exploration holes in them.
After passing through a variety of different operators, Southern Empire picked the project up in 2020.
...And based on their analysis of the historical data, they are confident that there’s a lot more gold to find at Oro Cruz.
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Tantalizing High-Grade Results
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That data greatly increase the odds that that drilling will add even more gold to Oro Cruz’s historical, 342,000-ounce inferred resource.
Typically, gold can be mined profitably using open-pit methods at 1 g/t grades and using underground methods at grades between 3 g/t to 6 g/t.
With that thought in mind, take a gander at a few highlight intervals from historical drilling at Oro Cruz:
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• 10.7 meters of 20.9 g/t
• 11.4 meters of 10.1 g/t
• 12.2 meters of 13.4 g/t
• 6.9 meters of 23.1 g/t
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Down-dip extensions of these intervals remain untested and with all that underground infrastructure to work with, Southern Empire has a great opportunity to add ounces quickly.
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| Historical drilling data at Oro Cruz suggest more drilling can advance its ~342,000-ounce inferred gold resource toward SMP’s million-ounce goal. |
Add in the shorter-term potential to generate some cash flow from leftover heap leach stockpiles and waste rock dumps, and you have a project with a huge head start on greenfields explorers.
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Exceptional In-Place Infrastructure
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If Southern Empire’s guess is right, and they’re able to outline a million ounces (or more) of gold at Oro Cruz, the project has all the pieces in place to make it an attractive takeout target.
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| Oro Cruz comes with almost three kilometers of pristine underground development left behind by the American Girl Mining Joint Venture. |
In a world where major miners are constantly in search of projects that can grow their reserves, having the right infrastructure in place matters.
Oro Cruz checks all the infrastructure boxes, including:
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• Extensive underground and open-pit mining development left behind by the American Girl Mining JV
• Paved road access
• An electric power line (the same one that powers Mesquite) that transects the property
• A nearby, mid-sized city in Yuma that gives any producer access to a sizable labor force and other local infrastructure
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All this makes Oro Cruz about as turn-key a project as it gets.
Simply put, if Southern Empire can use the drill bit to prove up that targeted million ounces here, it’s a safe bet that some major, mid-tier or aspiring producer is going to be extremely interested.
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Take Advantage Of A Huge Valuation Mismatch
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So far, the market’s missing the potential at Oro Cruz, a fact underscored by Southern Empire’s severe undervaluation.
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It currently trades at only around C$10 million — and that includes a roughly $4 million stake in a fellow junior called Augusta Gold.
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That means a company with a historical gold resource...obvious ways to grow that resource...and a wealth of surrounding and on-site infrastructure, is trading for just a little more than a shell company.
It’s a valuation mismatch that the market’s eventually going to wake up to.
For now, though, you have a chance to buy Southern Empire Resources at bargain-basement prices.
If you like gold in these inflationary times, buying Southern Empire near current levels offers a compelling way to leverage that trend.
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CLICK HERE
To Learn More about Southern Empire Resources
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