Playing With The House’s Money

This red-hot mining bull market is hungry for discovery plays.

With two drill programs with the potential to deliver market-moving results within days, Alianza Minerals (ANZ.V; TARSF.OTC; T921.F) could be just what investors are looking for.

Dear Fellow Investor,

There are two basic models junior explorers can follow on the path to discovery.

The more common one is the “flagship project” model, where a company owns one or two core projects and then seeks funds to test those projects with the drill bit.

The other model is prospect generation, in which companies leverage exploration expertise (and/or deep knowledge of particular jurisdictions) to build large portfolios of early-stage projects.

To fund the more expensive aspects of exploring those projects (i.e., drilling), prospect generators typically form partnerships with more well-heeled mid-tier and senior miners.

While the “flagship project” model offers a company more control over when and how a project gets explored (and more exposure to an individual discovery’s upside), the prospect generation model gives shareholders more tickets in the lottery and generally a better chance for success.

In a gold bull market, prospect generators with the best chance of delivering outsized gains for investors have three things in common:

1) Strong property portfolios

2) Significant joint venture partnerships

3) Active exploration programs.

But add in another factor: For even the most devout prospect generator, some projects pack so much potential and have such obvious targets begging to be drilled…that the company decides to go ahead and poke the holes themselves.

Some of the biggest success stories in mining exploration have followed both paths simultaneously.

And another is now poised to do the same…

Because with an ongoing, JV-funded drilling program on a gold project in Nevada and a self-funded drill campaign coming soon on a high-grade silver target in the Yukon, Alianza Minerals (ANZ.V; TARSF.OTC; T921.F) could make big news within days.

Exploration’s Version Of “Betting On Black”

If you’ve ever played roulette, you know that one lower-risk strategy is to bet that the “pill” will land on either a black- or red-colored pocket.

Prospect generators’ large exploration portfolios are analogous to “betting on black” (or on “red,” if that’s your preference), with the potential for success increased by spreading a company’s bets over multiple projects.

Alianza’s extensive property portfolio, which includes projects spread across five safe mining jurisdictions in the Americas, provides an excellent case in point.

As you can see from the graphic below, the company’s portfolio is focused on the Cordilleran regions of North and South America and includes projects in Nevada, the Yukon, British Columbia, Colorado, Peru and Mexico.

Key projects within that portfolio include:

• Horsethief: Located in southeastern Nevada, this project is prospective for the type of elephant-sized, sediment-hosted (Carlin-style) gold deposits that have made the state one of the world’s leading gold jurisdictions.

• Haldane: This high-grade silver target lies within the Yukon’s prolific Keno Hills silver district (217 million ounces of silver produced between 1913 and 1989 at an average grade of 1,149 g/t silver).

• Tim: Tim sits along Yukon’s border with BC and boasts high-grade trench results (10.2 oz/ton silver and 9.1% lead over 4 meters). The nearby Silvertip Mine is owned by Coeur.

• BP and Bellview: The projects lie on the southern edge of the Carlin Trend from which “Carlin-style” deposits get their name. Alianza sees similarities between these projects and other recent discoveries along this portion of the trend.

Joint Ventures With Deep-Pocketed Partners

A key part of the prospect generator model is finding those deep-pocketed mid-tier and senior miners to help get work flowing on as many projects as possible.

Alianza has cut joint venture deals on two of its key projects — Horsethief and Tim.

The option for Horsethief is with Hochschild Mining, a London Stock Exchange-listed miner with operations in Peru and Argentina.

Hochschild’s deal for Horsethief, signed in March 2019, gives it 5.5 years to earn a 60% interest by conducting US$5 million in exploration, including US$500,000 in the first 18 months of the deal.

Once it has achieved its initial earn-in, it may increase that interest to 70% by spending another US$5 million over three years.

It’s an ideal situation for Alianza, as the initial funding from Hochschild has paid for the current drilling program the partners are conducting on Horsethief.

Given Alianza’s low trading levels and the excitement surrounding good drilling results these days, good news from this Hochschild-funded program could send Alianza Minerals (ANZ.V; TARSF.OTC; T921.F) soaring.

Longer term, there’s also the potential that Alianza’s JV deal for Tim — inked with Silvertip operator Coeur Mining this past January — could pay big dividends as well.

Coeur can earn an 80% interest in Tim by spending C$3.55 million on exploration over five years, making C$575,000 in cash payments and completing a feasibility study by the eighth anniversary of the deal.

The key with both deals is that Alianza gets to advance its projects while keeping a significant piece of each project’s upside, all while conserving its cash hoard.

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Drills Are Turning As We Speak

These deals mean Alianza gets to essentially play with the house’s money on Horsethief and Tim…and to retain enough money to drill its high-grade Haldane project on its own.

That program is slated to start soon.

Given the Keno Hills district’s long history of high-grade silver production (of which Haldane has played a part), high-grade assays from this program provide another near-term catalyst for Alianza’s share price.

First up, though, will be the initial assays from the first six holes Alianza and Hochschild have completed at Horsethief.

Those results are due any day now, with strong gold grades likely to spike ANZ’s share price.

Thanks to its prospect generator model, Alianza’s Haldane program provides a backstop to the story as does the company’s broader portfolio, which promises to attract more JV deals in the current red-hot market.

Simply put, ANZ is a low-risk way to speculate on short-term drilling success and long-term bull markets in gold and silver.

Buy Alianza Minerals (ANZ.V; TARSF.OTC; T921.F) for the drill-hole speculation. Keep it for the leverage it offers on rising precious metals prices.

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