Source: Thibaut Lepouttre for Streetwise Reports 12/04/2018
Thibaut Lepouttre of Caesars Report profiles a company active in Portugal that uses the prospect generator model.
Explaining the prospect generator model
Avrupa Minerals Ltd.’s (AVU:TSX.V; AVPMF:OTC: 8AM:FSE) business model is quite simple: after adding projects to its portfolio, it tries to get them to a drill-ready stage where after it starts looking for a joint venture partner to do the heavy lifting.
This usually results in a very cost-effective way of exploring multiple projects without incurring the associated expenses: The partners usually cover the exploration expenses in return for a majority stake in the properties they are working on. Avrupa usually retains a minority stake in a project, which subsequently gets converted into a Net Smelter Royalty.
An excellent example of how the business model works is the joint venture deal on the Slivovo gold project in Kosovo. Avrupa discovered an interesting gold target in the country and allowed Byrnecut to earn an initial stake of 75% after spending a few million dollars on advancing the project. Byrnecut has subsequently increased its stake to 85% after delivering an economic study on the project, and as soon as it reaches a 90% stake, Avrupa’s position will be reduced to a 2% Net Smelter Royalty.
Doing business in Portugal
In the past, we have discussed Blackheath Resources (BHR.V), which was trying to advance a portfolio of tungsten assets in Portugal, so we are quite familiar with Portugal as a mining destination. And so is Avrupa. In fact, one of the assets Blackheath Resources was working on (the Covas tungsten project in Northern Portugal) was optioned from Avrupa Minerals, which has assembled a diversified portfolio of assets in the country over the past few years.
The the annual report of the Fraser Institute does a good job in ranking the jurisdictions from the perspective of a mining company. The Fraser Institute looks at countries based on how prospective they are to discover mineralization, but also how good the legal framework is (in some countries you own a mine, and the next day the president’s cousin is the new owner).
Whereas Portugal isn’t performing too well on the mineral potential index due to the relatively high percentage of the answer “not a deterrent to investment,” which only counts for half the value of a vote for “encourages investment.” But Portugal’s really strong point is the “Policy Perception Index,” where the country scores a stunning 87%, ranking it the 11th best nation to explore in the world, based on the perceived legal framework to conduct exploration and development activities.
And that’s what ultimately matters. Avrupa believes it owns some key claims in Portugal that are very prospective (which takes care of the mineral potential side of the index), and knowing the government policy is to be supportive of exploration and mining activities only strengthens Avrupa’s case.
A deeper dive into Avrupa’s two main projects: …read more
Source:: The Gold Report