Marifil Mines (CVE:MFM) has an exciting year ahead for shareholders, says president John Hite, as the Canadian explorer, which is focused on its 25 properties spanning 555,000 hectares in Argentina, is planning on spinning out its potash assets into a separate company.
This is a move that will see Marifil likely shell out a "nice dividend" through a big portion of the shares from this transaction.
Earlier this month, the exploration-stage resource company hired Robert J. Rennie to aide with the proposed spin-out of its fertilizer-related assets, under a consulting services agreement. Rennie, who holds a PhD in soil microbiology from the University of Minnesota, is slated to become the president and chief executive of the Newco, or the new separate entity.
Rennie spent 20 years working for Agrium (TSE:AGU) - one of the world’s largest fertilizer companies. While at Agrium, he was chairman of the board of both Profertil S.A., a joint venture between Agrium and Repsol.
Marifil’s flagship potash properties, K-2 to K-6, are located in the Neuquén Basin in Argentina, where the company has identified "extremely significant potash targets" on all five properties through a review of oil well drill logs, Hite says.
The 100 percent-owned K-2 potash project, which is comprised of 99,964 hectares, is based on four wells that span an 18 kilometre distance from north to south. Within the triangle of wells, Hite says the co-relation is "startling", with mineralization projected from hole to hole.
Based on these wells, Marifil projects a potash target that potentially exceeds 200 square kilometres and yields around 200 million tonnes of KCI (the composite grade of all four potash-bearing beds of sylvinite from two horizons.
Hite notes there are similar targets on the company's K-3 and K-4 properties, with 50 to 100 million tonnes of potential KCl based on fewer wells.
The K-5 property, Hite says, is the "best explored", with 51 wells and intercepts of up to 4.5 metres thick, "running 40% to 45% KCl grades."
"With good grades and reasonable depths to around 1,000 metres deep, there is potential for underground or solution mining at K-5," says Hite, a professional geologist that has run junior mining companies out of Canada since 1987.
Hite adds that the company has identified up to seven separate horizons of potash.
Marifil plans on twinning two of the holes on K-5, and based on these results, the TSX Venture Exchange would need to approve the use of the remaining 49 holes on the property for a resource estimation, assuming the results match what is seen in the drill logs.
"There is giant potential here," the company's president adds.
But despite being the second largest potash holder in Argentina, Marifil's experience lies with hard rock mining, and is relatively new to the game of potash. It therefore has planned to spin out its potash assets into a separate entity, complete with a new board and president, with enough funding to develop the potentially lucrative properties.
Hite says an investment banking firm has already approached the company about raising a "significant amount of money", with an initial goal of around $6 million to be used to prove up the potash resource, followed by another $15 to $20 million of raising once this is done.
As an alternative, Hite says that a joint venture for each potash property is also a possibility, with the company recently having met with an interested potash player in Vancouver. But the spin off into a single entity is the preferred option.
Marifil's second flagship property is the San Roque project in the Rio Negro province of Argentina, a 51 percent-owned joint venture with NovaGold Resources (TSE:NG) (AMEX:NG).
San Roque is a 70,046 hectare "enormous" discovery, comprised of a large sulphide system with 108 holes. One of the last holes NovaGold drilled in the southeast portion of the property yielded an interval of 34 metres grading 2.27 grams per tonne (g/t) gold, with minor amounts of lead and zinc, says Hite.
The project is characterized by "steeply dipping linear structures", with a projected resource of around 30 to 60 million tonnes. The asset is open ended in every direction, says the company, and at depth.
"We think we can expand significantly at San Roque, and assuming we can raise another $4 to $6 million required for drilling, we could have an NI 43-101 resource in place by this time next year," insists Hite.
Marifil also owns the high grade silver-copper Toruel property in the Rio Negro Province near the small town of Los Menucos, which it has farmed out to Netco Silver.
Netco can earn a 50 percent interest in the project during the next three years by paying a total of $200,000 in cash, issuing 3.15 million shares to Marifil and making work expenditures of $2.8 million. Drilling is expected to start on the site by June this year.
Hite also says investors should take note of the company's porphyry copper projects, including the high grade, near-surface Cerro Samenta project in Salta province, where it has already received an offer from a "major copper company" for a joint venture.
This property, which is surrounded by large copper deposits such as the giant Esplendida mine, has had "fantastic" trench samples, remarks Hite, including 154 metres at 1.06% copper, 22 metres of 4.2% copper, and 50 metres of 2% copper.
"We have an exciting year ahead of us," says Hite, "with a nice dividend in the offing."
"The company has three legs under its stool - precious metals, base metals and industrial metals - making us widely diversified.
"As the world's economy and population grows, particularly in China, India and Brazil, we will be there to help produce," concludes Hite.
Marifil, with about $1.4 million in the bank, raised nearly $1 million last year from joint ventures and property sales, and Hite is looking to duplicate this goal in 2012.
The company closed Wednesday on the TSX Venture Exchange at 14.5 cents.
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