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RRI – Riverside Resources is Being Proactive, Even

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investor15   Friday, 11/22/13 11:14:32 AM
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RRI – Riverside Resources is Being Proactive, Even in This Market


RRI's team is heavily focused in Mexico as well as Arizona and BC

Dr. John-Mark Staude’s Riverside Resource (RRI:TSXV), the prospect generator with precious and base metal assets across some of North America’s most prolific mineral belts, announced initial exploration results from their Flute and Lennac projects in BC. The projects were identified as part of a three year alliance with Antofagasta, the Chilean copper giant, which ends in 2014 and saw Antofagasta invest $1.8 million in exploration. RRI recently inked a new $1.8 million deal with Antofagasta to explore for large copper porphyries in northwestern Mexico. They have a similar deal in Mexico with Hochschild Mining PLC for $2.25 million in exploration work for gold prospects in Sonora.

During this past year exploring on the Flute and Lennac projects, the companies completed reverse-circulation (RC) drilling, Ah-horizon soil sampling, induced polarization geophysical surveying, geological mapping and rock sampling and now believe they have identified solid drill ready targets for a potential 2014 drill campaign. RRI has generated new anomalous copper-gold targets with three new porphyry-style intrusive centres discovered. They are particularly interested in the new massive sulphide zone.

In broadly spaced sampling the company identified a 1.2km copper-in-soil anomaly over 120 parts per million copper at the Red Top target and remains open in three directions. The highlight from Red Top returned 0.19% copper and 70ppb gold.

Riverside's President/CEO John-Mark Staude

Riverside’s President and CEO, John-Mark Staude, commented: “The second year of exploration work at Flute and Lennac outlined more copper-gold and found the massive sulphide zone. Through the encouraging results from soils and RC drill holes, we are pleased to look toward spring 2014 to work with Antofagasta to now drill test these with core drilling to get into the heart of the systems. We look forward to further work and results in B.C., with the alliance now having three strong projects with the recently announced agreement for the Swift Katie copper project.”

The newly identified massive sulphide zone identified on the Flute project is adjacent to large magnetic feature which sits at the junction of a regional north-south and north-west trending faults. As a geologist friend of mine informed me last night: “good things happen at the intersections.”

Riverside has been active this fall, taking advantage of the current markets; picking up prospective projects and adding them to their substantial database of highly prospective, earlier-stage, prospects. On November 1st the company announced they, along with their alliance partner Antofagasta, would option to earn-in 80% of the Swift Katie copper project in BC from Valterra Resources. For this RRI and Antofagasta will commit to $5 million in exploration expenditures over four years. The project has had previous work done, almost 20,000m (70 holes) of drilling, which has identified 1.9km of strike length with 900m of width and 600m depth that remains open in most directions.

“We are excited by the exploration upside at the already established Swift Katie porphyry copper project,” states John-Mark.

La Herradura mine in Sonora hosts 7Moz and is operated by Fresnillo/Newmont

Then, a few days later, RRI announced they would be acquiring three new gold projects in the Sonora Megashear Gold Belt from Argonaut Gold (AR:TSX). John-Mark is most excited about the Bohemia project which is located 15km from the past producing La Choya mine (which Penoles is putting back into production) and the 7 million ounce La Herradura gold mine. Bohemia is comprised of high-grade gold found in veins, stockwork and wall rocks. RRI and its alliance partner, Hochschild, were able to pick these projects up on the cheap, only having to dish out $40,000 in cash and a 1% NSR of which half can be bought back for $500,000 at any time.

The Bohemia project looks amenable to a typical Mexican low cost, open-pit, heap leach gold mine, which remains a favorite of the majors given the low capital intensity and operating costs to produce gold at these types of projects. Ultimately, that is their model. They pick up projects on the cheap, option them out and let other companies spend money and earn into them. Then they either get the project back with more money spent on them, or they build a mine with their partner (usually predominately funded by the other party).

Riverside is tightly held, with over 30% of the outstanding shares being held by smart money as well as management. Shareholders include resource investing legends: Sprott Asset Management and Rick Rule as well as mining royalty such as Kinross Gold and Cliffs Natural Resources.

They have $5.5 million in cash with a minimal burn rate given they spend other companies’ money on exploration costs which, in this environment, should be attractive to any and all resource investors. The company is getting a combined $4 million in exploration work being done on a portfolio of projects over the next three years. RRI is moving their alliance partnership assets forward as well as moving their Sugarloaf and Penoles projects toward initial resource estimates.

Unlike most of its peers, Riverside is doing significant work on their early-stage projects which provides consistent news flow. They have five projects currently under joint venture and another nine which they are looking to option out. They are constantly evaluating new projects so acquisitions are always a possibility for these guys.

RRI has a market capitalization of $12.5 million, they have $5.5 million in cash and are expected to get a total of $6.5 million spent on their assets over 2013.

As Brent Cook of Exploration Insights put it: “although less exciting than a throw of the dice, the prospect generator model offers an intelligent and relatively lower risk alternative for speculating in the junior exploration market.”

Their corporate video gives a good 90 second overview:


Riverside Resources is a client. This is an opinion and not investment advice. Due your own due diligence.


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