Junior Gold Miner Brazil Resources: What’s Been Done, What’s To Come

We first introduced you to Brazil Resources Inc. (TSX.V: BRI | OTCQX: BRIZF) in the fall of 2012, when we applied Casey Research’s The Eight P’s of Resource Stock Evaluation to the company.  We’ve decided to revisit this company, look at its progress over the past six months and explore some of the upcoming catalysts BRI has in store for the next 12 months.

As a reminder, Brazil Resources is a gold company which is focused on the exploration and development of its five projects in Brazil, as well as its large concession in northern Paraguay.  Its founder and Chairman, Amir Adnani, CEO of Uranium Energy Corp (NYSE: UEC), is a rising star in the mining industry, and took UEC from exploration to production in under five years.  The President and CEO is Stephen Swatton, who prior to joining BRI was the head of BHP Billiton’s Global Business Development and Technical Team Division (Exploration Department).

The company is still very well financed with over $4.2 million in the bank, and maintains a strategic alliance with one of the largest financial banks in Brazil, the Brasilinvest Group.

Since we last looked at BRI, the company has been rapidly advancing its two main projects, Cachoeira and Artulândia.

Cachoeira, Brazil Resources’ flagship property, which is located in the Gurupi Gold belt, was originally acquired from Luna Gold Corp in the fall of 2012 for roughly $18/ounce in the ground.  When acquired the project had an NI 43-101 indicated mineral resource of 12.5 million tonnes at 1.11 g/t Au or 446,000 ounces of gold, and an inferred resource of 5.4 million tonnes at 1.27 g/t Au, or 221,300 ounces of gold.

On March 4, 2013 the Company released an updated NI 43-101 resource report which substantially increased the resource at Cachoeira.  The project now has an indicated resource of 17,470,093 tonnes at 1.40 g/t Au, or 786, 737 ounces or gold, and an inferred resource of 15,666,580 tonnes at 1.12 g/t Au, or 563,200 ounces of gold.

With a resource estimate which more than doubled, Brazil Resources is moving the project along and has plans to drill the property in Q2 2013 to upgrade much of the inferred resource to the indicated resource category. Furthermore, the Company plans to do environmental permitting, and completion of other work to better understand the project from a structural and economic standpoint.

Another project worth investigating further is the Company’s Artulândia project.  Artulândia, a 12,000 acres property located in the central part of Brazil, is situated in the same state as several other well known gold deposits.  In particular, Artulândia is located approximately 140 km away from Yamana’s (NYSE: AUY) Chapada gold-copper mine, a 5.5M ounce deposit and AngloGold Ashanti’s (NYSE: AU) Serra Grande mine.

The potential of Artulândia could be far reaching.  In the fall of last year, Brazil Resources did some rock sampling and trench work which yielded very positive results and a polymetallic copper-gold discovery was announced.  The Company has since announced that it will be initiating a drilling program at the project to further its exploration.  With that being said, excitement is buzzing around this project, which we should note, has had no previous exploration work done on it, and is a discovery made uniquely by the technical team of the Company.

The success at both of these projects isn’t the only thing keeping investors happy; BRI has outperformed the Toronto Venture Exchange, by gaining more than 40% since it IPO’d in May of 2011.

At a time when many junior exploration companies are scaling back, Brazil Resources is pushing forward.  Looking ahead to the next 12-18 months, the company plans to continue developing its current projects and acquiring new projects with proven resources. BRI not only has the technical team to develop its projects, but the management team with the experience and ability to raise capital in a difficult market, and make strategic acquisitions.

Key milestones that have the potential to drive the share price significantly higher in the next 12 months:

  • Pending exploration drill results at its Artulândia project;
  • Acquisition of an additional advanced stage project with proven gold resources; and
  • Environmental permitting at Cachoeira, and additional work to better understand the economics of the project.

We will keep a close eye on this company which is performing very well given the current state of the gold market.

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