Transformative Acquisition Secures Full Ownership of High-Grade Alaska Project

Source: Streetwise Reports 11/20/2024

American Pacific Mining Corp. (USGD:CSE; USGDF:OTC) announced it has finalized a transformative agreement with Dowa Metals & Mining Alaska Ltd. to acquire Dowa’s interest in Constantine Mining LLC, securing 100% ownership of the Palmer VMS Project in Southeast Alaska. Find out how this deal positions the company for future growth and exploration opportunities.

American Pacific Mining Corp. (USGD:CSE; USGDF:OTC) announced it has finalized a transformative agreement with Dowa Metals & Mining Alaska Ltd. to acquire Dowa’s interest in Constantine Mining LLC, securing 100% ownership of the Palmer VMS Project in Southeast Alaska. Under the agreement, Dowa will pay American Pacific US$10 million and retain an option to acquire up to 50% of the zinc concentrate produced at the Palmer Project for the initial and subsequent years of production.

The Palmer VMS Project is a significant copper-zinc-gold-silver exploration project located 60 kilometers from the Haines deep seaport. It includes defined NI 43-101 mineral resources and has seen over US$116 million in investments to date. American Pacific has consolidated ownership to focus on advanced exploration and resource expansion. An updated mineral resource estimate is underway, aiming to build on the project’s high-grade copper zones and extensive mineralized trends.

In the news release, CEO Warwick Smith described the acquisition as “transformative.” He noted that this is an opportunity to advance exploration and deliver significant value. The transaction is expected to close in Q4 2024, leaving American Pacific with over US$16 million in cash and two 100%-owned flagship projects: Palmer in Alaska and Madison in Montana.

The State of Copper

In a YouTube presentation on October 18, Jeffrey Christian of CPM Group described copper’s long-term outlook as “bright.” Christian cited a growing demand driven by global electrification efforts and supply constraints. He stated that while a short-term price dip was possible due to current market surpluses, the medium- to long-term trajectory showed “deficits by 2025 and 2026,” which would likely lead to significantly higher prices. Christian also highlighted copper’s essential role in China’s infrastructure expansion, including power grid investments, which saw a 23-24% increase in 2024.

Chen Lin described the transaction as “incredible” and praised the company’s strengthened financial position with “16 million cash with 30+ million market cap.” He noted the transformative nature of the deal.

On October 25, Mining Weekly wrote that Goldman Sachs raised its 2025 copper price forecast to US$10,160 per ton. The article attributed the increase to strong demand in China following government stimulus measures.

The report stated, “Demand for aluminum and copper will benefit from the equipment upgrade and consumer goods trade-in programs,” and described how China’s fiscal efforts could boost global metals markets. Goldman also noted potential upside risks from further stimulus, balanced by downside risks from possible U.S.-China trade tensions.

Three days later, USA Today reported that copper prices rose 12.03% year-to-date. The rise saw the metal trading at US$4.36 per pound. The article noted that copper is critical to industries such as electrical wiring, construction, and clean energy technologies, including electric vehicles and renewable energy systems. Key factors influencing copper prices included China’s economic activity, currency fluctuations, and mining disruptions. The transition to green energy was highlighted as a “key driver of future copper demand,” with copper playing a vital role in the electrification of economies globally

Catalysts Section

According to the company’s November 2024 investor presentation, the acquisition of Dowa’s stake in the Palmer VMS Project aligns with American Pacific’s strategy to grow its portfolio through high-grade, 100%-controlled assets. The project presents immediate catalysts, including the ongoing updated mineral resource estimate and high-priority drill-ready targets along the 15 kilometers of mineralized trends.

The company plans to capitalize on the US$10 million cash infusion to fund advanced exploration, further resource expansion, and feasibility studies. American Pacific’s financial position, bolstered by cash reserves of over US$16 million, positions it to leverage its assets effectively while pursuing additional joint ventures or acquisitions.

Additionally, the Palmer Project’s robust historical data and exploration results support its significant upside potential. With its 2019 Preliminary Economic Assessment highlighting a post-tax NPV of US$266 million, American Pacific’s consolidation of the asset underscores its commitment to value creation through focused development and strategic exploration initiatives, according to the presentation.

An ‘Incredible’ Transaction

In a letter dated November 18, Chen Lin of What is Chen Buying? What is Chen Selling? praised American Pacific Mining Corp.’s recent acquisition of 100% ownership of the Palmer VMS Project in Alaska, alongside a cash infusion of US$10 million from Dowa Metals.

He described the transaction as “incredible” and praised the company’s strengthened financial position with “16 million cash with 30+ million market cap.” He noted the transformative nature of the deal.

On the same day, Michael Gentile, in a letter titled “USGD – Wildly Accretive Transaction,” called the acquisition “the most accretive M+A transaction I have ever seen in the 25 years that I have covered the commodity sector.” [OWNERSHIP_CHART-9545]

Gentile detailed how the company transitioned from holding 30% ownership in the Palmer and Madison projects to owning 100% of both assets. He also noted that the Palmer project already includes a “14MM ton resource at 12%+ [zinc equivalent] ZnEq,” suggesting the potential for strong future performance. He concluded that American Pacific is now “in a great position to unlock the value of both these assets either via sales or JV transactions or by choosing to drive the development forward themselves.”

Ownership and Share Structure

According to the company, strategic junior mining investor Michael Gentile owns approximately 12% of the company, with institutional ownership comprising 15%.

Refinitiv noted that major shareholders include Merk Investments LLC with 1.53%, Chief Executive Officer and Director Warwick Smith with 0.35%, Managing Director of Exploration and Director Eric Saderholm with 0.27%, and Palos Management Inc. with 0.18%.

The remaining 73% is held by retail investors.

The company’s market capitalization is CA$49.15 million, based on 196.59 million shares outstanding. Its 52-week trading range spans from CA$0.17 to CA$0.43.

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1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of American Pacific Mining Corp.
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( Companies Mentioned: USGD:CSE; USGDF:OTC, )

Source: https://www.streetwisereports.com/article/2024/11/20/transformative-acquisition-secures-full-ownership-of-high-grade-alaska-project.html