The Blue Moon project in Mariposa County, California, provides investors with great leverage to green commodities such as zinc, copper, gold and silver. Zinc will be the primary output of this TSXV-listed developer as it moves towards a PEA.
Six years after taking over as CEO of Blue Moon Metals, Patrick McGrath says the stars are beginning to align for the Blue Moon project.
As the driving force behind the Blue Moon project in Mariposa County, California, McGrath first secured a drilling permit and then oversaw a trio of drill programs that have just resulted in an updated 43-101 resource estimate.
Published on November 27, the estimate showed a 22% increase in zinc grade from the previous iteration - issued in 2018 - with 48% of the mineral resource upgraded from inferred to indicated. It registered 3.5 Million tonnes in the indicated category at 11% zinc equivalent, containing 431 million pounds of zinc, 53Mlbs of copper, 0.2Moz of gold and 5Moz of silver plus 3.8 Mt in the inferred category at 11% zinc equivalent, containing 455Mlbs of zinc, 45Mlbs of copper, 0.2Moz of gold and 6Moz of silver.
McGrath said the update "provides us with a solid foundation to review the next stage of work including a PEA for the project".
The CEO said he was confident of further resource upside, adding: "we continue to have significant expansion and exploration opportunities at our project."
The promising momentum comes after a long wait. As a historic mine originally operated by Hecla during the Second World War, Blue Moon sat on the shelf for over 30 years before McGrath got involved.
He was drawn to the project's strong potential to yield further discoveries from its VMS clusters and to build a mine. And the addition of zinc to the US critical minerals list in November 2021 has only cemented his belief that Blue Moon is set to rise.
"Obviously, the government wants to secure a domestic source of zinc in the United States. And here we are, with a newly printed 43-101 mineral resource," said McGrath.
Key Advantage over peers - near existing infrastructure
The project is well located from a logistics perspective and benefits from proximity to infrastructure, including a three kilometer gravel road to the highway leading to Oakland port, nearby communities to house and supply labor and a hydroelectric power plant one mile to the north.
"Most of our peer group are located in remote areas with little to no access to infrastructure. This is a competitive advantage of Blue Moon that should come to the forefront in an economic study," said McGrath.
As the project moves towards a PEA - which the junior hopes to deliver in 2024 - this will bring the focus of McGrath to permitting, traditionally viewed as challenging in The Golden State.
"I think the biggest knock on this project is that a lot of people just don't believe we're going to get a permit to mine in California, even though the state is the fourth largest producer of gross metals - in terms of dollar value - in the United States."
"So that's why a primary focus is on the engineering and permitting of the project. We believe any de-risking of the permitting risk should result in a re-rating of the Blue Moon project. I believe Blue Moon offers one of the most compelling valuations gaps among our peer groups on the TSXV," he said, pointing to Blue Moon's modest market capitalisation of C$1.5 million.
"How many TSXV companies with a C$1.5 million market cap have upgraded their mineral resource estimate and are advancing to the PEA stage? We believe we offer one of the best leverage plays to base and precious metals in the junior sector," said McGrath.
McGrath has taken confidence from the fact other companies obtained mine permits and commenced commercial production in California, together with the sheer size of the industry in California.
Equinox's Castle Mountain mine, headed by legendary mine builder Ross Beaty, commenced operations in November 2020 and Golden Queen successfully navigated California's permitting landscape a few years earlier with its Soledad Mountain project.
Both companies operate open pit heap leach gold projects - ones McGrath views as a far tougher sell than Blue Moon, which is set to be developed as a smaller footprint with a low impact underground operation. Notably, MP Materials' operations in California account for approximately 15% of the rare earth metals consumed annually worldwide, while Warren Buffet has a resource stake in California with the state's plans to extract lithium from geothermal brines via geothermal operations near the Salton Sea.
For further peace of mind, McGrath took the precaution of reaching out to the former CEO of Golden Queen, who walked him through who they used in terms of service providers and key personnel.
"The former CEO walked me through his experience permitting a mine in California, introduced me to his key service providers and highlighted the path. It's not easy obtaining a mine permit anywhere in the world today and that includes California. Buts its achievable and we believe Blue Moon has several legacy advantages including past permits that have been issued on the project including a past permit to build a shaft," he said.
Strong track record
McGrath has assembled a sterling team to move Blue Moon forward. On the geological side, the recent 43-101 was co-written by renowned technical advisor Tom Henricksen, who won the Colin Spence award in 2018 for his role in the discovery of the Hod Maden VMS/epithermal deposit in Turkey.
Board members include fellow Hod Maden team member Enrique Correa, a former banker and current mining entrepreneur and Jonathan Gagné, a senior consulting engineer working on Greenstone Gold's multi-million ounce Hardrock gold project, which is on track to pour gold in 2024.
"We've got Enrique with his banking and finance background, Tom with the exploration success looking at expanding what he did with Hod Maden, and Jonathan with his mining engineering background about to commence commercial production at Greenstone. And also on the advisory side is Larry O'Connor, the guy who helped kickstart the Mesquite gold mine in California," said McGrath.
Henriksen and Correa came on board earlier this year as part of a strategic group that invested C$500,000 in the company.
The new investment group has also provided McGrath with validation for his strategic focus on engineering and permitting. While not as exciting as the drill bit, McGrath believe's this strategy is the best path to de-risk the asset and add value.
"It's a compelling asset overlooked by the market," he said.