Precipitate poised for action

Precipitate Gold is set to have a memorable year with an earn-in agreement with Barrick Gold in Dominican Republic advancing, a mandate to chase down a merger or acquisition and a presidential election that could reinvigorate exploration in Dominican Republic.

April will see Barrick Gold complete the fourth year of a six-year earn-in agreement on Precipitate's Pueblo Grande concessions adjacent to its Pueblo Viejo gold mine in Dominican Republic. Barrick can earn a 70% interest by spending a minimum of US$10 million on the project and delivering a prefeasibility study (PFS). Barrick is expected to spend $5 million on exploration by April.

"The work has been a bit slow, but I am pleased with what they have been doing. They brought in low sulphidation and porphyry specialists to develop a new understanding of the targets."

"They initiated a drilling programme in [September 2023] and got part way through but then stopped to reevaluate. They saw interesting alteration in the core and want to do more detailed geophysics on a tighter spacing before restarting drilling," Precipitate Gold chief executive Jeff Wilson told Mining Journal.

That delay means Barrick is unlikely to hit its deadline for delivering a PFS to achieve its 70% earn-in. This raises the likelihood that the major would want to negotiate an extension, or possibly but out the project or Precipitate directly if it likes what it sees.

Barrick has drilled in an area called Pueblo Grande Norte, immediately northwest of the Pueblo Viejo pits, and is doing early-stage exploration on the other side to the east, where it has delineated some target areas.

"It's possible that Barrick may wish to renegotiate an extension, but as Pueblo Viejo is a tier one asset for them, I imagine its goal would be to attain a 100% interest. Barrick has expressed that it is expanding its exploration footprint in Dominican Republic, so maybe they see enough to approach us about a way to acquire more, or all of Precipitate's assets in country," said Wilson.

Election

A presidential election on 19 May will see the Dominican Republic's president Luis Abinader, bid for a second term, which could prove pivotal for gold exploration in the island state. When elected in 2020, expanding the gold sector beyond the Pueblo Viejo mine was one of his aims.

Aside from agreeing to an extension to Pueblo Viejo to extend its life beyond 2040, Abinader has been a barrier to further development.

GoldQuest Mining has been twiddling its thumbs since 2018 to receive final approval to develop its Romero project in San Juan region in the far west of the country. The Energy and Mines Ministry approved GoldQuest's exploitation permit in January 2018, since when it has sat on the president's desk for ratification.

It is believed Abinader's pen has been stayed for political reasons, specifically that he sees no political capital gains from allowing the project to proceed. With a two-term limit and an inability to run for office in 2028, he may be more comfortable making decisions and granting GoldQuest's permit.

In addition to being great news for GoldQuest, such a decision would also likely spur Precipitate to invest some of its C$5 million treasury on drilling at its Juan de Herrera property, including the  Ridge target, adjacent to Romero.

"If GoldQuest gets its permit, we can be drilling at Juan de Herrera very quickly as we have advanced targets, drilling permits, and our own drills," said Wilson.

M&A

Much of Precipitate's future amounts to waiting on the pleasure of other parties. However, sitting around is not in Wilson's nature. With equity markets for junior explorers still dire and many chief executives exhausted from the battle to stay afloat, Wilson sees Precipitate's $5 million treasury as leverage for another deal.

Precipitate negotiated a US$5 million cash payment and 3% net smelter return royalty from Barrick in May 2022 as it sought to acquire the land it required to expand Pueblo Viejo.

"We don't feel compelled to jump into something, but we are looking at how we can turn that cash into something to spend our money on exploration. The market continues to be soft; it is still a buyers' market. I would like to find something where we can be in control of our destiny. We are equipped to maneuver on any front without the overhang many companies have of needing a catalyst to go out and raise money," said Wilson.

Shares in Precipitate Gold are trading at 6c, valuing the company at C$8 million.