Levon Resources: Silver, Zinc and Lead in Mexico

T.LVN, Levon Resources, silver, mexico, Ron Tremblay

One of the frustrations of exploration is assembling a highly prospective area, doing the work and realizing that there is a key piece of land which you don’t own. Ron Tremblay, CEO of Levon Resources, (T.LVN) was in exactly that position for several years.

“We didn’t have the central claim. We did a PEA without that land and we came up with an Internal Rate of Return of 18%. But we couldn’t access some of the best material.” said Tremblay.

Tremblay was referring to Levon’s 37,000 hectare, 100% owned, Silver, Gold, Zinc, Lead property in Chihuahua State, Mexico. The Cordero property is five kilometres from a major highway, has a power line running through it and is near a town with a population of at least 150,000 which has been supplying miners for centuries.

The last resource estimate was prepared in 2014 and disclosed; Silver: 488.5 M oz indicated, 44.4 M oz inferred Gold: 1.37 M oz indicated, 84,000 oz inferred Zinc: 9.0 B lbs indicated, 663.3 M lbs inferred and Lead: 4.7 B lbs indicated, 440.3 M lbs inferred. This estimate, and the subsequent PEA, was based on the results of 244 drill holes encompassing 118,937 meters of core drilling.

Even before Levon acquired the central claim on July 9, 2013, the Cordero project was a world-class silver resource and a huge zinc resource, with excellent recoveries in a good jurisdiction with great infrastructure. But the resource estimate and PEA came out during 2014 which was one of the worst periods the junior exploration market has ever experienced.

“The market was just not interested in precious metals,” said Tremblay, “So we didn’t continue to spend money on the property. Our share price had backed off and the market conditions were terrible.”

“A couple of years later the market showed signs of life and the silver price was firming. And we’ve seen an improved price for lead and zinc,” said Tremblay. “Now we have gone back to work.”

“We were able to purchase the central claim for 2 million dollars with no residuals.”

The order of battle is pretty straightforward, “We do more drilling and update the resource estimate. Then we do a revised PEA for the entire resource,” said Tremblay. “We expect that in the new PEA the stripping ratio will improve and we’ll have better grade material. If we improve the strip ratio to .8/1 we’ll improve our Internal Rate of Return. We have excellent metallurgy with high recoveries from testing. Grade is only part of the story.”

“We plan a mill throughput that will project at least a 25-year mine life,” said Tremblay. “We see 40,000 tons per day, ramping up to 80,000 tons after 7 years as the goal with an approximately 90% recovery rate. Our deposit does not need to be ground fine for processing.”

Tremblay is confident that with good recoveries, a low strip ratio and solid grades, the new PEA could see a much improved internal rate of return. “Compared to other, similar, projects our IRR could be substantially higher,” said Tremblay.

With the firming prices of zinc and lead, the Cordero property seems to check all the boxes. “We don’t need to raise capital,” said Tremblay. “We have approximately 10 million US in cash and marketable securities and our drilling program will cost 1-2 million per year. Essentially, this project is a call on silver. But we are not relying on just one metal, 9 billion pounds of zinc is very attractive.”

“What we have here is a big growth curve with no immediate need to finance,” said Tremblay. “But our expertise is in mineral exploration, we’re not miners. We will look for a merger partner with mining expertise.”

A deal with a major is the goal and Levon has been careful to keep its share issuance reasonable, “We have 121 million shares out with 40% being very closely held. I personally hold better than 10%,” said Tremblay.

With the revamped PEA anticipated before Christmas and the metals market and junior market strengthening, a merger scenario is looking very positive.

“Our job now is to make people aware of the project,” said Tremblay. “We are now ready to help them understand the true value of Cordero.”

That value could be parlayed into a straight buy out or a “share deal” but Tremblay is not interested in a joint venture. As the exploration work and the economic feasibility of the project are firmed up Tremblay is confident that a larger company will want to become the operator at Cordero. It is just a matter of the right company seeing the project as a good fit. And because Levon has plenty of cash in the bank, there is no need to rush. Finding the right deal to maximize shareholder value will take as long as it takes. Tremblay wants to do a deal, but only something that makes sense for all involved.


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