In the mining space, the usual business model pursued by companies is to identify and acquire mining projects and develop them leading to production or acquisition by a larger mining group for further development. That strategy has its own merits of course, as demonstrated by thousands of mining companies through out the history. Another equally attractive option is to make substantial investments in a series of mining companies that are pursuing the development of attractive projects. Apart from the obvious advantage of risk diversification, the strategy enables the holding company to generate high returns particularly if these investments were made at early stages of projects.
That is the business of model pursued by Canadian Venture and Frankfurt listed Zimtu Capital Corp. (TSX.V: ZC, FSE: ZCT1). The company seeks to invest in early stage/seed level opportunities in the resource space and actively participate in company building through the provision of advisory services connecting companies to properties of merit.
Zimtu has been making strategic investments in attractive mining companies over the last few months. Timing has particularly been interesting as the market melt down in the face of global financial crisis has presented opportunities to make investments at attractive prices. According to Zimtu management, the process is expected to continue during which Zimtu intends to build a portfolio of mining companies around its core holdings.
So what are Zimtu’s core holdings? Zimtu owns 3 million shares of Commerce Resources (TSX.V: CCE, FSE: D7H), 2.8 million shares of Western Potash (TSX.V: WPX, FSE: AHE) and 17 million shares of Triple Dragon Resources Inc. (CNSX:TDN, MU:T0R). Acquired at low prices during their initial stages of development, Zimtu is already sitting on a large profit. These investments have a current market value of approximately $7.8 million.
Zimtu is committed to its business model and the corporate strategy and has been actively engaged in mineral property transactions over the last few months. The latest is its involvement in two additional mineral property transactions. Zimtu was a property vendor for Butler Resources Corp.'s (TSX.V: BTD.H) ("Butler") acquisition of the Archie Lake Rare Earth Property in Saskatchewan as well as Ultra Lithium Inc.'s (TSX.V: ULI, DE: QFB) ("Ultra") acquisition of the Berland River Lithium Brine Properties in Alberta.
The transaction brings Butler and Ultra to Zimtu’s fold. For its participation in the Butler transaction, the Company will receive 1,000,000 common shares and $20,000 subject to exchange approval. For its participation in the Ultra transaction, the Company will receive 1,000,000 common shares and $25,000 subject to exchange approval.
The transaction also gives Zimtu an exposure to rare earths and lithium. The Archie Lake Rare Earth Property is located approximately 50 km east of Uranium City, Saskatchewan and 50 km south of Great Western Minerals' Hoidas Lake REE Deposit. The historic exploration on the area is summarized in February 1971 assessment reports (not NI43-101 compliant) on file with the Saskatchewan Ministry of Mines. Historic exploration on the property includes an airborne radiometric survey and follow-up prospecting and trenching over one of the anomalies identified. The assay reports from the previous exploration showed that ten samples analyzed by spectrographic analysis method showed elevated concentrations of rare earth oxides. Values ranged from 0.1 to 15.7% RE(2)O3 and averaged 4.04% RE(2)O(3).
The Berland River Lithium Brine Properties consist of seven permit applications encompassing approximately 650 square km located approximately 200 km west of Edmonton, Alberta. Within the region, formation waters of the Devonian-aged Woodbend (Leduc) Group as well as the Beaverhill Lake Formation have shown to contain anomalous concentrations of lithium, with values from 75 to 140 mg/l reported.
As part of the Company's business, Zimtu provides mineral property advisory services helping to connect companies with properties of interest. The Company is continually evaluating and acquiring resource properties to make available for partnership. In return, Zimtu acquires equity in a variety of mineral exploration companies. Benefits of this strategy are expected to materialise when markets recover. Zimtu’s investment in strategic metals such as tantalum and rare earths as well as the exposure it provides through the investment in Western potash leaves Zimtu a unique story.
About Zimtu Capital
Zimtu Capital is an investment company focused on the natural resource sector. The company utilizes its capital to create, invest in, and grow exploration companies and provides assistance with technical, governance and capital expertise to maximize their full potential. Zimtu currently holds investments in marketable securities, and has cash available for future investments and opportunities. Investors in Zimtu receive exposure to a diversified and growing series of early-stage resource investments, which would normally not be available to them.