Red Metal Resources, Ltd. (OTC: RMESF)

Red Metal Resources Ltd. is a mineral exploration company engaged in the exploration and potential development of mineral properties in Chile and Canada. The company’s Chilean holdings consist of three projects: the Farellón project, which comprises eight concessions covering 1,234 hectares on the Carrizal property; the Perth project, which comprises thirteen concessions covering 2,044 hectares also on the Carrizal property; and the Mateo project, which consists of five concessions covering 182 hectares in the same region. In Canada, the company holds the Point Piche project, comprising eleven mineral claims and applications for eight additional claims located in the Timiskaming Graben approximately fifteen kilometres north of Ville-Marie, Quebec, and the Larder Lake project, which consists of 149 claim units totalling 3,246 hectares in the Larder Lake Mining Division of Ontario. All of these properties are held indirectly through its wholly owned Chilean subsidiary, Minera Polymet SpA. Red Metal Resources Ltd. does not conduct mining or mineral processing; its activities are limited to acquiring, mapping, sampling and drilling exploration targets.

As of the date of the filing, Red Metal Resources Ltd. has not generated any revenue because it has not yet identified a mineral resource of commercially exploitable quantity on any of its properties. The company’s prospective revenue would come from the sale of copper, gold, cobalt or other mineral concentrates to downstream users once a viable deposit is delineated. Potential customers include the Chilean national mining company ENAMI, which refines and smelts copper from small and medium scale miners in Chile, and the Dos Amigos heap leach facility situated about fifty kilometres south of Vallenar. In addition, the company could sell its output to base metal traders, international refiners and metal dealers should a marketable resource be established. To date, the company funds its exploration programs through private placements and the issuance of common shares, as seen in the recent acquisitions of the Point Piche and Larder Lake properties where cash payments were complemented by share issuances. The company maintains a minimal workforce, with Polymet employing one person and relying on independent consultants as needed, while most of its support such as vehicles, office space and equipment is obtained through short term contracts. The only long term financial commitments are royalty payments on four of its mineral concessions, payable only if exploitation begins, and annual property taxes on all concessions.

Red Metal Resources Ltd. occupies a junior position in the highly competitive mineral exploration sector, where it vies with numerous other companies for limited exploration financing, joint venture partners and technical services such as geologists, drill contractors and field supplies. The firm describes itself as one of the smallest participants in the industry and notes that it does not represent a competitive presence. Its competitive situation is shaped by its reliance on raising capital through equity markets and by the speculative nature of early stage exploration, which offers no guaranteed returns and exposes it to the same market risks as its peers.

The prospective customer base for the company’s future production includes ENAMI, which refines and smelts copper sourced from small and medium scale mining operations in Chile, and the Dos Amigos heap leach facility located southwest of Vallenar that processes copper ore via heap leaching. Should the company succeed in defining a commercially exploitable mineral resource, it would also look to sell to base metal traders and international metal refiners that purchase concentrate for further processing. No additional specific customer names are disclosed in the filing.