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METALLIC MINERALS | Exploring for High-Grade Silver in the Brownfields of the Yukon

FINANCING OPPORTUNTY FOR ACCRECREDITED INVESTORS

Greg Johnson, chairman and CEO of Metallic Minerals, sits down with Maurice Jackson of Proven and Probable to discuss his company’s silver exploration in the Yukon.  This is a 3 part series introduction into the value proposition of the Metallic Group of Companies. Important Note: Enclosed is a Financing Opportunity of Accredited Investors.
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http://www.theaureport.com/article/2018/10/24/exploring-for-high-grade-silver-in-the-brownfields-of-the-yukon.html

Exploring for High-Grade Silver in the Brownfields of the Yukon 
Contributed Opinion

Source: Maurice Jackson for Streetwise Reports  (10/24/18)

Maurice JacksonGreg Johnson, chairman and CEO of Metallic Minerals, sits down with Maurice Jackson of Proven and Probable to discuss his company’s silver exploration in the Yukon.

Maurice Jackson: Joining us today is Greg Johnson, the CEO and chairman of Metallic Minerals Corp. (MMG:TSX.V), which is known for high grade silver in Canada’s Yukon Territory.
Today’s interview will be the first of a three-part series, introducing the value proposition for the Metallic Group of Companies comprising Metallic Minerals, Group 10 Metals and Granite Creek. These are three separate leading exploration companies, each with a different metal of focus, but with a common approach to business under the proven management of the Metallic Group.

Today, we will focus on Metallic Minerals, a leading explorer of high-grade silver in the Yukon Territory. Mr. Johnson, for someone new to the story, who is Metallic Minerals? What is your flagship project? What is the thesis you’re attempting to prove?
Greg Johnson: Metallic Minerals is a leading explorer for high-grade silver, and we are exploring in the Keno Hill silver district of Canada’s Yukon territory. This famous silver district is one of the highest-grade silver producers in the world, producing over 200 million ounces of past production and hosting over 100 million ounces of current resources.
Over the past two years, Metallic Minerals has consolidated the district adjacent to Alexco Resources, and we are undertaking exploration along the extensions of the known productive structures that continue onto our land holdings. We believe that the Keno Hill Silver District has the potential to be a billion plus ounce silver district, and geologically is very similar to the Coeur d’Alene District in Idaho, which has produced over 2 billion ounces of silver from very similar style veins.
Maurice Jackson: Please share where in the Yukon the Keno Silver Project is located and provide us with some historical context.
Greg Johnson: The Keno Silver Project is located in the central part of the Yukon and was discovered after the famous Klondike Gold Rush with dozens of producing mines developed in the district over the years since the 1920s to the present.
Metallic Minerals has consolidated what was previously very patchwork land ownership, with more than 40 different owners in the district. It’s largely now Alexco and ourselves, with eight past-producing, high-grade mines on our holdings, giving us excellent exploration potential.
Exploration of the Keno District over the past few years has seen some major new discoveries including the Bermingham silver deposit by Alexco, which is probably one of the best new silver discoveries in the industry, by grade and quality. It really demonstrates the remaining potential in this proven high-grade district for new discoveries.
Maurice Jackson: Mr. Johnson, we’ve covered some good background on the Keno Silver Project. Walk us through the project.

Greg Johnson: I think a good way to start is by taking a look at a map of the lower part of the Yukon. You can see on this map, the Keno District is right in the middle of the Yukon, located on the highway. There’s grid power on site with a mill operated by Alexco Resources. The Silver Trail highway from the Keno area connects to the Klondike highway leading through the capital, Whitehorse, and down to existing port shipping facilities, in Skagway, Alaska.
All the infrastructure that’s needed to build a mine is already here in the Keno District. This project also sits within the traditional territory of the Nacho Nyak Dun First Nation, who have comprehensive cooperation benefits, agreements in place with both Alexco and some of the other most advanced projects in the region. It’s really an excellent place to be exploring.
If we take a look at a regional map of the district you’ll see the Alexco holdings in the light green and the Metallic Mineral holdings in the golden brown color, that really forms the core part of the Keno Hill Silver District, where these high grade silver veins occur.

Within the region, there are additional players, such as Victoria Gold Corp. (VIT:TSX.V), which is developing a large open-pit mine that’s currently under construction. To the north, Atac Resources, partnered with Barrick Gold on the Rau Trend property, which is adjacent to our Mackay Hill project, another high-grade silver project that we’ll talk about a bit later.
On this map you can more clearly see the road access in the area, with Keno city and the Keno Hill mill in the center of the district. This infrastructure gives accessibility to the entire property and will really facilitate a development of any resources in the future.
Alexco Resources built the current mill in 2010. You’ll see that the average grade is between 840 and 930 grams per tonne for the current mine plan for Keno Hill. This is the highest grade of silver in its class. At 3.5 to 4 million ounces per year, this would make this a top 10 silver producer in terms of silver production levels among listed companies.
<pYou’ll notice that the capex for the new mines is quite low at $27 million dollars, with an exceptional IRR, and that’s because these deposits are quite shallow. These deposits are very high grades, and the relatively low tonnage and near surface depths make for a low capital investment to bring these to production.
If we take a look at grade of the Keno District versus grade of the other primary silver mines in the industry, this chart compares the mine grades of those various projects.
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What you’ll see on the far right are a number of relatively low grade mines, then a large group of mostly underground, medium grade deposits. Then on the far left of the chart it highlights six silver mines that truly stand out in terms of their grade.
Keno Hill, is the second highest total grade, and the highest in terms of silver grade with the new mine plan of any of those deposits. What also stands out in this comparison is that it is located in Canada. It’s one of the few Canadian silver projects and thus among the lowest political risk.
The style of deposit and the style of the veining that we see at Keno occurs as high sulfide, silver, lead, zinc veins. These are structures that form in the key host rocks, such as the Keno Hill quartzite and greenstones. What you can see in this image is underground at the Bellekeno Mine and is fairly typical of the mineralization that you would see in the Keno District.

These are structurally controlled deposits and for exploration it is key to understand where the structures are. This tabular zone shown here would continue towards the surface, and it would continue at depth varying in terms of its overall width. These are very high-grade silver veins and that can run over 5,000 grams per tonne in the in the Keno District.
If we take a look at the geologic map of the entire Keno Hill District from Silver King on the West to Cobalt Hill on the East, it measures about 35 kilometers from end to end. The lines on map represent the 12 known mineralized structural trends and in the orange circles are the past producing mines that occur along those major trends like “pearls on a string.” You can see in yellow the recent new discoveries in the district, which highlights some of the new mines that we expect to see going into production in the near future. The small red circles represent high grade past producers that occur on the Metallic Minerals holdings.

Our lands are dominantly to the East, which is the lesser explored part of the district, but also continue to the South and West and in places internal to the Alexco holdings. We have focused on acquisition of key blocks of ground that have shallow past production and have potential for resource development.
Looking at a cross section across the district from West to East allows us to look at a slice through the geology and to see the regular nature of these deep seated structures that have formed vein deposits in the district.
The red stippled ellipses represent the mineralized zones particularly in the brittle quartzite host rock, which is shown in light purple. The Keno Hill quartzite is an excellent host for these structures to form these Keno type deposits.
It’s believed that underneath the Keno District we had metal rich intrusive bodies that were the source of the fluids that drove these vein deposits. As you move from west to east, you see a general decrease in the amount of exploration and production that we’ve seen in the district. The Bermingham Trend is the most developed with 160 million ounces of past production plus current resources, while the lesser explored adjacent Elsa and the Husky trends have about 35 million ounces each. As we continue to the east, you have the Flame & Moth Deposit, which is a new discovery in the district with about 50 million ounces, and then Bellekeno at about 25 million.
As you progress further east the areas had some shallow historical mining but, as mentioned, were these were mostly held privately and have not generally seen modern exploration. These areas have been subsequently consolidated under Metallic Minerals and have the same style of geology as on the western side of the district where most of the past production was focused. We are now exploring in these less explored areas as part of our Keno Silver Project.
Looking at a long section along the vein on the Bermingham Trend, we get a sense of the types of geologic settings and deposits that form across the district. In the center of this section are the Hector-Calumet Mines, which were the largest producers in the district at over 100 million ounces, of very high grades in excess of a 1,000 grams per tonne silver.

Notably, Alexco recently discovered the Bermingham deposit along this major structural trend, in an area of relatively modest past production just 1 kilometer from the Hector-Calumet mines. That deposit has now grown into some 50 million ounces, it still remains open at depth, and it has the potential to become perhaps even the largest deposit in the district.As an exploration geologist you get quite excited when a deposit of this quality and size is being found right near surface and only a kilometer from the largest producer in the district. This is a strong indication that this is a district that has excellent potential for new discoveries, as we continue to explore a lot on these trends.
As you go to the east from the Hector-Calumet, you get out of the quartzite hosted vein systems and into the greenstone hosted vein systems. This is a second brittle host rock that provides an excellent setting for developing high grade mineralization, and the Sadie Ladue mine is an example of a greenstone hosted Keno deposit.
These styles of deposits are the same styles that Metallic Minerals is looking at in on our ground in the other parts of the district. We have ground that is both east and west of the Bermingham Trend, and we have been prioritizing among various targets to pick the ones that we believe have the best potential to advance the most rapidly towards resource development.
We have three priority categories of targets at Keno that are at different stages of development. The most advanced targets are at the resource delineation stage, where we have high grade mineralization at surface, with trenching and shallow drill holes that indicate we have a mineralized system similar to the setting seen in other parts of the district. We’ve been drilling along those structures to determine the scale and potential of those targets at the Caribou, Homestake and Formo deposits.

We have six other targets where we have high-grade mineralization at surface with trenching and surface sampling, but these have not yet been drill tested. These targets are now refined enough that we’re ready to go in and drill test them as part of our 2019 program. Initially, we’ll probably drill four to six holes on these targets looking to determine whether or not these have potential to become large vein systems, similar to what we see in other parts of the district.
In addition, we’ve got about 20 earlier stage targets, where we are developing and refining our understanding of the system through tools such as a geophysics and soil sampling, trenching and mapping. These will be targets that we’ll be looking to advance to a drill targeting stage. Coming out of this program in 2018, we’re quite excited to be continuing our work, refining the targets that we have drilled and getting these initial step out drill test completed, on some of these already identified target areas.
Maurice Jackson: Mr. Johnson, you’ve demonstrated that Metallic Minerals is exploring for high grade silver in a world class district. Compare and contrast how shallow your deposits are compared to similar districts like the Coeur d’Alene District, Idaho, which was the start of many of the best-known silver miners like Coeur and Hecla.
Greg Johnson: This is an excellent point, Maurice. When we look at the Keno District, as I mentioned it is very comparable in terms of style geologically with Coeur d’Alene, but in the Keno district the deepest mining to date is only to about 300 meters from surface. The deepest drilling is in the new Bermingham discovery at 400 meters of depth.
By contrast, in the Coeur d’Alene District they’ve recently completed a new shaft to 3 kilometers of depth and region has produced over 2 billion ounces of silver. This highlights the potential in the Keno District as we continue to explore a long trend in depth and to really grow this similar style district beyond the 200 million ounces of past production and current 100 million ounces of total resources.
Maurice Jackson: The Keno Silver Project is considered a large brownfields exploration property, for the members of the audience that may not be familiar with the term brownfields. Please explain why this should matter to them.
Greg Johnson: A brownfield exploration property is a term that we use when you’re exploring an area that has had significant past production and discoveries. Many people may not realize that the majority of the exploration dollars that are spent each year in the mining industry actually go into expiration in and around existing mines, because that is one of the best places to make discoveries that can be rapidly developed and produced using the existing infrastructure in the area. The adage in the mining industry is the best place to find a mine is right next to an existing one.
In this case, in the Keno District, we’ve consolidated our landholdings alongside an existing mine operator, Alexco Resources, and we are exploring on those same productive geologic structures. This dramatically increases the probability of exploration success, and for making new discoveries. It also would allow us to utilize existing infrastructure in the district to facilitate rapid development of low capital cost mines.
Maurice Jackson: Metallic Minerals has another silver property in your portfolio, McKay Hill, where is it located from the Keno Hill Project and please provide us with some historical background.
Greg Johnson: The McKay Hill property is an earlier stage property, but it’s an opportunity that we see for another potentially district scale, high grade silver-lead-zinc property similar to Keno. It’s about 50 kilometers to the north up near Atac Resources’ ground; it was historically a high-grade producer back in the 1930s and the 1940s. What our work over the last couple of years has shown is that we’ve got a large number of veins in the area, that these come right to surface, and with the sampling that’s been done to date, we see the opportunity to develop a second project with significant potential here. We completed a work program in parallel to our Keno Silver Program this year on the property, and we’re expecting to be able to release results from that very shortly.

Maurice Jackson: How has the work gone this year at McKay Hill?
Greg Johnson: Well, it’s been an exciting year this year. This is a follow-up year from last year’s program where we did initial sampling in some of the known historical prospects. This year, our work expanded out across the property using geophysics, geochemistry and prospecting. We did work in new areas that hadn’t been previously recognized and expanded the known zones. What was exciting is that we had several new vein discoveries that we uncovered this year and we significant expanded the size of the historical central zone now approximating a kilometer in length and 250 meters in width. It really looks like we’ve got the potential for something that’s coming together as a bulk mineable target, as well as a number of other high-grade vein occurrences on the property that really justify additional work.
The results that we received last year showed similar types of mineralization to Keno with silver equivalent values over 1,000 grams per ton, and sometimes gold values exceeding 10 or more grams per tonne in some select samples. This is again a polymetallic system, it’s silver, lead, zinc, copper and gold. It’s an exciting opportunity earlier stage, and is indicating that this regio shows excellent potential for creating value, as we continue to explore and advance this portfolio projects.

Maurice Jackson: All right sir, now you’re wrapping up exploration for this season at the Keno Silver and McKay Hill Silver Projects. When should we expect to see the next results from this year’s drilling and target development work?
Greg Johnson: Much like last year, we would anticipate being able to release results over the next couple of months, as we receive them. Last year based on putting those numbers out, we saw quite a good response in the market and are encouraged as we continue to advance and highlight the potential on the property. We expect to have a series of news releases ahead for the company, and we look forward to being able to lay out those results and indicate the potential, the number of targets we’ve got and the opportunity going forward on these properties.
Maurice Jackson: Lastly, Metallic Minerals is also building a portfolio of alluvial gold production royalties in the Klondike Gold District. Can you tell us about that?
Greg Johnson: This is a fairly new opportunity for the company. Last year, we had a chance to pick up a large block of ground in the Klondike Gold District, the historical Gold Rush area where alluvial or placer production of gold in gravels was discovered in the 1890s. Since that time, production of gold has continued in the region, with large bucketline dredges through the 1970s, and later open pit mining along the major drainages. To date there’s been about 20 million ounces of gold produced in the region.

The Indian River drainages are now the single largest producer in the Klondike District, producing about half of all the alluvial gold in the Yukon. Metallic Minerals has been able to acquire a large block of land in this area, with the opportunity to be able to invite experienced placer mining operators to option this ground where we receive a 10% to 15% royalty on their production.
We completed two options last year and have already received some initial royalties from test mining in 2017 and 2018. This year we have leased another 6 miles out of 27 miles with exploration activities happening this year on those new leases.
We see this as an opportunity to start to build a production royalty business, that though modest to start with, over time we think can be fairly substantial for the company. It could allow us to build sustainable and cash flow while we continue exploration as one of the leading silver explorers in the Yukon.
In particular, the opportunity on Australia Creek is an interesting one, as this area was not historically mined and it is one of the few areas in the region where land packages of scale are available to be developed. These initial leases have established infrastructure that then allows additional high quality operators to come in to the upper parts of the stream. We are currently in the permitting process on three new operating areas, and we’ll have the potential for another 10 operators here in the next year or two. We are in discussions currently with a number of parties who are interested in acquiring ground in this highly prospective area.

It’s an exciting development for the company, and I think it has the opportunity to provide sustainability and potential cash flow for the company going into the next couple of years.
Maurice Jackson: I am quite impressed with the 10% to 15% production royalty that you’re receiving here. Share with us how are we able to accomplish this?
Greg Johnson: It’s a point that’s worth noting since, in the hard rock mining business royalties are often range from 1% to 3% range, the difference here is that the cost to run an alluvial mine in terms of the equipment and the operating cost and capital is much, much lower.
This means that operators can afford to pay a higher royalty for alluvial production because there’s not as much capital investment and the timeline to permit one of these projects is months as compared to years for hard rock deposits. That allows the opportunity for both higher royalty payouts and a faster pathway to production on these in comparison with a royalty for a hard rock deposit.
Maurice Jackson: This really speaks to the business acumen of Metallic Minerals. What is management’s philosophy? Are you looking to build mines or are you focused on exploration?
Greg Johnson: On the silver side of the business, we’re very much focused on the opportunity to make discoveries and to rapidly advance those to resource definition. We think that this stage is one of the greatest periods for value creation and represents opportunity for investors to benefit by being part of it. It’s not uncommon that the value that’s created in that initial discovery and resource development phase may not be exceeded again until these projects actually go into production, often times many years later.
This is a team that’s been serially successful, in terms of finding large deposits and developing name those and advancing those. We really see that as the opportunity for our investors to participate in that process.

On the alluvial gold business, what we’re focusing on is acquiring large land packages, getting them permitted, and then inviting experienced operators to come in and pay us a royalty on production. So it’s really a combination of both value creation through new discoveries and production royalties that define the opportunity with Metallic Minerals.
Maurice Jackson: Switching gears, I learned from Rick Rule and Doug Casey that the people running the business are equally, if not more important, than the latent material on the ground. Mr. Johnson, please introduce us to your board of directors and the management team and what unique skill sets do they bring to Metallic Minerals?
Greg Johnson: I think this is really an exceptional group of explorationists and professionals. We’ve worked together in the past with other companies. Many of us worked with the well-known large producers such as Barrick Gold and others, and were key members of leading explorer/developers such as NovaGold, Trilogy Metals, Wellgreen and Northern Free Gold. This is a group that has been credited for the discovery and advancement of some of the largest deposits in North America, including the Donlin Creek Gold Deposit in Alaska, now over 40 million ounces of reserves; the large Galore Creek Copper, Gold, Silver Deposit in British Columbia; and the Wellgreen Platinum Nickel Copper Deposit in Yukon. This is also a group that has been involved in permitting mines in Yukon, and has been recognized for its environmental stewardship and our approach to business.

It’s exceptional to see an explorer have the depth of experience that we have in this team with many people having 20 to 30 years or more experienced in the industry. I think it really was an opportunity for a great group of people who’d worked together in the past to be able to come together to work on some truly exciting projects. Where they saw the potential to create value, to be an equity shareholder and to have some fun working on some really exciting projects.
Maurice Jackson: Let’s talk about the stock, tell us about your share structure, options, warrants and cash position.
Greg Johnson: The company is a relatively new company, founded in middle of 2016. Now, we’ve got 61 million shares outstanding, and with options and warrants, it’s about 87 million fully diluted. Current market capitalization is approximately $15 million and we’ve got about $1.3 million in cash as of our last quarter, and we’ve got about $1.8 million in callable warrants that are deep in the money, and we are debt free. We’ve got a good tight share structure, we’ve got probably trading something on the order of about 1 to 2 million shares a month.

On a relative trading basis, you will see that the Metallic Minerals has held up well against both the Silver ETF as well as the GDXJ shares, the Junior Miners ETF. I think that’s largely because our shareholders recognize the long-term value in the Keno Silver district and the potential opportunity to participate in that discovery process. I think that we’ve been able to demonstrate value creation despite a very challenging market, through the results we’ve had to date and look forward to continuing to deliver on those kinds of results.
Maurice Jackson: What was your budget this year on Keno Silver and MacKay Hill?
Greg Johnson: We spent about $2 million at Keno Silver, and about $500,000 at Mackay. At McKay, we are advancing towards a drill targeting stage and should be ready to drill for 2019. At Keno, a combination of target development and refinement, and drill testing at the three most advanced targets on the property, where we’ve done step out drilling to continue to understand the scale and potential of those opportunities.
Maurice Jackson: Tell us about your burn rate.
Greg Johnson: Our burn rate is quite modest. One of the benefits with the Metallic Group of Companies is that we’re sharing an admin team and office space. We’re really focused on keeping costs low, terms of running the company, being able to focus money in the ground. We’re probably running at about $50,000 a month, including our technical team, to run the company, and we’ve got some opportunities to reduce those numbers further. This is really all about trying to focus funds on doing value creating activities, and that’s really money in the ground and money at the drill bit.
Maurice Jackson: Do you have institutional investors at this point?
Greg Johnson: Even though we’re a relatively newer company, we do have several mining focused institutional funds. We’ve got one group out of Europe already and two of Toronto, making up about 11% of the shareholders, and then we’ve got about 30% of the shares held by high net worth individuals, and management and board is one of the largest holding groups at 25%.
Maurice Jackson: What is the float?
Greg Johnson: We are probably looking about 30 million shares and probably significantly less as the actual available stock that’s out there for trading. It’s fairly tightly held, though we have pretty good liquidity for a smaller company in the sense that we’re trading at a couple of million shares a month on most months.
Maurice Jackson: All right, sir, you survived, multilayered question here. What is the next unanswered question for Metallic Minerals? When can we expect results and what will determine success?
Greg Johnson: The next few months should be an exciting period for the company. We’re expecting news results from both Keno Silver and MacKay Hill coming out over the next couple of months, similar to last year. There has been considerable progress on both projects and we continue to develop and advance new targets at both.
In addition, with the expansion of the resource at Bermingham that was announced recently by Alexco, and with them advancing that into production very shortly, that should draw attention to the district over the next six months and should be a positive catalyst for Metallic Minerals.
The Keno Silver project is an ongoing opportunity for value creation. It’s a very large land package, in 2019 we’ll have nine targets that are a drill ready, including the three that are at the early resource delineation stage. We’ve got another 20 targets that were advancing towards drill testing. This is a property that’s got a long history of discovery and production and we will continue to be focused on building out that value for our shareholders.
We’re also very bullish on the silver price. Looking at where we are in the metal price cycle, and the historic returns that have been seen particularly in the silver sector coming out of these market bottoms, we think this is an excellent time for investors to be looking at high quality names in the precious metal space, and particularly in silver.
Maurice Jackson: Mr. Johnson in the introduction we alluded to the Metallic Group of Companies, please introduce us to them.
Greg Johnson: In early 2018, Metallic Minerals and Group Ten Metals announced they were forming a collaboration as part of the Metallic Group of Companies, with some common directors between the companies and a similar approach to business. Group Ten Metals is focused on platinum and palladium along with nickel and copper, in the Stillwater District, of Montana. In October, we announced the newest company to join the group, Granite Creek Copper, as a newly launched copper focused exploration company with an exciting project right next door to a high-grade copper producer in the Carmacks District of the Yukon.

These three companies share a common philosophy and approach to business; all three have focused on acquiring large blocks of brownfield holdings during the low part of the metal price cycle next to operating mines so that the infrastructure and facilities are already in place. All of these show multiple targets that have potential for new discoveries, with targets that start at surface.
With these operating mines next door, it really provides an opportunity to be able to fast track development on these targets by utilizing the existing infrastructure in their respective districts. There is the potential for partnering with those operators or if we’re successful in discovering very large scale deposits, which we believe is the potential in these properties, to be able to see perhaps even the entire district become a target for consolidation by even larger companies.
The Metallic Group of Companies are reducing costs by having a common admin group and CFO, as well as allowing us to have a deeper technical team with some specialists that can be shared across the group.
It’s an exciting group of companies with a common philosophy. Our objective is to build real value for the Metallic Group investors going forward.
Maurice Jackson: What did I forget to ask?
Greg Johnson: Well, I think that was a pretty comprehensive discussion. One last point that’s probably worth mentioning is regarding our newly launched copper exploration company, Granite Creek Copper. We have just announced that we are undertaking an initial offering on Granite Creek Copper, and interested accredited investors can contact us if they would like to get additional information on that private placement opportunity.
Maurice Jackson: If one wants to get more information on Metallic Minerals, please share the website address.
Greg Johnson: Our website is http://www.metallic-minerals.com.
Maurice Jackson: As reminder, Metallic Minerals trade the TSXV symbol MMG, and on the OTCQB symbol MMNGF. For direct inquiries, please contact Chris Ackerman at 604.629.7800 Ex.1, he may also be reached at info@metallic-minerals.com.
Last but not least, please visit our website www.provenandprobable.com where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com.
Greg Johnson of Metallic Minerals, thank you for joining us today on Proven and Probable.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.

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Precious Metals

HEDGELESS HOURSEMAN | Novo (Pilbara): More Than Meets the Eye

The Pilbara story has changed quite a bit in 2018 and I thought it might be good to recap some of the biggest changes (so far) and cover my personal view in terms of value proposition and Risk/Reward (mostly from the stand point of Novo Resources).

On the corporate/insider action side we have seen quite a bit of action, including the following for the Pilbara juniors:

 

On the geological/exploration front there has been quite a few developments as well:

 

1 – The Karratha Gold Project (West Pilbara – Mount Roe Conglomerates)

We have learned that the upper Comet Well/Purdy’s Reward gold bearing conglomerate horizon is much more nuggety than the lower (well organized and thicker) Comet Well horizon(s), and that even tens of 5 tonne bulk samples is probably not enough to give us an accurate number in terms of average grade. An approximate “true grade” number will probably have to wait until we are trial mining this horizon.
It seems Novo has been successful in their previously stated goal in terms of try to locate/track the conglomerate through drilling:

“Hennigh said core-scanning to prove the continuity of the conglomerates was proving “very effective” and the company was encouraged by ore-sorting technology.”
Source

In light of the previous success with the first “ore sorting” machine that SGS used for the upper CW/Purdy’s material, Novo has already contracted ore sorters from Tomra, and Quinton Hennigh made the following remarks recently:

“Hennigh said core-scanning to prove the continuity of the conglomerates was proving “very effective” and the company was encouraged by ore-sorting technology.
“We see ore-sorting as a very, very important means to treat this ore when the time comes,” he said.”
Source

2- Beaton’s Creek (East Pilbara – Hardey Formation Conglomerates)

As some may know, Novo signed an MOU (Momerandum Of Understanding) with japanese mining giant Sumitomo to “further develop the Beaton’s Creek project” in July of last year.
This tidbit was included in the News Release:

“Sumitomo will provide certain of its personnel to assist the Company with the preparation of its internal study, including basic engineering design work and other studies, and permitting (the “Study”).  The Study is being targeted for completion in late 2017Once the Company and Sumitomo have completed the Study to both parties’ satisfaction, Sumitomo will have the right to elect to participate directly in the Beatons Creek project and/or make an equity investment in the Company (the “Option”).”
Source

Since then, a lot has happened. Late last year, Novo went back to Beaton’s Creek (late 2017) on the back of their new realization in terms of adequate sampling size after talking to a coarse gold expert, and this time they had the funds. This was a few months after Kirkland cashed up the company big time with $56 M. Keep in mind that the 5 tonne bulk samples they are doing over at Karratha are very very expensive ($40,000 per sample!) and at least similar bulk sampling was probably not economically feasible for Novo before this, given the many years of abysmal market conditions and thus sparse funding options for pretty much all juniors.
Their coarse gold expert suggested that Novo should take at least 2 tonne bulk samples from Beaton’s Creek, which is still much less nuggety than Karratha, and might be a tell that 5 tonne samples for upper CW/Purdy’s might have indeed been a bit “greedy”. Remember, 5 tonnes was the absolute minimum sample size that the expert suggested for Karratha.
Anyway, what Novo seems to have discovered is that the grade estimation based on drilling for Beaton’s Creek might have been severely understated due to the nugget effect. In fact, according to Novo’s preliminary findings, Beaton’s Creek Hardey Formation conglomerates might be up to twice as rich compared to the original resource estimate.
As anyone will know, IF that kind of bump in grade turns out to be close to being true, that completely changes the project and economics big time. 
During Novo’s latest presentation from the Denver Gold Forum, the presentation started out with Quinton showing drone footage from Beaton’s Creek and a new cross section with the gold bearing reefs. Quinton also mentioned that the company has an office and currently 12 people stationed in the town of Nullagine (The Beaton’s Creek project is located right next to the town).
Sumitomo MOU —> Kirkland cashes Novo up —> Goes back to Beaton’s Creek late last year with a full treasury and takes large bulk samples —> Discovers that due to the nugget effect, the grade might be up to twice as high —> The Sumitomo/Novo study scheduled to be released around the same time got pushed back… For perhaps obvious reasons? —> Novo continues bulk sampling activities through out the year —> Now we have 12 people stationed at Nullagine —> New Beaton’s Creek resource expected in the coming weeks (HH: We got it but only for the 2017 work!) —> Quinton starts off the Denver presentation with Beaton’s Creek.
… Can anyone see an interesting pattern emerging as to how good, and by some people conveniently “forgotten”, the Beaton’s Creek project might be? And barely anyone even acknowledges its existence judging by the discussion, or rather lack of discussion, in the forums. This inability by the market do focus (and thus put value) on more than one thing is the whole reason why spin offs usually work out so well. Depending on how good the new Beaton’s Creek resource will look, one can then play with the thought in terms of what a Spin Co with the Nullagine assets would be worth, and then subtract that from Novo’s enterprise value of about US$260 M. If the market is pretty much oblivious to the potential value from Beaton’s Creek alone (again, judging by the almost non existent discussions regarding the project), then what part of it is actually reflected in the Enterprise Value of Novo, if at all? Seriously, stop, think and try to recall when the focus wasn’t only on one thing and one thing only (Karratha) by most longs and ESPECIALLY the bears/bashers. Also, do you remember any positive market reaction after Quinton stated that Beaton’s Creek might be twice as rich? I don’t. Did you see any particular reaction when the big land package in Egina was announced and explained? I remember some big bulk buying but no real change to the SP… Food for thought. I rest my case. 
In the Novo News Release that was out just two weeks ago (Oct 10), we got an update to the Beaton’s Creek (BC) resource that ONLY included work from 2017. The larger BC bulk samples that might reveal that BC’s real grade is up to 100% higher than has been reported via drilling are still in que. Think about this for a minute. The SGS debacle did NOTHING for the long term value proposition. The gold is still there, and it looks to be twice as rich (4-5 g/t perhaps). We all know that the market (especially when it’s depressed) is extremely impatient, and will often over-discount a short term hurdle, for the benefit of patient investors seeking outsized returns. There is no way that targets of this scale lose lets say 50% of their long term NPV just because a couple of first ever bulk samples got delayed for multiple months.
Furthermore, the News Release included indicative  production costs numbers for Beaton’s Creek and they were superb:

 
… Thus, the preliminary or “indicative” production costs totals around US$20.4 per tonne, and recoveries are simply outstanding!
So lets see what the gold value per tonne might be and what indicative operating margins BC might have:
Well, lets start conservatively and use a grade of 2.3 g/t and 90% recoveries (2.3*0.9=2.1). That comes out to US$81.9 (worth of gold) per tonne based on the current gold price of US$1,231/Oz, and would thus result in an operating margin of  75.1%(!). In other words it would (preliminary) cost 306 USD to produce an ounce of gold worth US$1,231 today (20.4*31.1/(2.3*0.9)). Such an operation would have a lot of room for unexpected costs, and would put BC down as one of the lowest cost operations in the world.
Now, lets imagine the real grade is closer to 4.5 g/t, and remember, the production costs in terms of US$/tonne should be roughly the same:
4.5 g/t and 90% recoveries = 4.1 recovered grams of gold per tonne of rock, which is worth $162.3 USD. In this scenario, the operating margin would be 87.4%(!). In other words in would (preliminary) cost 154.7 USD to produce an ounce of gold (20.4*31.1/(4.5*0.9))… Yes, that’s US$154.7 per ounce, and would possibly be one of the lowest cost operation in the world from an operating costs stand point!

  • Lets imagine that the original plan of having a relatively modest 2,000 tpd operation going at BC for a minute. In that case we could be looking at something like this:


 
Even if we take the low ball estimate of 2.1 g/t of recoverable gold and almost doubled the operating costs to US$600/Oz, then a 2,000 tpd operation could theoretically spit out US$27.7 M in annual free cash flow. Now consider the fact that ALL of Novo’s projects are TOGETHER valued at US$226 M based on Friday’s close.
If we instead look at the 4.1 g/t of recoverable gold scenario and roound UP the costs to US$200/Oz, then a modest 2,000 tpd operation could theoretically spit out a whooping US$88.3 M in annual cash flow from BC alone! That would put our current EV/Future FCF (excluding dilution) at 2.55 (226/88.3).
Are we really paying anything for the potential ultra district scale upside in all our different other targets if those estimates are even close? What if Novo would put up a 4,000 tpd operation instead? Food for thought.

  • below is a crude NPV table that assumes
    • a whooping US$100,000,000 in CAPEX for a pretty modest 2,000 tpd operation:
    • Uptime of 325 days/year
    • Discount rate of 5%
    • Mine life of 15 years
    • AISC = Operating costs in this case.

 

Beaton’s Creek NPV scenarios. Source: The Hedgeless Horseman.

In the table above you can see the that all scenarios highlighted in GREEN would mean that Novo’s current Enterprise Value (Market Cap – Cash) is more than covered by the theoretical NPV of Beaton’s Creek alone. The scenarios highlighted in RED represents the production profiles for Beaton’s Creek that would partly cover Novo’s Enterprise Value. As you can see, you can downgrade the theoretical scenarios a lot before we would start to actually pay for any of the blue sky upside, for any of our targets outside of BC. Personally I am comfortable with using a conservative scenario of 4.1 g/t and operating costs at US$500, which would still leave a lot of room for downside before I take on ANY exploration risk. In fact, even if you average the 2.1 g/t and 4.1 g/t scenario with the parameters described above, the average still comes out north of our current EV… And few even knows BC exists it seems like(!).
Let me show one more slide just to prove my point. Below are different scenarios but this time using a discount rate of 7% and Uptime at 250 days/year:

Beaton’s Creek NPV scenarios. Source: The Hedgeless Horseman.

In the low balling scenario for BC, and even upping the operating costs to US$500/Oz, the operation would still pretty much make up 50% of our current Enterprise Value. THEN we can start talking about what fraction of potential is priced in from the rest of the basin. In the preliminary “true grade” scenario for BC (which in turn might be low balling it), the costs would have to be over 4.5 times higher than Novo believes in order for BC not to theoretically cover our current Enterprise Value.
This is why I don’t get the sentiment. Some people seem to think that there is some large percentage of blue sky potential already priced in, and specifically the MYTH that is ALL about the Comet Well “patch”. What is priced in outside of the low ball BC scenario is my question? The way I look at it is that when I topped off my holdings last week, I was getting 13,000 km2 of prospective ground with MULTIPLE district scale target potential for FREE(!).  Basically, in my view I wasn’t taking much risk (if at all) in terms of how CW, rest of the Mt Roe, rest of the Hardey Formation, Egina and/or the potential source would pan out… This kind of R/R is why I simply love Novo. Market seems to have no clue, and that is what I have been taking advantage of. The hefty decline doesn’t scare me, it just makes it even more obvious that the market, your average retail investor and/or pundit REALLY has no clue. Novo used to be cheap, now I feel like I am literally stealing an entire basin.
How many “bashers” or “pundits” even mentions Beaton’s Creek? And if they do they pull out some ridiculous numbers out of their ass with nothing to back it up (I am looking at you Topend). The results (intentional or not) is that they make retail investors actually believe that Novo is MUCH riskier than it is at face value. They make people believe that a dozen bulk samples out of one potentially basin wide Mt Roe prospect (CW) will dictate Novo’s future, when in reality, nothing could be further from the truth. This is probably why the bashers/bears constantly scratch their heads as to why Kirkland Lake doubled down at $5/share not long ago. No wonder, since most seem to have no concept of Risk/Reward or what Novo’s total value proposition is. I know one entity that does know it very well though… Kirkland Lake.
Most “bashers” for lack of a better word always seem to focus on one thing at a time, and they keep harping on it… Find an obstacle and then press on it and keep pressing on it in order to keep all forum discussion on that subject (hurdle/problem). They always stick to what might go wrong, but never in their life are willing to talk about what it would mean for Novo and the Pilbarians if the insiders are actually correct in being this bullish, and not to mention what amount of “risk” is already priced in (…and then some). Now who has got a better grasp on the prospects and value proposition? And yes, they got serious skin in the game and thus are risking millions to go with their investment thesis…
I include both the risk and REWARD side of the equation. If you include only the risks, then you are either a basher or ignorant and have no business handling your own money. IMHO.
If Novo and the Pilbarians unlock this 600×300 km gold field(s), then the sky incalculable, and if by some chance, every project, every area and every geological target turns out to be completely and utterly worthless by the time they have burned through all their cash and BC is set on fire, then yes, the downside is theoretically 100% as with any investment. Odds of all that happening? Slim to none in my book.

3. Egina

(This section that will cover the district scale “Egina” typ targets is still in the works)
 

RISK VERSUS REWARD

Lastly, keep in mind that the Pilbarians are INTERNALLY DIVERSIFIED in terms of both different types of targets AND areas.

  1. (Sub) Mt Roe conglomerates as evidenced by numerous Pilbarians and historical reports
  2. Hardey Formation conglomerates as evidenced by Beaton’s Creek, other Pilbarians and historical reports
  3. Modern gold bearing gravels derived from all of the above and possibly more as evidenced by Egina, Friendly Creek and countless historical reports
  4. Structural gold as evidenced by numerous Pilbarians
  5. Other metals as evidenced by Artemis most recently

Burn through all cash and every current project and all other prospects must turn to crap, and yes, then you might theoretically have your 100% loss. Not only that, but given the fact that multiple juniors are basically working on different parts of different macro prospects, they must all come up empty for there to be no implied value on any Pilbarian in terms of Mt Roe, Hardey and gold bearing gravels.
Odds of that happening? Food for thought.
And by the way, don’t buy into anyone telling you that they know what lies beneath the surface in Pilbara. I have heard from many different people from down under just how UNDER explored the whole craton is. It is huge, rather remote and often a very hot place. There were not even any conglomerates mapped in Karratha for example, and now with Novo’s lead, the Pilbarians are turning up new conglomerates and finding gold all the time.
So to repeat, just based on what has been announced so far, Novo’s current projects consist of:

  • 1. The Beaton’s Creek Project – Hardey Formation Conglomerates
    • Which got Sumitomo involved and is getting a new resource any day/week now.
    • With excellent recoveries and is free digging that can be mined via a bull dozer.
    • Wide open system that is drillable (although grades might still be understated through drilling)
  • 2. Karratha Gold Project – Sub Mt Roe (hard rock) conglomerates
    • Including the thinner and very nuggety Upper Comet Well sequence that is proximal to a tuff marker horizon.
    • Including the thicker and lower less nuggety (well organized) bottom Comet Well (Cannonball) sequence.
    • Can possibly be miner at very low costs with the help of ore sorting machines (Machines already contracted).
    • Wide open system which is not drillable (at least at CW/Purdy’s).
  • 3. Egina Gold Project – Near surface gold sourced from eroded conglomerates etc
    • Modern near surface gravels that contain both nuggety and fine gold.
    • Can possibly be mined at very low costs (bull dozer and gravity separation).
    • Wide open system with over 100 years of reported mining activity and over 100 known sites of mining activity known today.
    • Possibly drillable due to the fine gold, but perhaps overkill.

… Out of the three projects above, Beaton’s Creek could be considered well advanced since it has an existing resource and will be getting a new one with the help of bulk sampling instead of only drilling. The Karratha Gold Project will (in my opinion) most likely see trial mining 2019 on the back of a mineralization report. Egina already has some existing mining leases and I think it will be in trial mining/production phase in H1 2019.
One ought to remember that these projects are tiny fractions of the overall 10,000 km2+ land package that has been staked by Novo and the other Pilbarians.
The big picture unknowns for the 600×300 km basin are:

  1. How big is the Sub Mt Roe mineralized gold system?
  2. How big is the Hardey Formation system?
    • Is it similar to Beaton’s Creek in the West and Central Pilbara as well?
  3. Are there more systems?
    • (The West Mt Roe conglomerates are believed to have been sourced from older conglomerates.)
  4. What, where and of what quality is the source(s) that created this seemingly 600×300 km basin wide gold anomaly?
    • Carbon leader type gold?
    • Basin wide hard rock sources?
    • A combination of the two above?
      • Most of the Pilbara craton has experienced metamorphism.
      • It is believed that there has been subduction zones active during the Archean.
      • Plenty of shears and faults.
      • Some believe that Pilbara experienced at least two major meteor impact events.

Novo is thankfully not alone in terms of proving up the very UNDER EXPLORED Pilbara Craton. We get news almost every week from Pilbara juniors that includes nugget finds, gold confirmed in stream sampling and/or
If things turn out well in the short to mid term, then Novo might see cash flow from two projects sooner rather than later, and hopefully begin to scale up from that point forward. If both these targets are anywhere near as high margin as some have theorized, then we can potentially be seeing some material free cash flow and thus be self funded starting next year already. It is also worth noting that given the sheer potential scale of both systems, if proof of concept is achieved, such operations might be workable for many many years to come. That is why I think that as soon as/if trial mining shows that one or both tiny slices of these “gold fields” are indeed economic, and preferably very high margin, then one can start theorizing at least a range of potential NPV scenarios for [X] km2 of similar strata.
In short, I see Novo and some select Pilbara juniors as (in my opinion) cheap options on one or more gold systems proving to be economic and if one or more prove to be, the potential scale is off the chart. With the Pilbara juniors trading for peanuts and Novo trading at an EV of about US$226, one has to wonder what part of success is priced in for one, two, three or more of the gold systems on top of yet undiscovered systems such as the source(s)? In my personal view, these are crazy cheap valuations given what it would mean if the insiders and their bullishness proves to be correct. With Kirkland buying more Novo at $5 just a couple of months ago, I would assume they are either stupid or the market has no clue how to put value on such a vast and complex case as Pilbara. My view is that the market is suffering from tunnel vision and depressed overall sector sentiment. I really get the sense that many view Novo for example as some kind of super risky “one trick pony”, when in fact it has loads of cash, multiple projects (one advanced), near term cash flow potential, bigger blue sky scenarios than any known gold junior in the world and top quality management/backers with skin in the game.
 

“Price is what you pay. Value is what you get” – Buffet

 
Current Pilbara junior favorites are:

  • Novo Resources
  • Pacton Gold
  • De Grey Mining
  • Kairos Minerals.

There are more Pilbara juniors with prospective ground, but when taking into account the blue sky potential, management and backers, I would say those four comes out on top in my opinion.
When I take into account the multiple project diversification aspect and consider the potential blue sky scenarios I can’t help to feel that the valuations of most of the juniors already have discounted an obscene amount of risk. Are you paying for any “unconventional” upside in De Grey for example? Food for thought.
When you divide Novo’s current EV by three (number of current projects) you get US$75. Then lets play with the thought that the US$75 number represents the current price for 1) The Mt Roe gold system, 2) The Hardey Formation gold system and 3) The Egina gold system…
Is the CW/Purdy’s and the tens of kilometers of nearby strike potential as “confirmed” by Brent Cook and Kirkland Lake only worth US$75 M?
I mean even Cook stated that there are “tens of millions of ounces” in that area alone, and IF Moriarty and Barron are even close to being right, then that figure wouldn’t even reflect 500 Toz of high margin gold.
Is the potential for Egina and all similar “terraces” that covers a huge area (where there used to be conglomerates etc) only worth US$75 M?
I mean this is perhaps the cheapest form of mining that exists. Will all these flats host gold in economic quantities? No, but you only need a fraction of the area to be economic in order to rack up US$88 M in discounted free cash flow. Especially given the probably rock bottom CAPEX.
Is the potential for the Beaton’s Creek system and the already delineated Hardey Formation target to the north of it only worth $US75 M?
I mean Beaton’s Creek was apparently looking good enough for Sumitomo to get involved, and that was before Novo realized that the grade might be significantly higher, and it’s wide open. And as stated above, QH disclosed that they have already delineated considerable Hardey Formation strike in another area to the north of Beaton’s Creek. Also note that Beaton’s Creek ore is free digging, has excellent recoveries, is wide open and they seem to have found at least one additional Hardey Formation system already. How much of all that is priced in?
I would argue that any of these gold systems at least has the potential to overshadow US$265 on a stand alone basis, let alone US$88. The important thing to remember is that we are not talking about a few kilometers of strike potential here, we are talking about tens or hundreds of km squared. They are unconventional in every aspect of the word, and who know, it might end up being the production margins that is the real story and not even the sheer scale. What I mean by that is that lets assume that the average $AISC for gold production in all conventional forms is US1,000 and the average Free Cash Flow is US$200/Oz when gold is at US$1,200. Now lets play with the (very speculatile) thought that Beaton’s Creek can produce gold at US$500/Oz, CW at US$400/oz and Egina at US$300/oz. That in turn would mean that these ounces in the ground should be worth 4 times as much as conventional ounces on average. This is all very speculative, but if we get signs of this panning out in the trial mining, then the valuations above will look ridiculous in hind sight, in my humble opinion.
With all of the above said, this is mining and nothing is easy, but the point I am trying to make is that I consider much of the risk to already be priced in and thus you are not paying for much of the upside potential. For example, if De Grey Mining’s valuation does not reflect much more than their known hard rock gold, you get all conglomerate potential etc for free. If Novo’s Enterprise Value reflects 2-3Moz of AVERAGE margin gold in a tier 1 jurisdiction, then how much are you paying for thousands of km2 of land with potential for multiple (thus different/diversified) gold systems? Any stock can go to zero, but compare the valuation to what the upside potential is and you will be hard pressed to find something similar in my opinion. On the same note, I think it is a stretch to think that Kirkland invested an additional $20 M at $5/share with the expectations of Novo ending up with only 2-3 Moz based on what is known at this early stage even. I’d side with Kirkland Lake in terms of Novo being at LEAST worth $5/share given what I have discussed in this article over the market’s view that the R/R is worth $2.7/share, and that is AFTER the Egina announcement.
Any and every stock has a theoretical downside of 100%, but there are no gold juniors (that I know of) out there with the upside potential that matches some of the Pilbara juniors and their multiple (super) district scale targets. If they unlock 1% of Pilbara, that’s pretty much blue sky already. The unparalleled size potential is one thing, and the other is margin or free cash flow potential. We are already beyond spoiled when it comes to size potential, but if we get proof of concept of this to be as low cost operations as some speculate, then those two factors should be multiplied. For example, if the Pilbarians are able to delineate 10 Moz from a few km2 down the road (to start with), then that is obviously massive in its own right. BUT, if they show that the margins are say three times better than conventional ounces, then I would argue that their deposit(s) is equivalent to 30 Moz of conventional gold (10×3). Do you see the potential upside scenarios? The market is pricing in very little of anything, and we already know Cook and Kirkland have previously stated that there are tens of kilometers of strike from the Mt Roe conglomerates (Egina type included?) alone, and we know Moriarty and Barron believe this will be dirt cheap to process. Given that nothing close to even a few million ounces of high margin gold is priced in for the Pilbarians, you are not even paying for that upside.
And people claiming that “the consensus” is that there are tens of millions of economical ounces are out of their minds. The market IS the consensus and they are valuing for example Novo at $2.26 and not to mention the other juniors, while insider and main bull Kirkland Lake paid $5 just a couple of months ago per share of Novo. Since that purchase, Egina was announced, and the stock dropped 20% because; 1) Hot money didn’t get their assays and 2) QH said that the upper and most nuggety horizon would produce volatile assays with 5 tonne samples. Anyone thinks that this nuggety nature was a surprise for Kirkland when they bought at $5? Please.
As a matter of fact, the bears ARE the consensus, they just don’t realize it since they in my opinion 1) Only focus on ONE small patch from ONE of the gold systems, 2) Doesn’t seem to have run any numbers and what different success scenarios would mean for the Pilbarians, and 3) Doesn’t realize that the market has discounted the Pilbarians down to the bone already.
… Just go over the forums for the last couple of months and I think you will agree with me. 
When you hear people say that they don’t think any of the gold in Pilbara will be economical do extract, one might ask how anyone can possibly know that since we haven’t even gotten to trial mining and the huge Pilbara Craton is very under explored. And again (I keep harping on this), nothing close to blue sky for even one of the systems is priced in, so you are not paying much for the potential anyway, since the bears and their bearish views ARE the consensus at these valuation levels. 
While everyone and their mother is obsessing over the first tens of 5t bulk samples from one (in this context) small patch, Novo and Pacton are quietly buying up as much additional land as they can in the Egina area Central Pilbara. Remember, this area is about much more than the Mt Roe conglomerates, and this is what Brent Cook has said about specifically the Mt Roe conglomerates:

“It goes for tens of kilometers” – Brent Cook
“It’s big. It’s really big. We just don’t know if it is economic” – Brent Cook
“There’s no doubt there is gold there. There is tens of millions of gold in this conglomerate unit” – Brent Cook

 
… It’s up to one self to determine what kind of chance of success is priced in for that Karratha target alone, not to mention the other 99% of the land package and multiple other targets. Again, investing is not about absolutes (black and white). I want to buy companies where I can see a favorable Risk/Reward scenario which basically means, in the case of junior explorers, that the upside potential has been overly discounted due to perceived risks, bad sentiment and/or the market poorly understands the sum of its parts.
 

Check list:

[x] Market heavily discounting every project given what is already confirmed
(tens of km strike, BC wide open with better grades, Egina not valued at all since it didn’t really budge on the news).
[X] Bad market sentiment dragging pretty much everything down no matter the developments (with few exceptions) 
(Whole sector is off 50%-80% from its 2016 highs)
[X] Market having a hard time understanding/valuing what Pilbara is about.
(Tunnel vision on one project and most of the discussion is about the hurdles and not really discussing what it would mean if the hurdle is overcome)
(Case in point: Dropped over 20% due to assays not being reported in Denver and that the upper CW/Purdy grades would be volatile)
(Kirkland Lake doubling down at $5 with superior information while SP and thus consensus is doom and gloom)
… Food for thought. Make up your own mind.
 
Note!!! This is NOT investment advice. Junior mining stocks are risky and can be very volatile. Novo Resources has been my biggest position since 2016 and might buy and sell stock at any time. I can’t guarantee 100% accuracy in terms of what is contained in this post and thus would encourage everyone to do their own Due Diligence. This post is contains my personal view on Novo.
Best regards,
The Hedgeless Horseman
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Categories
Precious Metals

PRECIOUS METALS | Stuck in the Twentieth Century

October 24 2018
The Miles Franklin Newsletter
If your having trouble viewing this – Click Here
From The Desk Of David Schectman
David’s Commentary:
For the last 35 years hardly a day has gone by that I didn’t spent time reading about the economy, precious metals, the dollar and much more. I learned to process the information through a “doom and gloom” filter. Fortunately, although there have been some bumps along the road (stock market crash in 1987, dot com crash in 2001 and the stock market crash in 2008), things have worked out much better than I thought they would. And that’s a good thing. All that silver I purchased at $6 and all that gold I purchased at $300 as “insurance” look just fine today – even though I never had to “cash in.” The stock market and the global economy are doing just fine – we are told.
The “kick the can down the road” policies are still working. We have yet to hit the wall, that is surly out there. I am amazed that the mountains of debtand deficits we’ve created haven’t taken their toll yet.
Where is the inflation that should have accompanied all the money and debt creation since I got into the precious metals business 35 years ago?
Oh, it’s there all right. All you have to do is look for it and you’ll find it. It’s easy to spot in luxury goods like expensive cars and watches and at fancy restaurants and sporting events. Speaking of which – my son Andy and Bill Holter attended the World Series opener in Boston last night. They had poor-boy seats in the left field bleachers and they paid $1,600 a ticket. Susan and I went to a Timberwolves (NBA) game on Monday and the seats cost $350 each. There was a family of four sitting directly in front of us and the were all eating burgers and fries and soft drinks and I couldn’t help wonder how can a family of four afford an evening out to a ball game like this that must have cost them over $1,500?
Since most of the new wealth has gone to the top third of the population, the things they purchase will show the largest increases. They have the cash to pay for it. The bulk of the new money has gone into financial assets, which is the playground of the well-to-do. The rich get richer and the rest struggle.
But what goes up must come down. The only question is when?
The one thing that is constant is my undying belief in gold and silver in spite of the price performance of the last six years. I constantly remind myselfthat I didn’t buy my precious metals to make a profit. It was my financial insurance, the base of my asset pyramid. The gold and silver was always there, just in case. Now I did sell up to half of my gold and some of my silver on the way down from the peak a few years ago, but I never touched my “core” position. Recently I started to build up my gold and silver reserves again. I purchased four mint boxes of Silver Eagles and 50 Gold Buffalos. My doom and gloom outlook is flashing a big red warning sign. It’s telling me that this time could be “the big one.” I felt the same way in 2007. We came close to a total collapse, but the Fed came to the rescue with a massive dose of money and credit and saved the banks and the economy – for a while. But the Fed is withdrawing liquidity from the market (they are selling tens of billions of dollars worth of bonds from their portfolio which soaks up liquidity). They are raising interest rates and we are getting dangerously close to a repeat of 2007. But this time it will be worse.
My views are very “Twentieth Century.” I am taking the liberty to include the first decade of the Twenty First Century in that statement. That’s one of the nice things about writing my own newsletter. I get to “take liberties.” I have never abandoned my Twentieth Century views on gold, silver, inflation, debt and money creation. I don’t care what the price of gold is or where the Dow is, as the longest bull market in stocks on record comes to an end, my Twentieth Century views will serve me well.
Yes, I am stuck in the Twentieth Century down to my world-class collection of WWII firearms and aviation art, my audio system that is based on a reel to reel tapes, tube amplifiers, LPs, CDs and my “antiquated” belief in gold and silver.
On that note, I love the following article by Simon Black goes back a bit further and Looks at how well gold has retained its value from 1,000 years ago.
Simon Black
Look at how well gold has retained its value from 1,000 years ago
On October 12, 929, roughly 1100 years ago, Abd-ar Rahman III of the Umayyad Dynasty was proclaimed ruler of Cordoba– the Islamic kingdom that comprised most of Spain at the time.
Rahman was just 21 when he ascended to power, and he remained there for nearly 50 years as one of the wealthiest and most powerful monarchs in Europe.
Historians Denis Cardonne and Edward Gibbon calculate his annual tax revenue at approximately 12 million gold dinars… which was a LOT. READ MORE HERE
David’s Commentary:
We are facing the worst of both worlds. Expect falling asset inflation (housing and the stock market) and rising cost inflation (rising oil and tariff-induced price increases).
Here is another “It’s So Like The Twentieth Century” article. That’s a century when gold was cool.
John Rubino
The sentiment shift is still subtle, but it’s both real and widespread…
The sentiment shift is still subtle, but it’s both real and widespread. After a few years of being ignored and/or dismissed as basically useless, gold is cool again, attracting positive comments in the media and increasing accumulation by big investors.
India, for instance, imported less gold than usual in the first part of this year but lately has ramped up its buying, with August imports more than double the year-earlier amount. READ MORE HERE
David’s Commentary:
According to John Williams (Shadowstats), There are two forces bearing down on the economy. Oil price-driven inflation and Federal Reserve rate hikes.
Faltering Consumer Liquidity Clobbered September 2018 Retail Sales and New Residential Construction.
Most of our GDP is based on debt. Spending is slowing because so many consumers (retail is 68.5% of GDP) are already strapped with too much debt. This is a bad time to get smacked with the double whammy of rising oil and rising interest rates. Those are forces that can topple the economy.
Ted Bauman
U.S. GDP Is Riddled With Debt
A year ago, the billionaire founder of Bridgewater Associates, Ray Dalio, said that most of what we think we know about the economy is wrong.
That’s setting us up for a big, unwelcome surprise.
Dalio’s point is one I make often. If you only pay attention to averages, you’ll miss the most important things about the economy.
And it’s likely to cost you a lot of money.
Every day we’re bombarded with statistics. Gross domestic product (GDP). Unemployment. Inflation.READ MORE HERE
David’s Commentary:
In a conference call with Jim Sinclair and Bill Holter it was impossible to miss the enthusiasm they both had for gold in 2019. Jim says the coming bullmarket in gold will surpass anything we have yet seen. $3,000 to $5,000 gold is baked in the cake. How could one not be excited? The forces that propel a gold bull market are knocking at the door – rising inflation, rising interest rates (which will slow the economy and derail the stock market) and the loss of the Petro Dollar standard, which will punish the dollar. The Black Swans are circling.
This article focuses on one of my favorite topics, the Petro Dollar. If Saudi Arabia abandons the dollar and starts trading oil in Yuan prepare yourself for a falling dollar (due to reduced DEMAND) and rising prices. This is a very favorable environment for gold.
Zero Hedge
China Will ‘Compel’ Saudi Arabia To Trade Oil In Yuan — And That’s Going To Affect The US Dollar
October 11, 2017
China will “compel” Saudi Arabia to trade oil in yuan and, when this happens, the rest of the oil market will follow suit and abandon the U.S. dollar as the world’s reserve currency, a leading economist told CNBC on Monday.
Carl Weinberg, chief economist and managing director at High Frequency Economics, said Beijing stands to become the most dominant global player in oil demand since China usurped the U.S. as the “biggest oil importer on the planet.” READ MORE HERE
David’s Commentary:
This is why you need to hit a grand slam home run with gold and silver. It’s one of the sure ways to build up your nest egg to be able to deal with theballooning cost of living we all face.
Lance Roberts
F.I.R.E.’d Up – A Million Ain’t What It Used To Be
The FIRE (Financial Independence Retire Early) Movement is literally on “fire” after Suze Orman recently suggested that one would need $5 million if they wanted to retire early.
“You need at least $5 million, or $6 million. … Really, you might need $10 million,” she said — short of that, it’s just not going to be enough for most people.
“You can do it if you want to. I personally think it is the biggest mistake, financially speaking, you will ever, ever make in your lifetime. I think it’s just ridiculous. You will get burned if you play with FIRE.”READ MORE HERE
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About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David’s son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin’s primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We are rated A+ by the BBB with zero complaints on our record. We are recommended by many prominent newsletter writers including Doug Casey, Jim Sinclair, David Morgan, Future Money Trends and the SGT Report.
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Energy

ENERGY | DNI Metals Update – New Madagascar Team

TORONTO, ON / ACCESSWIRE / October 24, 2018 / DNI Metals Inc. (CSE: DNI; OTC PINK: DNMKF) (“DNI” or the “Company”).
New Madagascar Team
DNI has terminated its relationships with Steven Goertz, previously DNI’s country manager, and his team. Dan Weir, the CEO of DNI, is taking charge of all of DNI’s Madagascar operations which includes, but is not limited to, obtaining the environmental licenses for its Vohitsara and Marofody properties. Mr. Weir is putting together a new team, which will include inhouse legal counsel, government relations personal, an office manager and an accountant.
As DNI constructs its pilot plant and ultimately larger scale production, additional team members will be required.
Upgraded OTC Listing
DNI has been approved to upgrade to a QB quotation on the OTC markets in the USA.
DNI applied to have its shares trade on the OTCQB because some DNI investors found it difficult to trade our stock, particularly through discount brokers.
The OTCQB Venture Market offers early stage and developing international companies the benefits of being publicly traded in the U.S. with lower cost and complexity than a U.S. exchange listing.
According to the OTC, the key benefits a quotation on the OTCQB are:
Efficient Market Standards: Companies may leverage their local market disclosure (SEC Exchange Act Rule 12g3-2(b)). There are no Sarbanes-Oxley and SEC Reporting requirements to trade on OTCQB, bypassing burdensome, costly and duplicative NYSE and NASDAQ listing requirements.
Transparency: OTCQB is recognized by the SEC as an established public market. OTCQB companies provide current company information and meet financial standards that enable brokers to more easily quote and trade a security.
Visibility: Companies engage a far greater network of U.S. investors, data distributors and media partners, ensuring U.S. investors have access to the same high-quality information that is available to investors in their local market, but through U.S. platforms and portals used to conduct research.
New Mauritian Companies
DNI has completed the process of forming two Mauritian companies, DNI Mauritius Vohitsara and DNI Mauritius Marofody in which the ownership of DNI’s Malagasy subsidiaries, will be transferred to the Mauritian entities.
The benefits are twofold:

  1. Mauritius and Madagascar have an Investment Promotion and Protection Agreement (“IPPA”) in place since late 2010. See details below.
  2. A double-taxation treaty is in force between Madagascar and Mauritius.

Mauritius Investment Promotion and Protection Agreements
While much of Mauritian success as a well‐established international financial center can be attributed to its continually expanding network of double taxation avoidance agreements (“DTAAs”), there is another significant advantage to investing through Mauritius. Mauritius has entered into Investment Promotion and Protection Agreements (“IPPAs”) with various African countries that, while less well‐known than DTAAs, are potentially of great importance to investors seeking to invest in the developing markets of Asia and Africa.
IPPAs are bilateral agreements between countries designed to promote and protect the interests of investors from one country in the territory of the country where the investment is being made. Among other things, IPPAs increase investor confidence by ensuring a fair and equitable protection of investments. Mauritius has concluded 34 IPPAs, of which 18 are in force. Each agreement provides the following guarantees to investors:

  1. Fair and equitable protection of investments
  2. Fair and equitable treatment of investments and returns of investors
  3. Free transfer of monies relating to investments and returns
  4. Non-expropriation guarantee – investments shall not be nationalized, expropriated or subjected to measures (having effects equivalent to nationalization or expropriation) except for public purposes, under due process of law, on a non‐ discriminatory basis and against prompt, adequate and effective compensation (which shall be made without delay, and be effectively realizable)
  5. Most favoured nation rule with respect to treatment of investments and compensation for losses (in case of war or armed conflict, revolution, a state of national emergency, revolt, insurrection or riot) – investors who, suffer losses in the territory of the other contracting party resulting from the following shall be accorded restitution or adequate compensation:
    1. Requisitioning of their property by the forces or authorities of the latter contracting party
    2. Destruction of their property by the forces or authorities of the latter contracting party, which was not caused in combat action or was not required by the necessity of the situation of the observance of any legal requirement.
  6. Provisions for settlement of disputes between investors and the contracting states.
  7. Provisions for settlement of disputes between contracting states.

Mauritius’ network of IPPAs with various African countries makes it an ideal investment platform. In these countries, there is often pressure to redistribute wealth to local indigenous populations, which have historically been both politically and economically disenfranchised. This has resulted in a perceived threat of nationalization of assets (such as mines and natural resources) in certain of these countries. In these circumstances, it is useful to invest via a country that has an IPPA with the relevant African country, in order to take advantage of the guarantees offered by the IPPA. Source: Conyers Dill & Pearman.
Madagascar and Mauritius entered into an IPAA titled: « Accord De Promotion et de Protection Réciproque des Investissements entre le Gouvernement de la République de Maurice et le Gouvernement de la République de Madagascar » on 06th April 2004. The IPAA was fully ratified by both countries at the end of 2010. This instrument utilises the International Centre for Settlement of Investment Disputes (ICSID) for dispute resolution. It has been proven to be an effective recourse for investors in Madagascar.
Environmental Licenses
DNI had been promised the environmental licenses would be completed early in 2018. DNI had been given receipts and documents to show that the licenses were progressing and that the fees had been paid. Through an ongoing investigation, the Office National pour l’Environnement Madagascar, ONE, has determined and informed DNI that the many of the receipts and documents were falsified, and that the fee payments had not been paid. In fact the Cahier d’Charge and the environmental impact study for Marofody had not been filed with the ONE.
DNI is now aware of what needs to be completed in order to obtain the licenses and is rectifying the situation.
DNI – CSE
DMNKF – OTC
Issued: 120,698,403
For further information, contact:
DNI Metals Inc. – Dan Weir, CEO 416-595-1195
DanWeir@dnimetals.com
Also visit www.dnimetals.com
Forward-looking Statements
This press release contains forward-looking statements, including statements that relate to, among other things, the following: (i) the geological characteristics of the projects; (ii) the potential to discover additional mineralization and to extend the area of mineralization; (iii) the potential to raise additional financing; and (iv) the potential to expand and upgrade the resource estimate of the projects. Forward-looking information is subject to the risks, uncertainties and other important factors that could cause the Company’s actual performance to differ materially from that expressed in or implied by such statements. Such factors include, but are not limited to volatility and sensitivity to market metal prices, impact of change in foreign exchange rates, interest rates, imprecision in resource estimates, imprecision in opinions on geology, environmental risks including increased regulatory burdens, unexpected geological conditions, adverse mining conditions, changes in government regulations and policies, including laws and policies; and failure to obtain necessary permits and approvals from government authorities, and other development and operating risks, and can generally be identified by the use of words such as “may”, “will”, “could”, “should”, “would”, “likely”, “possible”, “expect”, “intend”, “estimate”, “anticipate”, “believe”, “plan”, “objective”, “hope” and “continue” (or the negative thereof) and words and expressions of similar import. Although DNI believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties, and undue reliance should not be placed on such statements. Certain material factors or assumptions are applied in making forward-looking statements, and actual results may differ materially from those expressed or implied in such statements. Additional information about material factors that could cause actual results to differ materially from expectations and about material factors or assumptions applied in making forward-looking statements may be found in the Company’s most recent annual and interim Management’s Discussion and Analysis under “Risk and Uncertainties” as well as in other public disclosure documents filed with Canadian securities regulatory authorities. Forward-looking statements are provided for the purpose of providing information about management’s current expectations and plans relating to the future. Readers are cautioned that such information may not be appropriate for other purposes. The Company does not undertake any obligation to update publicly or to revise any of the forward-looking statements contained in this document, whether as a result of new information, future events or otherwise, except as required by law.
SOURCE: DNI Metals Inc.

Categories
Precious Metals

PRECIOUS METALS | Another Day Older and Deeper in Debt

The Miles Franklin Newsletter
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Gary Christenson-Contributing Writer For Miles Franklin
Another Day Older and Deeper in Debt
Miles Franklin sponsored this article byGary Christenson. The opinions are his.
Official US national debt exceeds $21 trillion. National debt increases over $3 billion per day.
Another day older and $3 billion deeper in debt!
The U.S. government pays the interest by issuing new debt. But that new debt increases total debt and (eventually) drives up interest rates, which requires more borrowing to pay the annual interest payments. Another year older and deeper in debt! A reset will occur when the debt load becomes too heavy.
WHY DEEPER IN DEBT?
Governments spend currency units, corporations demand their payoffs, the warfare and welfare lobbies own congress and the “borrow and spend” circus performs.
“The real story is we made a significant investment in the military which is very, very important, and to get that done we had to increase non-military spending.”
The Deep State extracted its share of the swag, participants collected their payoffs and debt expanded. Borrow and spend is the lifeblood of the Wall Street and D.C. circus.
But it extends beyond Washington D.C. Consider these massive debt burdens in the U.S.:
·     Sub-prime auto loans. Defaults will rise in the coming recession.
·     Over $1 trillion in credit card debt. More defaults coming.
·     Over $10 trillion in mortgage debt. The 2008 recession hammered mortgage debt and related derivatives. The next recession could be worse.
·     About $1.5 trillion in student loan debt, much of which is deferred or in default. The next recession will illuminate the lunacy in this program.
·     Public and private pension liabilities are underfunded by many $trillions even though stock markets trade near all-time highs. The next recession will push many pension plans over the abyss.
·     U.S. government has unfunded liabilities of $100 – $200 trillion. Those liabilities increase every day and will be defaulted or paid in mini-dollars.
Summary: Congressional promises and boondoggles push the U.S. deeper into debt.
From David Stockman:
“That’s how the Warfare State-Welfare State system works, greased by the Deep State and its fetid ecosystem of bureaucrats, “think-tanks,” lobbyists, lawyers, pundits, carnival-barkers, grifters and other thieves.”
Another government contract, weapons system, wars, expanded welfare, free cell phones, ethanol subsidies, food stamps (SNAP), foreign aid to buy US weapons… and the circus descends deeper in debt.
BUT LET’S NOT TAKE IT TOO SERIOUSLY:
The Treasury Department issues bonds and sells them to the Fed. The Fed creates the dollars and buys the bonds. Insiders collect their swag, the government pays off corporations and voters, and those new dollars devalue existing dollars. Prices rise and the circus rolls down the road toward debt-ruin.
The game works until confidence in the currency and/or the Fed breaks. That confidence has not broken yet, but it will.
The dollars are mostly illusory. They are debts of the Federal Reserve. Bonds are promises to repay future mini-dollars by a government that can only repay via additional borrowing or printing. In a better world using real money, not fiat debt-based pretend dollars, the government would be a poor credit risk—a large chance of default.
That realization is coming. The U.S. needs a return to asset backed money that the banking cartel can’t create from nothing. This option is not politically viable in 2018.
Tennessee Ernie Ford sang about the plight of coal miners decades ago. Coal miners were often paid in company script which bought food and supplies at inflated prices in the company story. The “script” had no intrinsic value and was backed only by management promises. Silver coins – real money with intrinsic value—circulated in the United States while mining companies issued script. But script created more profit for mine owners.
“You load sixteen tons, what do you get?
Another day older and deeper in debt.
Saint Peter don’t you call me ‘cause I can’t go I owe my soul to the company store.
Today we use “script” called Federal Reserve (digital and paper) Notes (debts), which have no intrinsic value and are backed only by promises from the Fed and the U.S. government. Labor is exchanged for debts from the Fed—the “Company Store.”
We use a flawed system that benefits the banker cartel, big corporations and the government. The system will not change without trauma. “I owe my soul to the company store.”
Our economy runs on low interest rates, credit and ever-increasing debt – auto loans, corporate loans, credit cards, mortgages, etc. Most retail transactions use plastic cards. The banking cartel takes their cut. Confidence holds the game together. But rising interest rates cut profits, increase debt service, and bankrupt marginal companies and households!
Another day older and deeper in debt. $21 trillion plus unfunded liabilities and rising $billions every day. If credit dries up, like in 2008, the piper will be paid in blood and bankruptcies.
Protect yourself from the coming reset:
a)  Reduce your debt load.
b)  Some retirement promises will not be paid.
c)  A reset is inevitable.
d)  Debt must be paid, defaulted or inflated away.
e)  Much of the debt can’t be paid.
f)    Default creates immediate and devastating consequences.
g)  Inflation and hyper-inflation are destructive but delay the consequences. Politicians like delayed consequences.
h)  Congress, the Administration and the banking cartel prefer inflation. Borrow and spend created inflation has worked for decades. The political and financial elite are unlikely to want change.
i)    Read Chris Marcus: Is the Price of Silver About to Explode?
Gold and silver are real money. They will retain their value and purchasing power as dollars are devalued, and will be safe assets during the coming reset, regardless of when or how it occurs.
Another day older and silver prices are low! Call Miles Franklin at 1-800-822-8080.
BRIEN LUNDIN | the Fed, the Dollar and Precious Metals
BRIEN LUNDIN | the Fed, the Dollar and Precious Metals
Brien Lundin, publisher of Gold Newsletter, sat down with Maurice Jackson of Proven and Probable to discuss precious metals and their relationship with recent Fed actions and the dollar.
Visit our website for more detailshttp://proven.flinnwestsolutions.com/.
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About Miles Franklin
Miles Franklin was founded in January, 1990 by David MILES Schectman. David’s son, Andy Schectman, our CEO, joined Miles Franklin in 1991. Miles Franklin’s primary focus from 1990 through 1998 was the Swiss Annuity and we were one of the two top firms in the industry. In November, 2000, we decided to de-emphasize our focus on off-shore investing and moved primarily into gold and silver, which we felt were about to enter into a long-term bull market cycle. Our timing and our new direction proved to be the right thing to do.
We are rated A+ by the BBB with zero complaints on our record. We are recommended by many prominent newsletter writers including Doug Casey, Jim Sinclair, David Morgan, Future Money Trends and the SGT Report.
For your protection, we are licensed, regulated, bonded and background checked per Minnesota State law.
Miles Franklin
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Suite 834
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Categories
Precious Metals

JUNIOR MINING | Pacton Acquires Calidus Conglomerate Gold Rights

VANCOUVER , Oct. 23, 2018 /CNW/ – Pacton Gold Inc. (TSXV: PAC, OTC: PACXF, FSE: 2NKN) (the “Company” or “Pacton“) is pleased to announce that it has entered into a definitive agreement (the “Agreement“) to acquire the conglomerate gold rights (“Gold Rights“) of Calidus Resources Limited (ASX:CAI) in both the Marble Bar sub-basin, and the Northeast Pilbara sub-basin of Western Australia’s Pilbara craton. (Figure 1).

Figure 1. Pacton Pilbara Gold Exploration Projects (CNW Group/Pacton Gold Inc.)

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Figure 1. Pacton Pilbara Gold Exploration Projects (CNW Group/Pacton Gold Inc.)

Subject to TSX Venture Exchange acceptance, the conglomerate gold rights will be transferred to Pacton within 50 days.

The acquisition of the Calidus conglomerate gold rights is strategically significant for Pacton, and is consistent with Pacton’s directed strategy of acquiring Fortescue Group exploration conglomerate gold assets in parallel with its equally growing portfolio of Mesoarchean and Paleoarchean orogenic “mother lode” exploration projects.

Calidus is exploring for orogenic shear hosted gold deposits at its Warrawoona Gold Project south of Marble Bar in the Paleoarchean “basement rocks” of the Pilbara craton, which is excluded from the Agreement with Pacton (Figure 2).

Pacton’s Agreement with Calidus allows it to explore and exploit any conglomerate or transported gold deposits in the sedimentary rocks overlying the basement rocks in the Calidus holdings, which are scattered from the town of Marble Bar to the Nulllalgine-Beaton Creek area. The Fortescue Group formation that overlies the basement rocks on the tenements covered by the Calidus Agreement are composed entirely of outcropping Mount Roe Basalt.

Figure 2. Location of Calidus tenements subject to Calidus-Pacton Agreement. (CNW Group/Pacton Gold Inc.)

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Figure 2. Location of Calidus tenements subject to Calidus-Pacton Agreement. (CNW Group/Pacton Gold Inc.)

Pacton is currently conducting field exploration in the Mallina Basin, on its Egina area properties, located approximately 200 km west of the Marble Bar sub-basin. Field exploration will commence on the Calidus project immediately following the transference of the conglomerate rights to Pacton.

Three areas of the Calidus conglomerate gold right tenements have already been targeted for exploration. Two areas are located near the town of Marble Bar. The third area, an immediate priority, consists of a portion of a north-pointing, 10 km long “spear” of Mount Roe basalt, which is the northern extension of the Mount Roe formation that underlies the Novo Resources Corp (NVO:TSXV) conglomerates at Nulllagine and Beaton Creek , located approximately 20 km to the south. The Pacton portion of the “Spear”, with a combined edge strike-length of about 15 km,  covers an area of 20 km2, approximately the same area as the Mount Roe surface exposure on Novo’s Beaton Creek tenements. This is due to the fact that the Mount Roe Basalt surface footprint at Novo’s Beaton Creek project is covered by the overlying Hardey formation conglomeratic members.

The preliminary targeting of the Calidus conglomerates is unusually precise due to the favourable weathering characteristics of the Pilbara and the differential silicification of known conglomerate units. In other words, Pacton has recorded the signatures of known Pilbara conglomerate deposits and has prioritized similar signatures on its Calidus conglomerate targets, including the “Spear”.

A preliminary estimate of mapped Mount Roe Basalt in all Calidus tenements includes approximately 50 linear km of Mount Roe edge exposure and downhill talus slope, covering a total area of approximately 90 square km. (Figures 3, 4, 5 & 6 showing selected Mount Row features).

Conglomerate target planning will continue and field operations will commence immediately following the transference of the conglomerate gold rights from Calidus to Pacton.

Figure 3. Section of distinct contact between Mount Roe Basalt and basement rocks. (CNW Group/Pacton Gold Inc.)

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Figure 3. Section of distinct contact between Mount Roe Basalt and basement rocks. (CNW Group/Pacton Gold Inc.)
Figure 4. Magnification of inset shown in Figure 3 above. (CNW Group/Pacton Gold Inc.)

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Figure 4. Magnification of inset shown in Figure 3 above. (CNW Group/Pacton Gold Inc.)
Figure 5. 300 m wide erosional edge and talus slope falling away from the Mount Roe high area in upper left of air photo. (CNW Group/Pacton Gold Inc.)

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Figure 5. 300 m wide erosional edge and talus slope falling away from the Mount Roe high area in upper left of air photo. (CNW Group/Pacton Gold Inc.)
Figure 6. “Tip of the Spear”. Mount Roe Basalt showing resistant, steep edges (left). Further down the 10 km spearhead, the Mount Roe silicified edges are still prominent. Note the drainage dissection winding across the spear (right). This will assist stratigraphic sampling at surface. (CNW Group/Pacton Gold Inc.)

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Figure 6. “Tip of the Spear”. Mount Roe Basalt showing resistant, steep edges (left). Further down the 10 km spearhead, the Mount Roe silicified edges are still prominent. Note the drainage dissection winding across the spear (right). This will assist stratigraphic sampling at surface. (CNW Group/Pacton Gold Inc.)

Agreement Terms

Under the terms of the Agreement, the Company through its wholly-owned Australian subsidiary, will acquire the Gold Rights by issuing Calidus or its nominees 7,000,000 common shares. The Agreement includes a right to deferred compensation whereby Calidus may receive up to 3,000,000 additional common shares of Pacton on the first anniversary of completion of the transaction based on the 30-day VWAP of Pacton’s shares on the date of such issuance.

The Company will be seeking TSX Venture Exchange acceptance of the transaction forthwith.

About Pacton Gold

Pacton Gold (PAC: TSXV; PACXF: US) is a well-financed Canadian junior with key strategic partners focused on the exploration and development of conglomerate-hosted gold properties located in the district-scale Pilbara gold rush in Western Australia.

The technical content of this news release has been reviewed and approved Peter Caldbick , P.Geo., a director of the Company and a Qualified Person pursuant to National Instrument 43-101. The qualified person has not yet verified the data disclosed, including sampling, analytical, and test data underlying the information or opinions contained in the written disclosure.

On Behalf of the Board of Pacton Gold Inc.

Alec Pismiris
Interim President & CEO

This news release contains or refers to forward-looking information based on current expectations, including, but not limited to the Company completion of the proposed transaction described herein, the prospect of the Company achieving success in exploring its properties and the impact on the Company of these events, including the effect on its share price. Forward-looking information is subject to significant risks and uncertainties, as actual results may differ materially from forecasted results. Forward-looking information is provided as of the date hereof and we assume no responsibility to update or revise such information to reflect new events or circumstances.

Neither TSX Venture Exchange, the Toronto Stock Exchange nor their Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

Pacton Gold Inc. (CNW Group/Pacton Gold Inc.)

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Pacton Gold Inc. (CNW Group/Pacton Gold Inc.)
Cision
Cision

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SOURCE Pacton Gold Inc.

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Categories
Precious Metals

BOB MORIARTY | Irving Delivers, Market Yawns

Original Source: http://www.321gold.com/editorials/moriarty/moriarty102318.html
Investors are funny. You can go to the chat boards and read about Novo Resources that had an incredible run in 2017 and read about how unhappy investors are that the price of shares has gone down. It’s my entire fault or it’s Quinton’s fault or it’s Eric Sprott’s fault. It’s everyone’s fault except the investors who wanted to wait until Novo went up to buy.
Well, screw them and the horse they rode in on. I was writing about Novo when it was $.45 a share, not telling people to buy at $8. Maybe if investors actually want to make money they should buy my book and learn to buy cheap and sell dear. It works for me and I am certain it will work for them.

(Click on image to enlarge)

Irving reported samples showing $23,400 rock in 2016 and investors ignored them. I’ve written the company up half a dozen times yet I was able to buy shares for $1 not long ago. And just the other day they reported more absurdly high-grade assays.
If you add up the gold assays from the 13 samples, you come to an average of over 46 grams of gold per ton. Irving is going to have the highest grade gold mine in the world and those samples represent exactly what they are going to find when they drill.
They are going to drill someday. A drill is on the way over but finding drilling assistants in Japan is a problem. Drilling might be in late November or be put off until spring but someday they will drill. When they do, I am going to hock the family jewels and buy more Irving shares. I own a lot now but not like I’m going to when they actually announce drilling.
Don’t bother whining to me about how you bought Irving shares after results came out and the price went down eventually. I don’t care. Whine to Quinton, I’m sure he gives a shit. Or better yet, whine to Eric Sprott, he loves holding the hands of investors who want to buy at the top and dump at the lows.
Irving is an advertiser. They are not as cheap as they were when I bought at $1.00 in August but they are a whole lot cheaper than they are going to be a day after they release the first drill results. I own shares. Do your own due diligence.
Irving Resources
IRV-C $1.33 (Oct 22, 2018)
IRVRF OTCBB 40.6 million shares
Irving Resources website
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Bob Moriarty
President: 321gold
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321gold Ltd

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Exclusive Interviews Precious Metals

BRIEN LUNDIN | the Fed, the Dollar and Precious Metals

Brien Lundin, publisher of Gold Newsletter, sat down with Maurice Jackson of Proven and Probable to discuss precious metals and their relationship with recent Fed actions and the dollar.
VIDEO

AUDIO

TRANSCRIPT
http://www.streetwisereports.com/article/2018/10/22/brien-lundin-the-fed-the-dollar-and-precious-metals.html
Maurice Jackson: Joining us for a conversation is Brien Lundin, the president of Jefferson Financial, helping to protect your world.
Please tell us about Jefferson Financial and what type of services you provide.
Brien Lundin: We are essentially a provider of investment information. We publish Gold Newsletter, which is the oldest precious metals advisory in the world, having been started by Jim Blanchard in 1971 as a way for him to advocate for the return of gold ownership, legalized gold ownership to American citizens. And I also produce the New Orleans Investment Conference, an annual event that Jim Blanchard also started in 1974 after he was successful in helping to get gold legalized. He had an investment conference to teach American investors how to buy gold, how to invest in the gold markets, and silver, and it’s been going on ever since. We have the oldest, and I believe the most respected investment event out there.
Maurice Jackson: We brought you on today to get your insights on a number of topics, and I would like to begin our discussion with the Federal Reserve and its commitment to increase interest rates and reduce its debt obligations on its balance sheet. I have to begin by asking you, is that even possible for the Fed to unwind its balance sheet?
Brien Lundin: Well, it can unwind its balance sheet, I think the key question is at what pace it can simply let the obligations run off as they mature, which would take quite literally decades for that to happen. But the key is, can the Fed do it without unforeseen, or dangerous consequences to the U.S. economy and stock market. And frankly I don’t think it can, as it increase its balance sheet as it was the buyer of last resort to keep interest rates low. And as the Fed had, as you know, an unprecedented program called Quantitative Easing, which was just money printing, all of this to support the market. We saw the effects in not retail price inflation as many of us feared, but in financial assets inflation, which to be fair, was their goal all along.
On the way up, as the balance sheet was rising and as quantitative easing was hitting its stride, the correlation between the Fed’s balance sheet and the S&P 500 was around 97%, so the Fed inflated the stock market, bull market. It was directly behind it.
And the question now is, if they had that much of a correlation on the way up, well, now that they’re on the way down, are we going to have a similar correlation? And I think the events of the week when the DOW lost over 1,400 points over a couple of days is powerful evidence that the Fed won’t be able to get away with it without some dire consequences in the equity markets.
Maurice Jackson: Speaking of those dire consequences, from a macro perspective, what type of impact are the Fed’s decisions having on global markets? And should we be concerned about contagion and capital flight from peripheral markets?
Brien Lundin: Well, it’s actually attracting some money to the U.S. because you have, on a relative basis, higher rates in U.S. treasuries than you have in similar instruments in Europe and elsewhere. So it is attracting money and helping to support the dollar, but I don’t think it’s making the dollar strong. If anything, it’s preventing the dollar’s decline because the Fed wants rates to rise now, it really can’t do it much longer for a number of reasons.
First , the Fed is going to crater the economy if it gets rates to high. Second, we can’t, because of the large debt loads we have right now; the U.S. simply cannot bear the burden of higher interest rates while we have this kind of a debt burden. If interest rates got to historic levels, and by historic levels, I’m talking of 10, 15 years ago where the interest rate burden on the Federal debt was on the order of 5–6%. If we got to those levels again, then the interest burden on the federal debt would be on the order of $1.2 trillion. And that’s far greater than the whole deficit is right now.
So, I just don’t think that’s politically possible. So if we’re looking at interest rates of 5–6% on the Federal debt, we’re talking about a Fed funds rate that probably around 3%. I think that’s the upper limit.
Maurice Jackson: You referenced the U.S. currency’s decline. You know the U.S. for all intents and purposes is in a trade war. And President Trump recently shared he’s not in favor of the Fed’s recent rate hikes. Is the Fed jeopardizing his position in discussions with his adversaries in the trade war?
Brien Lundin: I don’t think his trade war really affects that so much. I think one of the reasons why Trump is out there bemoaning and belittling the Fed so vociferously is because he’s looking for an excuse in case the economy starts downward. Or in case there’s a serious stock market decline. He wants to be able to blame it on someone except himself, and the Fed will be the obvious target. So he’s kind of setting the table for that, I believe. Plus he’s obviously in favor, and his administration is in favor, of low interest rates and debt. I think that’s what we’re going to keep getting.
Maurice Jackson: Now when do you foresee the Fed’s rate hikes ending? And what may be the effects upon the conclusion, long term?
Brien Lundin: Well, if the upper limit is around 3%, that means we have about three more quarter-point rate hikes ahead of us. If the Fed does one in December, which everybody expects, then that means it will only need a couple more to get to 3%, and that could happen in the first half of next year.
I don’t think that’s a widely understood or appreciated fact right now. I think there’s some spark money that’s been seeing that for some time, in realizing that the Fed is in the back half of its rate hike campaign, while other currencies, other central banks, like the ECB and the Bank of England, have yet to begin their rate tightening. But they are on schedule to do so very soon. So I think there’s already been a shift in large money allocations from the dollar into the euro and the pound. And I think we’re going to continue seeing that, and I think that’s the reason why the dollar has not been able to, say, break out of the 95 range on the dollar index and why I believe the dollar will be headed lower over the next six months or so.
Maurice Jackson: Speaking of smart money, we like to remind our audience that we refer to money as physical gold and physical silver. Talk to us about the recent price movement in gold.
Brien Lundin: What’s really been interesting about gold is that it has risen on a number of occasions recently when the stock market was crashing and yet the dollar was strong. Now typically that would argue that the buying is safe haven related. And, Maurice, I never like that as a driver for gold. I’m never in favor of that as a reason for gold to go up for any sustained period because these, the safe-haven type buying, these geopolitical political issues, these little flash crises, they come and go, and they don’t provide a sustained driver for gold. What really drives gold over the longer term are concerns over monetary issues, concerns over debt and currency depreciation and the like, and inflation.
So when you see the dollar going up along with gold, that’s a sign that the buying is safe haven related and probably not lasting. However, at the same time, and even on those days when the stock market was crashing, the gold stocks were rising. They were very strong and that argues for a more of a long-term approach to the gold buying. That’s an indication that people are buying gold because they see longer-term monetary based factors at play. So it’s a little bit of both right now, and I find it very interesting. It’s going to shake out one way or the other, but what’s encouraging is that we’re seeing indications of both types of demand for gold. But both are contributing to higher gold prices. And in fact, if we can get enough of a gain in gold to spark a short covering rally, by all the short speculators out there, then I’ll take that. That’s fine with me. That could be enough to really start a longer-term rally in metals.
Maurice Jackson: I have to ask this as well. What prudent action should someone take, based on today’s discussion regarding physical precious metals?
Brien Lundin: Well, they need to own physical precious metals. That’s what I tell everyone; if you’re a newbie to the sector, make sure you have your physical precious metals component, the foundation of your precious metals allocation. Make sure you have that in place, make sure you have it accessible. Don’t put it in bank safe deposit boxes. Make sure you have access to it. I’m a big fan of small denomination silver coins that are junk, you know, old junk silver. As an important component of what somebody should own, but they need to get the physical component in place. That’s the first thing, and even some experienced gold and silver bugs to the sector, they like to play around in the mining stocks, but a lot of them don’t have that physical component in place.
And you really need to, that’s your insurance, it’s something everyone needs. And has to have an insurance against not the unforeseen, but against the inevitable.
Maurice Jackson: You said a lot of information there. I’d like to just recover there for a second. Number one you referenced not to have it in a safe deposit box. Could you please expand on that for a little bit?
Brien Lundin: One of the things you’re insuring yourself against or hedging against by owning physical metals is a bank holiday. So if they lock the banks, how are you going to get to your precious metals? Now that limits your storage options, but there are still a number of options out there, including some in a personal safe, some in other security centers. And then if you’re going to have a fairly large allocation of physical, you can have some in storage facilities both domestic and international.
I tell people that I have very good friends in the precious metal storage business. Yet, I still recommend that if you’re going to have a substantial physical bullion investment, to spread your storage around, because you just never know. You never know what’s going to happen in each specific company or facility. And that’s a risk that you can easily diversify and really should.
Maurice Jackson: You know another fact that a lot of people aren’t aware of, is the safe deposit boxes at your banks, are they FDIC insured?
Brien Lundin: No, they’re not a deposit. So they’re not insured.
Maurice Jackson: That is very important for for our audience to understand.
Brien Lundin: And they’re not insured. The authorities have access to those with a subpoena. Interestingly, one of the things we discovered here in New Orleans during Katrina is that you should also not have a safe deposit box on the first floor of a bank. Because there are a number of safe deposit boxes in the New Orleans area that were under 12 feet of water for a weeks at a time after the hurricane. And they are not waterproof by the way, so a lot of these things you need to consider when looking to store precious metals and valuable documents.
Maurice Jackson: Another point you made was regarding mining stocks. I think a lot of individuals who are investors, particularly in the secondary market, are not aware that they can own physical metals, so they’re under the impression that they own mining company that owns gold and that is incorrect. You are only basically a company that is mining, but they don’t provide you the physical metal. When you purchase the stock, you’re going to get back cash, you’re not getting back the metal. Very important for us to understand here. If I may ask you this sir, we all have our favorites, of the big five, which are gold, silver, platinum, palladim, and rhodium, which ones have your attention and why?
Brien Lundin: Gold and silver primarily; the other three have large industrial components to them. So there are other factors, and they make good investments and good speculations in certain times, but gold and silver are the pure monetary metals. A lot of people talk about the industrial component to silver, but quite frankly, if silver was only valued on its industrial value, it would be $5 an ounce or less right now. So the rest of that margin or premium in its price is really monetary value. If you like gold, you have to love silver because silver is going to follow gold, but it’s going to move more than gold in the same direction. So it offers kind of an innate leverage to the gold price. If gold’s rising in terms of the fiat currency, silver’s going to also rise but to a greater degree.
Now there’s the downside of that as well; it’s going to go more quickly to the down side in a down market. But it is something that I tell people they really need a hold, a blend of the two. But for your hedging against financial catastrophe or a steady devaluation of the dollar, you really need to own gold and silver primarily.
Maurice Jackson: May I ask you this as well? The gold-silver ratio, how does that factor in your decision on purchasing?
Brien Lundin: Well, I think it determines the health of a market more so than timing, perhaps a little bit about value, or the relative value of the metals. But when the gold-silver ratio is falling, that means that silver is outperforming gold to the upside. And that is the hallmark of a good, strong, consistent, sustainable bull market in gold. And when the opposite is in effect, then it’s not positive, it doesn’t reflect on strength in the metals in general. I don’t don’t recommend that people trade the gold-silver ratio, because if you say sell gold and buy silver because the ratio is falling, then you’re mitigating your potential gains because they’re both going to rise, or they’re going to head in the same direction.
So if they’re both rising and you’re selling gold, you’re cutting a good portion of your potential gains out of the equation. So I don’t like trading your ratio, I like to look at it as a signal of the relative strength of the trend in one direction or the other.
Maurice Jackson: Interesting perspective, and thank you for sharing that. Switching gears, the New Orleans Investment Conference will be conducted November 1-4 in beautiful downtown New Orleans. Mr. Lundin, tell us about the world’s greatest investment event? Who are some of the featured speakers and discussion topics?
Brien Lundin: Well, I touched on it a bit earlier. The conference has been around since 1974 when Jim Blanchard started it, and Jim was a fairly flamboyant kind of a guy. He really went over the top with inviting big name speakers to the conference, so we’ve inherited that legacy and try to burnish as best we can. And so we get speakers here that you won’t see elsewhere, in general the line-up of speakers that we bring to our attendees is higher quality I believe than you’ll find anywhere else.
This year we have Robert Kiyosaki, we have political commentators Mark Steyn and Jonah Goldberg. We have James Grant who is one of the most eloquent advocates for gold in particular, most eloquent commentators on the financial markets out there. We have Doug Casey, of course, who’s always a big fan favorite. We have Peter Schiff, we have Dennis Gartman, Rick Rule. We have Guy Adami from CNBC who’s a really interesting guy. We have Ben Hunt who writes a blog, and doesn’t speak very often at conferences, but he has a blog that’s widely read by some really smart people in the markets.
And then we’ve got dozens upon dozens of other speakers, experts in just about every sector, but with a particular emphasis on metals and mining stocks.
Maurice Jackson: What type of attendees usually attend the New Orleans Investment Conference?
Brien Lundin: Well, they are smart, number one, because you have to be smart to pick this event to come to it, because it caters to really smart investors. It also caters to self-directed investors; these are people who are independent thinkers, maverick thinkers, they’re information hungry. They may have a large portion of their portfolio with money managers, but a large portion of their portfolio is directed by them, and according to the views that they have.
And the conclusions that they have after a lot of investigation of the markets and trends and listening to a lot of people. So it’s a smart group. It’s a successful group. One of the things I tell our attendees every year is that, yeah, we have great people, top of the line experts on the stage, but look around you. There are literally hundreds of very successful investors around you at this event. And I’ve never seen one of them who wasn’t willing to share his ideas and strategies, you know? And best thoughts on the markets and where they’re heading. So there’s a lot of fantastic market intelligence just within the crowd at our event.
Maurice Jackson: There’s a number of intellectual capital there at the conference. And speaking of the attendees, this will be my third year in attendance, and I have to admit I’m looking forward to meeting the attendees equally as I am to the guest speakers. The networking opportunities with some of the best minds all in one place is priceless. If you do not have your tickets, we welcome you to visit our website, provenandprobable.com and on the right hand column of the website you will see an image for the New Orleans Investment Conference. Click on the image, and you will be taken directly to the registration page.
Before we close, tell us about the gold newsletter and how we can retrieve your information on a regular basis.
Brien Lundin: Well, Gold Newsletter, as I mentioned, before is the oldest and I would say one of the most respected and successful newsletters or advisories on precious metals and mining stocks out there. Jim Blanchard started it in 1971, literally the day that Nixon closed the gold window. And it’s an important history in the hard money movement in advocating for the very legalization of gold in America. So we have a long, illustrious history. We’re trying to build on that every day, and we cover not only the economy, geopolitics and the kinds of things that affect all of the asset classes, but we do specifically focus on precious metals and what’s driving them and we cover a number of mining stocks. Typically junior mining stocks that have the potential to rise when precious metals prices rise or on discovery of new deposits. So that’s kind of our casino as, or where we have a number of high potential, higher risk for sure, but much higher potential investment opportunities.
Maurice Jackson: You know, Mr. Lundin, for someone that wants to get more information regarding Jefferson Financial, please share the contact details.
Brien Lundin: Well, for Gold Newsletter you can go to GoldNewsletter.com very simply, and for the New Orleans Investment Conference, NewOrleansConference.com, although I believe you’ll have some links as well, Maurice, that will get people some special opportunities to the conference.
Maurice Jackson: I certainly will sir. And as a reminder for our audience, we are licensed brokers to buy and sell gold, silver, platinum, palladium and rhodium, off shore storage accounts, and precious metals IRAs. To have conversation, please email Maurice@MilesFranklin.com, or call 919-274-5680.
And last but not least, please visit our website ProvenandProbable.com, where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com.
Brien Lundin of Jefferson Financial, thank you for joining us today on Proven and Probable.
Brien Lundin: Great to be with you.
With a career spanning four decades in the investment markets, Brien Lundin serves as president and CEO of Jefferson Financial, a highly regarded publisher of market analyses and producer of investment-oriented events. Under the Jefferson Financial umbrella, Lundin publishes and edits Gold Newsletter, a cornerstone of precious metals advisories since 1971. He also hosts the New Orleans Investment Conference.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.

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Categories
Energy Oil & Gas

Oil & GAS | Oil Companies Ditch Permian for Oklahoma Plays

Original Source: https://energyandresourcesdigest.com/oil-companies-ditch-permian-oklahoma-plays-nfx-eog-scoop-stack-merge-score/
If you follow the oil markets as I do, you might have heard that the Permian Basin in West Texas is the most prolific oil basin in the U.S. But the Permian has a big problem.
Producers are unable to get any more oil out.
Yes, there’s plenty more oil there. But the Permian has run out of takeaway pipeline capacity.
New pipeline projects won’t be ready until 2020. That means producers have had to severely discount their Permian crude destined for Gulf Coast refineries. For instance, on September 4, WTI Midland oil traded a discount of $23.95 per barrel to Magellan East Houston oil.
Those discounts come right off of a producer’s bottom-line profits. If you’re an investor, think of it as coming right off of your share price.
Oklahoma producers don’t have those problems. Sooner State exploration and production companies are laughing all the way to Cushing, Oklahoma.
Today there are several major oil plays in Oklahoma, referred to as the SCOOP, STACK, SCORE and Merge plays.
The STACK play acronym comes from the Sooner Trend oil field, Anadarko Basin, and Canadian and Kingfisher counties. Unlike the Granite Wash, Eagle Ford or Bakken, STACK isn’t a geological formation but a geographic area.
The SCOOP (South Central Oklahoma Oil Province) play is a geological formation. It’s also located in the Anadarko Basin.
The SCORE (Sycamore, Caney, Osage Resource Expansion) play is the sole idea of Newfield Exploration. Steve Campbell, a senior VP at Newfield, said Newfield was currently leasing 350,000 acres in the Anadarko Basin.
“It is the equivalent of 1 million net effective acres when all the multiple stacked horizons are considered,” he said. Newfield plans to invest $365 million to further delineate its SCORE acreage and different play levels.
Lastly, the Merge play is where STACK and SCOOP come together – hence “merge.”

Pipelines in the Right Places

Unlike West Texas’ pipeline-limited Permian, Oklahoma pipeline companies are staying ahead of producer capacity demand. They are doing this in the face of initial production rates that are similar to those in the Eagle Ford and Permian plays.
Since 2013, Oklahoma producers have invested in higher production well completions. They are also focused on the core acreage in the Oklahoma plays. That has resulted in a 70% increase in initial production rates.
Currently there are 139 rigs operating in Oklahoma. Most of them are in the SCOOP and STACK formations. And I think we’re going to see rapid growth in Oklahoma’s other plays as well.
Producers with acreage in the SCOOP, STACK, SCORE and Merge plays will begin to shift drill rigs there from the backlogged Permian.
Both Newfield Exploration Co. (NYSE: NFX) and EOG Resources Inc. (NYSE: EOG) are a great way to play the growing oil boom in Oklahoma.
Good investing,
Dave

Categories
Energy

URANIUM | U3O8 Corp. Announces Closing of Up-Sized Non-Brokered Private Placement, Securities for Debt Transaction and Amendments to Warrant Terms

Toronto, Ontario–(Newsfile Corp. – October 22, 2018) –  U3O8 Corp. (TSX: UWE) (OTCQB: UWEFF) (“U3O8 Corp.” or the “Company“) is pleased to announce that further to its news release dated October 1, 2018, it has completed its previously announced non-brokered private placement. Due to increased investor demand, the Company increased the size of the private placement to $573,500 from $400,000. The Company issued 2,294,000 units (“Units“) at a price of $0.25 per Unit, for total gross proceeds of $573,500 (the “Offering“).

Each Unit consists of one (1) common share in the capital stock of U3O8 Corp. (“Common Share“) and one (1) common share purchase warrant (“Warrant“). Each Warrant entitles the holder to purchase one Common Share at a price of $0.40 per Common Share until the date which is thirty-six (36) months following the closing date of the Offering, whereupon the Warrants will expire.

Proceeds of the Offering will be used for metallurgical test work on the Company’s Laguna Salada uranium-vanadium deposit in Argentina, for general corporate and administrative purposes, and to enable the Company to consider exercising its right to maintain its 39% holding in the private frac sand company, South American Silica Corp. (“SAS“), should SAS undertake a private placement in light of positive developments in the frac sand industry.

In connection with the Offering, the Company paid to certain eligible finders compensation consisting of cash commissions of $7,000 and 28,000 compensation warrants (“Broker Warrants“). The Broker Warrants will be exercisable into Common Shares of the Company at $0.40 and will be valid for a period of twenty-four (24) months from the date of closing of the Offering.

All securities issued and issuable pursuant to the Offering are subject to a four month and one day statutory hold period.

Closing of the Offering is subject to the receipt of all regulatory approvals, including the Toronto Stock Exchange.

Securities for Debt Transaction

The Company has agreed to settle outstanding cash debts in the amount of $51,500 to certain service providers and former employees (the “Creditors“) through the issuance of an aggregate of 206,000 Units at a price of $0.25 per Unit.

Additionally, the Company has agreed to settle $88,268 with the Creditors through the issuance of 304,371 common shares at a price of $0.29 per common share (the “Debt Shares“) (together, the issuance of the Units and Debt Shares to Creditors, the “DebtSecurities“).

The issuance of the Debt Securities is subject to the receipt of all applicable regulatory approvals, including the Toronto Stock Exchange. The Company is choosing to settle the outstanding indebtedness through the issuance of the Debt Securities as the Company will require cash for working capital and continuing operations.

The Debt Securities and securities issuable thereunder are subject to a four month and one day statutory hold period.

Related Party Transactions

Dr. Richard Spencer (CEO of the Company) and Mr. John Ross (CFO of the Company) participated in the Offering (the “Insider Participation“) and their participation constitutes a related party transaction within the meaning of Multilateral Instrument 61-101 (“MI 61-101“).

Dr. Spencer acquired 140,000 Units for proceeds of $35,000 and Mr. Ross acquired 140,000 Units for proceeds of $35,000.

In the absence of exemptions, the Company is required to obtain a formal valuation for, and minority shareholder approval of, the related party transaction. The related party transaction is exempt from the formal valuation and minority shareholder approval requirements of MI 61-101 as neither the fair market value of securities being issued to insiders nor the consideration being paid by insiders exceeds 25% of the Company’s market capitalization.

U.S. Registration

The securities offered pursuant to the Offering and the issuance of the Debt Shares have not been registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act“), or applicable state securities laws, and may not be offered or sold to persons in the United States absent registration or an exemption from such registration requirements. This press release shall not constitute an offer to sell or the solicitation of an offer to buy nor shall there be any sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful.

Warrant Extension and Amendment

The Company and holders of 759,250 common share purchase warrants (“Original Warrants“) issued pursusant to a previous private placement have agreed to extend the expiry date and amend the exercise price of the Original Warrants.The Original Warrants will expire twelve months from the original expiry date and be exercisable into a common share of the Company at $0.50, as depicted in the table below:

Issue Date Issued Exercise
Price
Original
Expiry
Date
Amended
Expiry
Date
Amended Exercise
Price
Effective Date Original # of Warrants Issued
November 3,
2015
$0.70 November 3, 2018 November 3, 2019 $0.50 November 3, 2018 759,250

None of the Original Warrants are held by insiders of the Company.

The Toronto Stock Exchange has provided conditional approval for the extension of the expiry date and amended exercise price with an effective date for the amendments of November 3, 2018.

About U3O8 Corp.

U3O8 Corp. is focused on exploration and development of deposits of uranium and battery commodities in South America. Battery commodities that occur with uranium resources include vanadium, nickel, zinc and phosphate. The Company’s mineral resources estimates were made in accordance with National Instrument 43-101, and are contained in the following deposits:

  • Laguna Salada Deposit, Argentina — a PEA shows that this near surface, free-digging uranium-vanadium deposit has low production-cost potential; and
  • Berlin Deposit, Colombia — a PEA shows that Berlin also has low-cost uranium production potential due to revenue that would be generated from by-products of phosphate, vanadium, nickel, rare earths (yttrium and neodymium) and other metals that occur within the deposit.

Additional Information

Information on U3O8 Corp., its resources and technical reports are available at www.u3o8corp.com and on SEDAR at www.sedar.com. Follow U3O8 Corp. on Facebook: www.facebook.com/u3o8corp, Twitter: www.twitter.com/u3o8corp and YouTube: www.youtube.com/u3o8corp.

For further information, please contact:

Carolina Diaz at carolina@u3o8corp.com or phone (416) 868-1491 or Richard Spencer, President & CEO, U3O8 Corp., Tel: (647) 292-0225 richard@u3o8corp.com

Forward-Looking Statements

This news release includes certain “forward looking statements” related with the development plans, economic potential and growth targets of U3O8 Corp’s projects. Forward-looking statements consist of statements that are not purely historical, including statements regarding beliefs, plans, expectations or intensions for the future, and include, but not limited to, statements with respect to: (a) the low-cost and near-term development of Laguna Salada, (b) the Laguna Salada and Berlin PEAs, (c) the potential of the Kurupung district in Guyana and (d) the price and market for uranium. These statements are based on assumptions, including that: (i) actual results of our exploration, resource goals, metallurgical testing, economic studies and development activities will continue to be positive and proceed as planned, and assumptions in the Laguna Salada and Berlin PEAs prove to be accurate, (ii) requisite regulatory and governmental approvals will be received on a timely basis on terms acceptable to U3O8 Corp., (iii) economic, political and industry market conditions will be favourable, and (iv) financial markets and the market for uranium will improve for junior resource companies in the short-term. Such statements are subject to risks and uncertainties that may cause actual results, performance or developments to differ materially from those contained in such statements, including, but not limited to: (1) changes in general economic and financial market conditions, (2) changes in demand and prices for minerals, (3) the Company’s ability to establish appropriate joint venture partnerships, (4) litigation, regulatory, and legislative developments, dependence on regulatory approvals, and changes in environmental compliance requirements, community support and the political and economic climate, (5) the inherent uncertainties and speculative nature associated with exploration results, resource estimates, potential resource growth, future metallurgical test results, changes in project parameters as plans evolve, (6) competitive developments, (7) availability of future financing, (8) exploration risks, and other factors beyond the control of U3O8 Corp. including those factors set out in the “Risk Factors” in our Annual Information Form available on SEDAR at www.sedar.com. Readers are cautioned that the assumptions used in the preparation of such information, although considered reasonable at the time of preparation, may prove to be imprecise and, as such, undue reliance should not be placed on forward-looking statements. U3O8 Corp. assumes no obligation to update such information, except as may be required by law. For more information on the above-noted PEAs, refer to the September 18, 2014 technical report titled “Preliminary Economic Assessment of the Laguna Salada Uranium-Vanadium Deposit, Chubut Province, Argentina” and the January 18, 2013 technical report titled “U3O8 Corp. Preliminary Economic Assessment on the Berlin Deposit, Colombia.”