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Alexander Green is the Chief Investment Strategist of The Oxford Club and Liberty Through Wealth. He heads The Momentum Alert, The Insider Alert and The True Value Alert. The independent Hulbert Financial Digestconsistently ranked his Oxford Communiqué as one of the top-performing investment letters in the nation for 15 years.
Marc Lichtenfeld is the Chief Income Strategist of The Oxford Club and its resident biotech expert. He is the Senior Editor of The Oxford Income Letter, which is based on his proprietary 10-11-12 System. He is also the Editor of Tactical Trader Alert, Lightning Trend Trader and Chairman’s Circle Breakout Alert. Over the years, Marc’s commentary has appeared in The Wall Street Journal, Barron’s, and U.S. News & World Report, among others. Today, Marc is a sought-after media guest who has appeared on CNBC, Fox Business and Bloomberg.
Matthew Carr is the Emerging Trends Strategist of The Oxford Club. He is also the Editor of Oxford Resource Explorer, Prime System Trader and The VIPER Alert, as well as a Contributing Editor to Energy & Resources Digest.
David Fessler is the Energy and Infrastructure Strategist of The Oxford Club. He is the Editor of Fessler’s Flash Profits and a Contributing Editor to Strategic Trends Investor and Energy & Resources Digest. As a degreed electrical engineer, Dave was vice president of two successful tech businesses – LTX Corporation and Quality Telecommunications Inc. Since “retiring” at age 47, Dave has used his educational and professional experience to research the best opportunities in the technology, infrastructure and energy sectors.
Steve McDonald is the Editor of Oxford Bond Advantage and a Contributing Editor to The Oxford Income Letter and Wealthy Retirement. He is also the Host of our Market Wake-Up Call videos. Steve is a regular speaker at many Club and Investment U conferences and seminars. He’s worked as a professional broker and has been an active trader of bonds for more than two decades, specializing in ultra-short maturity corporate bonds. Before entering the investment industry, Steve was a naval aviator, flying fixed and rotary-winged aircrafts, and also served as a surface warfare officer.
Karim Rahemtulla is the Options Strategist for The Oxford Club and the Editor of Automatic Trading Millionaire. He is a multilingual best-selling author and recognized derivatives expert with 25 years of investment industry experience. Through his Automatic Trading Millionaire service, he shows Members how to safely and reliably generate thousands in extra income each month by buying and selling exchange-traded options.
Nicholas Vardy is the ETF Strategist for The Oxford Club. Based in Europe, Nicholas is a widely recognized expert on exchange-traded funds and an accomplished investment expert. Nicholas has been a regular commentator on CNN International and Fox Business Network. He has also been cited in The Wall Street Journal, Newsweek, Fox Business News, CBS MarketWatch, Yahoo Finance and MSN Money Central.
TSX VENTURE SYMBOL: FUU
KELOWNA, BC , Oct. 25, 2018 /CNW/ – Fission 3.0 Corp. (“Fission 3” or the “Company“) announces that it has granted incentive stock options (the “Options“) to Directors, Officers, employees and consultants entitling them to purchase up to 8,100,000 shares in the capital of the Company subject to the policies of the TSX Venture Exchange. The Options are exercisable until October 25, 2023 at a price of $0.19 per share. The Options were granted in accordance with the Company’s Stock Option Plan approved by the shareholders on December 14, 2017 . The Options will vest as follows: 1/3 on the October 25, 2018 and 1/6 will vest every six months thereafter, until all Options have vested.
About Fission 3.0 Corp.
Fission 3.0 Corp. is a Canadian based resource company specializing in the strategic acquisition, exploration and development of uranium properties and is headquartered in Kelowna, British Columbia . That Company’s common shares are listed on the TSX Venture Exchange under the symbol “FUU.”
ON BEHALF OF THE BOARD
“Dev Randhawa”
Dev Randhawa, CEO
Fission 3.0 Corp.
Cautionary Statement: Fission 3.0 Corp.
Certain information contained in this press release constitutes “forward-looking information”, within the meaning of Canadian legislation. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur”, “be achieved” or “has the potential to”. Forward looking statements contained in this press release may include statements regarding the future operating or financial performance of Fission 3.0 Corp. which involve known and unknown risks and uncertainties which may not prove to be accurate. Actual results and outcomes may differ materially from what is expressed or forecasted in these forward-looking statements. Such statements are qualified in their entirety by the inherent risks and uncertainties surrounding future expectations. Among those factors which could cause actual results to differ materially are the following: market conditions and other risk factors listed from time to time in our reports filed with Canadian securities regulators on SEDAR at www.sedar.com. The forward-looking statements included in this press release are made as of the date of this press release and Fission 3.0 Corp. disclaim any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as expressly required by applicable securities legislation.
Neither TSX Venture Exchange nor its 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.
SOURCE Fission 3.0 Corp.
View original content: http://www.newswire.ca/en/releases/archive/October2018/25/c6982.html
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TORONTO and VANCOUVER , Oct. 25, 2018 /CNW/ – Minera Alamos Inc. (the “Company” or “Minera Alamos”) (TSX VENTURE:MAI) is pleased to report the discovery of a new broad zone of gold/silver mineralization in its Phase 1 drill program at the Santana gold project, Sonora, Mexico . The discovery drill hole into the new Divisadero zone, was drilled approximately 200m north of the known mineralization limits at the Nicho Main and Nicho Norte zones and returned a wide intercept of disseminated gold, silver and copper mineralization in a previously underexplored part of the Santana Property. The hole is the first drilled deep enough to intersect this new style of polymetallic mineralization that is associated with an andesite porphyry unit related to disseminated pyrite and intrusive breccias. Based on surface exposures and known geology the mineralized system appears to be open to expansion in all directions.
Drilling Highlights:
- Hole S18-121 – 95.7 m of 0.85 g/t Au, 9.8 g/t Ag and 0.33% Cu – (1.47 g/t AuEQ)
from 32 m
Including 70.0 m of 1.1 g/t Au, 11.8 g/t Ag and 0.56% Cu – (1.88 g/t AuEQ) beginning at 55 m down hole.
“This new discovery hole is an extremely exciting development for the Company” stated Darren Koningen , CEO of Minera Alamos . “One of the driving factors behind the merger between Minera Alamos and Corex earlier this year was the significant untapped potential we believed we could unlock once the two Companies’ contiguous land packages were combined. As our knowledge base grows and we continue to better understand the regional geology we should continue to find additional mineralization. The discovery of the Divisadero area provides further evidence that the mineralizing events that occurred in the Nicho area are present at shallow depths elsewhere on our extensive property holdings.”
Hole S18-121 (70-degree inclination) was the Company’s first effort to assess the potential extensions of known mineralization on Corex’s Santana claim group on to the Minera Alamos Los Verdes claim group directly to the north. Rather than exhibiting Nicho style mineralization, S18-121 returned a considerable interval of more porphyry style mineralization with broad, rather evenly distributed gold, silver and copper disseminated throughout much of the hole starting from 32 metres down the hole (see Table 1).
The Company is currently evaluating the significance of this new discovery and its relationship with the mineralized breccia systems that form the predominantly gold rich mineralization at Nicho Norte and Nicho to the southwest. Preliminary surface mapping immediately adjacent to the intercept shows that the mineralized porphyritic unit extends in all directions and appears to be distinct from the Nicho Main and Norte zones to the south. Additional holes are planned to further test the discovery as part of Phase 2 drilling at Santana.
The Phase 1 drilling program has now concluded with the completion of ten holes totalling approximately 1500 m . The remaining holes yet to be reported include further testing of the southwest extensions of the Nicho deposit (see Figure 1). Planning of the Phase 2 drill program will begin once the remaining drilling results have been received and evaluated.
Table 1 – Mineralized intervals from 2018 Santana Project drill program
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Mineralized Interval 1,2 |
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Drill Hole |
From (m) |
To |
Width |
Gold (g/t) |
Silver (g/t) |
Copper (%) |
Gold Eq 3 (g/t) |
Area |
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S18-121 |
32.0 |
127.7 |
95.7 |
0.85 |
9.8 |
0.33 |
1.47 |
Divisadero |
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incl |
55.0 |
125.0 |
70.0 |
1.10 |
11.8 |
0.56 |
1.88 |
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Notes: |
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1. |
Grades/widths of mineralized intervals represent complete “from” “to” drill depths as shown. |
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2. |
The hole was drilled at a 70-degree inclination. The true width of the mineralized zone in this new area is currently unknown. |
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3. |
Gold Equivalent calculated using the following metal prices – $1250/oz gold, $16/oz silver and $2.85/lb copper. |
Assay results are pending from the remaining three holes; the results, as well as additional geological interpretations, will be released as they are received over the coming weeks. All diamond drill samples were collected by Minera Alamos personnel including the Company’s exploration geologists. Drill core samples were cut in half and divided into 1- 2 m intervals. One half of the sample was bagged for analysis and the remaining half was logged by Minera Alamos personnel and stored for future reference. Blanks, duplicates, and standards were randomly inserted with the samples sent for analysis as part of the normal QA/QC procedures.
All samples were prepared and analyzed for gold using fire assaying with AA/gravimetric finish. All samples were sent for sample preparation at the ALS-Chemex facility in Hermosillo, Mexico .
View photos
Figure 1 – Drill Hole Location Plan (CNW Group/Minera Alamos Inc.)
Guadalupe de los Reyes Option Payment Extension
Minera Alamos and Vista Gold Corp. (“Vista”) have agreed to extend the due date for the second US$1.5 million option payment for the Guadalupe de los Reyes gold / silver project in Sinaloa, Mexico (“the GdR Project”) by six months to April 23, 2019. The extension will better align development plans for the GdR project with those previously announced for the Company’s Santana and Fortuna projects. Minera Alamos continues to advance engineering efforts for the GdR project and community discussions related to the development of a commercial gold mining operation at the site.
As consideration for the deferral, Vista will receive an additional US$150,000 in cash, US$50,000 of which has already been paid and US$100,000 of which will be paid no later than January 23, 2019 . In addition, Vista will receive interest at a rate of 1.5% per month on the deferred amount beginning January 24, 2019 .
Mr. Darren Koningen , P. Eng., Minera Alamos’ CEO, is the Qualified Person responsible for the technical content of this press release under National Instrument 43-101. Mr. Koningen has supervised the preparation of, and has approved the scientific and technical disclosures in this news release.
About Minera Alamos
Minera Alamos is an advanced-stage exploration and development company with a growing portfolio of high-quality Mexican assets, including the La Fortuna open-pit gold project in Durango with positive PEA completed, the Santana open-pit heap-leach development project in Sonora with test mining and processing completed and the Guadalupe de Los Reyes open-pit gold-silver project in Sinaloa with mine planning in progress. The Company is awaiting the pending approval of permit applications related to the commercial production of gold at both the Santana and Fortuna projects.
The Company’s strategy is to develop low capex assets while expanding the project resources and pursue complementary strategic acquisitions.
Caution Regarding Forward-Looking Statements
This news release may contain forward-looking information and Minera Alamos cautions readers that forward-looking information is based on certain assumptions and risk factors that could cause actual results to differ materially from the expectations of Minera Alamos included in this news release. This news release includes certain “forward-looking statements”, which often, but not always, can be identified by the use of words such as “believes”, “anticipates”, “expects”, “estimates”, “may”, “could”, “would”, “will”, or “plan”. These statements are based on information currently available to Minera Alamos and Minera Alamos provides no assurance that actual results will meet management’s expectations. Forward-looking statements include estimates and statements with respect to Minera Alamos’ future plans with respect to the Projects, objectives or goals, to the effect that Minera Alamos or management expects a stated condition or result to occur and the expected timing for release of a resource and reserve estimate on the Projects. Since forward-looking statements are based on assumptions and address future events and conditions, by their very nature they involve inherent risks and uncertainties. Actual results relating to, among other things, results of exploration, the economics of processing methods, project development, reclamation and capital costs of Minera Alamos’ mineral properties, the ability to complete a preliminary economic assessment which supports the technical and economic viability of mineral production could differ materially from those currently anticipated in such statements for many reasons. Minera Alamos’ financial condition and prospects could differ materially from those currently anticipated in such statements for many reasons such as: an inability to finance and/or complete an updated resource and reserve estimate and a preliminary economic assessment which supports the technical and economic viability of mineral production; changes in general economic conditions and conditions in the financial markets; changes in demand and prices for minerals; litigation, legislative, environmental and other judicial, regulatory, political and competitive developments; technological and operational difficulties encountered in connection with Minera Alamos’ activities; and other matters discussed in this news release and in filings made with securities regulators. This list is not exhaustive of the factors that may affect any of Minera Alamos’ forward-looking statements. These and other factors should be considered carefully and readers should not place undue reliance on Minera Alamos’ forward-looking statements. Minera Alamos does not undertake to update any forward-looking statement that may be made from time to time by Minera Alamos or on its behalf, except in accordance with applicable securities laws.
NEITHER TSX VENTURE EXCHANGE NOR ITS 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.
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Minera Alamos Inc. (CNW Group/Minera Alamos Inc.)
SOURCE Minera Alamos Inc.
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View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2018/25/c5613.html
VANCOUVER , Oct. 24, 2018 /CNW/ – Group Eleven Resources Corp. (TSX.V: ZNG; OTCQB: GRLVF; FRA: 3GE) (“Group Eleven” or the “Company“) announces the commencement of preliminary drilling at the Company’s 76.56% owned Stonepark zinc-lead project (“Stonepark”) in the Republic of Ireland . The primary aim of the program is to advance the Company’s ongoing ‘Big Think’ exploration strategy by providing important 3D geological information ahead of Group Eleven’s ‘Big Drill’ exploration program in 2019. Preliminary drilling is expected to total 1,500-2,000 metres and focus entirely outside the existing Mineral Resource Estimate footprint (see news release dated April 17, 2018 ).
View photos
Group Eleven Commences Drilling at Stonepark Zinc-Lead Project, Ireland (CNW Group/Group Eleven Resources Corp.)
“We are excited to embark on this important next stage of exploration in the Limerick basin. Despite being relatively new and underexplored, this zinc camp is already the most metal-endowed region in Ireland , outside Boliden’s Navan zinc deposit” stated Bart Jaworski , CEO. “Mineralization discovered to date in this area includes Glencore’s Pallas Green deposit1, our neighbouring Stonepark deposit2, our Carrickittle and Oola occurrences3, as well as, our five regional prospects identified by the previous operator. Our Gortdrum4 prospect – an open-pit copper mine from the 1960s – is also in the area and postulated as a feeder system for zinc mineralization in the district.”
“The above deposits and occurrences are located in a roughly concentric pattern around the Limerick Volcanic Complex. Recent academic work suggests these volcanics may play a significant role in the emplacement of zinc mineralization. One of the exciting ideas being developed by Group Eleven as part of the ‘Big Think’ is that known mineralization represents merely the outer edges of the system – with its heart located towards the centre of the volcanics. With that in mind, it will be very interesting to combine geological information from this preliminary drilling with results from the ongoing Tellus airborne survey to produce high-priority drill targets for next year’s ‘Big Drill’ program.”
What is ‘Big Think’? Group Eleven’s ‘Big Think’ exploration is an open-minded and methodical search for tier-one zinc deposits in the Irish Zinc District through comprehensive re-evaluation of over 70 years of exploration data, combined with cutting edge geophysical and geochemical techniques. The Company believes no other zinc-focused junior or major company is currently exploring on such a broad and deep scale in Ireland . Please see our ‘Q&A‘ discussion on the ‘Big Think’ for further information. For more information on the Tellus survey, see news release dated September 27 th, 2018. Maps of the Limerick basin are shown on www.groupelevenresources.com.
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__________________________ |
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1 Pallas Green hosts 44.2 million tonnes of 7.2% Zn + 1.2% Pb in the Inferred Category (Glencore; Dec 31, 2017). |
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2 Stonepark hosts 5.1 million tonnes of 8.7% Zn + 2.6% Pb in the Inferred Category (Group Eleven; June 18, 2018). |
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3 Carrickittle prospect hosts historic drilling with up to 5.8 metres of 10.7% Zn and 1.7% Pb; Oola prospect hosts extensive medieval silver-lead workings (Group Eleven intersected 0.45m of 107 g/t Ag + 4.9% Pb; Dec 31, 2017). |
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4 Gortdrum, mined from 1967-1975, contained an historic estimate of 4.2 million tonnes of 1.2% Cu + 23 g/t Ag. |
Qualified Person
EurGeol John Barry MSc., M.B.A., P.Geo, Vice President of Exploration Strategy and Director of Group Eleven’s Irish subsidiary, is the qualified person at Group Eleven Resources, as defined by NI 43-101. Mr. Barry has worked for extended periods on Irish-style zinc deposits over much of the last 30 years and is a professional member of the Institute of Geologists of Ireland and a member of the European Federation of Geologists. Mr. Barry is responsible for the scientific and technical information that forms the basis for this news release.
About Group Eleven Resources
Group Eleven Resources Corp. (TSX.V: ZNG; FRA: 3GE and OTC: GRLVF) is focused on zinc exploration in Ireland . The Company’s large land package (99 prospecting licenses totalling 3,200 square kilometres) allows Group Eleven to leverage new geological thinking and geophysical technology to systematically rethink key aspects of the Irish zinc district. Key projects include Ballinalack (with Joint Venture partner Nonfemet), Stonepark (with Joint Venture partner Connemara Mining), Silvermines (100%) and Tralee (100%). The Company’s team includes accomplished mining professionals with direct experience in finding mines, building companies and exploring Irish zinc deposits.
Additional information about the Company is available at www.groupelevenresources.com.
ON BEHALF OF THE BOARD OF DIRECTORS
Bart Jaworski , P.Geo.
Chief Executive Officer
Cautionary Note Regarding Adjacent Property Information
This press release contains statements regarding the Pallas Green Mineral Resource estimate by Glencore plc. Such statements are obtained from publicly available sources and are provided for informational purposes only. The results within the report referenced are not meant to be indicative of the results and findings of the Company’s Stonepark property.
Cautionary Note Regarding Forward-Looking Information
This press release contains forward-looking statements within the meaning of applicable securities legislation. Such statements include, without limitation, statements regarding the future results of operations, performance and achievements of the Company, including the timing, content, cost and results of proposed work programs, the discovery and delineation of mineral deposits/resources/ reserves and geological interpretations. Although the Company believes that such statements are reasonable, it can give no assurance that such expectations will prove to be correct. Forward-looking statements are typically identified by words such as: believe, expect, anticipate, intend, estimate, postulate and similar expressions, or are those, which, by their nature, refer to future events. The Company cautions investors that any forward-looking statements by the Company are not guarantees of future results or performance, and that actual results may differ materially from those in forward looking statements as a result of various factors, including, but not limited to, variations in the nature, quality and quantity of any mineral deposits that may be located. All of the Company’s public disclosure filings may be accessed via www.sedar.com and readers are urged to review these materials, including the technical reports filed with respect to the Company’s mineral properties, and particularly the technical report entitled “NI 43-101 Independent Report on the Zinc-Lead Exploration Project at Stonepark, County Limerick, Ireland ” with an effective date of April 26, 2018 by Paul Gordon , John Kelly and Belinda van Lente (SLR Consulting Ireland) with respect to the Stonepark Project.”
SOURCE Group Eleven Resources Corp.
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View original content to download multimedia: http://www.newswire.ca/en/releases/archive/October2018/24/c5419.html
Vancouver, British Columbia–(Newsfile Corp. – October 24, 2018) – Contact Gold Corp. (TSXV: C) (the “Company” or “Contact Gold”) is pleased to announce that it has filed a final short form base shelf prospectus (the “Shelf Prospectus“), further to its preliminary base shelf prospectus filing announced on September 28, 2018. Both documents have been filed with the securities regulatory authorities in each of the provinces and territories of Canada, except Québec.
The Shelf Prospectus will, subject to securities regulatory requirements, enable Contact Gold to make offerings of up to $30 million of any combination of common shares, debt securities, subscription receipts, units and warrants (all of the foregoing, collectively, the “Securities“) during the 25-month period that the Shelf Prospectus, including any amendments thereto, remains valid. The nature, size and timing of any such financings (if any) will depend, in part, on Contact Gold’s assessment of its requirements for funding and general market conditions. Unless otherwise specified in a prospectus supplement relating to a particular offering of Securities, the net proceeds from any sale of any Securities is expected to be used to advance Contact Gold’s business objectives and for general corporate purposes, including funding ongoing operations and/or working capital requirements, repaying indebtedness outstanding from time to time, discretionary capital programs and potential future acquisitions. The specific terms of any future offering of Securities will be established in a prospectus supplement to the Shelf Prospectus, which supplement will be filed with the applicable Canadian securities regulatory authorities.
A copy of the Shelf Prospectus is available on the Company’s issuer profile on SEDAR at www.sedar.com and also may be obtained by contacting the Corporate Secretary of the Company at Suite 1050 – 400 Burrard Street, Vancouver, British Columbia, Canada, V6C 3A6, telephone 604 426-1295.
This news release shall not constitute an offer to sell or the solicitation of an offer to buy, nor shall there be any sale of Securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such jurisdiction. The Securities have not been, nor will they be, registered under the United States Securities Act of 1933, as amended and may not be offered or sold in the United States or to, or for the account or benefit of, U.S. persons absent registration or an applicable exemption from the registration requirements.
Technical Report
The Company also reports that it has filed a National Instrument 43-101 Standards of Disclosure for Mineral Projects (“NI 43-101“) technical report entitled “Pony Creek Project, Elko County, Nevada, United States of America” (the “Report“), effective October 16, 2018 and dated October 22, 2018, on SEDAR at http://www.sedar.com. The Report has also been posted on the Company’s website.
About Contact Gold Corp.
Contact Gold is an exploration company focused on producing district scale gold discoveries in Nevada. Contact Gold’s extensive land holdings are on the prolific Carlin, Independence and Northern Nevada Rift gold trends which host numerous gold deposits and mines. Contact Gold’s land position comprises approximately 275 km2 of target rich mineral tenure hosting numerous known gold occurrences, ranging from early- to advanced-exploration and resource definition stage.
Additional information about the Company is available at www.contactgold.com.
For more information, please contact (604) 449-3361 for either:
John Wenger, Chief Financial Officer wenger@contactgold.com
John Glanville Director, Investor Relations glanville@contactgold.com
Cautionary Note Regarding Forward-Looking Information
This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate to, among other things, statements with respect to the Shelf Prospectus, any shelf prospectus supplements, the proposed use of proceeds from any offering using the Shelf Prospectus, and the anticipated exploration activities of the Company at its properties.
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.
VIDEO
AUDIO
TRANSCRIPT
Original Source:
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)
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.
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.
<p
You’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.
<
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.
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.
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You’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.
<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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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:
- Kirkland lake Gold acquiring 4M additional shares of Novo Resources at $5.00 per share for a total sum of $20,000,000.
- This transaction jacked up Kirkland’s stake to 18.86% in Novo on an undiluted basis (Just under the soft ceiling of 20%)
- On a diluted basis, Kirkland would own 25.46% of the company.
- Novo Resources acquires a large land package in the Egina area (Central Pilbara)
- International Prospect Ventures (IZZ.V) enters LOI for acquisition of an NSR on the Comet Well Property.
- Apparently McEwen is a major shareholder in IZZ(?).
- Novo Resources Exercises Right to Purchase Half of Comet Well Royalty.
- THE insider forks up the cash to buy back part of the royalty on Comet Well.
- Mark Creasy tips $1M into Coziron via his Creasy Group.
- Pacton Gold raises $5.5M in a private placement that includes Eric Sprott.
- Pacton Gold making multiple acquisitions and has started an aggressive boots on the ground program already.
- Including mining leases in the new Egina area.
- Even including an agreement in regards to plant access with Calidus, and a deal on the Radio Hill plant with Artemis Resources.
- DGO Gold acquires a 10% stake in De Grey Mining at a premium.
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 2017. Once 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.
- (Sub) Mt Roe conglomerates as evidenced by numerous Pilbarians and historical reports
- Hardey Formation conglomerates as evidenced by Beaton’s Creek, other Pilbarians and historical reports
- Modern gold bearing gravels derived from all of the above and possibly more as evidenced by Egina, Friendly Creek and countless historical reports
- Structural gold as evidenced by numerous Pilbarians
- 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:
- How big is the Sub Mt Roe mineralized gold system?
- How big is the Hardey Formation system?
- Is it similar to Beaton’s Creek in the West and Central Pilbara as well?
- Are there more systems?
- (The West Mt Roe conglomerates are believed to have been sourced from older conglomerates.)
- 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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