PDAC 2024: First Signs Of A Bull Market?


The Prospectors & Developers Association of Canada (PDAC) was well attended this year, with 26,926 attendees coming to Toronto from all over the world, for the best business, investment and networking opportunities in the mineral exploration and mining industry. This was a significant improvement over last year, when 23,819 participants visited the largest mining conference on the planet. With more than 1,100 exhibitors, including governments, companies and leading experts from around the world, PDAC 2024 was one of the largest events in the association’s history anyway. The weather was pleasant, with temperatures around 5-12C and lots of sun all week, with the outlier being the first day of the Red Cloud event, which saw an unforecasted drop to -1C and a bit of snow. I mention the Toronto weather separately as it can vary so much, and can be very harsh at times. As I am from The Netherlands, I am not used to Niagara Falls freezing temperatures at all, and prefer this for sure.

Last year’s PDAC sentiment was revolving around an anticipated upcoming recession and high inflation, potentially followed by a commodity bull market. We haven’t seen a recession yet, despite very mixed economic indicators, and we are still facing higher than targeted inflation (2%), after the most aggressive rate hiking sequence ever. The current high gold and copper prices might indicate the first signs of a long awaited commodity bull market, although highly inflated opex and capex neutralized most high metal prices so far.
When listening to many participants at this year’s PDAC, the general feeling seems to be if metal prices keep rising, and costs maintain current levels or even start dropping, the coveted bull market could commence, especially with many long-lasting shortages forecasted due to extensive underinvestments. It was a good thing to hear on many occasions, that juniors managed to raise much more money during PDAC than normal, likely supported by the recently achieved all-time high gold price, and copper reaching 7 month highs.

As always, the PDAC President made an official concluding statement at the end of the conference:
“PDAC 2024 carried forward the Convention’s 92-year legacy, serving as the premier venue for unveiling new trends, technological innovations, and industry discussions,” said PDAC President Ray Goldie. “Once again, PDAC was proud to showcase a rich array of programming including capital markets, Indigenous relations, student and early career development, and sustainability.
Canada is poised to lead the green transition as the supplier of choice for responsibly sourced critical minerals. It is imperative we bolster our critical mineral wealth, and we cannot ignore the foundations of our mineral industry. PDAC’s closing call to our federal government is that it must renew the Mineral Exploration Tax Credit that is set to expire this month.”

Much more interesting was the interview Goldie did with Investing News Network. He dubbed critical minerals as the main topic, followed by solving funding problems by juniors. He sees royalty companies and family offices starting to step in, where equity markets were before. The story about his involvement with the relocation of the convention from the Royal York to the Metro Convention Center makes you realize that Goldie isn’t completely new to the scene. He also mentioned the strategic plan of PDAC: the three purposes of the organization are giving members access to capital, access to land and access to skills. It seems PDAC is in good hands.

To get an impression of the level of keynote speakers: they included Jakob Stausholm, CEO, Rio Tinto; Michael Stanley, Mining Lead, The World Bank; Denise Johnson, Group President, Resource Industries Caterpillar Inc. and Wojtek Wodzicki, the Lundin Group Vicuña Exploration Team.

A household subject for my PDAC review is probing the sentiment on the exhibitor floor:

Michael Fox, Editor of Prospector News:

“I had a very good PDAC, it was extremely busy, I managed to put together a lot of people to talk business this year, more than the last few years, and secured some new clients. I found the sentiment as being cautiously optimistic. I suspect that a gold price over $2100 had a lot to do with that. I did however notice a lack of news coming out and more practically a lack of M&A activity. So, we as an industry still have a long way go to go before we have a healthy market again.”

Jason Weber, President & CEO of Silver North Resources (client):

“Of course the PDAC is now a week of conferences with the Red Cloud Pre-PDAC gathering Thursday-Friday, the Metals Investor Forum Friday-Saturday and then PDAC proper starting on Sunday through to Wednesday afternoon. It was great to escape the cold temperatures (and snow!) in Vancouver for the balmy Toronto temperatures but it makes for a long week. I was quite curious to see what the mood was going to be at PDAC after such a dismal fall and winter in the junior markets and no January-March uptick that we can often count on (and usually ends right around the conference). Although we are optimists at heart in this business, the mood was in fact cautiously optimistic this time around, being bolstered by the strong performance of gold and silver on the Friday before the conference and continued the following week during the show (further highlighted by the number of financings launched during PDAC).

Silver North did not have a booth at the Investors Exchange at the convention but did at the Metals Investment Forum. We spoke on the last panel of the day with John Kaiser and had a great response from investors, shareholders and technical people discussing our Haldane and Tim silver projects in the Yukon, even continuing as most of the other booths were torn down. That was very positive for us and is an indication that perhaps the tide is turning when it comes to discovery-stage silver exploration projects. Only time will tell, but there certainly was a sense that we might be coming off the bottom in the junior markets, and we have been faked by false starts many times in the last few years. That said, I think that there was a sense that we may have been seeing some real capitulation and that the bottom is in now.

We also had some very productive discussions with groups during PDAC that have projects available. My sense is that the difficult markets have forced companies to narrow their focus and trim their project portfolios because of the difficulties in raising capital to keep and explore them. We reviewed some surprisingly good projects that would complement our existing projects, and I have a feeling that the asking prices are fairly reasonable. Another sign that we are at or nearing a bottom perhaps.”

Zach Flood, President & CEO of Kenorland Minerals (client):

“I mostly had meetings outside of the conference this year. Sentiment was cautiously optimistic with gold price on the rise. Juniors are still struggling for capital. Majors are very active looking for good exploration projects.”

Ken Brinsden, President & CEO of Patriot Battery Metals:

“We could feel a perking up of enthusiasm and hope from investors around lithium in the recent months. We have also seen a big increase in the interest from strategic players in the battery supply chain industry to entertain discussions. We have seen the Japanese company Mitsubishi signed a JV deal with Frontier. There were a lot of Korean and Japanese groups in attendance at PDAC. EV sales are still maintaining their upwards trajectory and the worries that China will dominate the industry are very real. We believe we can play a key role in the Western world supply chain of battery materials.

What we are witnessing is a rapid improvement in the knowledge and understanding level of investors and market participants about the lithium industry and EV supply chain. The questions are getting a lot more precise and the differentiation of our main property, Corvette, compared to others, is better understood. Size and grade matter, of course, but crystal sizes, quality of rock for potential processing, quality of potential partnerships are all things that come up in conversations and create a distinct appeal for Patriot.”

Mark Saxon, President & CEO of T2 Metals:
“I headed to PDAC with fairly modest expectations. The broader market was testing all-time highs while the junior market was near all-time lows and little money had been raised. There are typically many no-shows during tough times, with empty booths the sign of capitulation. I was pleasantly surprised by the event however. Aisles were busy, booths were full, conversations weren’t too full of gloom, and most importantly I met quite few younger or less traditional mining people taking a fresh approach towards mining, exploration or marketing. My son joined me for the first time, and it was great to share a real PDAC vibe, even if my threats of the annual record-breaking blizzard were misplaced.

We were fortunate in T2 Metals (TWO.V) as we reported strong gold and copper results in the weeks leading into PDAC, and we sit within a group of companies that are all attracting interest. Our flow of foot traffic was constant and I’m sitting on a big pile of business cards needing follow ups. Investor interest switched from lithium & nickel to copper, gold & uranium, and it was great to see T2 Metals getting recognized for having acquired and progressed a strong copper-dominant project portfolio. I came away with an up-trending share price and a positive feel for 2024 for those companies with the technical team, project and mindset for real exploration.”

Greg Ferron, President & CEO of PTX Metals (client):
“My main observations are as follows:
Industry
• Strong government and industry support and growing interest (meaning real industry automobile, technology) for battery metals in Canada and globally. These groups generally focus on a theme to create jobs, politics, environmental, community such as First Nations and infrastructure, and take a long-term view. We are in the early stages of this transition and it’s great to see. They will probably invest big and play the long game, which will benefit the mining industry over many cycles.
• Finally, mining seems to get some respect for its importance, and improving ESG practices.
• In terms of the market, look at the big cap stocks in resources and mining. Inflows are starting the past 3 months with positive or flat performance from Teck, Barrick, Lundin, Suncor, AEM, TRP, AGI, Rio, BHP, AGI. We could very well be in the early stages of a major commodities and bull market for mining sector which could potentially run 5-10 years before leveling off to a more substantial and sustainable sector.
• Discoveries, robust orebodies, and hot metals still rule the sector.
• The junior mining sector needs a period of consolidation which could start in 2024.
PTX Metals
• More specific to home, PTX Metals Inc (PTX:CSE) (PANXF:OTCQB) recently acquired a historic copper nickel and PGE (dominant metals) and cobalt resource drilled by Inco, and was located within the existing boundary of its district scale W2 project in Ontario. The transaction will prove to be transformational for the company.
• An estimated USD$2.5 billion of in situ value on the historic resource area (14.6 Mt Cu Ni PGE). This excludes the 60 holes outside the resource area to the NE along 10km of strike.
• This is the first time any company has had the whole 250 km2 package together under one roof with the historic Inco resource blocks and extension to the NE that runs about 10 km.
• We are drilling now.
• Significant expansion potential at depth and step out along strike and new targets.
• The company also has several gold and uranium assets.”

Scott Berdahl, President & CEO of Snowline Gold:

"We had a busy run at this year’s show – at our booth, at the core shack, at various corporate presentations including the Tombstone Gold Belt breakfast, and at meetings all over downtown Toronto. It was great to see gold hitting record prices at the convention, and that brought with it a lot of enthusiasm and energy, but despite the optimism there still seems to be a sense of waiting—particularly waiting for gold equities to take meaningful steps towards the gains seen in the price of the physical metal. We’re still not seeing a huge influx of generalist investors, and it remains a difficult market for a lot of issues. At Snowline we have been fortunate to have kept a strong treasury, and while there is growing awareness of and interest in our story, I got the sense that there is a lot of capital in the wings that could come into the space if the gold price holds or if other tailwinds appear."

Mark Brown, President of Pacific Opportunity Capital:

“Well as an investor at PDAC, there were all sorts of ups and downs – Nickel and Lithium were on the down side while Uranium and Gold (and Silver!) were on the upside. Since most people look at these prices for sentiment it is important but the key is that high prices just get funding for exploration so discoveries can be made and that is what really brings in more capital to the sector. The suppliers, public companies and investors at PDAC were all very busy this year with lots of hard work to be done to bring the shine back to our whole modern mining sector. It was also great to see many younger faces at the conferences, keen to make a difference in supplying the green energy transition and new technology companies with always important metals.”

Brett Richards, President & CEO of Goldshore Resources (client):

“I think PDAC was as it always is – “Subtle Sunday” / “organized confusion” on Monday / and Tuesday-Wednesday student and senior citizen day(s) and overall, it is a good conference to take meetings, as everyone in our sector is in one city at the same time, so that has to be good – right ?
We meet – we speak – we catch up with people of days gone by and we look for new ideas.
But does it add shareholder value – no. Does it bring new orders to the mining services companies – not likely.

Is it a platform for social engagement, country/region promotion and overall marketing a brand – absolutely – but is there value in it ? It is a difficult argument to make pro or con – it is an event you have to go to, but wonder how is this helping my organization raise money (when there is no money) / create liquidity (when there is no money) – oh, but yes, it is “creating awareness” – so that must be worth spending $12-15,000 of shareholder money – as one has to get a booth spot and 3 people’s flights, hotels and any food and drinks not covered by all of the free events of banks and suppliers.

As was the BMO conference, I think the thematic is still copper, copper and more copper please. Gold played a close second, given the rally it went on during the week – but gold is only attractive to people over the age of 55 and PDAC’s demographic is about 2/3 in that age band, so gold was probably talked about more than usual, because we are all waiting for our “Day at the Races” and our “Night at the Opera”, when gold explodes towards $3,000 / oz or even higher. But I have to say that waiting continually feels like Annie – The Movie: ”Tomorrow – tomorrow – we love ya – tomorrow, you’re always a day away !”

Millennials don’t invest in gold – they invest in ADD trading environments like crypto and algo trading on high volume stocks for small margins, but consistent gains. Probably no one under 35 has ever heard of Warren Buffet, let alone learned what the fundamentals for good, sound investing for the long term mean.

I can’t help but think that over the last 3 years, these conferences are simply a means to promote a self-fulfilling prophecy – a rally / a bull run / stronger wind in our sails / momentum investing, use whatever adjective, metaphor or description you want; the sheer fact is that there are no new pools of capital being deployed into natural resources – full stop!

We can have a $3,000 / oz gold price and a $10/lb copper price – but if there is no correlation to mining sector valuations – there is no reason to get excited.
I will get excited when large, trillion dollar pools of fixed income / treasuries / bonds and other yielding products search for yield – and shift to higher risk and higher return investments; and by default, some of it will naturally come into natural resources.

When will it happen? Not until interest rates are so unattractive as an asset class – that money managers look to alternatives. Will we see it this year – who knows, maybe, but I doubt it. However, I caveat my statement with this: “We are in the midst of an early rally based on macro-economic fundamentals, like we have never witnessed in 50 years. It is early, and until capital flows into the sector – nothing is going to change. But the “wildcard” is the US election. The “Trumpian Spin Doctor” or the “Biden-omics Marathon Man” – both are going to exacerbate US deficits and compound the $34.5T US debt – with brand new QE to kick start the US economy / continued printing of currency, the continued over-spending on infrastructure and military, it is 2000-2020 all over again – wash, rinse, repeat – which is good for the US economy, but also good for gold, as markets know the trajectory of this plane takeoff! However, it loses altitude when the US Treasury has a problem finding financiers of their credit card spending spree. It is not a matter of “if” – it is a matter of “when”. The US have a problem – and people should listen to Jeff Daniels - as it feels like the US is losing its 250 year dominance to dictators, autocracy and megalomaniacs; of which one of the candidates seems like he wants to rule like one himself.

So was my PDAC experience rewarding, fulfilling and full of shareholder value ? Not really – it is why we don’t have a booth, as it is just another conference of meeting people who always hope for better days.”

Simon Dyakowski, President & CEO of Aztec Minerals (client):

“This PDAC was well attended and the turnaround in gold pricing on Friday March 1st, due to weakness in the US Dollar, created a noticeable buzz as the conference got underway on Sunday. The sentiment in the conference reminded me of early smart money positioning ahead of a broader sentiment improvement among the general investing public. It will be interesting to compare the attendance statistics from this PDAC to PDAC 2025.”

Rob McEwen, Executive Chairman & Chief Owner of McEwen Mining:

“The only area that I feel stood out was Saudi Arabia’s strong push to promote exploration, development and mining in the Kingdom. I believe that it could become a serious contender for attracting industry talent and expertise. They offer advantages that many other jurisdictions in the world do not, starting with access to large capital pools available at low cost, short permitting period, 100% property title, low cost power, relatively low cost labour, no indigenous issues, low cost sea transport, partial reimbursement of certain exploration and development expenses, coupled with an extensive geological database for the country with targets in a region of the world with a long history of mining in a very prospective geological region. The Kingdom has decided to make mining the 3rd pillar of their economy behind oil and gas and chemicals. From my point of view, what they are offering something better to encourage mining than any other country in the world is doing today.”

Mark Fedosiewich, President & CEO Vior (client):

“Overall positive sentiment change right now is like a slow moving train, but this could rapidly speed up and soon. We have already noticed a modest uptick in positive sentiment at PDAC due to rising gold and copper prices. What really changes sentiment is never clear beforehand, and the narrative always comes after the fact. Fundamentals and the technical indicators for metals are slowly improving and several positive catalysts for improving precious metals prices may include debt & deficit issues/geopolitical concerns/inflation risks and lower interest rates, or a combination of many.

The disconnect between resource equities and metal prices appears to be caused by the higher all in production costs neutralizing the higher metal prices, so when high inflation and rising costs abate with lower interest rates, and metal prices remain at current levels or ideally higher, this could really kickstart a positive sentiment train and a powerful bull market in resource equities. We have been through an extended period of resource equities selling, with the final washout having seemingly completed this past tax loss season, and into the January-February period.

When a real change in sentiment occurs, it will first be noticed within the producers, then the developers, and lastly the junior explorers. There are still reasonable pools of capital available, especially outside of Canada (Australia, US, Middle East, Europe) but you need to convince the right people to unlock it. Capital markets in Canada are somewhat broken for now, due to the continued overwhelming interest in tech & crypto, however, this could quickly change when some money flows begin to return to the resource and precious metals space.”

Until a few weeks ago, general mining sentiment was pretty negative. Usually there is a build-up after New Year towards the PDAC, supported by lots of positive news releases and accompanying marketing efforts, often followed by a sensational drop in share prices of (junior) miners after the PDAC, frequently dubbed the “PDAC curse”. This time things look a bit different, as mining metal bellwethers gold and copper only started rising weeks ago, seemingly in anticipation of a weaker dollar, shortages and lowering inflation. There wasn’t much of a PDAC buildup this year, and more and more people seem to believe in an upcoming bull market now, especially with lower inflation and rate cuts expected in H2, 2024.

The PDAC is also the stage for various awards, to acknowledge impressive feats in the industry. Two of the most important awards are the Bill Dennis award and the Thayer Lindsley award.

The Bill Dennis award, named for a former President of the association, honours individuals who have accomplished one or both of the following: made a significant Canadian mineral discovery; made an important contribution to the prospecting and/or exploration industry. The recipients for 2024 are: John Burzinski and the Osisko Mining Exploration Team for the discovery and ongoing expansion of the Windfall gold deposit in Quebec.
The Thayer Lindsley award recognizes an individual or a team of explorationists credited with a recent significant mineral discovery anywhere in the world. Recipients for 2024 are: the Lundin Group Vicuna Exploration Team for the discovery of the Vicuna district in the Central Andean copper province in Argentina and Chile.

The Bill Dennis Award: John Burzynski and the Osisko Mining Inc. Exploration Team

For the discovery and ongoing expansion of the Windfall deposit’s Lynx gold zone located in the Abitibi greenstone belt, Eeyou Istchee James Bay, Québec.

Discovered by John Burzynski and the Osisko Mining Inc. Exploration Team, the Windfall deposit stands as one of Quebec's most significant gold finds, both in terms of size and grade. It ranks among the premier discoveries not just in Canada, but globally over the past ten years.

In 2023, Osisko delivered a positive feasibility study on Windfall delivering 12.2Mt grading 8.1 g/t Au for 3.1 Moz Au of probable reserve. The study results outlined a robust project delivering an average of 306,000 oz Au/year of full production. The discovery of the Lynx zones at Windfall has resulted in an outstanding expansion of the previously known deposit in a volcanic belt not typically recognized as host of significant deposits and brought worldwide attention worldwide towards the emerging district.
The Lynx zones were discovered and expanded from 2016 through 2022. During that period Osisko executed an ambitious drilling campaign, ranked among the world’s largest, with up to 35 rigs operating concurrently on the site. This extensive effort, encompassing 1.8 million meters of drilling, marked a significant financial commitment to the district. Windfall's magnitude and ore grade have consistently grown since the discovery of Lynx in 2016, a testament to the success of their drilling initiative.

Remarkably, their program featured Canada's longest diamond drill hole, stretching beyond 3,400 meters. Preliminary data shows the deposit could extend beyond a depth of 2,800 meters. Combined with recent exploratory results in adjacent areas, there is compelling evidence pointing to a more expansive deposit. This underscores Windfall's potential to cement its place among Canada's elite long-life, high-grade gold deposits.
On May 2, 2023, Osisko announced a 50/50 Joint Venture on the Windfall Gold Project with Gold Fields for cash payment totaling more than C$600M. Combined with work and capex commitments, this represents an investment of C$1.2B at Windfall, fully funding Osisko to mine production and validating the quality and robustness of the deposit.

In my view it is a good, high grade deposit, although the amount of drilling (1.8M meters for just a 7.4Moz Au M&I and Inf resource, 3Moz Au converted into reserves) seems like an inefficient spending of exploration dollars. The market cap of Osisko Mining (C$1.06B at the time of writing) seems rich as well, since Osisko only owns 50% of Windfall after a 50/50 JV with Goldfields, although Windfall is fully financed to production now, with Osisko paying for 50% of capex, enabled by the Goldfields payments. At a gold price of US$2,000/oz Au, the after tax NPV5 for the entire project is US$1.275B, meaning the NPV8 likely drops below US$1B. Certainly when taking into account the date of the FS (Nov 2022), which means at least a 20-25% increase in opex and capex since then. There is no doubt in my mind Windfall will be profitable, but I’m not sure the valuation of Osisko Mining is justified, as they are valued at being into commercial production at the moment. There is still a few years to go for that, and many things can and will go wrong when constructing and ramping up. Let’s wait for the permits first, although Quebec is known to be supportive.

The Thayer Lindsley Award: The Lundin Group Vicuña Exploration Team

For the discovery of the Vicuña district in the Central Andean copper province in Argentina and Chile.

The Lundin Group Vicuña Exploration Team, including Wojtek Wodzicki, Bob Carmichael, Diego Charchaflie, Patricio Jones, Martin Rode, and Alfredo Vitaller, have achieved groundbreaking discoveries over the span of more than two decades. Their feats don't just encompass the identification of three copper-gold porphyry deposits but the establishment of a new mineral district astride the Argentina-Chile border. This success, a first in the Central Andean copper province for several decades, is attributed to a science-driven approach, technical excellence, entrepreneurial spirit, and perseverance.

In the 1990s, the Lundin Group initiated geological and geochemical studies in the Vicuña belt, an area of the Andes that had, up until that point, remained relatively underexplored. Positioned between the renowned Maricunga and El Indio gold-silver belts, this region posed formidable challenges due to its high-altitude conditions ranging from 4500 to 5500 meters above sea level. However, undeterred, their continuous endeavors unveiled a series of copper-gold porphyry systems. These include the Filo del Sol's shallow oxide mineralization found in 2001, the Josemaría deposit in 2004, the Los Helados deposit in 2008, the deeper Aurora zone at Filo del Sol uncovered in 2020, and most recently, the initial stages of Lunahuasi (formerly known as Potro Cliffs) in 2023.

At present, Josemaría is navigating its way from engineering evaluations towards obtaining permits and, eventually, entering production. Meanwhile, the Los Helados resource's growth trajectory has been upward both in terms of size and grade, thanks to the 2022 discovery of hidden copper-rich breccias. The Aurora zone, with its remarkable high-grade drill intercepts, has garnered significant attention. Evidence of this is a notable intercept measuring 858 meters with 0.86% Cu, 0.7 g/t Au, and 48.1 g/t Ag, leading to 1.8% CuEq in FSDH41. Aurora's high-grade finds persist, with extensions northward in the pipeline, and Lunahuasi's preliminary outcomes promise high yields, as demonstrated by a 60 m intercept with 7.52% CuEq, of which 10 m boasts an impressive 18.00% CuEq in DPDH002. Collectively, the resources from Josemaría, Los Helados, and Filo del Sol amount to 38 billion lb Cu, 28 million oz Au, and 356 million oz Ag, with a definite potential for expansion.

Given the immense findings and potential, the Vicuña district is poised to ascend as a pivotal global hub for copper, gold, and silver production — a milestone of paramount importance for both Argentina and Chile. This remarkable achievement has been predicated on traditional, tried-and-tested field methods, emphasising detailed outcrop and drill-core observation and state-of-the-art interpretation using the latest geological concepts and models.

The potential for this district has been known for a long time, but the parent company NGEX Resources lagged for a long time due to its low graded deposits, not economic at the time. This all changed after 2016, when copper and gold prices started recovering, and Filo was spun out, followed by further spun-outs Josemaria and NGEX Minerals in 2019. This bet on rising copper prices has been a long wait for the Lundin family (NGEX Resources was founded in 2009), but it is finally paying off, as the three spin-outs Filo, Josemaria (acquired by Lundin Mining) and NGEX already generated C$4.9B in value, and this certainly isn’t the end of it as especially NGEX is drilling the very interesting high grade Lunahuasi discovery with absurd intercepts of 62m @ 6.98% CuEq and 184m @ 4.61% CuEq.

As these two projects/district plays are more advanced and established, they are likely to receive such prestigious awards. Two other discoveries I am following closely, which in my view are almost certain candidates for the shortlist of these awards, are less advanced but already embody the absolute top for their respective metals lithium and gold: Corvette, the hard rock lithium project owned by Patriot Battery Metals, and Rogue, the Yukon gold project owned by Snowline Gold.

Last but not least there are the parties and dinners in the late afternoons and evenings, the networking events like no other, with dozens to choose from, ranging from Ripley’s Aquarium to the Steam Whistle to of course the famous Fairmont Royal York Hotel.

This concludes my review of the latest PDAC conference, and I’m already looking forward to the next one, which will be organized March 2-5, 2025. See you there!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.

Disclaimer:
The author is not a registered investment advisor, and currently has a long position in Silver North Resources, Kenorland Minerals, PTX Metals, Goldshore Resources, Aztec Minerals, Vior, NGEX Minerals, Patriot Battery Metals and Snowline Gold. Silver North Resources, Kenorland Minerals, PTX Metals, Goldshore Resources, Aztec Minerals, and Vior are sponsoring companies. All facts are to be checked by the reader. For more information go to the various company websites and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

Kenorland Minerals Drills 19.25m @ 19.95g/t Au At Regnault, Receives ECOLOGO Certification

As the stockmarkets in the US are printing all-time highs again, not really urging the Federal Reserve to lower rates anytime soon it seems as inflation remains well above target, Kenorland Minerals (KLD.V)(3WQO.FSE) announced the final drill results for Regnault, part of their flagship Frotet Project in Quebec. Again lots of good, economic intercepts, providing useful infill and step-out results, growing the mineralized envelope. Besides this, Kenorland completed the conversion of their 20% JV interest in the project into a 4% NSR royalty with Sumitomo, which is a formality, but still had to be finalized of course. On a more general note, Kenorland also received their ECOLOGO Certification for Mineral Exploration Companies after following a certification process for 2 years. This certification ensures the highest standard of responsible and social practices, involving  a rigorous audit to evaluate performance in environmental impact, personnel safety, well-being of impacted communities, fair and ethical business practices, compliance with applicable legal requirements and efficient use of financial resources. This alignes perfectly with everything else Kenorland is doing, as in my view it is the best prospect generator around by a countrymile.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding Kenorland’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Kenorland or Kenorland’s management. Kenorland Minerals has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

The Fall 2023 drill program results for Regnault were announced on February 23, 2024, and handled the assays for 20 holes, totaling 11.918m. These holes were designed as step-out and infill holes, especially for the R1 and R5-R8 structures, with the absolute highlight being 23RDD185, an infill hole for R6 which returned 19.25m @ 19.95g/t Au including 1.9m @ 106.48g/t Au, leaving a pretty decent residual grade of about 10.5g/t Au. Other highlights are:

The following map is probably hardly readable, but the black lines represent the recently reported collars.

For more clarity, here is the 3D model of Regnault structures:

Combined with this older 3D model:

Let’s see what the latest results could have added for ounces at Regnault. The latest reported results didn’t appear to extend R1, so we still arrive for R1 at 1100 x 300 x 5 x 2.75 = 4.5Mt, at a slightly higher average guesstimated grade of 6.2 g/t Au because of the recent high grade intercepts, this would mean a hypothetical 897koz Au.

The R2 vein only saw further infill drilling although narrow and high grade, so R2 is estimated unchanged at 1800 x 200 x 2 x 2.75 = 1980kt, at a slightly higher average guesstimated grade of 8.3g/t Au this results into a hypothetical 528koz Au. For the R3 structure it is the same, so the envelope could still be estimated at 1500 x 100 x 2 x 2.75 = 825kt, at a slightly higher average estimated grade of 7.4g/t Au this results in a hypothetical 196koz Au.

The R4 structure was drilled with broad step-outs, which also intersected much wider (but lower average grade) intercepts (35.45m @ 2.9g/t Au and 8.95m @ 6.34g/t Au) so this mineralized envelope increased considerably, and is guesstimated at 300 x 300 x 6 x 2.75 = 1.485Mt, at a lower average guesstimated grade of 5g/t Au (coming from 10g/t Au) this could imply a hypothetical 238.75koz Au (coming from 36koz Au so this is significant). This results in a total hypothetical estimate for R1-R4 of 1.86Moz Au.

Step-out results were also reported for the R5-R8 veins. For the R5 vein, the envelope is estimated this time at 900 x 75 x 5 x 2.75 = 928kt, at a slightly lower average estimated grade of 8.5g/t this results in a hypothetical 254koz Au.

For the R6 vein (including a second vein in between R5 and R6), the envelope is estimated a 100m longer now and slightly thicker due to the headline 19.25m @ 19.95g/t Au intercept, and sits at 1200 x 75 x 6.5 x 2.75 = 1608.75kt, at a slightly higher average estimated grade of 8.5g/t this results in a hypothetical 440koz Au. For the R7 vein (including a second vein in between R7 and R8), the envelope is estimated at 1050 x 50 x 7 x 2.75 = 1Mt, at an average estimated grade of 8g/t this results in a hypothetical 260koz Au. For the R8 vein, the envelope is estimated at 1050 x 80 x 3 x 2.75 = 693kt, at an average estimated grade of 7.5g/t this results in a hypothetical 167koz Au.

For the deepest structures R9, R10 and R11, up dip drilling was completed to test extensions towards the surface, but unfortunately intersected mineralization wasn’t economic so far:

“Two drill holes were designed to test the shallower portions of the Regnault diorite up dip from the 2023 winter discovery holes that intersected mineralization down to 1,000m vertical depth including 23RDD172 which returned 2.56 g/t over 41.85m including 11.96 g/t Au over 4.45m (see press release dated August 8, 2023).

These large step-outs (200-300m) returned narrow, moderate grade mineralization within the R9, R10, and R11 shear zones including 23RDD174 which returned 3.70m at 2.14 g/t Au including 0.40m at 10.70 g/t Au, a 215m up dip step-out from 23RDD159 that returned 1.20m at 55.70 g/t Au (see press release dated May 31, 2023).”

Therefore I go with my earlier estimates for these 3 veins. For the R9 vein I arrived at 1250 x 50 x 3 x 2.75 = 516.5kt, at an average grade of 8g/t this remains at a hypothetical 133koz Au. My existing estimates for the other veins resulted in 3 x 450 x 50 x 1 x 2.75 = 185kt @ 10g/t = 60koz Au for R10, and 3 x 450 x 50 x 2 x 2.75 = 371kt @ 15g/t = 179koz Au for R11. These R5-R11 veins result in a total, hypothetical number of 1.49Moz Au.

Adding those two sub totals together, my overall estimate for Regnault would increase quite a bit, and would go from a hypothetical 2.98Moz Au to a hypothetical 3.35Moz Au for now. For average grade I prefer to go slightly lower because of R4, from 7-8g/t Au to 6.5-7.5g/t Au.

Kenorland is drilling at full speed ahead at Regnault with 4 rigs, and at O’Sullivan with 2 rigs, and is still well funded with over C$20M in the treasury. The company will come up with an exploration update on all other projects later this quarter.

Conclusion

After closing the conversion transaction of their 20% interest in the Frotet project into a more valuable and much more tradeable 4% NSR, Kenorland keeps delivering with the drill bit at Regnault. According to my estimates, the final set of drill results has added another guesstimated 0.4Moz Au, arriving at a hypothetical 3.35Moz Au for now. This will certainly provide Sumitomo with a nice base case to build a mine plan upon, so I’m definitely looking forward to way Sumitomo plans to advance Regnault towards production, as solid plans for realization would put the 4% NSR firmly on the radar of the big royalty names. Besides this, let’s not forget Kenorland is well funded on its own, and doesn’t have just JV Tier I opportunities, but also some fully owned exploration jewels to work for on this year. Stay tuned!

For a quick overview of the discovery process of Regnault see this nice video.

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a long position in Kenorland Minerals. Kenorland Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.kenorlandminerals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

 

Goldshore Resources Grows Moss Into 1.5Moz Au Indicated And 5.2Moz Au Inferred

With the Federal Reserve indicating doubts about retreating inflation levels, postponing a potential first rate cut to at least May, the US stock markets hesitated just a moment, the S&P500 printing new all-time highs shortly after, and with gold remaining well over US$2,000/oz, Goldshore Resources (TSXV:GSHR)(OTCQB:GSHRF)(FWB:8X00) stayed the course as promised, and announced their updated resource estimate for their Moss Gold Project in Ontario.

The NI43-101 compliant 1.5Moz Au Indicated and 5.2Moz Au Inferred Mineral Resource was slightly larger than the last 6Moz Au Inferred resource, at a combined total of 6.7Moz Au. It was good to see Goldshore starting to convert Inferred into Indicated, with increasing grades. A higher confidence level is always good to have when engineering a Preliminary Economic Assessment (PEA), which is scheduled for later this year, always a useful first indication of economics. There is a lot to talk about regarding resource modeling, strategy and valuation, and I will do so with CEO Brett Richards and VP Ex Pete Flindell in this article.

All presented tables are my own material, unless stated otherwise.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding Goldshore Resources’ resource potential/economics including the non-NI43-101 compliant combining of Indicated and Inferred resources are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Goldshore or Goldshore’s management. Goldshore Resources has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

When Goldshore Resources announced the new updated NI43-101 compliant resource estimate for their Moss Gold project on February 6, 2024, the company not only showed resource growth and grade improvement, but also a partial conversion of Inferred ounces into Indicated, which is important for Moss. As the last updated resource caused a lot of confusion due to the overly conservative QP, CSA Global, investors definitely wanted to see a report that crossed the t’s and dotted the i’s this time around. New QP, APEX Geoscience, did just that, and although tonnage remained almost the same, new constraints and insights on modeling and the use of historic results generated a combined Indicated and Inferred resource of 6.7Moz Au, at an average grade of about 1.12g/t Au, versus 6.0Moz @ 1.02g/t Au Inferred for the last May 2023 resource estimate.

The indicated open pit total of 1.5Moz Au @ 1.23g/t Au is a significant advantage when contemplating a smaller 5,000tpd PEA scenario, as for example a 100koz per annum 2Moz Au total production scenario as calculated in my last article would be mostly covered by higher confidence Indicated ounces. Also of interest is the sensitivity table, as no less than 3.5Moz Au @ 1.98g/t Au remains for Moss at a cut-off of 1g/t Au, which is a very good grade for an open pit project. Of course as a lot of the higher grade ore is located below 200-300m depth, which requires a lot of sub-gram material to be mined, so Goldshore can’t just carve out a 2Moz @ 1.9g/t Au open pit production profile.

VP Exploration Pete Flindell notes the flexibility of the project saying: “Our paused PEA showed a 30Ktpd operation can sustain grades over 1 g/t Au for the first 7-10 years, an average annual production rate in excess of 250Koz Au and a life of mine strip of 3.4:1. The new model looks like it may support a smaller open pit operation with a grade north of 1.5 g/t Au, producing ca.150Koz Au per annum with a life of mine strip below 3:1. This is because of the density of shear-hosted mineralization along the core of the Moss Trend in the upper 200m.”

APEX optimized the open pit using costs from the paused PEA and an $1850 gold price. This creates a “superpit,” projecting to a depth of 400-500m, which shows that the Moss Gold deposit can sustain a large scale project. However, this would require a lot of infill drilling to convert as much as possible into Indicated for a PFS, plus metallurgical test work to prove up the viability of heap leaching for lots of low grade material. Furthermore, this would be the large capex option for Moss. Therefore, the smaller production scenario focusing on the upper 200m as mentioned above would be cheaper to develop and of course the small capex option.

Let’s get back for a minute and see how APEX reinterpreted the available data from 738 drill holes in total (historic and current drilling), and saw possibilities to convert into Indicated after all, after CSA refused to do so. First of all, they did an in-depth review and validation of all historical assays, and they also reviewed previous evaluation of twin drilling and resampling programs. APEX found that the twin holes generally exhibited corresponding mineralization with the historic holes with a degree of variability expected for a gold deposit, and resampled historic core showed no significant bias in resampled assay values versus original values. They did note that the amount of twinning and resampling wasn’t enough to draw definitive conclusions, but is adequate for a PEA, which is scheduled to be completed later this year once the viability of heap leaching is determined, and Goldshore/APEX can scope the proper process and project around the deposit.

As a consequence, APEX conducted a spatial paring analysis, comparing distribution of historical assays with modern drilling data. APEX compared assays from similar geological settings, noting that historical assays from low grade mineralization were not well represented because of high detection limits (effectively 0.35 g/t Au) or because the core was not sampled. This dataset contained thousands of paired samples, providing sufficient certainty for this current MRE. They concluded that the historical and modern paired data were similar without evident bias for lab methods or generations of data, providing sufficient confidence regarding historic drill data to complete this MRE.

It was interesting to see that APEX, after comprehensive modelling, developed shear-hosted gold estimation domains, based on Goldshore’s geological model to guide this domain modelling, and facilitate density assignment by geological unit. As a result, gold mineralization is represented by so-called Core Shears and Marginal Shears, with Core Shears containing higher grade gold in granodiorite units, and Marginal Shears containing lower grade gold in different host rocks. In total, 94% of gold mineralization of the MRE is contained in these 2 shear types. This constrained model reduced the amount of low grade diluting the shear-hosted gold mineralization, which is why the average grade increased by more than 10% in the new MRE. Through lots of cross sections, the potential for shears continuing to depth, along strike and in parallel settings is obvious, but the exploration for deeper mineralization will have to wait as comprehensive, deeper drilling would cost a small fortune.

VP Ex Pete Flindell was pleased with the work APEX had done so far: “APEX have completed a thorough and objective review of the geology of the Moss and East Coldstream Gold Deposits, and the underlying drill database. Their implicit modelling of core and marginal shears has led to a more accurate model of the gold distribution. This has resulted in a significant improvement in the Mineral Resource Estimate, which can now form the basis for infill and step out drill planning, and a definitive PEA. Their work also highlights immediate potential to grow the MRE in and outside of the RPEEE pits.”

As there is no sufficient budget for a costly drill program at the moment, Goldshore Resources will continue with a less expensive, but extensive program of relogging and resampling of all historical drill holes whose collars have been located and accurately surveyed. Where possible, these drill holes are also being surveyed using modern downhole surveying equipment. Resampling of historical drill core will continue, although most core blocks are now illegible rendering resampling impossible.

It is good to see them having the budget and time to optimize their PEA scenario, after members of the SAF Group came in, with Brian Paes Braga providing most of the money himself. I wondered what Paes Braga’s idea is for scenarios to create shareholder value. CEO Brett Richards commented the following: “BPB now owns 11% of the company – 31M shares.  SAF Group are now the strategic partner which comes in to buy the back end of a charity flow deal if we decided to finance a drill campaign, which is great to have.  However, we are both not interested in doing this on this valuation, so we will let the market determine when we are able to drill.”.

This all makes sense, and to be honest it is strange to see a junior with an economic and significant resource being in this position, entirely at the mercy of the markets. It is what it is as sentiment hasn’t been helpful the last year or so, despite the gold price doing very well. I discussed the extremely cheap valuation of Goldshore and what to do about it with CEO Richards at length.

The Critical Investor (TCI): Would you like to use the 1.5Moz Ind and for example 1Moz Inf as a base for a small 5000tpd PEA scenario regardless of met work results, or do you want to increase Ind further before including into the PEA?

CEO Brett Richards (BR):  “I can’t answer whether we will do a PEA on this resource or whether we step out, drill and add ounces to our global inventory. I don’t know – because the market is not giving us anything right now, and we can’t make decisions on a $25M MC. So I guess the answer is “yes” for both stepping out and adding ounces; and “yes” for infilling and commencing a study (PEA / PFS).  I am just not certain of the timing or the sequence, as the market will determine that based on how it values our higher quality resource.”

“If we were to conduct a PEA right now – I think we would look to delineating a quantity of ore sufficient for a 5K tpd operation (+/-) as we discussed before, and focus on where that is in relative to the pit shells put on the resource; and then hang together a project around that. However, there is an argument for continuing to step out some of these (many) targets, with a strategy to take this to 10M – 15M oz next stage of development. Through our summer field programs, the team has mapped a path to 10-15Moz Au in targets that lie within 5km of Moss.’

“Given the nature of this ore body – I think we would be jumping ahead by predicting what processing method we should be looking at, relative to the quantity or type of ore or grade of ore we have. I think methodically, we need to understand whether we drill for quality or quantity – as that will shape the discussion around what a study looks like after that. Only the market will tell us this.”

TCI: Would you ever skip a PEA and go for a PFS?

BR: “I think the Moss Gold Deposit needs to be better understood from a quantum perspective before we scope a project.  That being said, we may not have the share price luxury of either infilling the current resource to PFS levels; or fully exploring (drilling) the size of the upside.  We will eventually need to validate the economic viability of what we have by doing a PEA on whatever size resource we determine we want to work from as the starting point.”

“One critical component of scoping the correct process is also understanding the metallurgical performance of all of the possible processing permutations. The key missing element of this is whether heap leach recoveries are high enough (>50%) and can be combined with flotation (re-grind and CIL) of the sulphide associated material.  Is that the most optimum – we will hopefully answer that in the coming months.”

“To design a flotation plant plus HL, delivers a meaningful production profile of >350K oz per annum for >+14 years, this would require circa 10ktpd going through a flotation plant on a (low grade to high grade) cutoff at or above 0.8-1 g/t Au (so head grade for LOM would be > 1g/t Au, and in the early years close to 2 g/t Au.)”

“If heap leach column tests come back positive, then this option changes the project profile completely, and makes for a very economically robust option (HL + Flotation @ 10ktpd).

The heap leach results will not be known until June – so we have time to either consider moving right to a PEA on the current resource; or consider a step out drilling campaign to advance the size and quality of the current resource.”

Pete Flindell (PF):  “The hybrid process still requires mining at 20-40ktpd, so this is not the small project. We need to evaluate the 5ktpd mill option, but this would be a more selective mining scenario that has not been evaluated.  It is likely to be less economic than the above operation, but is probably the stepping stone that Goldshore may need in order to manage initial capex.”

BR:  “We are currently trading at less than C$4/oz Au in the ground, and it costs $10-$15 per ounce (discovery costs – depending on season) – so there is no current rationale to support raising funds until we are at least a C$75M market cap company.  Historical trading norms are C$20-$25/oz Inferred and $40-$60/oz Indicated – which illustrates a C$137M market cap potential just on Inferred ounces– hence showing the potential for GSHR’s share price to re-rate closer to historical trading norms.  But current trends are far from historical norms – and we are uncoupled to trading norms as any gold junior.”

TCI: This all makes a lot of sense. Since you are talking metrics per ounce, one could say these numbers are prohibited to more advanced projects with at least a PEA on them, or more obviously economic resources. I made a case for the small 5ktpd scenario in my last article, based on 2Moz Au production, but this is of course not the entire resource. Don’t you think you are discounted for a good part of the resource, as a big capex project is out of the question for now, and heap leach not a reality yet?

BR: “I think we are discounted to the historical trading norms because of the state of the capital markets, and investors thinking size and scale = big cap ex = only exit is M&A to a major.  We have explored all project size options from the largest to the smallest, and everything in between.  We will continue to assess them as we get the heap leach met test work back as well.  I think we are discounted beyond that (and beyond our peers) because of retail and blog rhetoric on whether or not we have a lake to move (we don’t); what the cost of re-routing the river will cost (it will be reasonable – estimated at $3M in the paused PEA), do we have power (we do), and is the resource real (it surely is) and so on.  Let’s face it, we have a Canadian retail market that promulgates mis-information in the public and trades on the margin (and even naked shorts) on that information. We are vulnerable because we have good liquidity; however there will be a day of reckoning and this market could move towards its largest precious metal bull run in our history.  In my view, it is not a case of if – it is a case of when.”

TCI: As you once told me you had a 3-5 year timeframe in mind for Goldshore, to explore, develop and sell it. We are 3 years underway now, are you looking around for a suitor for the entire project at the moment if you can disclose?

BR:  “I think I caveated that we have 3-5 years to explore develop and then decide what the quasi-exit strategy is: “proceed to construction/build” or “proceed to partner/sell”.  As far as the timeframe, you are right – we are in that window, but the market has impaired our (and everyone’s) ability to advance their project in a normal timeline, so we are not at that “fork in the road” yet.  So no, we are not shopping the resource or the company to the general market. There is very little M&A appetite in the junior space currently, and we are as undervalued as they come, so why would we engage.  Our job is to deliver value to our shareholders, not to someone else’s.”

“I guess the obvious question is: “Why would we sell – for what value ?”  We would be better to wait this out for at least 12 months if we were sellers.  On an EV basis, we would be more attractive in 12-16 months (all things being equal).  Do we sell on the back of a PEA ?  I guess that depends if we are at $50M MC or $250M MC. – and the higher the valuation, the closer we are to making a decision to built it ourselves (as we would be closer to financing it ourselves).”

TCI: Interesting to hear the mine-building scenario isn’t out of the question. Something else, since you mentioned earlier on that the required amount of drilling for a PFS might be an issue, let alone the entire 8km long mineralized trend with numerous targets, could you estimate how much drilling you would think you might need for these subjects?

BR:  “The question is akin to the length of a piece of string.  It can be as long as you want it to be – given the mineralization of the land package we manage.  We feel that we could bring a large percentage of the existing MRE resource to M&I for a PFS with 40-50,000m of drilling.  We also feel we could add another 5-7Moz Au to the resource with 50,000m of strategic step out and scout drilling, followed by infill and delineation drilling.  That tests less than half of the 36 known satellite targets to Moss we have identified as high priority targets for resource addition.  So it is a good problem to have, but a problem nevertheless at our current C$26M current market cap.”

“So what is going to deliver the best value ?  Proving up a project on the current resource and leaving the upside – or testing the upside and bringing more inventory to a future MRE (albeit most at Inferred).  History tells us that quality over quantity usually wins out, due to historical valuation norms – and it may in our case – but we don’t know at this stage until we get the met test work back for heap leach testing, and we can decide a path from there.”

“Recent history has also told us that multi-billion-dollar capex projects tend to get the least valuation – as the probability of financing is quite low; and the probability of M&A is always unknown.  So bigger is not always better – but we need some more answers before we scope the processing methodology and plant throughput.”

TCI: Sure, and a 50,000m program isn’t cheap at say C$300/m all-in ( C$15M). Bigger isn’t always better in gold mining, as for example Freegold has about 20Moz Au Ind & Inf but economics aren’t prolific due to partly refractory ore, low grade and high strip ratio, hence the market cap of C$158M, generating EV/oz of about C$8/oz Au. Goldshore doesn’t have all that, and I am convinced a small scenario for Moss could be pretty economic at US$1850 gold and despite the 8.75% NPI (low impact royalty), but I’m also convinced investors like to see a thorough PEA as proof for economic viability first at this stage versus expanding mineralized potential first to say 12-14Moz Au, as a 7Moz Au project would already have an undoable capex at this point. What is your view on this?

BR:  “I would tend to agree with your assessment, but even though we announced that we had commenced a PEA with Ausenco in April 2023; the market didn’t respond at all (in fact pulled back) and we paused the PEA, as the market showed us there was no support for any definitive economic results.  Quite frankly, good news has been a platform for sellers to get liquid; leading to share prices getting beat up on good news flow (case in point Goldshore).”

TCI: In my view robust economics are important for this project for investors, more important than size at this point. Don’t you think, let’s assume the heap leach testing is successful, it would be best to scope a medium sized 4-5Moz Au project, high grading as much as possible for superior economics, going to a 200-250koz Au per annum production profile, affordable for not only majors but also midtiers?

BR:  “I have no other point of reference here other than my experience and opinion, and I would say that there is no (reasonable) small scale capex project for any of these styles of deposits in Canada (even where there is significant and accessible infrastructure).  By small I mean sub $200M – so it is about optimizing (and maximizing) the production profile for as low a capex as possible, which is a very delicate balance.  Whether there is appetite down the road for M&A to majors or mid-tiers – that is a question for them; as all we can do at Goldshore is focus on what we can control and play within the confines of a gold price environment that we think is reasonable.  The size that we scope this project will be right for us – it may not be right for others (who have a different view or a different agenda). “

TCI: I’m curious what size Moss will be scoped at eventually, and what parameters will be decisive. What happens next for Goldshore?

BR: “We continue to utilize our FT dollars to conduct the heap leach column testing; we prepare a (non-drilling) field program for the summer and fall for Pete and his geologist; we prepare a (drilling) field program (and people program) for when we are in a position to raise capital to drill (and that is seasonal – as it requires a different program for a winter start than a summer start); we continue to complete the field mapping and structural modelling we are doing outside the existing resource...and I try and tell the story to as many new people who love the gold macro-dynamic that is in front of us (geo-political / macro-economic / US election impact / global chaos).”

“Gold is going to stay strong (in my view) and gold equities are currently “un-coupled” versus a historic valuation perspective.  This won’t stay like this – and shouldn’t stay like this for long.  That can only mean good things for Goldshore and Goldshore shareholders in the future – but patience is a virtue I am getting sick of having!”

TCI: As you brought up FT dollars for various things, we also discussed your burn rate, which was quite substantial well into 2023, and has come down since the summer of last year. What have you done to accommodate the current lean and mean MO for Goldshore?

BR: “As we have reduced our staff by 80% and a large part of the team (including me) are on 25-50% salary and no incentives – our G&A is <$60K a month (in fact it is $50K a month average).  We have very little marketing and advertising budget (zero) – and are attending one conference this year other than PDAC.”

“We need to be prepared (cash preservation) for a capital market environment that doesn’t come back for 2 years, and currently, we have 24 months of working capital (HD and FT) should we have to wait this out.”

“I have over C$1.5M of my own money into Goldshore as I believe it is a world class gold deposit – and it will be a winner.  I will continue to buy more in the future, as this is a project that will go into production one day.”

TCI: Such a low burn rate is good to hear, skin in the game is also important. You can still deliver significant value with the PEA on a skeleton crew I’d say, waiting for better times. What is the status of things for permitting, like baseline work for the EIA? I take it you will need at least a PEA to apply for an EIA?

PF: “We are continuing the background work with the environmental team and community that will give us a head start on the permitting. We will need to complete a PFS to define the scope of the project for the EIA and other aspects of the permitting program, but our current work streams will reduce the post-PFS studies and shorten the permitting timeframe.”

“With respect to the heap leach test work, the paused PEA shows that Moss is a highly economic project without heap leach. It’s just that with it, we can bring production forward, thereby adding ounces to the annual production profile, while reducing the amount of tailings capacity required. So this test program adds real value to a PEA if successful, but it’s not a bust if it turns out not to be viable.”

TCI: As we discussed in the last article, the met work results involving all scenarios including heap leach, are expected in March/April, and the PEA was being scheduled to be complete before Beaver Creek (usually around mid-September), so Moss can be properly marketed to financiers. What is the current status on this?

BR:  “We will get the test work back in May/June and present the findings to the market at that time.”

As a reminder for investors, here is the explanation again for any water issues investors might see with the Moss project. Keep in mind just a small local river needs to be diverted, a river that widened at the project and formed a shallow lake, without any protected fish species in it or others that could cause problems. VP Ex Pete Flindell explains:

PF:  "Our independent environmental consultants, CSL, have re-evaluated the bathymetric data for inclusion in the upcoming Technical Report. In the process they found errors in the previous statements but noted that measurements of depth assume surface elevations that can change by meters over the seasons. This is what they have written into the Technical Report: Moss Lake and Kawawiagamak Lake occur in the vicinity of the Moss Gold Deposit. Bathymetric surveys show these to average 4.6m and 2.7m, respectively, with maximum depths of 15m and 16m, respectively. The Wawiag River runs along the axis of the Moss Gold Deposit and widens over the Main Zone to form Snodgrass Lake, which averages 1.7m deep and reaches a maximum depth of 4m. This explains why the Ministry of Environment considers the “lake” a river for the purpose of defining water limits for our Permit to Take Water (required for drilling).”

As another reminder, here is the estimated DCF calculation for the Moss Gold project. Considering the amount of infrastructure and power that needs to be constructed, together with the diversion of the small river etc, management expects to start up with a 5,000tpd operation, producing 100-110koz Au per annum, with ballpark capex numbers around US$250-300M. This would mean US$50-60k/tpd which is extremely conservative. For example Nighthawk Gold used US$29k/tpd for their 17ktpd combined open pit/underground operation in their 2023 Colomac PEA. Using an average head grade of 1.75g/t Au, recovery of 94%, strip ratio of 10 : 1 (treating the low grade ore as waste in the operation without the HL part), a total high grade production of 2Moz Au for a life of mine of 18 years, and a conservative average AISC of US$1100/oz because of high strip ratio, stockpiling (Nighthawk used a strip ratio of 9 : 1 and AISC of US$828/oz), my discounted cash flow model (DCF) generated an after-tax NPV8 of US$353M, and an after-tax IRR of 27.3%:

These are very decent numbers, which might be even improved further after met work is completed, and the resource further high graded and/or converted. I’m looking forward to the Moss PEA for sure.

By mentioning hypothetical PEA numbers for Moss Gold, it could be useful to see where the project stands when doing a peer comparison. Here are several Canadian gold project in various stages and either open pit or combinations of open pit and underground. Keep in mind Moneta and Nighthawk merged recently (indicated by *) into STLLR Gold (I assume they mean Stellar Gold), and Marathon was taken over recently by Calibre Mining (indicated by **). As there aren’t too many single open pit projects around in Canada, I added them with their last data as an stand-alone company, as they were delisted only recently.

Next up is the table that provides the EV/oz metric, it is actually the only metric there is for explorers with just a resource estimate, although it doesn’t say anything about economic viability of course without a study.

It will be clear that Goldshore sits among the cheapest peers, and is in fact the cheapest based on EV/oz, but for example Moneta and Nighthawk aren’t far away, of which Moneta has a much bigger resource and Nighthawk a much better grade, and both have recent PEA’s completed. I haven’t studied the other projects in detail, and don’t have explanations why they traded so cheap, or why other comparable projects trade at much higher multiples. However, the projects with the relatively higher grade have this grade predominantly because of underground resources, which often sport higher grades in order to be economic. In my view Goldshore could go a long way high-grading their exclusively open pittable resource at Moss, generating great economics because of it, and in turn separating them from the low-valuation pack. Time will tell.

To get an idea about P/NAV multiples, have a look at the table below:

Goldshore would also end up around 0.05-0.06, firmly in the bottom quartile. It is fascinating how for example a Rockhaven with a very low capex and very high IRR still ends joined last with a P/NAV of 0.03. I haven’t looked into this but there must be a good reason. The same goes for Moneta and Nighthawk. It seems that US$300-450M capex projects aren’t punished for their higher capexes, even Perpetua with a US$1.26B capex has a much higher multiple although it is more advanced and in the process of receiving substantial government grants. Overall it seems the current bad junior mining sentiment drags most metrics down to irrational levels not seen before at these metal prices, high inflation skewing capex and opex or not. Normally a PEA of a strong, decent sized economic project should have a P/NAV of 0.15-0.20 at a gold price discounted by 10-15%, so undervaluation is present across the board here. All wisdom to Richards, Flindell and their team to scope the right project after they received all necessary data, and hopefully the markets cooperate, making things much easier.

Conclusion

With the SAF Group behind them backstopping any future financing, Goldshore seems to have found their coveted “strategic partner / investor”, helping them out when it matters most. The latest resource update provides Goldshore with options, and the ongoing met work will determine which scoping scenarios for the PEA are feasible. It was good to see them converting 1.5Moz Au from Inferred to Indicated, increasing confidence, and all done by desktop study and assay analysis, without new drilling. The upcoming met work results will determine heap leachability and in turn project scope, and the following PEA will show economic potential, and hopefully sentiment has improved by then, potentially causing a re-rating as Goldshore looks pretty undervalued at the moment, together with many peers. Stay tuned!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a long position in Goldshore Resources. Goldshore Resources is a sponsoring company. All facts are to be checked by the reader. For more information go to www.goldshoreresources.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

Aztec Minerals Delineates California Zone Further At Cervantes Project, Mexico

With the Federal Reserve indicating doubts about retreating inflation levels, postponing a potential first rate cut to at least May, the US stock markets drifted lower initially, but found strength again soon that same day, and gold didn’t even faze and marched up to US$2083/oz anyway, the highest level of this year. Aztec Minerals (AZT: TSX-V, OTCQB: AZZTF) naturally stands to benefit from this being a gold focused junior explorer, and came one step closer to delineating a resource at its California target, as part of its Cervantes oxide gold project in Sonora, Mexico, after completing and receiving assays of a 13 hole reverse circulation drill program.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding Aztec’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Aztec or Aztec’s management. Aztec has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

Aztec Minerals announced the results of the last 13 hole RC drill program in two batches, one about 3 holes on January 18, 2023 and one about 10 holes on January 30, 2023. The program was designed as a cautious step-out program, exploring the mineralized envelope outwards in all directions for another 50m, and all holes intersected oxidized gold mineralization, often close to surface. Highlights of the program showed the following results:

Although the grades and lengths weren’t as good as the majority of intercepts in the middle of the California Zone, they were near surface and could be above the cut-off grade for a future potential open pit operation,  new mineralization was added here for sure. These highlighted results are presented in red on the map below:

The encountered gold mineralization is characterized by oxidized and unoxidized stockwork veinlets and disseminated sulfide sites, with silicification and phyllic alterations. Potassic alteration is present in places and is associated with mineralization as well. The company continues exploration on the potential step-out areas (green zone) to support future delineation of new drilling targets in the vicinities of the drilled area, aiming to define a larger, potentially amenable to heap leaching, gold mineralized zone. The gold mineralization is interpreted as an oxide cap, located on top of an underlying porphyry target. Interesting here is the potassic alteration. Knowledgeable readers might recognize this from the exploration strategy used by Hercules Silver (BIG.V), aiming at a potassic core in order to find a high grade porphyry target below their silver oxide cap.

Although the grades of the recent drilling were lower and intercepts shorter than previous drilling, obtained data further supported the concept that much of the metasediments intersected are unconnected blocks as xenoliths within the California intrusive porphyry complex as relicts of its piercement by its uppermost levels. It is also being shown that the metasediments, specifically the quartzites, can host gold mineralization which hadn’t been well evidenced before.

What this means, is the uneconomic intercepts drilled in some of the holes are not necessarily the boundaries of the mineralized zone. Since the California North zone has prospective mineralization in 2 drill holes, it looks as if the company will continue a northward expansion and connection of the two zones with future grid drilling. The section of hole 041 provides clues to more mineralization down the slope of the ridge, although of lesser thickness compared to the ridge itself, as hydrothermal breccias continue into the valley to the west:

 

The results recently reported could very well add another 100-125koz Au, so my estimated total for California stands at 1.1Moz+ Au at the moment. Anything above 1Moz oxidized gold is an interesting addition to nearby heap leach operations in my view.

On a sidenote: keep in mind Alamos Gold is a natural suitor for the Cervantes project in my view, as its Mulatos operation is within trucking distance:

After Aztec Minerals completed 1,631m of RC drilling in the latest program called 3A, CEO Simon Dyakowski explained that there are permits in place for an additional approximate 15 holes and 2500m of drilling. The company will spend a couple of months in the field during the dry season to determine the specific targets of a follow up program integrating the results of the recent drilling.

The summer of this year is reserved for further technical studies, reconnaissance work on other targets, channel sampling and geologic mapping of the new drill roads at California and other targets around the target area to expand surface sampling and mapping on the property in general, potential metallurgical testing and finally the Cervantes phase 3B RC drilling program of approximately 15 drillholes comprising 2,500m including California Norte and Jasper, subject to market conditions and financing. CEO Dyakowski had this to comment on eventual deep drilling of porphyry targets: “Basically the entire zone is a porphyry target, as we are at the highest levels of the system. It is too early to tell if we will drill deeper in phase 3B as we have not modelled or interpreted the recent drilling data. It is dependent on many factors.”

Aztec Minerals is also working on interpretation and drill targeting for Tombstone at the moment, which CEO Dyakowski expects to shape up during Q1, 2024, but with no current drill program in mind yet. This will likely depend on the markets according to him, if the markets are positive it will be easier to raise enough cash to fund a drill program for Tombstone this year.

My global estimate for the mineralized envelope for Tombstone stands at a hypothetical 700koz Au. Future drilling is expected to focus on targeting step-outs to the west, filling in gaps, and deeper CRD targets, more specifically on strike and dip extensions of the shallow oxide mineralization, and move deeper to test for larger, deeper "Taylor-type" CRD targets along and adjacent to the Contention structure.

Conclusion

Aztec Minerals completed a third drill program at its flagship Cervantes project, more specifically at its California target, slightly expanding the mineralized zone with growth in most directions with predominantly oxidized material. Although grades and lengths in this particular program were less than previous campaigns, they added mineralization again, and do not necessarily indicate a boundary of mineralization. There seems to be an estimated 1.1Moz + Au heap leach potential for nearby, large strategic shareholder Alamos Gold, or eventual competitors. Besides this, there also appears to be significant potential at depth, and keep in mind Aztec has a second oxide gold project, this time with CRD potential, Tombstone in Arizona. Stay tuned!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a position in this stock. Aztec Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.aztecminerals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

 

Coming Up: PDAC 2024

Since I am again a proud Media Partner of the upcoming Prospectors & Developers Association of Canada (PDAC), I am happy to send you information about the largest, and at least in my view, best mining conference on the planet. Every aspect of the mining industry is showcased here, from miners to explorers to prospectors on one side showcasing their investment thesis to investors, to geophysical consultants, data engineers, engineering firms, service providers, etcetc all showcasing their services and products to the mining industry, complimented by lots of mining-related delegations from jurisdictions. All day long there are tons of presentations by mining companies, technical sessions and panels, and in the evenings there are parties everywhere in the direct vicinity, ideal for networking and dealmaking. It is all happening in Toronto on March 3-6, so make sure to register in time, which can be done here.

A bit of history and fast facts: PDAC was founded in 1932, as an association of prospectors gathered to fight a new Ontario Engineers Bill, requiring prospectors filing a work assessment to have the report signed by a mining engineer. The bill never passed. From 1933 onwards, with over 900 members already, the annual meetings were held in the King Edward Hotel, followed by dinner and dancing, already setting the stage for a charismatic, large scale event. In 1943, the annual meeting turned into a two-day convention, and in 1944 this convention, already grown into 1700 members, had to move to the legendary Fairmont Royal York Hotel.

This hotel was the stage for many decades, until the convention became so large it had to move to the current destination, the Metro Toronto Convention Centre in 1997.

The association’s current name Prospectors & Developers Association of Canada (PDAC) initiated in 1987. Lots of new features in mining have seen the light of day at this convention, as the display of geological and geophysical maps, flow through financings, partaking in the revision of National Instrument 43-101, environmental excellence in exploration (E3, 3Plus), and many new geophysical, exploration and mining methods have been showcased here. Over the years, the number of attendees has grown into huge numbers, from 2,300 in 1992 to 14,500 in 2006 to a record of 30,369 in 2012, a figure that still stands as the all-time high to this day, due to the peak of the bull market at that time. The COVID-19 pandemic caused the convention to skip the in-person edition in 2021 for the first time since inception, the (again first time) summer edition of 2022 generated 17,445 attendees, and last year’s March convention welcomed 23,819 attendees again, which is close to normal levels.

My estimate is that a regular PDAC crowd has about 23,000-25,000 attendees when I participated (every year since 2014).

The beauty of PDAC is that you can find and talk to anybody that has something to do with the mining industry, so from geology students to titans like Rob McEwen or Robert Friedland to presidents and ministers of lots of countries, to the commissioner of the Royal Canadian Mounted Police to First Nations chiefs. It is the only industry to my knowledge where you have free access to very experienced and powerful people, and the majority of attendees have the same incentive: making money on mining stocks, so there is almost always somebody to talk to about these subjects, and even a simple low-budget retail investor could bring interesting insights to the table when discussing stocks with a legendary billionaire.

It helps of course if you have done your homework, know somewhat what you are talking about, have pre-selected a few dozen companies you want to know more about, contacted management of those companies and asked a first set of questions as preparation before you come to PDAC. Make sure you get as many RSVP’s as possible at the company booths for lots of breakfasts, lunches and parties as access is sometimes limited.

Just create an account at pdac.ca and proceed from there, and who knows we will get the chance to meet up at the booths, the afterparties or just a random bar in Downtown Toronto!

 

 

Gamechanger Deal For Kenorland Minerals: Converts 20% Frotet Interest Into 4.0% NSR Royalty

Ice drilling at Regnault target, Frotet project, Quebec

At a time where markets are weighing Federal Reserve comments about being hawkish towards rate cuts as inflation remains persistent, two major conflicts deepen (Russia-Ukraine) or seem to spread out (Israel-Hamas), the BRICS expand with new members, and recession fears are looming large in the background, gold remains trading above US$2,000/oz. In this market with mixed sentiments for juniors, and I was frankly waiting for drill results for their flagship Regnault, Kenorland Minerals (KLD.V)(3WQO.FSE) didn’t hesitate and felt the time was right to convert their 20% interest in their Frotet project, located in Quebec, into a 4.0% NSR royalty, which in turn also terminated their 20/80 JV with Sumitomo Metal Mining Canada (SMM). For additional context, a NSR is the value of the free cash flow after capex payback of the total amount of gold produced, not a net profit royalty. This transaction appears to be a pretty advantageous one, and I will explain in the following article why I believe this is a positive gamechanger for the company.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding Kenorland’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Kenorland or Kenorland’s management. Kenorland Minerals has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

Since Kenorland Minerals completed a 11,918m drill program at the end of last year, drill results are expected around the end of January, and the upcoming 2024 winter drill program is about to start around the same time, I didn’t really see the royalty news coming to be honest. For now, it seemed Sumitomo was happy with the results of the ongoing drill programs so far, and even seemed inclined to shift towards completing a NI43-101 resource estimate, as the estimated 3Moz Au target appeared to be well within reach. Kenorland is also well funded with C$23M in the treasury, so the 20% Regnault exploration expenditures weren’t really an issue in the near future. However, CEO Zach Flood had good reasons to do the conversion at this point.

The entire Frotet project, covered by the 4% NSR

He felt that they had arrived at a point, where the recently commenced conversion from predominantly exploration drilling to more and more infill drilling would need lots of their own cash, which wouldn’t directly attribute or translate equally into more value, and would be also harder to recoup later on. Most of the new discoveries at Regnault were made at depth anyway, up to a 1,000m deep, so ongoing exploration at depth would have been costly anyway, and better preserved to continue as underground drilling during production. Besides this, Kenorland’s strength is early stage exploration and as they have acquired other projects recently, their resources are probably better used elsewhere.

On the macro side of things, with gold a bit on a plateau right now, but with rate cuts anticipated somewhere in 2024, an arranged royalty would gain lots of value when the gold price starts rising, likely having no trouble fetching a buyer in a mature royalty and streaming market these days.

The 4% NSR royalty isn’t really typical, as usually a 2-2.5% NSR is created for such a minority stake, or even less. The reasoning for Sumitomo to agree on this number was pretty simple. It not only consolidates the entire project for them, but the 4% appeared to be comparable with the 20% of the economics, so it was basically equal to the 20% interest, and on top of this, Kenorland already invested C$7M of their own money in the project, so for both parties it seemed a fair deal. When looking at the buy down terms, we get an impression of the actual worth of the NSR:

“The Frotet Royalty is subject to the following buy down rights in favour of Sumitomo:

In the event Sumitomo exercises the foregoing buy down rights, the Frotet Royalty would be reduced to an uncapped 3.25% net smelter return royalty on all minerals extracted from the Project.”

A 0.5% NSR being purchased for C$10M equals C$80M for the entire 4% NSR on paper, but this seems a bit rich at this point, where quite a bit of drilling is needed to generate a maiden Inferred resource. Since CEO Flood estimates that Sumitomo would need at least another 1.5-2 years of drilling for this, this could entail 45,000-60,000m of drilling, costing about C$23-30M. Since royalties typically sell for C$10M per 1Moz per 1% NSR at FS/permitting stage, and my estimate for the deposit stands at about 3Moz Au at the moment (more about this later), this would mean a value of C$120M at FS/permitting stage, which is many years out from now. How to discount to today I have no clue, but taking the buy down rights into account, it seems the 4% NSR could be worth C$30-40M today.

It is not just the current worth of the NSR, it also means saving 20% of all upcoming Frotet project costs, ranging from drilling to studies to construction packages, which could easily run into the hundreds of millions for Kenorland, generating lots of dilution as a significant amount of capital needs to be raised. This 4% NSR is completely dilution-free. Besides this, a NSR only starts to generate cash for the owner after the first years of production, which could be 7-8 years out from now. Theoretically one could assume the payback of capex debt at a maximum in the first 3-5 years, but normally payback schedules are spread out over 8-10 years, so free cash flow probably commences earlier, but with a very fast development scenario for Regnault, 7-8 years doesn’t seem unrealistic and even fast. Therefore this 4% NSR is much more value accretive and provides much more room to manoeuvre for Kenorland in terms of monetization.

Another advantage, and maybe the biggest advantage of all, is the termination of the first right of refusal (ROFR) that Sumitomo had on the 20% interest of Kenorland until production. It meant that Kenorland couldn’t sell its interest to just anyone, but always had to go to Sumitomo first, which could then offer a very low price, or not buy at all. With the NSR in hand, Kenorland can sell it at any point in time to whoever it wants.

After talking to CEO Flood it appears that it is possible for Sumitomo to develop a mine at Regnault, and this is what makes this 4% NSR so attractive, as these are rare and coveted by all the royalty companies. The value of this royalty will only grow over time, as Sumitomo likely keeps advancing Regnault, and hopefully the gold price will print new highs as well in the coming years. He also thinks that because of the extensions at depth of the current deposit, the strategy may be to define a resource in the shallower part of the mineralized system (less than 500m depth) as infill drilling at greater depths would be very expensive, and could be done better from underground, when producing.

The flipside of this could be that if resources at depth aren’t included in a resource, it would be harder to negotiate value for this when selling the 4% NSR, as future value at depth would only show when it is actually drilled many years later during production. CEO Flood had this to say about this: “The Great Bear royalty sold for C$200M with no resource, so no I don’t think that matters too much, as long as there’s exploration results showing obvious scale and upside. The value will be determined by what a large sophisticated royalty company is willing to pay for it.” Fair point, although I believe Kinross overpaid for Great Bear, and the royalty price got more or less extrapolated from that hype. Time will tell.

Another issue I wanted to ask Flood was this: although Kenorland remains the operator for another year, it made me wonder about access to drill data after that point, as I have seen many royalty holders being kept in the dark after conversion. CEO Flood had a surprisingly confident answer to this matter: “We have fairly comprehensive data rights and can still disclose material results on the project. Definitely, it’s very important these days to get data rights.…. It makes the royalty much more marketable.” This is a very important aspect of this deal, as Kenorland will have very close tabs on results, developments and value appreciation estimates this way. CEO Flood continues to impress me, and a grand exit would only be well deserved. Let’s see where this royalty, and his numerous other projects will bring him.

This actually lead to another question: what is the endgame he has in mind for Kenorland? Is he aiming at continuing this way, discovering and selling minority interests, in the meantime growing the portfolio, receiving management fees to cover G&A, and grow it into a business like GMX? Or is he looking to find that one big Tier I asset and drill it on his own, generating the big payday like Great Bear? Or could he be looking at a transformation into a royalty company like EMX after their $65M interest sale? CEO Flood had this to say: “Our biggest strength at Kenorland is early-stage exploration - we are experts in that environment.  Incredible value is created through discoveries and we will continue to focus there. In the meantime, we have incredible upside through the royalty alone and downside is very limited.  At the same time, we have this vast exploration portfolio with a massive amount of blue-sky potential.  It’s the best of both worlds when it comes to an investment in this space. We won’t be changing our strategy any time soon.”

To finalize, as promised, and since it has been a while, here is a reminder of my 3Moz Au estimate of the mineralized potential of Regnault.

So far, Regnault seems to be following the concept of a large intrusive Lamaque like plug with series of stacked, (semi) parallel veins extending to great depths. The latest  results also indicate further extensions of many known veins, and especially R2 and R3 appear to be quite long, almost 2km:

The veins R10 and R11 seem to be multiple stacked vein sets, consisting of 3 separate veins each. The R11 length is estimated at about 800m, the width 100m, and the R10 length about 800m and the width 50m. Lots of intercepts were extremely narrow, below 50cm but high grade (25-36g/t Au).

The R1 zone is in fact a set of layered veins, but for guesstimating purposes this will be simplified as one zone. The latest reported results didn’t appear to extend R1, so we still arrive for R1 at 1100 x 300 x 5 x 2.75 = 4.5Mt, at an average guesstimated grade of 6g/t Au, this would mean a hypothetical 870koz Au.

The R2 vein has been connected to the R5-R8 structures, so R2 is estimated at 1800 x 200 x 2 x 2.75 = 1980kt, at an average guesstimated grade of 8g/t Au this remains a hypothetical 509koz Au. For the R3 structure we have more visual information now, so the envelope could be estimated at 1500 x 100 x 2 x 2.75 = 825kt, at an average estimated grade of 7g/t this results in a hypothetical 186koz Au. The R4 structure appears to be unchanged, so this mineralized envelope is guesstimated at 200 x 100 x 2 x 2.75 = 110kt, at an average guesstimated grade of 10g/t Au this could imply a hypothetical 36koz Au. This results in a total hypothetical estimate for R1-R4 of 1.60Moz Au.

For the R5-R8 veins a link between R2-R3 and R5-R8 has been established through the summer program, so I’m inclined to extend the R5-R8 veins by 100m each. For the R5 vein, the envelope is estimated at 800 x 75 x 5 x 2.75 = 825kt, at an average estimated grade of 10g/t this results in a hypothetical 265koz Au.

For the R6 vein (including a second vein in between R5 and R6), the envelope is estimated now at 1100 x 75 x 6 x 2.75 = 1361kt, at an average estimated grade of 8g/t this results in a hypothetical 350koz Au. For the R7 vein (including a second vein in between R7 and R8), the envelope is estimated at 950 x 50 x 7 x 2.75 = 914kt, at an average estimated grade of 8g/t this results in a hypothetical 235koz Au. For the R8 vein, the envelope is estimated at 950 x 80 x 3 x 2.75 = 627kt, at an average estimated grade of 8g/t this results in a hypothetical 161koz Au.

The envelope for R9 appears to be pretty long as shown on the first map, at least 1250m long, and is therefore estimated conservatively at 1250 x 50 x 3 x 2.75 = 516.5kt, at an average grade of 8g/t this results in a hypothetical 133koz Au. New triple vein sets were also discovered at depth as discussed, which were called R10 and R11, and each has a minimum length of 450m per the news release. This would result in 3 x 450 x 50 x 1 x 2.75 = 185kt @ 10g/t = 60koz Au for R10, and 3 x 450 x 50 x 2 x 2.75 = 371kt @ 15g/t = 179koz Au for R11.

These R5-R11 veins result in a total, hypothetical number of 1.38Moz Au.

Adding those two sub totals together, my overall estimate for Regnault would come in at an hypothetical 2.98Moz Au for now. For average grade I maintain an estimated 7-8g/t Au.

This is it for now, Kenorland will come up with an exploration update on all other projects around later this quarter which I will discuss together with the drill results for Regnault, which are scheduled to be announced in 3 weeks from now, and the new winter drill program at this project will commence around the same time as well.

Conclusion

It is time for Kenorland Minerals to be valued appropriately, since everything they are doing is top notch and Tier I. The latest conversion of their 20% interest in the Frotet project into a 4% NSR speaks volumes again in this regard, and should be considered a gamechanger, as the advantages definitely outscore the current situation, and immediately generates a value accretive asset for the company, easy to monetize at anytime to anyone. I’m looking forward to Sumitomo’s plans with the project, as clearly visible advancement towards a mine is the catalyst that would create real value from the NSR. And let’s not forget Kenorland is well funded, and has a portfolio full of potential Tier I discoveries, which will see exploration plans for 2024 very soon. Stay tuned!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a long position in Kenorland Minerals. Kenorland Minerals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.kenorlandminerals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

Platinex Consolidates W2 Copper-Nickel-PGE Project In Ring Of Fire; Gearing Up For Exploration

Platinex Inc (PTX:CSE)(9PX:FRA) had to manoeuvre carefully on their fully permitted flagship W2 copper-nickel-PGE project, a district scale land area in Northern Ontario, but finally managed to acquire the two missing pieces of the puzzle in the centre of their claim package.

Management had been trying to buy the two square-shaped claims in the middle of their project for a long time, as they contain lots of drill results including a small historic resource, and are an integral part of the W2 project. The acquisition price was surprisingly modest and mostly paid in Platinex equity, so good negotiating by CEO Greg Ferron there. As Platinex is cashed up with C$3.5M in the treasury, and the mineralized potential is really significant according to the historic drill results and the recent 3D modelling, I’m definitely looking forward to upcoming exploration plans.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding Platinex’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Platinex or Platinex’s management. Platinex has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

After acquiring and expanding the W2 project during the last 2 years, CEO Ferron finally managed to get the last two remaining claim packages, located south-west in the Central Area, from the vendor Gungnir Resources (GUG.V), who noticed the progress with exploration permitting, and decided it was time to get some leverage to the upcoming action.

Negotiations were difficult in the beginning, but since Platinex would naturally be the only logical buyer as it owned all claims surrounding the two squared blocks, CEO Ferron managed to settle on pretty favorable terms for Platinex:

“Platinex has paid C$30,000 and issued 3,000,000 Platinex shares to Gungnir. The Platinex shares were issued at a deemed price of C$0.05 and are subject to the standard 4-month and a day hold period. Platinex has also granted Gungnir a 2% net smelter returns royalty on the 19 claims (the “Royalty Interest”), which the Company may repurchase 1% for C$500,000.”

Since Platinex has been trading in the C$0.04 range lately, the total acquisition price accounted for C$150k, 80% being equity, so I consider this pretty cheap considering the strategic location and the 14.6Mt historic resource on the claims.

Holding a consolidated claim package is of course very useful for designing drill programs, as the two squares contain several important targets (in brown):

The 32 newly acquired claims total 630 hectares (6.3 km2) and include 42 out of 73 historical drillholes drilled within the Central Area of W2 (see Figure 1). A significant portion of the historically identified mineralization zones lay on these newly acquired claims. This includes the following drill hole intersections completed by previous owners:

The claims already owned by Platinex had even better results from surface, so the company could have progressed with drilling anyway, but to have this all consolidated certainly helps with designing exploration strategies:

Most of the historical drillholes are shallow (less than 150 m) and with potential open at depth. Keep in mind that regarding geophysics, the most interesting claims are located in the east, as can be seen on this map:

However, these claims haven’t seen any drilling so far, so I’m definitely looking forward to this. The 3D modelling of the Central Area already revealed significant potential. The technical community that follows the project also sees the Eastern Area likely with the best strike length and the potential to host multiple higher grade deposits. The area has not been drilled and it’s the first time the entire W2 (formerly Lansdowne) project is under one roof including the central resource area, the northwest (vanadium area) and the east targets.

When doing a back of the envelope estimate, one could easily arrive at a 70-100Mt target for the orange-red shapes (indicating > 0.8% CuEq), and keep in mind these shapes are all positioned near surface, so this kind of grade would be pretty economic. An IP survey and prospecting is planned for Q2, targeting some new areas like the eastern section, together with met work. Drilling in the central area is scheduled to commence in Q1, 2024. According to CEO Ferron, the drill program will consist of 2,000m of diamond drilling, spread out over 8 holes.

The exact program will be determined following the completion of the Maxwell plates modelling which will be concluded in January 2024. The drilling will focus on a combination of deep holes and new targets in the Central area, and some in-fill exploration/verification/twinning along the mineralized trend. The timing of the Eastern Area will be determined during the Central Area program, but for now it seems realistic to have this commencing in Q2.

Existing mineralization seems to correlate well with geophysical anomalies and other data, so no more prospecting and mapping should be necessary according to CEO Ferron, but he wouldn’t rule this out either, depending on what his technical advisors have to say. He prefers to be aggressive though and drill as soon as possible at the Eastern Area as well.  It was also good to hear from him that he isn’t contemplating optioning W2 out anymore or even selling it, as the potential for a real company maker is impressive, and much bigger compared to Platinex’s other project Shining Tree-Heenan Mallard in my view.

Shining Tree-Heenan Mallard

Since Platinex is also working at the Shining Tree – Heenan Mallard project, a quick update on this is always a nice to have. A trenching program is being completed at the moment, with results likely due at the end of this month. Drilling will follow shortly after this in Q2, 2024, and Platinex is in counsel with its JV partner Fancamp Exploration (FNC.V) about this.

The JV has just completed 3 drill holes in trenches, and 2 step out holes, drilling for a total of about 1,000m, with assays expected back from the labs at the end of this month and throughout February. Currently, 4 of 5 holes have been completed.

Green Canada

Platinex is planning to spin-out Green Canada, a fully owned subsidiary owning 4 uranium projects (with more coming) in Q2, 2024. The company aims to hold about 60% of Green Canada leading up to the IPO, the idea is to dividend a significant part of this out to existing Platinex shareholders on a pro rata basis. At the moment, Platinex is very busy closing one final uranium asset acquisition, involving a project which according to CEO Ferron will be by far the new flagship asset for Green Canada. Currently, they are also doing due diligence on 3 other uranium projects, and starting to work out the listing strategy, timing and structure, aiming for a listing in H1, 2024.

Conclusion

It was good to finally see CEO Ferron closing the acquisition of the central claims at the flagship W2 project, as I knew it had been a bit of a burden for Platinex over the last 2 years. Claim acquisitions are always very sensitive matters, hence I didn’t discuss this topic earlier. With the company cashed up, and having prepared drill targeting based on various datasets, and drill permits in hand, I’m looking forward to the upcoming drill program and especially the results. Considering the realistic potential for a 70-100Mt near surface target, W2 has the potential to grow into a real company maker. The spinout of Green Canada is likely a value accretive event too depending on the incoming flagship asset, and as a wild card Platinex’s gold exploration at Shining Tree-Heenan Mallard might provide interesting results as well. I’m certainly looking forward to 2024 developments as a longtime suffering, patient shareholder as this could definitely be the breakout year. Stay tuned!

This article is also published on www.criticalinvestor.eu. To never miss a thing, please subscribe to my free newsletter, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a long position in this stock. Platinex Inc. is a sponsoring company. All facts are to be checked by the reader. For more information go to www.platinex.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

A Critical Q&A With Jason Weber, President And CEO of Silver North Resources

With the world around us being in a flux regarding conflicts, inflation, BRICS expansions and the revival of Trump with impending US elections, planned for November of this year, Silver North Resources (SNAG.V) actually experienced more of a standstill since their name change, a 5 to 1 roll back, renewed focus on their fully owned silver projects and leaving the prospector generator model back in August of last year.
The company only recently managed to raise C$1.00M after announcing this in August 2023, spread out over two tranches, and is preparing now for a new 2024 exploration season for their flagship Haldane Silver project in the Yukon.
It seems like a good time to interview President & CEO Jason Weber, discussing the various topics that might interest investors, from past, present to future developments, and hear him elaborate on why Silver North might be a good exploration bet this year.

All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.

When looking at the 3 year chart below, it can be seen that the Silver North stock received fresh interest when the name change and roll-back were executed in August 2023. This didn’t last too long however, as the financing took a long time to materialize, with only a first C$815k tranche closed on October 19, 2023, too late to do the planned autumn exploration because of the upcoming winter break in the Yukon, and not enough to complete a full drill program at Haldane.

Share price 3 year period (Source: Tmxmoney.com)

As Silver North traded at C$0.22-0.25 at the time, the two tranches consisted of C$0.20c common shares with a half 3y C$0.30c warrant, and C$0.20 Flow Through (FT) shares. The second tranche of C$185k was closed just in time at December 27, 2023, as the deadline for FT taxation purposes is December 31, 2023. Especially the FT discount (at least in October) didn’t come from strength, as usually for taxation reasons FT is issued at a 20-40% premium. This was somewhat surprising to me, considering the strong backing they enjoy from the likes of Fruchtexpress and Pacific Opportunity Capital, but more on this in a minute.

With C$0.7M in the treasury nowadays, Silver North seems to have at least a bit of a financial base for 2024, and as CEO Jason Weber is an exploration geologist, I expect the company to go out drilling as fast as possible in the spring. As I’m curious about his plans, but also wanted to hear more context about events leading up to the current status, it was time to sit down with CEO Weber and discuss Silver North in more detail.

The Critical Investor (TCI): Hi Jason, good to speak to you again. Silver North has seen quite a bit of events last year, most importantly in my view leaving the longtime prospector generator model, but it also experienced an important non-event, as the company wasn’t able to do any exploration in the second half of 2023, as the funds weren’t there in time. Could you explain to the audience why the financing took so long, effectively delaying the plans for autumn drilling until after the winterbreak?

Jason Weber (JW): It is no secret that the junior financing market was incredibly weak through the second half of 2023. Unfortunately, we at Silver North were not immune to what was facing most junior explorers through this period, but we were able to get some funds in the treasury to get a leg up on next year’s program at Haldane.

TCI: Could you give us some names of well-known investors or institutionals that participated in this financing?

JW: We actually worked very hard to bring in new groups to the story which together with management and current insiders filled out the two tranches of the financing.

TCI: Let’s get back to the strategy change for a bit. You told me the last time we got together that you felt that Haldane, and by extension, the entire company was not getting the recognition for the silver discoveries made to date (and the potential for new ones) especially considering that the project is located in one of the world’s highest grade silver districts with over 100 years of production history.

As a silver focused junior explorer, the company can more efficiently direct its efforts in unlocking the value at Haldane with a much simpler and streamlined story for investors. You also felt strongly that the outlook for silver was very positive, especially when one considers the vital role silver plays in the transition to a green economy in everything from solar panels to electric vehicle. I fully agree with your arguments. Isn’t it the case for many if not all prospect generators that it is hard for investors to recognize the value of various, sometimes many minority interests, often operated by third parties?

JW: Yes it is very unfortunate, because I think the prospect generator business model can be extremely lucrative for shareholders, however it is also one of the most challenging business models to execute. To elaborate a bit more on this: with prospect generating you are always pitching your projects to producers, based on their technical merits without much available data, akin to geological concepts or ideas. Producers have very knowledgeable geologists and certain thresholds for size, grade etc, and you must develop a level of trust before they will take on an early stage project, so it can be pretty difficult sometimes to get them on board. On the other hand if you succeed it is a considerable stamp of approval of course. I also think that you have to constantly evaluate your projects and their potential value. If the greatest return can be obtained by funding exploration with your own treasury (and therefore maintaining full exposure to the value of the project) you must take that approach – which is what we recognized with Haldane.

TCI: And to your second point: for some reason silver doesn’t seem to get the love gold does, as the gold/silver ratio is skewing towards gold again:

I haven’t seen silver going up on the EV boom notwithstanding that artificial Reddit spike in 2020, and gold is trading relatively higher since 2013 or so. Could there be specific reasons for this you think?

JW:I disagree, I think we have seen silver move with gold, perhaps with just more volatility than gold. I hesitate to say that silver isn’t going up on the EV boom, I think the arguments one makes for silver and its industrial usage are long term. The last six months are a very short period, and a volatile one at that – I am looking at the outlook for silver as positive long term. I do believe that we are seeing the earliest stages of a recovery in the silver price and that volatility we have seen is part of that.

TCI: With the Alliance still holding the Stateline and Klondike properties, and having seen numerous suitors looking at the properties last year, could you enlighten us with the current state of affairs for the Alliance and these two projects? As I recall you told me there was a lot of interest, and both projects have solid targets to explore.

JW: Again, with the weakness in the financing markets for juniors, potential partners are finding it difficult to raise funds for exploration. That has delayed the process of signing up new partners. Silver North is trying to divest Stateline and Klondike, as we manage these projects. Volt Lithium (previously Allied Copper), who partnered with the Alliance on Klondike and Stateline, has already paid for our current holding costs and exploration expenditures so there is no financial risk for us right now.

TCI: Let’s move over to Silver North’s flagship project, Haldane in the Keno Hill District, in the Yukon and very close to the former Alexco properties (now owned by Hecla). As a reminder for investors, you had an extensive exploration program planned for the autumn of 2023.
On a sidenote: I have always loved the geological thesis behind this project, as the host rocks of Haldane clearly resemble the geological makeup of the rocks that host the abundance of high grade silver mines and deposits the Keno Hill Silver District is famous for, with the two zones separated by layer of overburden - glacial till and glacial fluvial sediments in the valley bottoms. According to CEO Weber, the orientation of the rock units at Haldane varies from the rest of the district, so it might be that a later fault exists between the two areas. He also thinks that the grey quartzite may actually be present in certain areas of the overburden-filled valleys (light yellow) considering the quartzite and silver-lead-zinc occurrences showing up on the north side of the valley.

He also believes the quartzite continues below the orange-brownish Sourdough unit, so there is a lot of exploration potential. In general, he has seen enough evidence to believe glaciers have scraped off the weathered rocks in the broad valley that dominates the district, exposing mineralized zones directly in the quartzite, which could be found, explored and mined easily by the early prospectors. As Mount Haldane towered above the glacier, the weathered rocks are still intact, causing Silver North to drill through this weathered layer, with hopefully the same highgrade silver beneath it, resembling the rest of the Keno Hill district. This has been born out at Silver North’s West Fault discovery, where the initial shallow drill intersections intersected lower silver grades in well-developed, but highly weathered veins, where deeper intersections hit the same style of veins with high grade silver mineralization.

Silver North was planning to fly airborne electromagnetic and magnetic surveys to help map lithologies, refine target structures (strike extensions and offsets) and potentially identify new target structures that may be silver bearing. This work would be followed up by trenching where applicable and diamond drilling. Drilling will target the extensions down plunge on the West Fault target where high-grade silver mineralization has been identified over an area 100 meters by 90 meters in size, and on two structural levels within the West fault structure.

Drilling would aim to build on previous intersections at West fault including 3.14m @ 1,315g/t silver, 2.43% lead, and 2.91% zinc (true widths), with grades and width increasing at depth. At least four holes were planned to test the extensions of this mineralization on 50m stepouts.

Drilling was also planned for the Bighorn target located 3 kilometers to the northwest of the West Fault. The Bighorn target was identified from soil geochemical sampling that returned anomalous values for lead and silver in soils. The only drill hole at this target returned 125.7 grams per ton silver and 4.39% lead over 2.35 metres from previously unrecognized vein structures. Trenching and groundwork in 2022 programs was able to refine targeting at Bighorn, and additional drilling will test this target for its potential to host wide, high grade silver mineralization. Additional drilling will also target the Main and Middlecoff targets, and any targets generated from the geophysical data and trenching.

Could you tell us if this exploration plan is still intact, if not what the adjustments are, and a global timeline for all this?

JW:That is still the plan. It is important to remember that we have an abundance of targets here. As the financing market improves we are able to test more targets, or drill more holes at each of the targets we want to test. Ideally we would like to commence drilling at the end of May, when the spring break up has ended and ours roads are dry and firm, so a completed financing before this would be convenient of course. We have cash to start up drilling, but we need more for a full program.

TCI: As drilling so far only returned a few economic intercepts, could you indicate to the audience what the potential is here, and why you believe this? Are you aiming at something like Keno Hill style intercepts of say 10m @ 7,500g/t Ag or an average reserve grade of 600-700g/t Ag?

JW: Absolutely, we are targeting deposits on the scale and grade of what Hecla and all its predecessors have mined in this district. Our West Fault drilling has shown that Haldane hosts both high grade and wide zones of mineralization indicating that the property can host deposits of the size our neighbour is mining. We also have very thick occurrences of the Keno Hill Quartzite – meaning we have great depth potential for mineralization. Some of those extremely high grades you quote from Hecla occur deeper than what previous workers in the district thought possible.


These recent deep intersections are extremely positive for the district and for Haldane itself. Amongst the various vein structures identified to date, we have in excess of 12 km of combined vein strike length potential to explore. We’ve only tested less than 600 metres of that! And now we know that anything we find can be continuous to depths not historically recognized. This is why we are so excited to have this project – it is a greenfields exploration opportunity in a prolific silver district – such a rare scenario.

TCI: Sure the exploration potential is there. So you figure the most potential for economic mineralization might be at depth, which is of course more costly to drill out?

JW: Sure deeper holes cost you more money, but in our case we can approach targets laterally along strike as well, and as we move down the hill sides, perhaps we won’t have as deep a weathering profile to deal with and therefore fewer metres required.

TCI: Regarding timelines, overall progress is fairly slow with a handful of drill results for most of the seasons each. Targeting deep mineralized potential doesn’t make this any easier. Could this be a reason for investors to look elsewhere, and have you switching to more drastic measures like a roll-back? Do you have something in mind to make things more compelling and attractive for investors, maybe also during the winter break?

JW: I think this was the basis for making the transition to Silver North and focusing on Haldane. With that focus we will be targeting larger programs, testing more targets with drilling and moving the project forward more efficiently.

TCI: Besides own exploration, another important regional development is ongoing next door as we know. At the moment, Hecla Mining just reached full production at their nearby Keno Hill silver mine, achieving 1.5Moz Ag for 2023, having solved the mining/milling issues that plagued new acquisition Alexco. The AISC is forecasted to be US$13.50-16.75/oz Ag, which is decent at a current silver price of US$23.03/oz Ag, and will likely come down more this year, as Hecla aims at ramping up to full production, which could come in at an estimated 2.5-3 Moz Ag/pa. Could you explain to investors how this development could exactly be a positive for Silver North? Should we think of existing infrastructure, or eventual ore trucking to the Keno Hill Mine?

JW: This is extremely positive for Silver North. One of the concerns investors may have had previously was that the deposits in the Keno District could not be mined economically with Alexco having issues when ramping up. With Hecla changing that narrative we will benefit with investors from this, attributing greater value to what we find, whether it is a standalone silver project or is trucked to existing facilities.

TCI: The second most important project for Silver North is the Tim Silver project, also in the Yukon. Coeur Mining, which has optioned the Tim Silver project, hasn’t been very active since 2021, as the exploration permit took more time than initially anticipated.

On December 21, 2023, Coeur and Silver North announced a slight adjustment to their option agreement to incorporate the permitting delays, giving Coeur more time to spend their exploration expenditures.
As a reminder, Coeur can earn a 51% interest in the Tim Property by completing all exploration expenditures and cash payments due by December 31, 2026, which will total at least C$3.55M and C$425,000 in cash payments. Coeur can bring its interest up to 80% by making additional cash payments of C$100,000 per year, completing a positive feasibility study and informing Silver North by December 16, 2028, of Coeur’s intention to develop a mine on the property. Coeur is the project operator and is currently compiling the data from previous programs and refining targets for the 2024 diamond drilling program at Tim.
Could you tell me more, if you have any idea at least, about this upcoming program regarding amount of meters & holes, cost per meter all-in, timelines?

JW: I don’t have anything concrete to discuss regarding the 2024 program at Tim, other than Coeur is committed to a $700,000 program and drilling will be a big part of that. With their existing infrastructure at Silvertip, only 19 km away by road, they expect the drilling costs to be relatively low. We expect the initial tests to be fairly shallow as they will likely test down dip from surficial showings.

The Coeur team has been quite successful expanding the resources they have a Silvertip in recent campaigns and have identified many similarities at Tim to the Silvertip deposits. Needless to say they are eager to apply the knowledge and expertise gained at Silvertip to make a new high grade silver discovery at Tim. We will be meeting with the Coeur team in the near term to get a better idea on the individual targets they are testing, the number of holes and depths, as well as projected start dates.

TCI: As Silver North has other projects as well, I wondered what the status of these projects was. For example, the company has been actively seeking a partner for their fully owned Twin Canyon gold project in Colorado since a year now, a project which also has seen its fair share of prioritizing drill targets, and a drill permit for a 13 hole, 3,950m RC drill program, being granted a year ago.
Besides this, Silver North has other projects in its portfolio, like in Nevada and Peru, and is actively looking to divest those or find partners for them. Could you give a quick update on these projects?

JW: Potential partners are finding it difficult to raise funds for exploration these days. I expect that as this changes we’ll see increased urgency from potential partners to get deals completed on these projects.
Having said this, we have trimmed down our portfolio in Nevada, dropping projects so we don’t retain further financial obligations on projects there.

TCI: This seems like a comprehensive update for investors. Do you have anything else to add here Jason, maybe ideas for M&A etc?

JW: One aspect of the difficult markets is that there are some really interesting silver projects that are available right now. We have evaluated a number of potential acquisitions that would be complementary projects to our current portfolio. We have shortlisted our favourites and where there is potential for a reasonable deal, we will work to build our silver portfolio.

Conclusion

Although negative junior mining sentiment has made an impact in 2023, I do believe Silver North Resources made the right decision by abandoning the prospect generator model, and instead focusing clearly on a fully owned flagship project like Haldane. They have raised enough cash to commence exploration this spring and summer, which hopefully could generate some solid results, bringing the share price at different levels, enabling the company to raise more with less dilution.
Besides this, partner Coeur is preparing to commence drilling in the spring at the Tim Silver project, and who knows they will find another Silvertip, as back in the day exploration between the two properties reportedly was determined by a coin flip, as potential looked so similar. Stay tuned!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter, in order to get an email notice of my new articles soon after they are published.
Disclaimer:
The author is not a registered investment advisor, and currently has a long position in this stock. Silver North Resources is a sponsoring company. All facts are to be checked by the reader. For more information go to www.silvernorthres.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

Mt Haldane

EGR Exploration Options Out Urban Barry, Plans Further Exploration At Detour West

After a busy summer of prospecting, mapping and VTEM surveys, EGR Exploration (EGR.V) is ready to commence the next phase of exploration at their flagship Detour West Gold property in Ontario. The project is on trend and directly west of the giant Detour Lake gold mine. EGR used a C$200k grant from the Ontario government for its summer work, has about C$300k left in the treasury, and gets a bit of money for optioning out their Urban Barry property, so fresh cash needs to be raised before 2024 drilling will commence. EGR managed to design a pretty extensive drill program, and this article will delve deeper into this.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

Please note: the views, opinions, estimates, forecasts or predictions regarding EGR Exploration’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of EGR or EGR’s management. EGR Exploration has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.

EGR Exploration managed to option out their Urban Barry property to Harvest Gold (HVG.V) a week ago, under the following terms:

This is a very small transaction, but it brings in some cash and shares, and removes exploration obligations for EGR for a non-core asset, which is always a good thing.

EGR completed its summer outcrop and prospecting program at Detour West in September, after completing interpretation of the high resolution airborne magnetic survey, both focused on drill targeting. As Detour West doesn’t have the easiest topography (most of it is swamp land), outcrops are limited, and had to be identified by LIDAR satellite imagery. This also means, that most of the outcrops needed to be accessed by helicopter. All gathered data will serve as a base for glacial till RC drilling. EGR has one of the foremost experts on glacial till sampling/RC drilling on its team, David Stevenson from Kenorland Minerals, where he co-developed a successful glacial till exploration strategy with the likes of Kenorland CEO Zach Flood.

The airborne magnetics survey generated a very detailed map, clearly representing 2 important fault lines, the Sunday Lake Deformation Zone (SLDZ) and Lower Detour Deformation Zone (LDDZ), which originate onto the Detour Lake Mine property, with SLDZ containing most of the mineralization at Detour Lake.

The company is targeting gold deposits associated with the potential extensions of the Detour-Fenelon trend structures onto the Detour West property:

As a reminder, EGR Exploration has decided to follow the exploration approach which has been successful for the Detour Lake Mine. This approach had a number of subjects which EGR wants to apply, with a few tweaks here and there. A review of Detour Lake Mine’s 2018 NI43-101 report 1 indicated that a successful pre-drilling exploration approach especially south of the Lower Detour Deformation Zones (LDDZ) has been Induced Polarization (IP) surveys on 200 m line spacing and Mobile Metal Ions (MMI) geochemical survey to assist in ranking of the geophysical IP anomalies.

With a bit more detail, the company is looking to do a program along an 8 km stretch of the western interpreted extension of the Sunday Lake Deformation Zone (SLDZ) starting approximately 1 km to the southeast of the A series RS drill holes. There are 10 airborne anomalies and 3 elevated conductivity zones present along this stretch of the interpreted SLDZ. Gold mineralization along the SLDZ is typically associated with the structural contact between mafic rocks of different ages. One thing to keep in mind is that the western part of the property can’t be explored as the thick meandering black line below indicates the watershed boundary.

The combination of all geophysical data, zoning limitations, prospecting, historic results, mapping, structural targets (see ellipses below) etc has resulted into the following drill targets, with drill holes planned 300m apart at fences 1,000m apart (lower map below):

The idea is to drill up to 125 RC/diamond holes in total that are aimed at testing the top of bedrock through the up to 60m thick glacial till, with the base of the till samples being expected on average to be at 40m deep. At that stage they will be ready to follow up with deeper diamond drilling if they receive promising results. So far the goal is to test top of bedrock and get a gold dispersal train, and hitting the right type of rocks along the East/West structures, proving up mafic, ultra mafic rocks and host rocks similar to the Abitibi, Detour Fenelon and Sunday Lake Deformation.

The drilling will be done by a combination of RC and diamond core drill targeting both till and rock core sampling. At the moment, EGR is busy with the drill permitting. After this site preparation will be done in Q1, 2024 parallel with a raise, and the highly anticipated drilling is planned to commence shortly after funds are raised, management believes they are good to go around the end of Q1, 2024. EGR is also looking at a strategic investor, JV and M&A opportunities to fund the drill program, all this without turning into a prospect generator as CEO Rodriguez isn’t ready to hand over a majority interest before knowing what the potential is yet.

Regarding costs for drilling: management anticipates all-in costs of C$10k per hole, including trail building, ice building and drilling. As the glacial till thickness from the previous Sonic program was on average 47.5m, the average expected depth this time will be 49m, with 1.5m going into bedrock. This would mean all-in costs of about C$200/m, and for example a potential first phase 60 RC holes would cost about C$600k. If these holes return sufficient gold values, a follow up program would drill deeper.

Conclusion

EGR Exploration has completed their reconnaissance exploration work including airborne magnetic survey, prospecting, mapping and prospecting, and managed to design two zones that will be drilled somewhere in Q1 2024 after the company raises more money. With strong backers like Crescat Capital and Fruchtexpress, such a financing has a healthy backstop, but better sentiment might help for small explorers like EGR for sure as most money these days flows into more advanced/derisked projects. As Detour West appears to have the hallmarks to potentially contain (very) substantial mineralization, but also has pretty complex geology, EGR acts very thoroughly and professionally in order to be able to strike any gold that could be located on the property. Stay tuned!

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.

Disclaimer:

The author is not a registered investment advisor, and currently has a long position in EGR Exploration and Kenorland Minerals. EGR Exploration and Kenorland Minerals are sponsoring companies. All facts are to be checked by the reader. For more information go to www.egrexploration.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

 

 

 

Platinex Closes C$2.0M FT Financing; Looking For District Scale Gold, Copper And Nickel In Ontario; Spinning Out Uranium Focused Green Canada Co

Introduction

After spending almost 1.5 years assembling and permitting several significant projects in Ontario, junior explorer Platinex Inc (PTX:CSE)(9PX:FRA) commenced reconnaissance exploration work in August at their gold and lithium projects, with assays for the lithium project called Muskrat Dam being expected around in January 2024. Solid gold sampling results have been coming in since October at the large Shining Tree project and the nearby, smaller Heenan and Mallard projects. These 3 gold exploration projects are part of the South Timmins JV with Fancamp Exploration (FNC.V), which funds a 2 year exploration program. No time was wasted, and a first 5 hole drill program has begun at the Heenan Gold project to test a greenfield trenching discovery and an IP target, and step out from these as well. There has not been any historical drilling at Heenan. There was an attractive historical gold discovery at nearby Mallard by Noranda.

The actual flagship project of Platinex is the fully permitted W2 copper-nickel-PGE project, which is a district scale land package close to the Ring of Fire. This project has seen the most exploration in the past, including 55 historic drill holes, indicating significant mineralization. Recent 3D modeling and interpretation of existing data has revealed large envelopes of potential near surface copper-nickel mineralization, which are waiting to be confirmed and further explored. The large scale of the project will likely see Platinex aiming at a JV, spinout or selling to a major. The recent closing of a C$2.0M financing enables Platinex to do significant exploration, potentially indicating value for third parties.

Another interesting aspect of Platinex is the creation of a subsidiary called Green Canada Co. (GCC), which was launched with a portfolio of 4 uranium projects spread across Saskatchewan, Ontario and Quebec, combined with the Muskrat Dam lithium project, also located in Ontario. The plan is to add another uranium project which will likely be the most prominent one, and after this spin out GCC around March/April 2024, with Platinex dividending out GCC shares to Platinex shareholders.

All pictures are company material, unless stated otherwise.

Company

Platinex is a junior mining company exploring mineral properties in Canada. Management under CEO Greg Ferron has been opportunistic in acquiring new projects where value is likely to be added quickly. For now Platinex is focusing on the W2 Copper-Nickel-PGE project in the Ring of Fire Region, the 75/25 South Timmins JV with Fancamp exploring for gold, which recently reached all-time highs, and the spinning out of Green Canada Co, involving uranium/lithium projects. Demand for battery metals such as copper, lithium, nickel and PGEs (platinum group elements including platinum and palladium), is at historical highs, and expected to remain high due to the unstoppable electrification and durable energy paradigm shift. A shortage in uranium caused by funds and utilities buying up all available uranium already took the price of U3O8 to US$90/lb, after trading at around US$50/lb a year ago, and this shortage is expected to deepen in 2024. It seems Platinex is focusing on the right metals here.

Share structure

Platinex is listed on the CSE, and there are 274.15 M shares outstanding (fully diluted 313.75 M), 44.45 M warrants (average strike price of C$0.06) and incentive stock options issued to the tune of 15.5M options. Management is contemplating a roll-back. Platinex has a current market capitalization of C$13.35 M based on the December 22, 2023 share price of C$0.045. The average daily volume stands at 243k in Canada, and there is increasing volume in the US.

Platinex Inc, 10 year timeframe (Source: tmxmoney.com)

CEO Greg Ferron has been working quietly under the radar since he was appointed to his current position in November 2021, and the various projects in Platinex’s portfolio are finally advancing now, which could hopefully lead to a breakout of the current trading range. Platinex is cashed up nowadays with approx. C$3.5M in the treasury, after closing an oversubscribed (from C$1M) C$2M flow-through financing @4c and no warrant on December 21, 2024. Proceeds of this round will be used for exploration expenditures completed at the W2 project. Shares are tightly held, as management holds no less than 10.5% of the current shares outstanding (CEO Greg Ferron holds 2.5%, Chairman Trusler & Family 8%), Treasury Metals (TML.TO) holds 7.5%, Fancamp 9.5%, Alamos Gold 3%, European HNW’s with strong ties to management hold 25%, and the company also enjoys approx. 5% institutional ownership.

Management

CEO Greg Ferron: Mr. Ferron has 20 years of mining industry and capital markets experience.  He has held various senior level roles in mining, corporate finance, corporate development, and investor relations – including at uranium developer Laramide Resources (LAM.TO), gold developer Treasury Metals (TML.TO), TMX Group and Scotiabank. Mr. Ferron has significant diverse merger and acquisitions experience, including Laramide’s Westwater ISR project acquisition, and more recently the Goldlund project acquisition as CEO of Treasury Metals, creating one of Canada’s largest gold developers. Mr. Ferron is also a director of Fancamp Exploration Inc (FNC.V).

Chairman James Trusler: Chairman from 1998 to present; CEO and President of the company 1998-2018, 2019 to 2021; President, J. R. Trusler & Associates (mineral consultant), 1995 to present. Geological Engineer with over 45 years of exploration experience with a history of discovery (multiple Ni-Cu-PGM deposits at the Raglan Nickel mine, owned by Glencore) and strategic acquisitions of world class scale gold, uranium and Ni-Cu-PGE deposits.

Director Felix Lee: Mr. Lee is an economic geologist and Senior Executive with over 30 years of business and project management experience in the minerals industry both in Canada and internationally. Mr. Lee completed his tenure as Director and Principal Consultant to CSA Global Canada in 2019 and was previously owner and President of the predecessor Toronto-based geological consultancy ACA Howe International Limited. Felix Lee is a former director and President of Prospectors and Developers Association of Canada (PDAC), the largest such mining industry organization in the world.

Technical Advisors:

The most prominent name in the advisory team is the recently appointed Mac Watson, a Canadian Hall of Fame entrepreneur and geologist based in Montreal, who was involved in many discoveries, including the Holloway Gold Project and several deposits in the Ring of Fire. Another big name is Dr. Fred Breaks (P.Geo), who is very experienced in greenstone belts, but also a well-known lithium expert. He discovered the two largest lithium-rich rare-element deposits (Li-Ta-Rb-Cs) in Ontario: Separation Rapids (Avalon Advanced Materials) and Pakeagama Lake (Frontier Lithium). Other very experienced geologists are Ike Osmani (MSc, P.Geo), who has extensive experience with various deposit types in Ontario, and actually described the predecessor of the current W2 project, and Blaine Webster (P.Geo). Mr. Webster is a very experienced geophysicist, who discovered among others the Juby deposit and Sandy Lake Gold Project, and completed 1,500 geophysical surveys in 35 countries as President of JVX Ltd. He is also the former President of Goldeye Exploration Ltd. and President of Golden Mallard Corp.

Projects

South Timmins JV

The South Timmins 75/25 JV with Fancamp located in Ontario is viewed as a strategic asset for the company. Its projects are located in the Abitibi Greenstone Belt in Ontario, home to some of the richest gold mineralization worldwide, with total production surpassing a staggering 180 Moz. The JV is fully funded with C$2M remaining to complete a 2 year exploration program. With a large land package in an active camp including Alamos Gold (AGI.TO), IAMGold (IMG.TO), Aris Gold (ARIS.TO) and many quality juniors, there is an real opportunity for the Shining Tree camp to contain a substantial gold deposit.

Both Heenan, Mallard and Shining Tree contain a significant 20km long part of the Rideout Tyrell Deformation Zone (RTDZ), which in turn has delivered several (very) large gold deposits like Coté.

Historic drill results at Shining Tree include 35.1m @ 1.1g/t Au, 5.2m @ 4.3g/t Au, 10.5m @ 1.65g/t Au, 7.15m @2.76g/t Au, 46.3m @0.65g/t Au, 7.2m @2.38g/t Au, 14.1m @1.2g/t Au and 12.2m @1.47g/t Au, all within open pit depths. A trenching program is being completed at the moment, with results likely due in January 2024. Drilling will follow shortly after this.

The combined Heenan Mallard property has also seen historic drilling, with highlights including 3.7m @ 5g/t Au, 3.8m @ 5.3g/t Au, 2.8m @ 3.5g/t and 1.8m @ 6.6g/t Au. Recent channel sampling returned gold values of over 0.5g/t Au for 13 samples out of 41, up to 7.5g/t Au. This is an extraordinary result for sampling, as usually a 20ppb threshold is used (= 0.02g/t Au) for drill targeting.

The JV has just completed 3 drill holes in trenches, and 2 stepout holes, drilling for a total of about 1000m, with assays expected back from the labs at the end of January 2024.

W2 project

Platinex could pick up the W2 project on the cheap, as the Ring of Fire area is known for its lack of infrastructure. However, sentiment around this area changed quickly after Wyloo acquired nearby Noront (NOT.V) for C$616.9M after a bidding war with a formidable competitor: BHP. As BHP is known for doing extremely thorough due diligence on their transactions, it seems certain they saw compelling reasons to bypass the usual Ring of Fire objections (despite being one of the most promising mining opportunities in Ontario for more than a century).

After lots of exploration in the Ring of Fire, the wait is on for building the road that will connect this area to the rest of Canada, most likely with the help of Ontario, the province with the most revenues coming from mining across Canada.

The W2 project has seen significant exploration so far, ranging from sampling to airborne surveys to 8,772m of drilling. Two distinct zones are specified by the company geologists, the Central Area (drilled historically) and the Eastern Area (no drilling yet but very promising EM survey anomalies, correlating well with copper-nickel mineralization):

Drill results for the property were impressive:

Most results were intercepted close to surface, indicating substantial open pit potential. Extensive 3D modeling generated many significant target zones, look at the scale at the bottom right to get an impression of the shear sizes:

When doing a back of the envelope estimate, one could easily arrive at a 70-100Mt target for the orange-red shapes (indicating > 0.8% CuEq), and keep in mind these shapes are all positioned near surface, so this kind of grade would be pretty economic. After the current C$2.0M @ 4c FT financing is closed, a gravity survey will be conducted, together with met work. Drilling is likely to commence in Q1 2024.

Green Canada

Green Canada is an investment vehicle created to give investors and Platinex shareholders direct exposure to predominantly uranium, with a tight capital structure. What I like a lot is the involvement of Laramide Resources, a long term uranium developer and one of the best success stories during the last uranium boom. Laramide CEO Marc Henderson is one of the most experienced, respected and knowledgeable uranium executives out there, and he will likely be a strategic advisor to Green Canada as well, which could be pretty beneficial of course.

Green Canada holds 4 uranium properties at the moment, one with a small historic resource, and will acquire another one soon which will likely be the flagship asset. Besides these projects, the company also received the Muskrat Dam lithium project, which is waiting for summer samples to return from the labs any day now. Some basic data: Green Canada as a private entity has 30M shares and is valued at C$2.7M, with a cash position of C$500k. Greg Ferron will be the CEO (he plans to find a uranium expert on the board and as Uranium VP Exploration and corporate development. The plan is to list in 1H 2024  and raise more at the IPO on the TSX Venture Exchange. Since Platinex currently holds about 60% of Green Canada at the IPO, the idea is to dividend a significant part of this out to existing Platinex shareholders on a pro rata basis.

Key points

Platinex seems to be shifting gears now, with drilling at the South Timmins JV recently commencing, more drilling coming up and having raised additional cash for drilling at flagship W2. Especially the latter has a high chance at success in my view, as this project has already seen strong results in the past, and the 3D modeling shows lots of mineralized potential. Add the spinout of Green Canada to the mix with its promising uranium properties and with a flagship asset in the works, uranium being the hottest commodity around these days and likely in 2024 as well together with gold, and it will be clear Platinex could be creating serious value for shareholders next year. Stay tuned!

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Disclaimer:

The author is not a registered investment advisor, and currently has a long position in this stock. Platinex Inc. is a sponsoring company. All facts are to be checked by the reader. For more information go to www.platinex.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.