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Ridgeline Minerals: From bear-market bootstrapping to high-potential Nevada play

  • High-grade silver discovery takes shape at Selena
  • Ridgeline (RDG-V) has $3.5M in treasury to drill Nevada projects
  • Nevada Gold Mines is hitting boomers near Ridgeline ground

By James Kwantes
Resource Opportunities

Nevada’s silver-laden history branded it “The Silver State” but the present is paved with gold. The more valuable precious metal is Nevada’s top export, worth US$2.7 billion in 2019 (casino games is a distant second at $550 million).

Since the 1962 discovery of Carlin-type gold by John Livermore and Alan Coope, more gold has been discovered in Nevada than almost anywhere on Earth. Gold ore is blasted and trucked out of giant open-pit deposits like the Goldstrike pit in the Carlin trend. It’s dug out from high-grade operations deep underground in the Carlin and Battle Mountain-Eureka trends and the Cortez camp. Gold also bleeds out of dozens of oxide heap-leach projects that dot the state.

Nevada’s importance came into sharp focus two years ago when Barrick and Newmont — the world’s two largest gold miners — combined their operations in the state to form Nevada Gold Mines (NGM). That deal was struck only after Barrick CEO Mark Bristow launched a hostile bid for Newmont, backing off when Newmont agreed to form the Nevada joint venture. Barrick is the operator and owns 61.5% of Nevada Gold Mines, which produced 2.13 million ounces of gold in 2020. It’s an important profit center for both companies.

FROM PRAIRIES TO PREMIER
Gold is also what brought geologist Chad Peters from Manitoba to Nevada, where he lives with his wife Carla and their two young sons. Peters is president and CEO of Ridgeline Minerals (RDG-V, RDGMF-OTC), which IPOed last year and drilled two of its four exploration projects in Nevada’s most important gold districts. If junior miners are lottery tickets, Ridgeline is more like a handful of them — each project could be worth multiples of the company’s current enterprise value of $13.8 million.

Ridgeline is planning follow-up drill programs in 2021, with a focus on expanding their high-grade oxide-silver-gold discovery at Selena in the South Carlin trend, and Swift in the Cortez district. The goal at the latter is to identify a high-grade multi-million-ounce gold deposit. But Ridgeline’s most valuable projects could still end up being the two that are under the radar for now: Carlin-East and Bell Creek. Those properties are in the heart of the Carlin trend, near Goldstrike, and Nevada Gold Mines has been hitting world-class intercepts on the doorstep. More on those later.

Ewan Downie’s Premier Gold (PG-T) plays a primary role in the story of how Peters ended up in Nevada. While studying geology at the University of Manitoba, Peters landed a summer job with Premier Gold working in Ontario’s Red Lake gold camp. That gig turned into a 10-year career with the company, much of it in Nevada. Premier Gold made its first foray into the state in 2012 with the purchase of the mothballed Cove mine project in the Battle Mountain-Eureka trend. Peters and his wife Carla moved down to Winnemucca, Nevada the same year.

At 27, Peters was the senior exploration geologist in charge at McCoy-Cove, where he led the discovery of the CSD Gap deposit. Cove now hosts 1.7 million ounces of gold at 10.8 g/t and is one of Nevada’s highest-grade undeveloped gold deposits. It’s also one of the cornerstone assets of i-80 Gold Corp., the Nevada-focused spinout that will emerge from the friendly acquisition of Premier Gold by Equinox Gold (EQX-T), announced December 16. The CSD Gap discovery was based on a new geological interpretation, an MO that Peters is now employing with Ridgeline.

Peters rounded out his time with Premier as the Nevada exploration manager, overseeing all of the exploration projects as well as Premier’s JVs with majors — including the South Arturo mine with Barrick. As the company advanced its portfolio in Ontario, Nevada and Mexico, Premier’s focus shifted from exploration to development and production. Exploration is Peters’s passion and he decided to strike out on his own in 2018, co-founding private exploreco Ridgeline Minerals with good friend Steve Nielsen, who also happened to own a drilling company. That wasn’t a coincidence …

BOOTSTRAPPING IN A BEAR MARKET
“It was the best of times, it was the worst of times.” The Charles Dickens quote from A Tale of Two Cities could also apply to Ridgeline’s early days. Peters left a well-paying job with a solid employer and took the plunge, starting Ridgeline out of an “office” in the garage of his Winnemucca home. Local relationships that he built living in Nevada helped Peters secure the company’s land package through EMX Royalty Corp. (EMX-V) — now one of the largest held by a junior in the state with three of the four projects literally at Nevada Gold Mines’ doorstep.

Next, Peters partnered with Neilsen, a Nevada businessman who owns Envirotech Drilling and had worked with Chad at the Cove discovery. The two struck an equity deal that gives Ridgeline the cheapest drilling costs of any company in Nevada. That means more dollars into the ground, increasing the odds of new discoveries. This partnership is already paying dividends with a shallow-oxide silver discovery announced at Selena months after the IPO.

The launch forced a new skill set on a guy more accustomed to navigating rock types than capital markets: raising money for a private exploreco during the depths of a bear market. It was a rather gruelling experience that tested his mettle and made for some interesting dinnertime conversations, Peters recalls: “I told Carla it would take me three to six months to get the company financed, and she ended up supporting the family for 14 months.” Private financing rounds at 12 and 22 cents with Ridgeline’s core shareholders funded early exploration, with the Peters family putting in $150,000 of their savings.

Ridgeline VP Exploration Mike Harp at Bell Creek, with a Barrick drill in the background
at Nevada Gold Mines’ Sinkhole Breccia target.

Peters tapped Mike Harp, an exploration geologist with 8 years of experience with Gold Standard Ventures (GSV-T) in the Carlin trend, as Ridgeline’s VP Exploration. Harp was a senior member of the team that found 5 million ounces for Gold Standard in the Railroad-Pinion district, including leading discovery of the North Dark Star deposit. Duane Lo, a veteran of the mining exploration sector, came on early as CFO and splits his time between Ridgeline and Entree Resources (ETG-T). At the board level, Peters brought in Newmont’s longtime Nevada specialist Lewis Teal, who has decades of discoveries under his belt and has authored multiple publications on the Carlin trend.

Relationships are one of the keys to Peters’s success and it shows in Ridgeline’s share registry. Early shareholders include heavyweights of the junior mining scene such as David Elliott, Paul Stephens and Andre Gaumond. Peters remains on good terms with Premier boss Ewan Downie, who invested in Ridgeline while the company was still private. He has shareholders on both sides of the recent Premier-Equinox deal — the Equinox management team also put money into Ridgeline’s IPO and Equinox CFO Peter Hardie joined Ridgeline’s board in October 2020. “The Davids” from EMX — CEO David Cole and chief geologist David Johnson — both invested in Ridgeline personally before it was publicly listed.

Three years after that bumpy launch, Ridgeline sports a $17.3-million market capitalization, with $3.5 million in the treasury to drill four high-potential projects in Nevada’s most important gold districts. As it turned out, the early adversity Peters faced running a private exploreco was good preparation for going public.

The Ridgeline chart has been a roller-coaster since the August 2020 IPO at 45 cents that raised $5 million. The stock promptly ran up to 75 cents before a long slow slide — some investors bailed when there were no immediate discoveries — took shares down to lows of 30 cents in December. “Discoveries aren’t made overnight,” Peters remarks. “At Selena it took us three phases of drilling and 21 holes to make a discovery.”

“Discoveries aren’t made overnight. At Selena it took us three phases of drilling and 21 holes to make a discovery.”

Chad Peters, Ridgeline Minerals CEO

In this emerging gold bull market, Nevada is again a hotbed of gold and silver exploration, with hundreds of juniors searching for economic deposits across the state. Many of those projects are far removed from the main Carlin/Cortez/Battle Mountain-Eureka trends, a gold epicenter that hosts a combined 220 million ounces of past production and current resources. Ridgeline is well-positioned with 125 square kilometres of ground in the middle of all three districts.

ONE IS NOT LIKE THE OTHERS
Having a Canadian CEO who lives in Nevada sets Ridgeline apart in a state crowded with junior miners whose bosses live elsewhere. His northern roots also landed Peters, now 34, an unexpected side gig — he was recruited to coach his son’s hockey team after other parents discovered he was Canadian.

Those “boots on the ground” put Peters at the center of the action, allowing him to hear of new discoveries first or soak up important tidbits of intel. It has even opened doors to acquiring cheap but valuable data, or claims from the prospectors who still control large land positions on Nevada’s still-fractured claims map. Peters lives less than a two-hour drive from Ridgeline’s Swift, Carlin-East and Bell Creek projects and five hours from Selena.

It’s not Ridgeline’s only key edge. That strategic drilling contract has allowed the company to stretch those dollars and drill 1,300 metres at Carlin-East in 2019, a combined 5,636 metres at Selena and Swift last year, and still enter 2021 with a healthy treasury of $3.5 million to drill all four projects. As a 7.8% shareholder, Peters is incentivized to make sure those dollars go as far as possible. Management owns a combined 17% of shares and public companies — EMX, Vior and Ethos Gold — own another 19%. Institutions are at 12%.

HIGH-GRADE SILVER AT SELENA
At Selena, Ridgeline went looking for gold but found silver — wide intervals of oxide high-grade silver, along with lower-grade gold. The company hit paydirt with hole 21, which intersected 36.6 metres grading 67.08 g/t silver and 0.26 g/t gold (90.05 g/t silver-equivalent “AgEq”). The discovery followed two earlier programs that had encountered promising hits, including 3m of 823.5 g/t AgEq and 36.5m of 77.8 g/t AgEq.

Mineralization outcrops at surface and has good continuity, extending for more than a kilometre down-dip and along strike. “We are drilling wide-spaced step-out scout holes and they keep hitting,” Peters says.

On a gram-meter basis, Selena results compare favourably to other high-grade silver explorecos, including in Nevada, that have market capitalizations much higher than Ridgeline’s. Selena’s grades are also multiples of those at Coeur Mining’s Rochester open-pit mine in Pershing County, Nevada — America’s largest silver mine. Rochester’s proven and probable reserves average about 11.3 g/t silver and 0.085 g/t gold. Coeur is in the initial stages of building a major expansion of the mine.

Peters and Harp recently managed to acquire the historical drill-hole database for Selena from the 1980s. That data, combined with the new discovery, will help the team design the next drill program, which could launch in April if the weather cooperates. Early metallurgical testwork shows the silver and gold oxide mineralization is amenable to heap-leaching. It remains early days but Selena is shaping up to be a classic Nevada heap-leachable oxide deposit.

HUNTING A GIANT AT SWIFT
If Selena is a base hit in baseball terms, think of Swift as a home-run swing. It’s a Carlin-type gold project about 7 kilometres northwest of Nevada Gold Mines’ Cortez mine complex, which hosts about 35 million ounces at 3.08 g/t gold. The neighbourhood hosts large, high-grade Tier 1 deposits, which is what Ridgeline is looking for. Only five deep drill holes have ever tested the Lower Plate target rocks on the 50-square-kilometre property.

A three-hole, 2,413-metre drill program completed late last year hit widespread skarn alteration within favourable host rocks and produced some sniffs of low-grade gold and high-grade silver mineralization, including 0.2 metres grading 0.22 g/t Au and 860 g/t Ag. It’s an indication that Ridgeline drilled into the guts of the intrusive heat source — the largest Carlin-type gold deposits are associated with buried intrusives, Peters says. “If you’re too close, the gold won’t precipitate out. We now know where we are in the system, and we know where we’re going next.”

Two of the three deep holes intersected the favourable Wenban formation. It sounds like something out of a Star Wars movie, but Wenban is considered the primary host rock for much of the gold in Nevada’s Cortez trend, including 15 million ounces in NGM’s Goldrush deposit. Data from the Phase 1 drilling will help Ridgeline vector in on higher-grade gold mineralization in the Phase 2 program.

CARLIN-EAST/BELL CREEK CATALYSTS: LOCATION, LOCATION, LOCATION
Barrick CEO Mark Bristow has identified Nevada as “one of our main hunting grounds” and Barrick’s moves at the Fourmile discovery show those weren’t idle words. The company has rapidly advanced Fourmile — north of Goldrush — since announcing a maiden Inferred resource of 700,000 ounces of gold grading 18.58 g/t (Fourmile is outside the NGM joint venture).

In resource exploration as in real estate, it’s all about “location, location, location.” And Barrick has been aggressively exploring on the doorstep of both Carlin-East and Bell Creek. Last year NGM intercepted 21.3 metres grading 35.3 g/t gold at its North Leeville target, north of the Leeville underground gold mine. That’s just 3 kilometres away from Ridgeline’s Carlin-East boundary, along the Leeville structural corridor.

Barrick-controlled NGM is also exploring aggressively just to the west of Ridgeline’s Bell Creek project. Assays are pending on a deep hole NGM drilled at its Sinkhole Breccia target just 250 metres to the west of Bell Creek. It’s valuable land — a 2020 Laurentian Bank analyst report on Ely Gold Royalties (ELY-V) assigns a US$41-million valuation to Ely’s REN royalties, which lie directly adjacent to Ridgeline’s 100% owned Bell Creek property, on the west.

Peters plans to drill both Carlin-East and Bell Creek but will watch Barrick’s next moves in the neighbourhood and proceed accordingly, while Ridgeline builds ounces at Selena and drills for a high-grade gold discovery at Swift.

Ridgeline Minerals (RDG-V, RDGMF-OTC)
Price
: 0.36
Shares out: 48.1 million (58.5M fully diluted)
Market cap: $17.3 million

Disclosure: James Kwantes was compensated for the writing and distribution of this article. Kwantes owns shares of Ridgeline Minerals, purchased in the 22-cent financing round, the 45-cent IPO and the public market. This article is for information purposes and should not be considered investment advice. All investors need to perform their own due diligence.

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Kodiak Copper site visit: “It’s a good start”

by James Kwantes
Editor and publisher,
Resource Opportunities

Site visit: Kodiak Copper MPD project (October 17, 2020)

Sent to Resource Opportunities Premium Subscribers pre-market on Oct. 20

Dear subscriber,

My final site visit of the year — on Saturday, Oct. 17 — took me to Kodiak Copper’s MPD project and core facility outside Merritt, in the heart of southwestern B.C.’s copper porphyry country. It’s a three-hour drive from Vancouver. En route, the snow was already flying at the summit of the Coquihalla Highway pass — elevation 1,244 metres (4,000 feet). But at site, the only winter weather to be found was a chill in the air. That’s typical for the area, which usually experiences hot summers and mild winters with minimal snowfall.

The favourable weather — and year-round exploration possibilities — is one of the reasons Kodiak has further upside potential, even from these relatively lofty levels. Kodiak has added about $80 million in market capitalization since I touched on it in the August 16 letter, and about $40 million since the Sept. 3 Flash Alert. As the sector has lagged, the stock has run hard on the high-grade copper-gold intercept announced on September 3. KDK is no longer cheap and there are expectations built in. There’s also still much to like. I have averaged up twice since the initial 43-cent purchase outlined in the Aug. 16 letter — at $1.65 and at current levels.

The site visit started at Kodiak’s temporary core shack on the outskirts of Merritt. The company is rapidly outgrowing the facility, where it shares space with a salvage yard. The core shack was formerly used by both Westhaven Gold and Kaizen Exploration. Kodiak is looking for a more suitable processing and storage site as the metres build at MPD.

Both chairman Chris Taylor and president/CEO Claudia Tornquist were present, along with Discovery Group founder John Robins, analysts and Kodiak geologists (Taylor had to leave early to fly to Red Lake). Hole 4 — which returned 282 metres of 0.7% copper and 0.49 g/t gold, including 45.7m of 1.41% Cu and 1.46 g/t Au — was in the core boxes. The highlight intersection was heavily magnetic — copper occurs in the magnetite-rich rock.

Kodiak CEO Claudia Tornquist and chairman Chris Taylor (third from right) at the core facility outside Merritt.

Kodiak is now drilling hole 8 and assays are pending on holes 3, 5, 6 and 7 (5,316 metres have been drilled in 7 holes this year). The company has described hole 5 as carrying “similar porphyry-style sulphide mineralization” as hole 4. But the strong correlation between magnetics and copper mineralization offer hints of good assays to come — holes 5, 6 and 7 all have significant magnetic signatures. The gold values, in turn, seem to be closely correlated with the copper — at least in hole 4.

On Oct. 22, Kodiak reported complete assays for the remainder of hole 4 as well as for hole 2. Hole 4 intersected 535.1 metres of 0.49% copper and 0.29 g/t gold, or 0.76% CuEq, starting from about 200 metres downhole. Hole 2 assays were lower-grade, intersecting 642 metres grading 0.21% Cu and 0.06 g/t Au from 173 metres downhole, including 32.8 metres of 0.46% Cu and 0.12 g/t Au.

Chris Taylor is getting quite good at formulating new geological interpretations that drive discovery and create shareholder value. The acquisition of Man, Prime and Dillard (MPD) came together after a trip he took to the area looking for porphyry projects, his specialty (Taylor worked as a project geologist for B.C. porphyry operator Imperial Metals for five years).

At MPD, 129 historical drill holes and 25,780 metres had been drilled across the properties by operators including Rio Tinto and Newmont. But few of those holes went below 200 metres vertical depth. Taylor saw deeper drilling as key at the property, which has copper showings at surface and in drilling and trenches over a 10-sq-km area. The Gate Zone discovery hole (MPD-19-003), announced Jan. 16 to little fanfare, hit 102 metres of 0.53 Cu and 0.16 g/t Au — the best hole in the 50-year history of the property. The highlight intercept in hole 4 improved upon that by a wide margin.

The consolidation of the Man, Prime and Dillard properties followed a familiar script, especially for Great Bear shareholders — Taylor seeing value where others did not. As he put it during the site visit, “MPD was a great project to buy because everyone thought it was shit.” Kodiak paid just $200,000 plus 1.8 million shares of Dunnedin, the predecessor company, to secure MPD. Consider: Friedland-backed Kaizen Discovery pivoted away from their neighbouring Aspen Grove copper porphyry project after a modest 2016 drill program. Kaizen recently announced plans to restart exploration; it’s still listed as a “non-core project” available for sale or joint venture on their website.

(At Great Bear, Taylor and Bob Singh saw potential where others — including Mark O’Dea, who gave up on the property — did not. Great Bear paid $210,000 and 100,000 GBR shares to secure 100% of Dixie including royalties.)

Kodiak is cashed up to expand the drill program in 2021, after closing a $12.7-million private placement that saw neighbour Teck come in with a 9.9% strategic investment. “It’s a good start” had been the Teck geologist’s poker-faced assessment after a close inspection of the core. Teck is mining 0.29% copper at its Highland Valley Copper mine — Canada’s largest open-pit copper operation — about 90 kilometres north of MPD. To the south, Copper Mountain is mining 0.25% copper.

Kodiak now has about $15 million in the treasury, derisking it on the dilution front. The company also retains the Mohave porphyry project in Arizona and the Kahuna diamond project in Nunavut. There are also 2.3 million Brixton Metals (BBB-V) shares Kodiak picked up by selling a non-core asset in the Golden Triangle in August.

The MPD project is about a 45-minute highway drive from Merritt, through Douglas Lake Ranch country (the ranch, one of North America’s largest, also has grazing rights at MPD). On the way to site, on a sidewalk in Merritt, we passed a campaigning politician who knows the importance of mining even though he doesn’t talk about it much: B.C. NDP premier John Horgan.

The Man, Prime and Dillard target areas that have seen most of the historical drilling are located in close proximity to each other on the property’s northwestern quarter. There are several areas with outcropping malachite and azurite, copper indicator minerals. The Gate Zone discovery is close to Prime, which is in proximity to Missezula Lake. There is a cottage community at the south end of the lake that is located on MPD ground (it’s visible on the satellite image if you Google “Missezula Lake”). It’s not a fatal flaw. But the lake and cottages are close enough that if an open-pit mine is built at MPD that incorporates Gate Zone, those properties would likely have to be bought out.

Kodiak now has core from each of the three target zones, and there are similarities. Core from Dillard, two kilometres away, looks similar to core from the upper part of the Gate Zone holes. MPD is shaping up to be a multi-zone copper porphyry system with significant gold values. Next Kodiak plans to test a 1.5-km by 300-metre copper in soil anomaly coincident with a mag low that runs south of the current drilling, followed by Gate Zone analogues elsewhere on the property. Taylor told us the Gate Zone reminds him of the Northeast Zone at the Mt. Polley porphyry mine operated by his former employer, Imperial Metals. The copper/gold-rich NE Zone was what allowed Imperial to put Mt. Polley back into production after it had been mothballed.

Gold prospects on the eastern portion of the property — which hosts epithermal/mesothermal mineralization — could be a potential spinout down the road, if Kodiak can delineate an economic ore body at MPD. Northeast of the MPD property is the Elk gold mine, which produced 50,000 ounces of gold grading 3 oz/t from surface. Elk was sold to a private company last year by Ross Beaty’s Equinox Gold for $10 million.

Drill results will drive Kodiak’s share price trajectory and there is reason to believe pending assays will continue to be good. MPD carries a hefty valuation for an early-stage copper drill play. But with early copper values that are multiples of grades being mined in the neighbourhood at Copper Mountain and Highland Valley — plus gold, this is no run-of-the-mill copper play. Kodiak ticks a lot of boxes:

— Road-accessible property in a mining-friendly area (low drill costs);
— $15 million in the treasury, with no need to finance;
— Tight share structure with strong management and Discovery Group backing;
— The makings of a high-grade copper-gold porphyry deposit, or a multi-zone system.

Kodiak Copper (KDK-V, KDKCF-OTC)
Price: $2.29
Shares out: 44.2 million (51.8M f-d)
Market cap: $101.2 million

Disclosure: James Kwantes owns shares of Kodiak Copper and Kodiak paid a fee for reprint and distribution rights. All investors need to complete their own due diligence on every investment including Kodiak, a high-risk junior mining equity. This Flash Alert is for information purposes and should not be considered financial advice.

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Genesis Metals builds high-grade ounces at Chevrier

by James Kwantes
Resource Opportunities

Genesis Metals is one of three Resource Opportunities sponsor companies.

Genesis Metals is building ounces and grade at its Chevrier project in Quebec’s Abitibi Greenstone Belt, as Phase 1 drill results outline growing zones of higher-grade material within the existing Main Zone deposit. The drill results are changing the profile of the deposit, which hosts current indicated mineral resources of 395,000 ounces (8.5 Mt averaging 1.45 g/t gold; cutoffs 0.5 g/t open pit and 0.95 g/t underground) and inferred mineral resources of 254,000 ounces (5.9 Mt averaging 1.33 g/t gold; cutoffs 0.5 g/t open pit and 0.95 g/t underground).

The latest drill intercepts are well above those average grades, with highlights including:
GM20-63: 9.71 g/t Au over 3.65 metres (within 76 metres of 1.93 g/t)
GM20-64: 9.73 g/t Au over 4.5 metres (within 84 metres of 1.65 g/t)
GM20-64: 9.64 g/t Au over 2.3 metres
GM20-64: 14.4 g/t Au over 2.2 metres
GM20-65: 5.57 g/t Au over 3.2 metres

Those intercepts were part of the second and final batch of assays from the 2,500-metre drill program at Chevrier that focused on southwest and northeast portions of the Main Zone. Most of the current resource estimate is contained within the Main Zone, with the East Zone hosting a small Inferred resource. Genesis used a new 3D model to better understand distribution and controls on high-grade gold mineralization.

Jimmy Pearson splits Chevrier core at the Genesis core shack.

Genesis CEO David Terry and his team are now reviewing the drill hole data as they evaluate the best targets for follow-up drilling, which is fully funded. The next drill program will likely take place in late summer or early fall; a further 5,500 metres of drilling is planned for the remainder of 2020.

Each of the Phase 2 intercepts above starts within 200 metres of surface, and holes 63 and 64 hit high-grade within wider mineralized envelopes. That bodes well for future inclusion in the pit-constrained resource once Genesis updates the Chevrier resource estimate. Hole 65 also hit deeper gold mineralization: 5.14 g/t Au over 3.95 metres from 213.3 metres downhole, and 7.88 g/t Au over 3.1 metres from 227.5 metres downhole.

Those assays followed Phase 1 drill results from Chevrier announced on June 2 that included:
8.92 g/t Au over 1.0 metres (within 1.79 g/t over 7.35 metres)
3.99 g/t Au over 3.0 metres
10.2 g/t Au over 1.15 metres (within 1.36 g/t over 19.7 metres)

“We look forward to additional drilling to better define this new high-grade component of the deposit, and to results from the ongoing surface exploration program focused on advancing priority targets elsewhere on the large Chevrier project,” Terry stated.

Likely targets include further definition of higher-grade shoots within and below the existing Main Zone deposit, as well as several high-priority targets elsewhere at Chevrier identified through last year’s property-wide glacial till survey. Ground prospecting to further refine those targets continues.

The biggest beneficiaries in this emerging gold bull market are juniors that can hit meaningful drill results containing high-grade gold. The Phase 1 drill program has delivered that for Genesis, with several hits that are multiples of average grades at the existing deposit. The company’s $15-million valuation — less than many pre-drill juniors — is backstopped by Chevrier’s existing gold resource and now, growing higher-grade zones.

The widths and grades of Genesis’s Phase 1 drill program compare favourably to the mineralization at well-known Canadian gold deposits including SSR Mining’s Seabee underground gold mining operation in northern Saskatchewan. Seabee’s average reserve grades are just above 10 g/t gold and the company is underground mining widths of 1-2 metres.

Genesis, of course, is an earlier-stage play. But the company’s shares remain under the radar, with the stock trading at or below where it spent most of 2019. That’s despite the developing high-grade zones as well as these positive features:

  • Backing of the serially successful Discovery Group;
    Located on a highway and near rail lines in the eastern Abitibi greenstone belt in a thriving mining district (Chibougamau) with other high-grade discoveries;
    More than $2 million in the treasury for further drilling later this year.
    Fresh approach under the leadership of Dr. David Terry and property-wide investigation and analysis, starting with soils.

Chibougamau is a rich gold mining district of high-grade discoveries and historical mines. More than 6.7 million ounces of gold has been mined in the area and there are plenty more ounces in the ground — including at high grades. Just southwest of Chevrier is the Monster Lake JV, where IAMGOLD and JV partner TomaGold have delineated 433,300 ounces of gold at 12.14 g/t Au.

Team, backers, project and neighbourhood — it all matters. So does price of entry. There’s a lot of money chasing a small number of hot junior stocks that have been running hard. But the big money is made positioning in promising plays that have yet to move. Genesis’s current valuation may spell opportunity for investors confident that this top team will identify more high-grade gold, both within the existing deposit and through discoveries elsewhere on the 290-sq-km property.

Disclosure: Genesis Metals is one of three Resource Opportunities sponsor companies and James Kwantes owns Genesis Metals shares, which makes him biased. This article is presented for information purposes and is not investment advice. All investors need to do their own due diligence.

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Strategic Metals poised to drill wholly owned high-grade gold project

By James Kwantes
Resource Opportunities

Well-run project generators are brick houses in a speculative corner of the market, where the winds of commodity prices and dilution are often house wreckers. Their share prices are typically backstopped by healthy treasuries, royalties and equity stakes, as well as extensive claims holdings. They are businesses, not cash-burning lottery tickets like most junior explorecos.

But for many speculators, that level of diversification is a knock. Those bricks provide stability but weigh down the “rocket ship” when a junior exploration company hits a bona fide high-grade gold discovery. Project generators typically retain only limited exposure to discoveries through royalties or small equity stakes.

The picture changes completely, however, when project generators make a high-grade discovery on a wholly owned project. Azimut Exploration (AZM-V) proved it in January with their Patwon gold discovery at the Elmer property in Quebec. Azimut is Quebec’s largest claims holder, diversified across metals and known for its technical savvy. On January 14, the project generator announced multiple high-grade gold intercepts at the James Bay project, including 12.43 g/t Au over 6 metres and 27.36 g/t Au over 4.7 metres.

The day before the discovery was announced, Azimut shares closed at 50 cents (@ $31M market cap). The stock rocketed to $1.50 the following day and remains at about that level, despite the uncertainty and tough market conditions that persist in the junior mining complex. COVID-19 forced the suspension of Azimut’s follow-up 6,000-metre diamond drill program at Patwon.

Azimut closely resembles another project generator with a wholly owned gold project that will be drilled this summer: Strategic Metals (SMD-V, SMDZF-OTC). Strategic, Yukon’s largest claims holder, is cashed-up to drill its Mount Hinton high-grade gold prospect in the Yukon Territory’s Keno Hill district. Strategic plans to spend about $3 million to explore Mt. Hinton this season, including up to 6,000 metres of drilling (diamond and RAB).

The program, of course, is dependent on how the Coronavirus pandemic plays out in the coming months. In Yukon, mining and exploration have been designated an essential service.

Strategic shares currently trade at about 35 cents, for a $34-million market capitalization. It’s a far cry from the $4.35 level ($381M market cap) that the stock hit in 2011. That share price was propelled by gold’s rise to US$1,900 an ounce — less than $200 an ounce higher than current levels — as well as ATAC’s high-grade gold discoveries at the Rackla property in Yukon (ATAC is part of the Strategic Exploration Group).

Doug Eaton (right), Strategic’s CEO and principal of Archer Cathro, the storied Yukon geological consultancy, was in the thick of it during ATAC’s high-grade discoveries.

But the veteran geologist says he’s more excited about Mount Hinton because of the volume of high-grade gold found at surface at such an early stage, during what appears to be a perfect storm for the gold price.

“Mount Hinton is the same kind of setup but the project is much more readily accessible than Rackla and it’s earlier-stage,” Eaton said. “It’s much more exciting than ATAC was at this stage. We have a chance of a major gold discovery under the till or talus.”

Eaton’s comments about Mount Hinton’s possibilities sound like fairly typical Howe Street-style promotion. But a couple of key differences make his observations worth a closer examination:

  • His comments say much more about Mt. Hinton’s prospectivity than they do the potential of ATAC’s Rackla project. Strategic holds a 6.4% stake in ATAC and is incentivized to see the company succeed. Eaton remains a believer that the Rackla deposits will one day produce tens of millions of ounces of gold.
  • Eaton, a geologist, has been working in the Yukon for almost 50 years. He has an almost-encyclopedic knowledge of Yukon mining projects, which helps Strategic snap up forgotten but highly prospective projects. Eaton has been involved in several of the Territory’s major discoveries, including the Casino copper-gold porphyry (now being developed by Western Copper and Gold).

REWIND: In the summer of 2017, Strategic sold six properties including Mt. Hinton to a private company called Territory Metals. The terms of the deal hinted that Mt. Hinton was no ordinary prospect — in addition to a 2% NSR, the agreement included a 10% NSR on any small-scale high-grade gold production and a $1.5-million milestone payment if Territory identified a 1-million-oz gold equivalent resource on any of the properties.

Territory’s go-public plans fizzled and Strategic got the property back. Archer Cathro geologists hit the ground hard in summer 2018. They extended a large geochemical soil anomaly and found multiple rock samples with high-grade gold samples that assayed greater than 9 g/t gold.

Last summer, Strategic hit paydirt with a prospecting program focused on the 3.5-km by 1.5-km gold-in-soil anomaly. One rock sample came back with a bonanza-grade assay: 2,340 g/t gold and 597 g/t silver. Follow up prospecting discovered visible gold at this site (the first reported native gold on the property) and subsequent samples containing visible gold were not assayed. Other chip samples also carried high gold and silver values, including:

  • 42.4 g/t gold & 94.2 g/t silver
  • 9.9 g/t Au & 5.45 g/t Ag over 1 m
  • 24 g/t Au & 36.1 g/t Ag over 1.25 m
  • 23.5 g/t Au & 1,720 g/t Ag
  • 202.0 g/t Au & 2,020 g/t Ag

The property has not seen much exploration despite its proximity to Alexco’s Keno Hill project — Mt. Hinton is just three kilometres south of Alexco’s Bellekeno deposit. That’s largely because of road access difficulties. But the situation has improved dramatically in recent years thanks to the thriving Granite Creek placer gold camp, located at the base of Mount Hinton. Two placer operators are pulling out multi-ounce gold nuggets and the Granite Creek drainage has become one of Yukon’s hottest gold camps.

Granite Creek placer gold operations, one of Yukon’s hottest mining camps, with Mount Hinton in the background.

Strategic brought in excavators last year to build a road network on the property, an effort that will continue this year once the snow melts. The planned 6,000-metre drill program is a large one for Strategic but so is the size of the potential prize. “To find this material at surface is remarkable,” Eaton remarked. Strategic geologist Steve Israel has now mapped three separate phases of mineralization on the property. More phases means higher volumes of mineralizing fluids, which can lead to more gold.

With Mount Hinton a potential near-term catalyst, Strategic’s share price — and downside — is backstopped by a healthy treasury of $6.8 million and large equity stakes, as well as its extensive Yukon claims portfolio. Significant equity stakes include:

  • ATAC Resources (6.4%): high-grade gold deposits on the Rackla property
  • Rockhaven Resources (36.3%): h-g 1.2M oz Au/28M oz Ag deposit, on a road
  • Terra CO2 (62.6%) – pending patent on non-CO2 generating cement replacement
  • Precipitate Gold (24.3%) – Barrick just signed a 70% earn-in agreement for Precipitate’s Pueblo Grande project beside Barrick’s Pueblo Viejo mine in Dominican Republic
  • Silver Range Resources (17.7%) – project generator focused on high-grade prospects in Nevada, NWT, Nunavut

With gold moving in the right direction, the Mt. Hinton drill program positions Strategic to capture the shareholder value that can result from a high-grade discovery. It’s an outcome Eaton has seen before — and why he kept Mt. Hinton in the portfolio when it came back, rather than optioning it.

“We’ve turned down some pretty good offers for Mt. Hinton,” he remarked. “That’s because everybody wants 100% of it.”

Gold is on the move as governments around the world fire up currency printing presses to counter the economic effects of COVID-19. That lift has not yet translated to the junior sector, despite gold hitting all-time highs in most major world currencies. Eaton believes the malaise of the past several years is partly a generational phenomenon — younger retail investors simply haven’t experienced the large multibagger wins that tend to drive money into the junior space.

“You have a generation of investors who have done well in mining but who are too old,” Eaton said. “The generations of younger investors haven’t benefited the way people who are older did in prior bull markets.” That may be about to change.

A high-grade gold discovery at Mount Hinton could trigger a rush to get into Strategic shares, if the action on Aug. 21, 2019 is any indication. That day, Strategic announced high-grade assays including the bonanza-grade rock sample. The stock shot from 39 cents to 47 cents on multiples of average volume. It could be just a taste of what’s to come if Strategic drills a high-grade gold discovery at Mount Hinton this summer.

Strategic Metals (SMD-V, SMDZF-OTC)
Price: 0.35
Shares out: 96.6 million (108.85M fully diluted)
Market cap: $33.8 million

Disclosure: I own Strategic Metals shares and Strategic is one of three Resource Opportunities sponsor companies. This article is not intended as financial advice and all investors need to conduct their own due diligence and/or consult an investment advisor.

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Fremont Gold gears up to drill for discovery at Griffon in Nevada

By James Kwantes
Resource Opportunities

Nevada is known as “The Silver State,” a nod to the 1859 discovery of the Comstock Lode. That rich silver endowment led to Nevada’s statehood, and profits from silver mining helped the North come out on top in the American Civil War.

But the discovery of the state’s rich gold districts, including the Carlin and Cortez trends, a century later quickly made Nevada one of the world’s premier gold mining jurisdictions. Those two districts alone have a combined gold endowment of more than 250 million ounces (production + reserves). And gold is the precious metal that remains Nevada’s largest export by dollar value.

However, U.S. Census Bureau statistics show that Nevada’s gold output is slipping. Gold exports of about $4.9 billion in 2018 dropped to $2.7 billion last year, a 45% decrease.

And Nevada is not the only gold-rich jurisdiction with a declining production profile. New discoveries are needed to replace the ounces being mined. And one of the best places to look for gold is on projects that have been orphaned by larger companies or by exploration companies that have shifted their focus elsewhere.

The latter is the story with the past-producing Griffon project at the southern end of Nevada’s Cortez trend. Fremont Gold (FRE-V, USTDF-OTCBB) purchased Griffon and its 89 unpatented mining claims from Liberty Gold (LGD-T) in December 2019, then raised $1.48 million to drill it. The project was orphaned by Liberty (formerly Pilot Gold), which is drilling out its Black Pine oxide gold project in Idaho. Griffon is southeast of Fiore Gold’s (F-V) Pan mine and Contact Gold’s (C-V) past-producing Green Springs heap-leach gold mine.


Fremont plans to drill 2,000 metres at Griffon, beginning in June. Twenty-six drill sites are currently permitted and the project is bonded. Fremont plans to drill a number of untested targets in the hopes of making a new discovery at Griffon.

Griffon was first drilled in 1988. By 1997 two oxide gold deposits had been delineated, at Discovery Ridge and Hammer Ridge. Over the next three years, Alta operated as a small producer, mining oxide gold from those deposits at average grades of 1.03 g/t in a heap-leach operation. That’s well above average grades of 0.6 to 0.7 g/t being heap-leach mined at typical Nevada oxide gold operations.

Alta’s focus was production, not exploration. The company did not thoroughly explore the property and almost all of the holes they drilled were less than 100 metres deep. Fremont has assembled a crack team of geologists to narrow down targets at Griffon:

  • Clay Newton, Fremont’s VP Exploration and a Phd structural geologist who brings fresh eyes to the project
  • Andy Wallace, Ph.D., a Carlin expert and co-discoverer of five Nevada gold mines as a principal of Cordex
  • Jamie Robertson, Ph.D., Alta’s former exploration manager and a regional expert on Nevada’s southern Cortez trend.

Target areas at Griffon include the untested three-kilometre long Blackrock fault to the east of the Hammer Ridge deposit (one of the two deposits mined by Alta Gold Corp.), the Pilot Shale horizon, and a number of geochemical anomalies. In addition, potential remains in and around the two past-producing open pits.

Clay Newton, Fremont Gold’s VP Exploration, checks out a jasperoid outcrop, an alteration style associated with Carlin-type gold mineralization, at Fremont’s Griffon property on the southern Cortez trend.

Drilling by Alta in an area southwest of Hammer Ridge hints at the property’s potential. Alta hit near-surface gold mineralization in many holes, including 57.9 metres of 0.86 g/t gold. Other drill holes in this area — all of them within 100 metres of surface — included:

  • 25.9 metres of 1.1 g/t Au
  • 36.6m of 0.93 g/t
  • 24.4m of 0.79 g/t

Last summer, Fremont sold its Gold Canyon project to McEwen Mining for 300,000 McEwen common shares in order to focus on securing more advanced-stage assets. The company’s first move was to option Cobb Creek from Contact Gold. Located in Elko county, Nevada, Cobb Creek is an advanced project with a historical gold resource that hasn’t been drilled since 1992. Although Cobb is an intriguing exploration project, Fremont plans to focus on Griffon this exploration season. The company also has the North Carlin, Hurricane and Goldrun projects in Nevada.

Gold is holding steady above US$1,600 an ounce and doing its job as a safe haven. The precious metal is also, increasingly, a buttress against the impending waves of money-printing as governments globally respond to economic paralysis caused by the COVID-19 pandemic.

Gold producers continue to rely on exploration companies to find the next economic ore bodies. That increases the appeal of well-managed juniors poised to create shareholder value with the drill. Fremont Gold fits the bill as it prepares to drill for discovery at Griffon. Insiders have been adding to their stakes, in both the public market and private placements. I have also been buying shares at these price levels.

Fremont Gold (FRE-V, USTDF-OTCBB)
Price: 0.06
Shares out: 81.5 million (121.2M f-d)
Market cap: $4.9 million

Disclosure: I own Fremont Gold shares and Fremont is one of three Resource Opportunities sponsor companies. Fremont is a speculative, high-risk exploration stock that may not be suitable for all investors. This article is not intended as financial advice and all investors should conduct their own due diligence and/or consult an investment advisor.

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Genesis Metals drills for high-grade gold in Quebec

Drilling later this year will test new targets identified by last year’s property-wide soil sampling.

By James Kwantes
Resource Opportunities

For veteran speculators, the latest hits to junior mining share prices feels like deja vu all over again. Sentiment is gloomy and market capitalizations are depressed. But gold in U.S. dollar terms is still up more than 25% year-over-year. And US$1,500 gold translates to more than $2,150 Canadian, an exceptional price for Canadian projects whose expenses are measured mostly in loonies.

Gold producers that deplete their reserves with every shift and every scoop still rely on junior exploration companies to find the deposits that will replenish their ore. Most juniors, meanwhile, had yet to respond even BEFORE the Coronavirus corrections — which has further pummelled the sector. Expectations are very low, along with share prices.

For exploration companies with strong management and backing, a flush treasury and potential for high-grade discoveries, it’s not a bad setup. Genesis Metals (GIS-V, GGISF-OTC) fits the bill. The Discovery Group company has $3.5 million in the treasury to drill its flagship Chevrier project in Quebec’s Chibougamau mining district. Chevrier is located in the eastern portion of the prolific Abitibi Greenstone Belt (180M oz of historical gold production).

Genesis is drilling an initial 2,500 metres (10 holes) at Chevrier, part of a planned 8,000-metre drill program this year. The initial program is designed to tap into high-grade shoots within the Chevrier Main zone deposit, expanding the higher-grade domain. Genesis’s market cap of about $7.9 million is backstopped by existing gold resources at Chevrier totalling 395,000 ounces Indicated grading 1.45 g/t Au and 297,000 ounces Inferred at an average grade of 1.33 g/t, at the Chevrier Main and East zones.

The company has already identified high-grade areas within the deposit — assays announced on January 22, 2018 included 8.73 g/t over 21.35 metres and 4.26 g/t over 19.4 metres at the Main Zone. But those results went unappreciated with gold trading at US$1,330 an ounce on its way down to $1,200. Later this year, Genesis plans to test targets elsewhere on the 295-sq-km property that were identified through last year’s property-wide glacial till survey.

Overseeing the exploration program is new CEO David Terry, an economic geologist who was appointed President and CEO on Dec. 2, 2019 (Jeff Sundar remains as Executive Director). Terry obtained a PhD in Geology from Western University in Ontario. He’s also well-schooled in the vagaries of bull and bear market mining cycles, through decades in the industry running projects — both large and small — for majors and helming explorecos. Terry is currently a director of several active exploration companies including Golden Arrow Resources, Aftermath Silver and Great Bear Resources. Great Bear, also a Discovery Group company, is drilling high-grade gold along kilometres of strike at its Dixie project in Red Lake, Ontario.

For Terry, the Great Bear directorship is a kind of return to Red Lake. His first summer job in exploration included mapping and sampling in the prolific district for a large mining company called Goldfields while he attended Western in the 1980s. He later worked for several years as a contract geologist with Cominco (which sponsored his PhD thesis) in Alaska, followed by a stint with Hemlo Gold exploring back in the Abitibi.

Geologist David Terry, the Genesis Metals CEO, in the field at a gold project in central Ecuador.

After obtaining his PhD, Terry worked for Westmin Resources then Boliden, as a geologist and project manager. When Boliden exited Canada with the mining sector in a post Bre-X slump, Terry took a position as a Regional Geologist for the B.C. Geological Survey in southeastern B.C. for three years. He spoke at the closing ceremony for Teck’s legendary Sullivan mine, which operated for nearly a century and produced 160 million tonnes grading 12% zinc/lead and 67 g/t silver. Since 2004 he has worked in management, director and advisory roles with a number of juniors exploring and advancing precious and base metal projects in both North American and a number of Latin American countries.

Terry joined the Great Bear board in July 2016, before the Dixie project was the company’s flagship. Great Bear’s mineralized LP fault is now recognized as one of the best gold discoveries of recent years, globally. But Terry remembers when the team operated in relative obscurity, with GBR shares trading for dimes not dollars.

As for Genesis, adopting a go-slow approach in 2019 laid the groundwork for an active 2020. Instead of drilling in the depths of a bear market, former President and CEO Jeff Sundar focused on building out the team and raising a war chest. Genesis joined the Discovery Group of companies and added Discovery principals John Robins and Jim Paterson as strategic advisors. The Discovery Group has an impressive record of wins in recent years, including the $520-million sale of Kaminak Gold to Goldcorp and the $117-million sale of Northern Empire Resources to Coeur. Rob Carpenter, the cofounder and former CEO of Kaminak, also came on as a strategic advisor.

Genesis’s successful financings were done in conjunction with a 5-for-1 share consolidation and the appointment of Terry as CEO. Rollbacks have a bad reputation — and rightly so — but consolidations done in conjunction with management changes and large financings can set the stage for success. Great Bear is another example of a successful rollback, its tight share structure helping to propel the stock post-discovery.

Chevrier is located in a prolific district of high-grade gold resources. Directly to the southwest is the Monster Lake gold discovery, where JV partners IAMGOLD and TomaGold have identified an Inferred resource of 433,000 ounces at 12.14 g/t gold. At the Nelligan project further southwest, Vanstar has delineated 3.1 million ounces of gold (Inferred) at about 1 g/t but last year hit 6 metres grading 56.46 g/t Au. IAMGOLD recently increased its interest in the project to 75%.

South of Chevrier, the Joe Mann gold mine produced 1.2 million ounces of gold at 8.26 g/t, as well as silver and copper. Infrastructure is excellent at Chevrier: a highway and power line runs through the property and the regional airport is a few minutes drive to the north. 

With Discovery Group backing, a strong management and technical team, and a full treasury to drill high-grade gold targets at Chevrier, Genesis has laid the foundation for success. And high-grade gold discoveries get rewarded by the market, even in these tumultuous times for juniors.

Genesis Metals (GIS-V)
Price: 0.18
Shares outstanding: 43.76 million (59M fully diluted)
Market cap: $7.9 million

Disclosure: James Kwantes owns Genesis Metals shares and Genesis is one of three Resource Opportunities sponsor companies. Genesis is a speculative, high-risk exploration stock that may not be suitable for all investors. This article is not intended as financial advice and all investors should conduct their own due diligence and/or consult an investment advisor.