Resource Opportunities

This special report on Yukon mining plays was sent to Resource Opportunities subscribers on January 5. Share prices have been updated but market capitalizations reflect the timing of the dispatch. The last Resource Opportunities special offer was very well-received, so I’m offering a January special for those who missed out. New subscribers can get a 1-year discounted subscription for just $99 — a savings of $200 off the regular price — by entering coupon code JANUARY at this link. The year is young, but early portfolio company gains show why savvy speculators are choosing Resource Opportunities. Erdene Resource Development (ERD-T), a Resource Opportunities pick at 37.5 cents on Sept. 30, has surged to 86 cents on drilling success at the company’s high-grade, near-surface gold discoveries in Mongolia. NexGen Energy (NXE-T), a Resource Opportunities pick at 30 cents, is approaching 10-bagger territory as excitement builds ahead of a resource update at its uber-high-grade Arrow uranium deposit in northern Saskatchewan. Join Resource Opportunities today and prosper!

January 5, 2017
By James Kwantes

Good morning and Happy New Year subscribers,
I trust you enjoyed the holidays. In the (SW) corner of Canada where I live, we experienced the novelty of a white Christmas — something most Canadians live through annually. Snow or not, the pace of life slows at this time of year, and so do the markets. While many junior mining stocks have rallied of late, it’s a quiet time in the markets and volume is typically low.

It’s also a quiet period in the Yukon, the focus of this dispatch. At the time of writing it was -19 Celsius (-2 Fahrenheit) in Whitehorse, the Yukon’s capital, and even colder in the northern mining hub of Dawson: -22. The days are dark, and needless to say, mining projects in the Territory are buried under snow. News flow is frozen too.

Quite a contrast from July, when I toured several exploration and development projects that were buzzing with activity. Drills were turning, gold was riding high and M&A talk was in the air. One of our stops was Goldcorp’s Coffee project, acquired from Kaminak Gold just two months earlier for $520 million. Agnico Eagle — one of the companies that was interested in Coffee — is the latest major to enter the Yukon, paying $14.5 million to acquire 19.9% of White Gold Corp. White Gold has the option to acquire more than 12,000 claims staked by legendary Yukon prospector Shawn Ryan, who will be a major shareholder of the new company.

So it’s frozen, but signs of life are stirring beneath the snow cover. And parkas are required clothing for Yukon winters, but you don’t buy one now. The best time to get bargain pricing on a winter coat is when you don’t need it, after winter is over. Better yet, when the sun is blasting every day and the grass has died.

And the best time to pick up high-quality junior mining stocks with Northern projects for low prices is right now. This year the bargains are even better because of gold’s decline from summer highs of US$1,365/oz to the current (still rather chilly) $1,1164/oz.

In alphabetical order, here are summaries of several Yukon plays whose share prices are likely to warm up along with the weather, as exploration and drilling programs get underway and results come in. The Yukon has long been recognized as one of the world’s most prospective mineral jurisdictions — a contention validated by investments from Kinross (Underworld’s White Gold project), Goldcorp and Agnico Eagle.

Things are buzzing again in the Yukon after a period of relative stagnation. Several of the Yukon plays have moved hard last week with gold’s rise, but this isn’t the big move. Just remember to take some profits when it’s shorts and T-shirt weather, because all these stocks are cyclical. Please see important disclosures at the bottom. Good luck with your bargain hunting!

Arcus Development Group (ADG-V)
Arcus remains under the radar, but its properties are among the best in the prolific White Gold district. Chief among them is Dan Man north of Goldcorp’s Coffee project, between Coffee and the Yukon River. Significantly, many of the 5 million ounces of gold at Coffee are located along north-south trending hydrothermal structures on the northern boundary, very near Dan Man. In October, Goldcorp took a 19.9% stake in Arcus after securing a similar foothold in Independence Gold, and Goldcorp will help design Arcus’s 2017 exploration program. Arcus is run by Ian Talbot, a lawyer and exploration geologist who was in-house counsel for BHP Billiton in Vancouver. Presumably he knows a thing or two about dealing with majors. Talbot is also chief operating officer of Strategic Metals. With any kind of exploration success by Arcus at Dan Man, snapping up the rest of the company would be a no-brainer for Goldcorp. Agnico’s recent investment in White Gold Corp. values the latter company at more than $70 million, many multiples of Arcus’s market capitalization. The stock hasn’t moved much, despite a likely drill program this year. For more on the company, see the special alert sent to Resource Opportunities subscribers on Oct. 24.

Price: 0.10
Shares outstanding: 72.8 million (88.5M fully diluted)
Market capitalization: $7.3 million
Current price: 0.115

Alexco Resource Corp. (AXR-T)
Alexco’s latest assays from the high-grade Bermingham discovery can be measured in kilograms, not grams. The best intercepts (true width) included 7.16 metres of 4,375 g/t silver and 3.98 metres grading 6,477 g/t. On Tuesday Alexco updated its silver resource at Bermingham — indicated ounces grew from 5.2 to 17.3 million, inferred from 700,000 to 5.5 million ounces. Bermingham is one of two new deposits being explored by Alexco, which shut down operations at its Bellekeno mine in 2013 because of low silver prices. The other deposit is Flame & Moth, located near a processing plant that is ready to go at the flick of a switch — when silver prices cooperate. Indicated ounces in the entire Keno Hill district now sit at 67.5 million, up 22% from the previous tally. There are two major headwinds for Alexco: the silver price and a 25% silver stream that Silver Wheaton has on Alexco’s entire district. The stream was the price Alexco paid to finance in October 2008 during the height of the financial crisis. The terms have been amended but are still very punitive, and renegotiating the stream is a top priority. Perspective: Alexco shares are not trading much higher now than they were when the company announced the Silver Wheaton financing. Alexco stock, which also trades on the NYSE MKT as AXU, offers tremendous leverage to the price of silver, currently US$16.50/oz.

Price: $1.97
Shares outstanding: 92.9 million (105M f-d)
Market capitalization: $183 million
Current price: $2.27

ATAC Resources (ATC-V)
ATAC is developing the Rackla project, Canada’s only Carlin-type gold district in the mountains of the Yukon. The rocks are comparable in lithology, mineralization and age to the Nevada trend that has produced more than 50 million ounces of gold. Rackla is a vast 1,700-square-kilometre property but the 30-kilometre Nadaleen Trend in the east is where much of the high-grade gold has been found in recent years. The latest intercepts included 61.29 metres of 2.75 g/t Au in the Orion zone at Nadaleen. ATAC also has the PEA-stage Tiger deposit in the Rau trend on the western part of the property. ATAC has consistently returned intercepts that are off-the-charts rich for the Yukon, including 38.8 metres of 17.11 g/t Au (2010) and 30.79 metres of 9.5 g/t (2014). The gold is rich but the exploration is expensive — some of the sites with the most gold are on mountaintops and require helicopters to visit and drill. ATAC shares have powerful leverage to gold and reached $10 a share in the summer of 2011 — a fact that puts the 26% move since Dec. 21 into perspective. Also in 2016, ATAC released an updated PEA for Tiger with better economics, including significant boosts in NPV, recovered gold and mine life. The stock has made a round trip from 30 cents at the start of the year, to almost a dollar at the end of July, to the current 43.5 cents. The Yukon’s White Gold district gets much of the attention these days. But Strategic Metals CEO Doug Eaton (Strategic owns 8.3% of ATC shares) reckons that in 100 years, the Nadaleen trend where ATAC has a dominant land position will have produced more gold than the Klondike trend that hosts the White Gold district. And Eaton probably knows as much about Yukon geology as anybody.

Price: 0.435
Shares outstanding: 122.8 million (131.35M f-d)
Market capitalization: $53.4 million
Current price: 0.40

Banyan Gold (BYN-V)
Banyan is a relatively new play in the southeastern corner of the Yukon that is exploring the Hyland project. The company has an almost 400,000-oz gold-equivalent resource at a grade of about a gram per tonne AuEq, with a goal of adding ounces. Banyan had some drilling success in the fall, announcing assays including 30.7 metres of 1.3 g/t Au and 8.0 g/t Ag. The company says its Hyland project has similar Carlin-type mineralization to ATAC’s Rackla. There are also strong ties to Victoria Gold (VIT-V) — Victoria owns 8% of Banyan’s stock and the company’s chairman is Mark Ayranto, Victoria’s executive vice-president. In August geological engineer Tara Christie was appointed Banyan’s president — she comes from a powerful Yukon placer mining family and is married to Victoria Gold CEO John McConnell. Christie and Ayranto together own more than 8% of outstanding shares and the tight share structure ensures the stock will move on drilling success. I recently purchased some as a speculation.

Price: 0.05
Shares outstanding: 46.9 million (63M f-d)
Market capitalization: $2.4 million
Current price: 0.055

Golden Predator (GPY-V)
During my visit to Golden Predator’s Three Aces project in July, I chipped rocks beside CEO Bill Sherriff as several of us searched for elusive visible gold (VG) at the site of a bulk sample. And we found some — it was Greg Hayes, then CFO and now a director, who identified some VG. Three Aces is Golden Predator’s exploration project north of Watson Lake in southeastern Yukon and home to two of the highest-grade surface outcrops ever discovered in the Yukon. Assays from a 4,300-metre 2016 drill program that went late are expected to be released in early 2017, which could be a catalyst for the stock. This year the company plans to drill up to 25,000 metres, so plenty of news flow is likely. Golden Predator also owns the Brewery Creek mine, a past-producing heap-leach operation located east of Dawson. Golden Predator is well-funded, with backers including Eric Sprott, McEwen Mining and Pat DiCapo. CEO Sherriff is a savvy operator with a promising exploration project near infrastructure and a development project that is economic at a higher gold price.

Price: 0.75
Shares outstanding: 76.7 million (123.1M f-d)
Market capitalization: $57.5 million
Current price: 0.72

Independence Gold (IGO-V)
Independence Gold is exploring for high-grade gold on the property adjacent to Coffee’s western boundary. Independence CEO Randy Turner is a closeology expert whose exploration chops have been honed by both skill and luck. Turner sold his Winspear Diamonds and its Snap Lake diamond project to De Beers for $305 million in 2000 and followed that up by selling Silver Quest and its 25% of the Blackwater gold project to New Gold (NGD-T) for $131 million in 2011. Luck: Turner happened to be holidaying in the Yukon with his wife when Kaminak announced its discovery hole at Coffee. He quickly staked virtually all the property on Coffee’s western boundary and has been running small exploration programs ever since. Intercepts have included 7.23 g/t gold over 12.2 metres (Sunrise) and 4.56 g/t over 10 metres at Denali, the latter from surface. Goldcorp acquired 19.9% of Independence in June. IGO surged to 50 cents in the summer but is now trading at about the same valuation as when Goldcorp bought in. Unique to Independence is the bulging treasury: IGO has more than $6 million in the kitty and a market capitalization of just under $11 million. The stock was a Resource Opportunities pick at 8 cents (August 2015) and has risen 30% since Dec. 21. But there’s plenty more upside here.

Price: 0.195
Shares outstanding: 55.5 million (59.3M f-d)
Market capitalization: $10.8 million
Current price: 0.185

Klondike Gold (KG-V)
2016 was a disappointing year for Klondike Gold shareholders. The stock ran from 11 cents to highs of 45 cents before plunging in August when the company announced several dusters at Violet Ridge, one of its Dawson-area projects. However, Klondike also consolidated an already dominant land position and announced some very good assays, particularly in the Nugget Zone and at Lone Star. 2017 has the possibility of starting out with a bang, too — Klondike has yet to release assays from its final holes at Lone Star, which were delayed by lab problems. With the larger land package, CEO Peter Tallman plans property-wide surveying to narrow down the best targets. Klondike’s drilling costs are among the cheapest in the Yukon and Tallman is playing the long game. Major shareholders include billionaire financier Frank Giustra and Roberto Aquilini of the Vancouver-based billionaire family that owns a vast array of assets, including the Vancouver Canucks hockey team. Tallman is searching for the motherlode that has deposited 20 million ounces of gold into area creeks over the past 120 years. But the discovery of an economic deposit would make Klondike’s stock worth many multiples of the current price. The journey between here and there will likely be bumpy but this is a low valuation considering the upside speculative potential.

Price: 0.195
Shares outstanding: 54 million (80M f-d)
Market capitalization: $10.5 million
Current price: 0.185

Rockhaven Resource Corp. (RK-V)
Rockhaven’s Klaza is a high-grade polymetallic gold project with excellent infrastructure — you can drive a Honda Civic to the property, as CEO Matt Turner will tell you. But it also has a size problem: the deposit needs more ounces to improve economics. A PEA announced in March outlined a 14-year mine life that would start with an open pit and move underground, utilizing three (expensive) declines. Life-of-mine, the operation would produce 630,000 oz gold, 11.364 million oz silver, 51.2 million lbs lead, and 52.5 million lbs zinc. But total capex was $358 million and payback was 7 years, for a project with a pre-tax NPV (5% discount) of $150 million and IRR of 20% and after-tax NPV of $86 million and IRR of 14%. I published a sell recommendation in April at these levels, although still have exposure to Rockhaven through Strategic Metals, which owns 46.5% of Rockhaven shares (on Tuesday, Rockhaven announced it was settling a $2-million debt by issuing Strategic another 11,346,712 shares). Market reaction to the PEA last spring was tepid and Rockhaven shifted to drilling out and expanding the deposit. 2016 was a success on that front — drilling targeted near-surface veins that are close to the open pit but not included in the existing resource. In September, for example, Rockhaven hit 17.01 g/t gold over 4.32 metres in a stepout hole.

Price: 0.20
Shares outstanding: 118.4 million
Market capitalization: $23.7 million
Current price: 0.19

Strategic Metals (SMD-V)
Strategic Metals is a project generator with the largest claims position in the Yukon and a long list of assets, as well as a very healthy cash position. Strategic had dipped below 40 cents and was trading at working capital levels before bouncing in the last couple of weeks. The company has been busy recently with these moves aimed at creating shareholder value:
– spinning out Trifecta Gold, a new exploreco that will list on the TSXV and hold the Eureka, Triple Crown (formerly called OOO) and Treble (LLL) properties. The properties are located in the prolific White Gold district, which is heating up again. Most of the Trifecta shares will be distributed to SMD shareholders, with Strategic also retaining a stake;
– optioning the Keno Summit and Gram properties in the Yukon’s Keno Hill silver district to Metallic Minerals (MMG-V), a new exploreco helmed by former Wellgreen Platinum CEO Greg Johnson;
– spinning out wholly owned subsidiary Terra CO2 Technologies. Terra CO2 is a green-tech company working on a technology that treats acid rock drainage by reacting it with discharged CO2 to produce a stable metal carbonate compound and saleable sulphur byproducts. Terra CO2 has reached the semifinals of the international Carbon XPRIZE competition, where first prize is US$7.5 million.
Strategic has almost half of its market cap ($20 million) in cash and stakes in dozens of explorecos, including:
– 8.3% of ATAC shares
– 46.5% of Rockhaven shares
– 32.5% of Precipitate Gold (PRG-V) shares
– 16.5% of Silver Range (SNG-V) shares
Perspective: Metallic Minerals, the new company that acquired Strategic’s two Keno Hill properties, has a market cap of $14 million. That’s about a third of the market cap of Strategic, which has a host of valuable assets, significant stakes in several explorecos and a large cash pile.

Price: 0.475
Shares outstanding: 89.1 million (93.5M f-d)
Market capitalization: $42.3 million
Current price: 0.53

Victoria Gold (VIT-V)
Victoria’s Eagle gold project is shovel-ready, with all permits in hand and an agreement with the local First Nations. Victoria has a mineral reserve of 2.7 million ounces and the potential to produce 200,000 ounces annually at low costs. It’s a lower-grade operation (.73 g/t Au), but a low strip ratio and the addition of richer satellite deposits sweeten the economics. At a US$1,250/oz gold price and a 78-cent dollar, Eagle has a post-tax NPV of $508 million and IRR of 29.5%. Last year, speculation that Victoria Gold could be the next company to sell to a major took shares above 75 cents. The stock drifted down to the low-.40s last month and has since rebounded.

Price: 0.57
Shares outstanding: 503 million
Market cap: $286.7 million
Current price: 0.54

Western Copper and Gold (WRN-T)
There are vast stores of gold and copper at Western’s Casino project, located near Goldcorp’s Coffee deposit. Casino’s proven and probable reserves measure 8.9 million ounces of gold and 4.5 billion pounds of copper, with a further 9 million gold ounces and 5.4 billion pounds of copper in the Inferred category. It would be the biggest mine in Yukon history and a major economic driver, with a 22-year mine life and capex of almost $2.5 billion. An LNG plant would power the whole operation. But Casino is also a dice roll because the project has been stuck in the laborious permitting process. That’s in large part due to a massive tailings dam, which was the subject of an independent review panel that suggested a few design changes. One of the changes will result in significantly less water — 80% less — than the prior iteration. Memories of the August 2014 tailings dam failure at Imperial Metals’ Mount Polley mine in British Columbia and the more serious Samarco disaster, which killed 19 people, loom in the background here. Western has an airstrip and currently transports materials by barge to the site, but a 120-kilometre unpaved road is planned. Because of the project’s size and footprint, Western is dealing with three separate First Nations. Permitting progress is never too headline-grabbing. But the stock has moved hard from the 30-cent level less than a year ago and Western is taking steps to derisk the project as it moves through permitting.

Price: $1.87
Shares outstanding: 94.5 million (100.5M f-d)
Market capitalization: $176.7 million
Current price: $1.85

Disclosure: I own shares of Arcus Development Group, Alexco Resource Corp., Banyan Gold, Independence Gold, Klondike Gold and Strategic Metals. Strategic Metals is a Resource Opportunities sponsor.

Contact: Email james.kwantes@gmail.com with any comments, questions or concerns, and james.kwantes@gmail.com for subscription-related inquiries. www.ResourceOpportunities.com

Editorial Policy: Companies are selected for presentation in this publication strictly on their merits, and Resource Opportunities sponsors are selected on their merits as well. No fee is charged to companies for inclusion, and a small number of sponsor companies help financially support the subscriber-funded newsletter by keeping subscription prices low. Dollar and $ refer to Canadian dollars, unless stated otherwise or obvious from the context (for example, a share price on a Canadian exchange).

Disclaimer: Readers are advised that the material contained herein is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The author and their associates are not responsible for errors or omissions. They may from time to time have a position in the securities of the companies mentioned herein, and may change their positions without notice. (Any positions will be disclosed explicitly.)

Copyright: This publication may not be reproduced in whole or in part, in any form, without the express permission of the publisher. Permission is given to extract parts of the report for inclusion or review in other publications only if credit is given, including the name and address of the publisher.

by James Kwantes
Editor, Resource Opportunities

Gold in Nevada.

It’s been a company maker for several of the world’s most successful mining companies, notably Barrick Gold (ABX-T) and Franco-Nevada (FNV-T). Barrick’s purchase of Goldstrike and subsequent discoveries turned the property into a 50-million-ounce monster and Barrick into the world’s No. 1 gold miner. Franco-Nevada’s 4% royalty on Goldstrike laid the foundation for what has become a $13-billion market cap royalty juggernaut.

Key to the Nevada gold story is Cordex, the exploration firm founded by legendary geologist John Livermore. Livermore found the Carlin mine and discovered a new type of gold mineralization known as Carlin-type. Under the leadership of Livermore and later Andy Wallace, Cordex is credited with 9 significant gold discoveries in Nevada, including the multi-million-ounce Carlin and Marigold mines.

In the space of 50 years, Nevada has become the world’s best gold mining jurisdiction. The state’s largest export partner is Switzerland, a testament to the amount of gold that starts under the Nevada desert and ends up in bank vaults in the wealthy European banking centre.

Nevada gold is also, increasingly, the focus of Columbus Gold (CGT-T), which earlier this week released a maiden resource estimate for its Eastside gold deposit in the state. At a .15 g/t cutoff and US$1,300/oz gold, Eastside hosts an Inferred resource of 654,000 ounces of gold at average grades of .57 g/t and 3.999 million ounces of silver at grades of 3.5 g/t. It works out to 721,000 ounces of gold equivalent.

The first pass at a resource estimate is literally scratching the surface at Eastside, notes Columbus Gold Chairman and CEO Robert Giustra. Only about 50% of mineralized material was included in the pit-constrained resource estimate, and the deposit is open at depth and to the south and west. Metallurgy tests have demonstrated the gold and silver is amenable to cyanide leaching, whether oxide or sulfide.

“Considering that only about one square kilometer of the large 58-square-kilometer property has been drilled so far, and only 136 holes drilled, a maiden resource of 721,000 ounces constrained in a pit, is an excellent start,” Giustra said.

And Columbus is busy planning its next steps, most recently consolidating its land package and planning the next drill campaign. The architect of value creation in Nevada is none other than geologist Andy Wallace of Cordex, Columbus’s exclusive exploration partner in Nevada. In a nutshell, Columbus has a Nevada discovery pioneer running their exploration programs in one of the world’s best gold mining jurisdictions. It bodes well as 2017 comes into focus.

While the maiden resource estimate was being prepared, Columbus turned its attention to grassroots exploration. Company geologists used mapping and geochemical sampling — including 3,400 surface samples — to identify 41 rhyolite domes. The domes are important geological features associated with gold mineralization at the Original Target, where most of the resource drilling at Eastside took place.

The domes range in diameter from 100 to 1,000 metres and are located along dozens of faults on Columbus’s claim block, mostly trending north or northeast. At one of its highest-priority targets, Target 5 (eight kilometres south of the Original Target), Columbus recently received a permit to construct a road and drill pads and drill 12 holes.

The company also recently concluded two deals at its 100% owned Bolo gold property, northeast of Eastside, that expanded the land package and eliminated a royalty. Bolo is a secondary Nevada exploration property, but Columbus is considering a small drill program after the land consolidation. Mineralization is Carlin-type and occurs in pods along two parallel faults, each of them more than 2.2 kilometres along strike. That makes it higher-risk exploration.

However, several of the 2013 holes hit impressive high-grade, near-surface intercepts at the South Zone of the Mine Fault, including:

• 133 meters of 1.28 g/t gold from surface (including 30.5 m of 3.24 g/t gold) in BL-38;
  89.9 meters of 1.0 g/t gold (including 40.9 m of 2.05 g/t gold) from surface in BL-39; and
  51.8 meters of 1.27 g/t gold from surface in BL-41.

As for the land agreements, they’re a testament to the benefit and cost savings that can be achieved by having an experienced hand on the ground in Nevada. In the first, Columbus opportunistically picked up the “Uncle Sam” patented claim after the claim holder stopped paying taxes on the land. Columbus petitioned the county to secure the claims, then patiently and quietly went through a multi-step legal process that ended with them securing the land. Uncle Sam is a key claim on the southern end of the South Mine Fault Zone — near some of the best drill holes — and it was picked up for a relative song, CEO Giustra says. Surface sampling at Uncle Sam is underway.

In the other deal, Columbus eliminated an underlying 1-3% NSR royalty on Bolo by swapping its Weepah property to the royalty holder. Weepah was a non-core property located south of Eastside.

2017 is also shaping up to be a big year at Montagne d’Or, Columbus’s multi-million-ounce gold deposit in French Guiana. Montagne d’Or hosts an in-pit gold resource of 3.9 million ounces Indicated at average grades of 1.45 g/t and an additional 1.1 million Inferred ounces at a grade of 1.55 g/t, at a 0.4 g/t cut-off.

A bankable feasibility study for Montagne d’Or is expected to land in the first quarter. Gold miner Nordgold can secure a 55.01% interest in the project by funding a minimum of US$30 million in exploration expenditures and completing the FS. Montagne d’Or has excellent infrastructure and would be one of the highest-grade open pit gold projects in the Americas. At a US$1,200 gold price, a PEA for Montagne d’Or modelled an NPV of US$450 million (5% discount rate), after-tax IRR of 23% and annual gold production of 273,000 ounces in the first 10 years at all-in sustaining costs of US$711/oz. Capex would be US$366 million, with a 3-year payback.

JV partner Nordgold is the natural acquirer for Columbus’s 44.99% stake in Montagne d’Or. Nordgold is a fast-growing and acquisitive Russian-based producer listed on the London Stock Exchange. The company operates 9 mines in Russia, Kazakhstan, Burkina Faso and Guinea and produced 950,000 ounces of gold in 2015. Its newest operation is the Bouly gold mine in Burkina Faso, which went into production in September after a 13-month build that came in under budget.

Nordgold’s latest financials paint a picture of a thriving mining company generating healthy cash flow. In the third quarter of 2016, Nordgold generated EBITDA of US$131.8 million and operating cash flow of US$109 million on revenue of US$278 million.. The company’s Gross mine in Russia is expected to go into production in the first quarter of 2018, after which Montagne d’Or will be the only major gold deposit in Nordgold’s pipeline.

But rather than sit back and wait for a takeover offer, Columbus is working to add value to an already strong project. The company is mobilizing for a 41-hole, 6,750-metre drill program testing targets both within and outside the deposit envelope. Columbus will test the west and east extensions of Montagne d’Or, including a geochemical anomaly 750 metres east of the deposit where a historical hole hit 31.94 g/t gold over 3.5 metres. In addition, two holes will test the depth of mineralization — little drilling has been done below 250 metres at Montagne d’Or. Drill permits are in hand and Columbus is building roads and drill pads and mobilizing drills this month. Columbus is fully financing the exploration program.

Columbus shares have outperformed the S&P/TSX Venture Composite Index this year. But the stock has drifted down along with the entire junior sector since the summer, when gold peaked at US$1,350 an ounce. After hitting a 52-week high of 93 cents in August, Columbus shares have fallen to 54 cents on the Toronto Stock Exchange, giving the company a market capitalization of about $77.2 million.

But in intensifying the downward pressure on Columbus shares, tax-loss selling creates opportunity for investors. Columbus is a catalyst-rich gold play with active drill programs at both the Montagne d’Or development project in French Guiana and the Eastside exploration project in Nevada.

In Nordgold, Columbus is partnering with an acquisitive, world-class gold producer to develop a five-million-ounce gold deposit in the Americas. In Nevada, one of the world’s best gold mining jurisdictions, Columbus is advancing exploration both at and beyond its Eastside project. A follow-up drill program is being planned at Eastside, where a just-published maiden resource estimate shows an Inferred resource of 721,000 ounces of gold equivalent at .63 g/t AuEq at a cut-off grade of 0.15 g/t and a gold price of US$1,300/oz.

Columbus Gold (CGT-T)
Price: .54
Shares outstanding: 142.9 million
Market capitalization: $77.2 million
Treasury: $5.2 million (as of Aug. 31)

Disclosure: Author is long Columbus Gold shares and the company is a Resource Opportunities sponsor. This article is presented for informational purposes only and should not be considered investment advice. Junior mining investments are speculative and not suitable for many investors. Always do your own due diligence. Nothing contained herein constitutes a representation by the publisher, nor a solicitation for the purchase or sale of securities. The information contained herein is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data. Any opinions expressed are subject to change without notice. The author and their associates are not responsible for errors or omissions.

http://www.columbusgoldcorp.com/s/NewsReleases.asp?ReportID=755937&_Type=News-Releases&_Title=Columbus-Gold-Drills-97.5-meters-of-0.68-gt-Gold-at-Eastside-Nevada

Columbus Gold Corp. is a Resource Opportunities sponsor company, helping support the subscriber-funded newsletter.

Message from Tommy Humphreys:

This morning, Resource Opportunities, a subscriber-supported investment newsletter founded by geologist Lawrence Roulston in 1998, appointed its next editor, Mr. James Kwantes, currently mining reporter with Vancouver Sun and editor of the World of Mining blog.

I know this because I recruited him for the position, having been working with Lawrence Roulston to revive Resource Opportunities since last Summer.

James and I have been close friends and associates for five years since I helped him establish the World of Mining blog. He has been an invaluable editor and source of council to me in the years I have built up CEO.ca, and is absolutely determined to make a success of Resource Opportunities.

Here’s the note I sent to subscribers this morning, introducing James:

Dear valued subscribers,

I have very good news about the future of this newsletter to share with you today. I also have a number of company updates and developments with Resource Opportunities companies.

As founder of CEO.CA, a digital business media startup, I’m overseeing the rapid growth of our new Canadian investor app, chat.ceo.ca.

Three talented Vancouver-based web developers and myself are experimenting with new messaging technology, specifically for junior resource investors. The users are playing an important role as well, providing feedback for continual improvements.

In recent weeks, Resource Opportunities has not been getting the attention it deserves.

Resource Opportunities’ founder, Lawrence Roulston, has also been busy building up a mining private equity firm with Quintana Resources Capital ULC. While Lawrence is able to provide as-needed technical advice for this newsletter, he and I both realized you deserve a dedicated editor.

Lawrence and I are proud to introduce James Kwantes as the next Editor of Resource Opportunities. James is someone who has subscribers’ best interests at heart and will help us profit greatly as the junior mining bull market inevitably returns.

James is the mining reporter at the Vancouver Sun, the city’s paper of record. A journalist with over 20 years of experience, James has interviewed a long list of executives, financiers and minefinders. In my five years of close friendship with James, he’s shown focus on only the highest-quality mining projects and management teams (including firms like Pretium Resources, Kaminak Gold and North Arrow Minerals, of late).

It’s important for you to know we recruited James because he is honest; he made the conscious decision to keep his independence from stock promoters, making him unique among mining writers.

James Kwantes is fully invested in making profits for subscribers. He is dedicated to identifying under-the-radar and high-quality junior mining companies, and has the help of a quality network of geologists, engineers and analysts, including Lawrence, to help with critical technical due diligence.

Ongoing, I will assist James with marketing and proactively share my top exploration ideas with him. You will always still be able to find me at CEO.ca and chat.ceo.ca, where we discuss many Resource Opportunities companies.

The Jack Nicklaus of newsletter writers was one of Lawrence’s contemporaries, Mr. Bob Bishop, who discovered countless major junior mining successes before the mainstream, and was wise enough to retire in 2007, at the top of the market. Mr. Bishop accomplished great success as a newsletter writer without a background in mining; he was a journalist, able to tell both sides of a story while educating readers.

I’m not saying James is going to win 18 major championships, or even come close to Mr. Bishop’s accomplishments. But I do think he is the best person in the world to be running this newsletter, and I am excited for what he can accomplish for subscribers, especially given the current low point in the mining cycle.

Please join me in welcoming our new editor, James Kwantes. He is taking subscriber emails and feedback at james.kwantes@gmail.com. For subscription-related inquiries, please email james.kwantes@gmail.com.

And with that I’d like to hand it off to James.

James is already off to the races, commenting decisively on several junior prominent junior mines in this morning’s issue.

There’s a 30 day money-back-guarantee offered for test-driving Resource Opportunities ($299/year here), and junior mining investors should consider subscribing.

Here’s to the start of something good,

Tommy Humphreys
Founder, CEO.ca
Partner site, ResourceOpportunities.com

James Kwantes has built an impressive library of interviews with mining executives.

West Vancouver diamond pioneer Gren Thomas still in the hunt for gems
March 17, 2015

Passion, persistence pave Peter Bradshaw’s path to top
February 24, 2015

Fronk eyes majors to develop northwestern bonanza
January 27, 2015

Home soil feels good for globe-trotting gold exec, Bob Gallagher
January 20, 2015

2014 another gruelling year for miners
December 30, 2014

Mining exec Randy Smallwood rides a silver stream
December 09, 2014

Pretium Resources lands $81-million deal with Chinese gold mining giant
December 08, 2014

De Beers lifts veil on where its best diamonds come from and how much they fetch per carat
November 04, 2014

Mining deals a positive sign, but insiders skeptical
October 28, 2014

Precious metals investing in not-so-golden times
October 14, 2014

Gold mining titan retains underdog sensibilities
September 23, 2014

CEO Watson grows a golden stream at Sandstorm Gold (updated with video)
August 26, 2014

Mount Polley mine disaster a blow to First Nations cooperation on B.C. mines
August 06, 2014

‘Queen of Diamonds’ has golden plans for Yukon project
July 08, 2014

O’Dea grows mining empire through a bear market
June 24, 2014

Diamond pioneer returns to the hunt for gems
June 10, 2014

Looking ahead to the next boom
May 20, 2014

Mining: Geologist takes mineral hunt to his hometown
May 13, 2014

Mining executive Bob Quartermain goes for gold in northwest B.C.
April 15, 2014

Roundup: Pretium CEO Bob Quartermain at Vancouver mining show
January 28, 2014

Junior miners: Worth the investment?
January 31, 2012

Billionaire mine developer Robert Friedland has said that real wealth in the mining sector is created by finding something.

Friedland would know this, having driven 5+ world-class mining discoveries in his career. He knows that to find a mine you have to spend a lot of money, and drill a lot of holes.

Another secret weapon of Friedland’s is people; he surrounds himself with impressive technical minds, and provides them with big budgets and plenty of autonomy to test their theories. Statistically speaking, explorationists who have already found mines are more likely to make future discoveries.

I first met Dave Broughton on an Ivanhoe Mines field trip to South Africa and D.R. Congo last year. Friedland stood beside Broughton at the site of Ivanhoe’s world-class Kamoa copper discovery. There, a Broughton led team had chased an exploration concept from stream and soil anomalies to drill targets and eventually, a world-class discovery. Kamoa was the first major copper discovery in the D.R.Congo in a hundred years.

At the 2015 PDAC conference in Toronto, Dr. Broughton and Mr. Friedland received the Thayer Lindsley International Discovery Award for their work finding Kamoa. This was the second time the Ivanhoe group had won the prestigious award at mining’s largest convention.

Just a few hours before Dr. Broughton received the award, he met up with Exploration Insights editor Brent Cook, CEO.ca cameraman Carter Smith and myself to talk a bit about his exploration methodology, as well as his plans for a next discovery.

David Broughton, Kaizen Discovery, Brent Cook, Exploration Insights, and Tommy Humphreys, CEO.ca discuss Kaizen’s Discovery Trail at the PDAC in Toronto, Mar 1, 2015:

Tommy Humphreys: I’m here with Dave Broughton who is the exploration boss at Kaizen Discovery as well as Ivanhoe Capital group, a very accomplished geologist, and my friend Brent Cook, editor of Exploration Insights. I wanted to introduce these guys because I think some of the work that Kaizen is doing is very fascinating and Brent hadn’t heard the story yet, and knows more than I do. To start off, what is the award that you’re receiving today and what brings you to PDAC?

Dave Broughton (DB): We are receiving, on behalf of a whole lot of people, the Thayer Lindsley Discovery Award, which is given every year by the PDAC for a significant international discovery. It’s the second time Ivanhoe group has won this. They won it for OT [Oyu Tolgoi] at the inaugural event when they first awarded it a number of years ago.

Brent Cook (BC): So now you’re up in the Yukon for something different?

DB: Kaizen, late last year, picked up a package of land and took over a small company with an adjoining package of land up in the Western part of Nunavut, and its another stratiform copper play like the one we found at Kamoa [Ivanhoe Mines’ DR Congo copper discovery]. There’s copper everywhere you land, so there are good signs when you just get on the ground and wander around. That’s been appreciated for a long time, it was discovered initially in the 60’s and some work was done then, but really, nothing’s happened for about 20 years. The last group of people to be in there in a significant way on the play we’re really excited about was Cominco and that was in the early 90s.

There really are two plays, there’s a volcanic hosted copper play, that has a lot of very high grade copper, well known, lode copper, I guess you’d call it, in volcanic rocks, and there’s a more, less appreciated play, which is what we’re really excited about, and it’s in the sedimentary rocks overlying it. The rocks are similar in age to those in the copperbelt which is intriguing, and there’s mineralization that’s outcropping and in most places it’s covered, certainly 95% cover. 150 kilometre strike of these sedimentary rocks with copper showing here and there but it really hasn’t been tested.

BC: How many holes have been put into this?

DB: Well, Cominco put about a half a dozen holes at the far eastern end of the area and the rest is basically untouched.

BC: What did they find?

DB: They hit mineralization. They didn’t hit an ore grade intersection over ore grade widths, but there are lots of holes at Kamoa or Kupferschiefer, or anywhere you want to go in these systems, you don’t always hit ore on your first hole. The usual things right: persistent and all that.

BC: What sort of width and thickness are we talking in this horizon from the drilling you’ve got so far?

DB: You’ve got mineralization over metres in lenses and so on. There is some government geophysical data that gives up some idea as to what the big structures might be that might help control mineralization. We have some old prospecting that we know about. It’s really going to be getting on the ground and walking those contacts and making up our own mind of where we can find mineralization. And then we’re looking at doing a series of widely spaced stratigraphic holes, just like you would in other districts. You’ve really got to step back. These things go for kilometres, Kamoa is 50 square kilometres in area, so you really have to look at it at a base of scale and then narrow in on what you find. We’re going to take a big-scaled approach to start with and test as much of the strike length as we can, I think.

BC: What’s the access like?

DB: The access is actually excellent. We’re just south of the old town of Coppermine.

BC: Ah, the old famous Coppermine?

DB: It’s a short helicopter ride from there to the project. There’s an airstrip, regular air service. There’s an old air strip actually on one of the properties we’re going to use for direct access with a fixed wing aircraft, so it doesn’t get much better in that sense.

BC: Conceptually, what do you need to see, what do you need to find there to take it to the Kamoa stage, or up to a stage where it’s a world class deposit or something that’s really profitable.

DB: Like anywhere, you want to drill a discovery hole that’s got an ore grade and width and then you want to step out from that and build tonnes. That’s what it’s all about.

BC: What grade do you need?

DB: Up there, good question. Kamoa’s average grade is close to 3%, there are other deposits around the world that have that. If you get 3% copper of sufficient width, you’re in business.

BC: So that’s how we can judge your program. Although admittedly the first round is basic geology which I think is really smart. Get a handle on what’s going on and then zero in. If we’re going to watch this play, it’s about, first off, we get the concept, it’s coming together or it’s not coming together, here’s our targets, next round or two rounds after that, we’re getting low cost mineable widths over 3+% copper, okay.

DB: That’s the objective but like anything, you find what you find, and you go with it. They are mining the Kupferschiefer at under 2%. It really depends on all sorts of other factors, I’m not going to be able to predict that.

BC: You’re not that good yet?

DB: Not that good yet, sorry.

BC: What sort of shape is the company in? How much cash do you have and what’s your market cap?

DB: We’re in good shape. We’ve got a unique strategic relationship with the Japanese trading houses, they fund a number of our exploration projects, and we’ve got a long history of relationships with them, going back to the Ivanhoe group as well. That’s kind of our key strategic difference that we’ve got. In addition, we’ve got a treasury and no debt so that helps too.

BC: They are funding by way of placements, or getting a piece of the project, or an offtake agreement, what’s their relationship?

DB: It varies project to project. We have projects in BC where they are funding the exploration directly. They are interested in the offtake in the long term for Japan; that’s really what’s driving them. And we’re interested in the metals that work for that reason.

BC: That was Kaizen. They are looking for stratiform copper in Nunavut. Actually pretty interesting concept. If they can pull together a large enough volume of rock at 3%, which is what they’re after, it sounds like the infrastructure is not too bad, that could be quite significant. They’ve got a good deal structured with a number of Japanese groups, so it’s worth watching for sure.

Discuss @ chat.ceo.ca

FORWARD-LOOKING STATEMENTS

Statements in this video and article that are forward-looking statements are subject to various risks and uncertainties concerning the specific factors disclosed here and elsewhere in Kaizen’s periodic filings with Canadian securities regulators. When used in this video and article, words such as “will, could, plan, estimate, expect, intend, may, potential, should,” and similar expressions, are forward-looking statements. Information provided in this document is necessarily summarized and may not contain all available material information.

Although Kaizen has attempted to identify important factors that could cause actual results, performance or achievements to differ materially from those contained in the forward-looking statements, there can be other factors that cause results, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that such information will prove to be accurate or that management’s expectations or estimates of future developments, circumstances or results will materialize. As a result of these risks and uncertainties, the results or events predicted in these forward-looking statements may differ materially from actual results or events.

Accordingly, readers should not place undue reliance on forward-looking statements. The forward-looking statements in this news release are made as of the date of this release. Kaizen disclaims any intention or obligation to update or revise such information, except as required by applicable law, and Kaizen does not assume any liability for disclosure relating to any other company mentioned herein.

Disclosure: Author is a small shareholder in both Ivanhoe Mines and Kaizen Discovery. This is not investment advice. Consult a professional investment advisor prior to making any investment decision.

Photo credit: Ivanhoe Mines