Omai Gold Mines Drills 9.9m @ 2.63g/t Au, 12.7m @ 1.85g/t Au and 2m @ 37.8g/t Au Along East And West Wenot Extensions; Appoints Don Dudek As Director

 

With gold slightly recovering from its US$1700/oz lows, as it trades at US$1782/oz at the time of writing, it seems traders liked to see the Federal Reserve backing down from a very aggressive rate hike policy, as the world economy continues to weaken, with the Russia-Ukraine conflict still being far from over, shortages are everywhere, and inflation continues to be at extremely high levels. Recovering gold prices, together with very cautiously recovering stockmarkets, are of course good news for junior gold developer Omai Gold Mines (TSXV:OMG) advancing their Omai Gold project in Guyana, and recently cashed up.

As a reminder, Omai Gold Mines already has delineated the Wenot deposit with a 2022 NI43-101 resource estimate (1.64Moz @ 1.5g/t Au, another adjacent mineralized envelope (Fennell) has a historic resource estimate of about 1.5Moz @ 1.5g/t Au. Omai is looking to bring out an updated resource for both Wenot and Fennell in October, which should definitely increase the intrinsic value of the company a great deal in my view. Their newly added director Don Dudek seems to think so too, enthusiastically joining forces in June.

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

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

On July 13, 2022, Omai Gold Mines announced the second batch of results of the ongoing exploration program at their Omai gold project in Guyana. The company drilled another 14 diamond drill holes totaling 3,403m east and west of the Wenot deposit, for a total of 19 holes and 4,826m. Management is pretty busy, as it is working on 5 different targets at the moment, and on its way to revise both the Wenot and Fennell (historic) resources, consolidating them into one NI43-101 compliant resource estimate. More on this later.

About one month before this, the company announced the  of Don Dudek as a new director. Dudek is a well-known name in the mining industry, and is a geologist with over 40 years of experience in various technical and corporate roles with junior to senior exploration and mining companies. He recently served as President and CEO of Savary Gold Corp., which was sold to Semafo Inc. in 2019. He has held senior technical roles for a number of mining companies including Endeavour Mining Corporation, Avion Gold Corporation and Aur Resources, and is currently Vice President Exploration for Wolfden Resources Corporation and Technical Director for Desert Gold Ventures. CEO Ellingham was very enthusiastic about Dudek, as he isn’t just very experienced, but is very enthusiastic about Omai and the potential to grow into a very significant gold deposit.  He has already collaborated with her on exploration strategies.

Talking about exploration, Omai Gold Mines utilized a second drill rig a few months ago, enabling management to test multiple targets at once.  The clear focus for now is on expanding the Wenot resource on trend, to the west and the east of the existing open pit, after drilling mineralization below this open pit. Expanding the Wenot resource into these un-mined areas is significant for an ultimate mine plan as these could contribute to lower-strip-ratio starter pits for the larger Wenot deposit.

Omai Gold Mines has the advantage of having a pretty good idea about more near surface mineralization at Wenot, as historic drilling tested this shallow mineralization in the saprolite layer, and the necessary data for a resource update is available. Most importantly: almost all intersected deeper zones run upwards to the shallow mineralized saprolite anyway, as visualized in a typical cross section:

Another aspect that seems to be typical for this deposit is the predictability of the width and grade of the vein structures from near surface to depth. This gives management more confidence, not only in the mineral resource estimate but also to the potential to expand the economic resources further at depth. Let’s have a look at the actual results.

Holes 22ODD-041 to 046 were reported in the latest news release, testing eastern and western extensions of Wenot, and full results can be seen here:

These results confirm that the Wenot shear-hosted gold mineralization extends to at least 900 metres west of the past-producing pit and 400 metres east of the pit, for a total strike of at least 2.7 km, which remains open along strike.

CEO Elaine Ellingham was pleased with the outcome so far: “These results indicate an exploration target with a size of at least 2.7 km long, by 450 m deep, by 200-300 m wide, with only 50% of this larger area having been drill tested, and outside of the pit area, only by wide-spaced holes or very shallow historic holes. The Wenot shear corridor is a regional structure and it is highly likely that the gold-bearing zones extend beyond the drill-tested area."

"We are sufficiently funded to advance our exploration program to the next significant milestone of expanding the gold resources on our Omai project through our drilling at Wenot and our renewed study of the Fennell historic resource. Once the current phase of Wenot drilling is complete, an updated NI 43-101 resource estimate will commence. We expect to re-start work shortly on some of the nearby exploration targets, including unexplored areas along the eastern extension of the Wenot shear corridor that continues four to five kilometres along strike, onto our adjoining Eastern Flats property.”

I found it very interesting to read about a renewed study of the Fennell resource. When discussing this with CEO Ellingham, it appeared they are planning to complete a consolidated NI43-101 compliant resource estimate containing both Wenot and Fennell. The cut-off for drill results of Wenot will be August 15, 2022, and most surprisingly, Fennell doesn’t need any new verification drilling. As far as I know, the regulators usually want companies to redrill at least 10-15% of a historic resource, but according to Ellingham, Omai still has enough of the historic drill cores with collar locations very well documented in its possession, along with original assay certificates and core photos. It appeared a company just needs at least 10% of existing cores for verification, so redrilling isn’t necessary. As long as a QP of a company validates the interpretations of such cores, the regulators rarely go against a QP according to CEO Ellingham. This is an interesting development, as a few months ago it seemed Omai had to drill 4-5 deep holes, which would be costly and timeconsuming, so it was initially postponed until Wenot expansion drilling would have been finalized. Fortunately CEO Ellingham saw a possibility to speed things up anyway, which could add lots of ounces very quickly.

When discussing resource potential for both deposits, it appeared that Wenot could contain an open pittable 1.9-2.0Moz Au, so a potential increase of 0.3-0.4Moz Au, and Fennell could be high-graded, leading to a hypothetical underground maiden resource of 700-800koz Au, at a potential average estimated grade of 3.5-4g/t. This is a pretty good development, as the current average grade of the historic Fennell resource was just 2.5g/t (for 1.4Moz Au), which wasn’t sufficient enough for incorporation into a mine plan (underground mining at current gold prices in this setting needs about 3.5-4g/t Au). The beauty of this Fennell resource is, that the highest grade parts are located closest to the surface, including the three intercepts over 1,000g/t @ 1m:

Another aspect of the current exploration program I found pretty interesting was the discovery of gold mineralization in sediments, besides the known gold within the volcanic rocks. Both 2021 and 2022 drilling has shown that the dikes and other shears also penetrated the sedimentary layers where they host similar gold mineralization. At the western extension, the mineralized zones in the sediments are even wider with similar grades. Hole 22ODD-051 was recently completed in this area and tested well into the sediments, with results pending.

As a reminder, Omai Gold Mines also drill tested west of the Fennell pit and to the southwest of the Wenot pit, in order to potentially find new deposits. Eight holes were been drilled, and assays were returned for the first 5 holes totaling 1,213m. Drilling at the Blueberry Hill target provided the following results of 3 holes:

22ODD-033    150.6    151.5    0.9    41.73
22ODD-034    19.5    21.0    1.5      0.53
Incl.    58.0    59.0    1.0      0.81
Incl.    63.0    64.2    1.2      1.80
Incl.    69.5    71.0    1.5      1.71
22ODD-035    46.6    48.1    1.5      1.91
         

Although hole 033 delivered a strong result, holes 034 and 035 didn’t, and this is caused by the complex geology, after high grade sampling indicated lots of potential. Hole 22ODD-036 tested a target south of the main east-west trending Wenot Shear, but returned no anomalous gold. Hole 22ODD-037 tested a geophysical target 220m south of the main Wenot Shear trend, and a few anomalous intercepts generated 6m @ 0.67g/t Au, 1m @ 0.77g/t Au and 1m @ 0.96g/t Au. Holes 22ODD-038 and 22ODD-039 tested western extensions of the Wenot gold zones, returning 8.5m @ 5g/t Au and 17.1m @ 2.32g/t Au. Holes 22ODD-040 and 22ODD-042 tested a northeast trending Snake Pond zone, resulting in 0.7m @ 2.1g/t Au in 040, leaving hole 042 with no significant intercepts.

Current exploration plans foresee a further 1200m of drilling until mid-August, and the next drill program will likely consist of 5000m and if a new raise is successful, this could commence mid-October.

In a nutshell it seems that Wenot extension drilling and the redefinition of Fennell is the fastest route towards more ounces for now, with the other targets needing  more attention and drilling than was anticipated at first, because of the very strong sampling and geophysical results. I’m not too bothered by this, as Omai has lots of targets to review, the geology could be more complex and just needs more studying, and exploration of the targets outside Wenot and Fennell is still at an early stage. More important for now is the direct 2.6-2.8Moz Au potential, scheduled to be NI43-101 compliant for the second half of October of this year, and as usual I like to see where the company could fit into the context of peers and their respective valuations.

As Omai Gold Mines is a gold developer in Guyana working on a potential open pit/underground project, it is not that easy to find good peers for a peer comparison, as not too many single project junior developers are around in the region, let alone OP/UG single project juniors. For now I opted for OP/UG single project juniors in the Northern Americas, in this case exclusively Canada. What I will do in a next phase as it is a lot of work, is adding a few Latin American single project UG or OP developers, a number of Northern American single project UG or OP developers, see if I can normalize the influence of jurisdiction, and in turn see if I can interpret/extrapolate the current set of metrics provided by these Northern American single project OP/UG developers.

In general as a continuous reminder for investors, a peer comparison as a valuation method isn't perfect as every single company has a unique set of parameters and should actually be analyzed in full and normalized as far as this is possible of course, and for example EV/oz doesn't say much about profitability of the project yet, potential high capex, potential permitting issues, capability of management etc, but with some comments to go with such a peer comparison it provides at least an indication, which is my intention. The main intent for peer comparisons is a basic valuation tool by trying to find the most equal companies regarding quality and size of projects, jurisdictions, financial situation, backing, management, permitting, in short everything that makes every project and company so unique in this space. The better the resemblance, the more useful the company for a comparison.

I picked a number of companies with one open pit/underground flagship asset, all having at least a recent resource, all of them in the Americas, gold-focused, and as I feel Omai Gold Mines could expand their resource meaningfully in the coming years, I added a number of larger developers as well. The first table is mentioning basics like structure, enterprise value and jurisdiction:

Please note that Genesis Metals was taken over by Northern Superior not too long ago. The second table shows resource figures, and the important metric EV/oz for developers:

An interesting peer project would have been Toroparu, also located in Guyana, also an open pit/underground project and owned by Gold X Mining, a company which got acquired by GCM Mining for C$315M. This project was at PEA stage when acquired in 2021, and contained over 10Moz AuEq. This would have meant an EV/oz of about C$30/oz. Because of the low gold grade (on average 1.42g/t) and the large underground component, this deposit wasn’t economic until gold rose past $1500/oz. The current owners are busy delineating a high grade structure in the deposit, hoping to add profitability. Notwithstanding all this, there clearly is demand for Guyana deposits, and I view Wenot and Fennell as much more economic compared to Toroparu, which fetched C$30/oz nevertheless.

If Wenot could indeed go to 1.9-2.0Moz Au, and Fennell could be converted into 700-800koz Au, a combined resource could come in to the tune of 2.6-2.8Moz Au. This would result, at an EV of C$17M, in an EV/oz metric of 6.1-6.5, which is very cheap when looking at their peers. If we would use the Toroparu EV/oz figure of C$30/oz, the Omai EV would be C$78M, which is about 4.5 times higher than the current EV.

Although we are not talking about Canada as a jurisdiction here, Guyana is stable, and a very reliable working environment for those who have experience and the right networks, and Omai Gold Mines has both in spades. According to CEO Ellingham, for example permitting is expected to be much faster as Omai isn’t working anywhere near local communities, and the government is very pro mining. As its combined resources seem to be much more economic than for example the equally low priced Chevrier, which has too much low grade underground mineralization in my view, on top of a very complex geology (which Omai also doesn’t possess fortunately), it seems likely Omai might be considered undervalued when the updated resource estimate comes out in October.

Share price 1 year timeframe (Source: tmxmoney.com)

The recent sell-off in most mining stocks the last few months has done a lot of damage to their charts, Omai Gold Mines not excluded, and no matter how you slice it, if we are experiencing a temporary dead cat bounce or a bottom-forming process, Omai could be very cheap at the moment.

On a closing note, the current cash position of Omai Gold Mines is C$2.0M, and the company is currently planning a financing later this year, for about C$4-5M, and are looking at possibilities of finding a strategic partner for a 9.9% interest.

Conclusion

Drilling the extensions of the Wenot deposit seems to be easy exploration for Omai Gold Mines, as almost all holes have hit mineralization so far. As Wenot geology is very predictable, the company doesn’t anticipate much trouble delineating more mineralization closer to surface, also helped by historic drilling. Besides updating the Wenot resource, Omai also hopes to include a maiden resource on Fennell in the resource estimate, which will generate a significant increase in gold ounces. This is a positive development, as more ounces means more interest by investors and suitors, as larger and economic deposits are becoming increasingly rare. Some comparing of peers points towards potential undervaluation when the resource statement will come out, and barring a black swan event, Omai Gold Mines appears to be more and more in bargain territory in my view.

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

Disclaimer:

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

 

 

 

Argentina Lithium Active At Salar De Rincon: Acquiring More Concessions, First Drill Results Coming In

Salar de Rincon; Salta Province, Argentina

In a time with record inflation, the Russia-Ukraine conflict advancing into a decisive phase as the Ukraine is almost completely shut off from the Black Sea now, with even Odessa under missile attack despite a transport/trading agreement on grain exports, the lithium product prices keep hovering at staggering heights, with spot pricing for lithium carbonate still near the 500,000 yuan/t, or US$75,000/t. This can be seen at this chart by Investing.com:

Unfortunately negative stock market sentiment, caused by worries about the Federal Reserve interest rate hike policies (very recently acting with a forecasted 0.75% hike, promising more to come) and related recession fears don’t have the most positive effect on junior mining stocks at the moment, lithium juniors included. Notwithstanding, the paradigm shift to renewable energy is in full swing and can’t be stopped anymore, causing increasing demand for everything battery related including metals like lithium and nickel. Argentina Lithium & Energy Corp. (TSX-V: LIT, FSE: OAY1, OTC: PNXLF) doesn’t seem to wait until the tide turns, and after raising almost C$6M in an oversubscribed financing at the beginning of this year, it is proceeding with drilling their new flagship Rincon West Project, and expanding their claim holdings at this project. Rincon is a very interesting area, as not too long ago Rincon Mining, a private company constructing an adjacent brine project at the same salar, and owned by Sentient Equity Partners, was acquired for US$825M by Rio Tinto.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

On July 21, 2022, Argentina Lithium announced that it won the public tender to purchase the Rinconcita II mining concession, located on the Salar de Rincon in the Salta Province, Argentina. With this the company has added another 460.5ha of salt flat properties, adjacent to not just the already owned 2,470ha Rincon West project, but also next to the aforementioned Rincon project acquired by Rio Tinto. The new claims can be seen on the following map:

No exploration work has been done at Rinconcita II in the past. Argentina Lithium also mentioned the acquisition of the 20.5ha Demasia Villanoveno II concession, through applications presented at the Salta mining authority, representing part of the original Rincon West claim package.

As part of the Rinconcita II acquisition, Argentina Lithium will make an initial payment of US$2.5M when signing the agreement. It also grants a 3% NSR to the vendor when it advances to the production stage, and the company needed to present a proposed exploration program for approval.

Argentina Lithium already owned 15,857ha of properties on the west side of the Pocitos Salar, and acquired 10,364ha of new properties at Pocitos in January of this year, for a total cash consideration of US$2.6M and C$850k in shares. This will cost the company US$285k in mandatory payments for the first year. As a reminder, Rincon West and Pocitos were acquired in October 2021. The terms for the two main properties, with a combined footprint of 18,227 hectares, weren’t cheap.

The company issued 750,000 shares to the local vendor on signing plus C$500,000 worth of shares over a 12-month period; and cash payments totaling US$4,200,000 over 36 months, but limited to only US$1,050,000 in the first 18 months, US$800,000 of which are firm commitments over the first year. Therefore, total commitments for the first year for Rincon West and Pocitos increase to US1.085M. As CEO Nikolaos Cacos expected to have the new properties at Pocitos permitted around Q2, 2022, I wondered what the status on permitting was here, and if/what kind of exploration programs including drilling have been designed. CEO Cacos answered “With our recent acquisitions, we have reassigned project priorities. Our primary focus is to define high-grade resources adjacent to major players on the proven salars of Rincon and Antofalla. Pocitos is a huge, underexplored lithium salar. We like the setting and the huge up-side potential, but Pocitos is an early stage exploration project. It will take its place lower in our project pipeline.”

Since the nearby project of Argosy Minerals in eastern Rincon has an average grade of 321mg/L Li, and the grade of the part of the Salar de Rincon for neighbouring and recently sold Rincon Mining is 397Mg/L Li, I expected the assay grades for the new drill program at Rincon West (which commenced on May 31, 2022 and lasts 5 months) to be over 300mg/L Li. As the company announced the results of the first drill hole on July 13, this was a good opportunity to verify expectations. It turned out that a 70m thick drilled interval returned lithium grades varying from 225 to 380Mg/L Li, so on average the 300Mg/L Li threshold seems to be met here. It was good to see Argentina Lithium assaying economic lithium grades right away from the start, as indicated aquifers don’t automatically mean sufficient lithium mineralization. The VP Exploration Miles Rideout was also pleased with the results:

"The first hole at Rincon West has revealed a permeable 70 metre interval with moderate to high-grade lithium values. This validates our belief that the concentrated lithium brines mapped in the adjacent resources does extend beneath our property. We are continuing our exploration drilling to delineate this mineralization with the aim of defining a mineral resource."

A second drill hole is in progress, and up to seven others are planned with at least four more being drilled this summer, all of them can be seen on the following map:

The yellow zones on the map above indicate conductive aquifers, defined by the TEM surveys completed in March-April of this year. These conductive aquifers are targets for drilling as they could contain concentrated lithium brines. Cross-sections based on the TEM survey can be seen here, with the purple zones indicating conductive zones (potential brines):

As can be seen, the conductive zone extends for about 12km representing significant potential brine volume.

All diamond drill holes will be drilled vertically, and the first drill hole was stopped in basement rocks at 300m depth below surface. Looking for brines you ideally hope for aquifers stretching 200-300m deep, but since the strike-length appears to be 12km, sheer size could provide sufficient volume here. I wondered what the average thickness is of the adjacent Salar de Rincon project, now owned by Rio Tinto. According to CEO Cacos “More than 90% of the historic drilling by neighbouring companies has tested to 100m depth or less. High-grade resource at shallow levels is an attractive feature of this basin, but we believe continued exploration will also produce positive results from deeper levels.”

The full results of the first drill hole RW-DDH-001 can be observed in this table:

There are more penalty elements in brine than shown above, and the most important ones can be seen in this table, also including the Salar de Rincon:

As can be seen, the average grade of the first drill hole is somewhat lower on all elements tested, compared to the Salar de Rincon itself. I asked CEO Cacos if this is what he expected, what he wanted and what he is looking for in the upcoming drill holes. He answered ”Our first hole produced extremely positive results, demonstrating we have brines that are approximately comparable to the published resources on the salar. This was our expectation. Ongoing drilling is intended to define the property’s potential and to provide the data for our resource calculation. I think the discovery hole was a great beginning.”

Located to the south of Salar de Rincon, the Pocitos Project was acquired together with the Rincon West property. Exploration plans for Pocitos involve 121 kilometers of TEM soundings in Q1, 2023, and as such is a lower priority exploration play for Argentina Lithium. According to CEO Cacos, these exploration plans have been adjusted following recent property acquisitions.

A new high priority for Argentina Lithium is its Antofalla North Project. The company expanded their Antofalla North project by acquiring 5,411ha in April, 2022 for a total of 14,987ha. The project is located approximately 25 km west of Argentina's largest lithium producing operation at Salar de Hombre Muerto. The Salar de Antofalla is over 130 km long and varies between 5 km and 10 km in width, with reported basin depths exceeding 500 m. The terms of the option agreement to own 100% include cash payments totaling US$2.8M over 4 years, C$7M in exploration expenditure commitments, and the vendor retains a 2% NSR, repurchasable for US$3M.

The Antofalla acquisitions are particularly notable since Albemarle, the world’s largest producer of lithium for EV battery production, has focused their salar property acquisitions in this basin and has a published high-grade resource. Albemarle’s project begins approximately 500m south of Argentina Lithium’s holdings. The current exploration plan for the Antofalla North project involves 110 km of TEM soundings, followed by an estimated 6 diamond drill holes. Regarding timing, CEO Cacos stated “Our drill permitting process is well advanced for Antofalla North, which extends between two provinces, requiring two submissions. We expect to complete our geophysical surveys in the fourth quarter, and to begin drilling early in 2023.”

When looking at it from a distance, since the company has a considerable quantity of projects in its portfolio now, and a corresponding, significant financial obligations, I wondered why the company acquired and optioned so many projects, as it is draining the treasury a few million dollars annually just on property acquisitions and obligations, which is costly shareholders money that can’t go in the ground, and dilutes the share structure when raising it. There is only so much you can explore and drill each year. Wouldn’t it be better to focus more on one or two best projects, and divest the others asap? The company appears to have burned through almost C$2M since December 2021, without doing much drilling and just TEM surveys, as it is contemplating a new C$2.5M @ 20c financing at the moment. CEO Cacos answered my questions with the following extensive explanation: “This was a strategic decision, also please note we still have C$4M in the treasury, but have the opportunity to raise more. We saw the opportunities to acquire the large blocks at Rincon and Antofalla, strategically located beside major resources. We recognized that these opportunities are unlikely to be repeated. Our team has the depth of experience to manage this ambitious portfolio effectively. A point that might not be obvious is that all our properties already have all-weather roads and nearby towns and infrastructure. In each case, we can move quickly to advanced geophysical imaging of brine deposits and drill testing, which will reduce our exploration time and cost. This benefit doesn’t come cheaply, but pays dividends through the entire life of the projects. In short, we prefer to invest in large, high prospectivity projects, rather than conceding property quality to other concerns.”

I like the concept of going for large quality claim blocks, as it increases chances of success. The flip side is you have to finance holding costs and exploration. If funding this is no issue, it is indeed the best strategy to follow in my view. So far so good. Investors seem to wait for results, and a turning of the markets:

Share price 1 year timeframe (Source: tmxmoney.com)

As usually happens in a bear market, lots of stocks become as cheap or even cheaper compared to the period right before such a bear market, although the asset value could have increased nonetheless. In this case Argentina Lithium acquired more claims at the various projects, conducted several surveys and started drilling at Rincon West, with other drilling coming up, and lithium product prices went ballistic again a few months ago, more than doubling since March. Therefore I’m not entirely convinced that the current low share price really displays the intrinsic value development of Argentina Lithium at the moment.

Conclusion

Argentina Lithium maintains a buying spree, although it already has an impressive land package, spread over four different lithium salar projects in Argentina, part of the Lithium Triangle. This is done because management places highest priority on property quality and scale. At the same time, the company is executing its exploration plan of geophysical imaging followed by drilling of conductive targets. Initial drill results at Rincon West confirmed grades almost similar to the adjacent Rincon Project, which was recently acquired by Rio Tinto for US$825M. At least four more holes are being drilled this summer, and I’m curious if the upcoming results will show a brine field of economic proportions and grade. With a giant like Rio Tinto owning the adjacent project, there already seems to be a natural suitor with deep pockets at their doorstep.

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

Disclaimer:

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

 

 

Alianza Minerals Commences Drilling At Klondike Copper Project

Klondike Copper Project, Colorado (US)

After receiving their exploration permits for the Klondike Copper project on June 22, 2022, Alianza Minerals (ANZ.V, TARSF.US) wasted no time and will commence drilling in the first week of August, 2022. Drilling was planned to start mid July, but according to CEO Jason Weber this was delayed last minute, in order to accommodate one additional (unplanned) hole at another project the rig was coming from, and the contractor also wanted to get the rig in for some maintenance before mobilizing to Klondike – Alianza agreed to the short delay. As the operator, with partner Allied Copper (CPR.V), a Venture listed junior mining company funding the work, and in turn earning in on the agreement they have with the Alliance. This is the first project Alianza is actually drilling, as part of the Alliance they struck with Cloudbreak Discovery PLC, a London listed entity (CDL.LSE). After completing mapping, sampling and magnetics surveys, sufficient interesting drill targets were identified in order to warrant drilling this summer.

Management is looking to do at least 2,000m of diamond drilling at their fully owned flagship Haldane Silver project this year. A C$750k financing, funding US work and general G&A was a first step as part of an intended C$2M raise in total, with another round, sufficient to fund the Haldane program, to follow in this autumn. The current sentiment in mining and the stockmarkets in general isn’t very positive because of all the recent developments around shortages and following inflation, as a fallout from the COVID ordeal, intensely hampering supply chains around the world for over a year. The Russia-Ukraine conflict doesn’t help either with lots of commodities like grain, corn, pig iron, natural gas and nickel prevented from being exported for various reasons. The Federal Reserve does everything in its powers with rate hikes to calm things down, but with huge debts piling up this is not without risk. Luckily the US Dollar took a breather after the Euro gained strength on EU rate hikes, so the gold price seems to recover a bit, causing a few green days now. Maybe this might help Alianza with raising more money. Being a hybrid prospect generator, they have other projects in the works as well, paid for by JV partners.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

It was good to hear permitting went as planned, not interfering with the original planning of drilling in July at Klondike, as contemplated in my last update on the company in May. The exploration concept revolves around finding disseminated copper-silver mineralization, amenable to open pit mining with Solvent Extraction Electrowinning (SXEW) processing, which is also used in the nearby Lisbon Valley Mining Complex. Management hopes to find a sediment hosted copper deposit here, a type of deposit accounting for over 20% of current copper production globally.

VP Exploration Rob Duncan can’t wait to see results: “We are looking forward to testing the targets we have prioritized at Klondike. Three excellent targets exist at the Northeast Fault, West Graben and East Graben areas, each of which shows multi-kilometre strike length potential for copper mineralization. This first phase of drilling is designed to make an initial test of each of the three targets.”

Two holes are planned for the Northeast Fault target to test its potential at depth to follow up a 4.6 m chip sample that averaged 1.56% copper and 1.4 g/t silver in 2021 sampling. One hole will  test the East Graben Fault at depth, where surface sampling returned 2.8% copper with 37.8 g/t silver and 1.5% copper with 24.3 g/t silver. Two holes will test the West Graben Fault, following up 2021 sampling that returned 6.23% copper and 127 g/t silver from a grab sample.

Despite the excellent sampling results, management is anticipating on hitting mineralized structures at the fault lines here. I’m looking forward to the drill results, which can be expected around October at the earliest according to CEO Weber. I can’t stress enough what a profitable deal this is for Alianza and the Alliance, as they paid just C$105k for the Klondike property, and earn-in partner stands to pay C$2.6M in cash and shares plus a royalty for 100% ownership in 3 years. Here are the terms again as a reminder:

The Alliance will retain a 2% net smelter royalty which is subject to a buy down provision where Allied may, at its discretion, repurchase half of the royalty for C$1.5M within 30 days of commercial production.

So even if Allied doesn’t find anything, Alianza stands to profit very well from their earn-in. On top of this Alianza also receives a management fee as the operator of the project on a per hour basis.

Klondike isn’t the only project seeing action this summer, as Alianza was eying potentially up to 5 different drill programs this year at their various projects, with the current focus on the Klondike and Stateline copper projects in Colorado for now. As a reminder, under the terms of the Alliance, either Cloudbreak Discovery PLC or Alianza Minerals Ltd can introduce projects to the Alliance. Projects accepted into the Alliance will be held 50/50 but funding of the initial acquisition and any preliminary work programs will be funded 40% by the introducing partner and 60% by the other party. Project expenditures are determined by committee, consisting of two senior management personnel from each party. Alianza is the operator of Alliance projects unless the Alliance steering committee determines, on a case-by-case basis, that Cloudbreak would be a more suitable operator. The initial term of the Alliance runs for two years and may be extended for an additional two years.

Depending on additional financing, Alianza will continue to work at their flagship Haldane Silver project as soon as possible again at Keno Hill, Yukon. Recent exploration of the past few years by Alianza has focused on the Mount Haldane Vein System (MHVS), and considering high grade results (HLD20-19: 1.78m @ 818g/t Ag and HLD21-24: 1.26m @ 3,267g/t Ag) at the West Fault target, management is narrowing its focus at this specific target even more, with drill targets defined.

CEO Weber expects to drill further stepouts at the West Fault, Middlecoff and Bighorn targets this fall, depending on available financing, and available drill rigs. A trenching program will commence in August to upgrade new target areas to drill-ready status.

Coeur Mining, which has optioned the Tim Silver project in the Yukon, has notified Alianza Minerals that results of the 2021 program have been compiled and once management has reviewed the data, a news release will detail the results of that work. Alianza expects to hear more about 2022 activities early summer. Site preparation for drilling will commence this summer.

The Twin Canyon gold project in Colorado also has seen its fair share of prioritizing drill targets, and a drill permit for a 10 hole RC drill program is still in the works. Alianza is actively seeking a partner to conduct the first drill program at Twin Canyon.

Another interesting development happening very close to Alianza’s Haldane Silver project in Keno Hill is the recently announced acquisition of Alexco Resource (AXU.TO) by Hecla Mining (HL.US) for C$74M, or C$0.60 per share. As Alexco was experiencing lots of difficulties ramping up their Keno Hill mine, Hecla timed their acquisition well right after Alexco announced further delays, crashing their share price.

Alexco share price (Source: tmxmoney.com)

As such a buyout isn’t decided and due diligenced in two weeks, it might be tempting to see all sorts of backroom dealings here, to the detriment of Alexco shareholders. Notwithstanding this, as Hecla also managed to persuade Wheaton Precious Metals (WPM) to extinguish the heavy burden of a large royalty stream by issuing no less than US$135M in Hecla common stock to WPM, it will be clear Alexco was probably saved by Hecla, and this obviously comes at a price. Hecla Mining, the largest US silver producer around, comes in with lots of expertise and a strong capital position, and will likely be able to iron out the mining/milling issues that plagued Alexco at Keno Hill. Establishing the Keno Hill Mine as a profitable silver mine backed by a large producer is a very favourable development for the district and thus also for Alianza according to CEO Weber.

Conclusion

It will be interesting to see what kind of drill results will come out from Alianza’s Klondike Copper Project around October of this year, after drilling will commence in the first week of August. In the mean time, the company will also commence a trenching program next month at their flagship Haldane Silver project, to further define additional drill targets. With a separate financing coming up for Haldane in the autumn, drilling will start shortly after closing. The Tim Silver project may  also see drilling this year by JV partner Coeur Mining, as they are preparing drill sites this summer. So lots of moving parts with Alianza Minerals these days, but a little patience is warranted before new drill results are being announced. Stay tuned!

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

Disclaimer:

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

Mt Haldane

 

 

 

 

Aztec Minerals Acquires 35% Cervantes Interest From Kootenay Silver To Achieve Full Ownership

Despite further increasing inflation, an ongoing Russia-Ukraine conflict which also creates food supply chain issues nowadays across the globe, slowing down economic growth in China but shortages for numerous commodities and products still growing or at high levels, and on top of this the stock markets looking at the central banks, especially the Federal Reserve regarding rate hike policies, Aztec Minerals Corp. (AZT: TSX-V, OTCQB: AZZTF) came out on July 26, 2022 with remarkable and very material news for their majority owned and operated (65/35 JV with Kootenay Silver) Cervantes gold project in Sonora, Mexico. By issuing Kootenay just 10M shares at a price of C$0.25, and a 0.5% NSR royalty, Aztec Minerals becomes the owner of the 35% JV interest, and consolidates Cervantes into full ownership. As Cervantes could be closing in on 1Moz economic heap leachable gold oxides, I believe this is not just a very profitable asset deal for Aztec Minerals, but also a positive development for potential suitors, which no longer have to deal with two owners anymore.

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

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

I must say I am truly puzzled by the deal terms, and the timing here. An acquisition price of 10M shares @ C$0.25, and a 0.5% NSR would amount to C$2.5M in shares plus an estimated C$1M value for the NSR, totaling C$3.5M for the 35% JV interest in Cervantes owned by Kootenay Silver. As I will estimate later on, a potential 0.9-1Moz Au heap leach project with low strip ratio and good metallurgy could easily be capable of fetching a hypothetical after tax NPV5 of US$150-200M. If we assume US$150M, a 35% interest translates into US$52.5M NPV5 or NAV, and with the current exchange rate of 1 USD for 1.29 CAD, this translates into C$67.8M. It probably isn’t very hard to understand that I view an acquisition price of C$3.5M in paper and NSR (which should be discounted as well as both most likely aren’t readily monetizable for the same price) which is just over 5% of NAV as an absolute bargain for Aztec. Granted, a resource hasn’t been defined yet let alone an economic study like a PEA, so additional discount is warranted, but the amount of completed drilling, at least in my view, points towards substantial numbers.

Before we delve a bit deeper into potential economics, let’s have a look at earlier reported final drill results of the 2021-2022 Phase 2 RC drill program at Cervantes, which has been completed in March for a total of 26 holes with 5,249m drilled. Most of the drilling was focused on the California Zone, but other targets are California North, Jasper and Purisima East. The final 4 results were targeting California, as can be seen here:

Of the four reported holes, three holes (22CAL-018/20/21) were aimed at a depth of 500m in order to test deeper porphyry potential below the oxides, but unfortunately hole 018 caved at a depth of 264.48m, meaning the drill bit was lost. When I discussed this with CEO Simon Dyakowski as I wondered how diamond drills could cave there, it appeared that the driller still used RC drilling, but with added power in order to reach the 500m depth target. This didn’t work out unfortunately, so 020 and 021 only drilled the oxide cap to appr. 200m depth. The results weren’t very economic, as only hole 018 hit 24m @ 0.216g/t Au, which is just above the 0.20g/t Au cut-off:

Hole 021 wasn’t a big surprise as it was a big stepout, but I expected more from 018, 019 and 020, as the immediately surrounding collars produced much longer, economic intercepts (50-165m @ 0.42-1g/t Au). Especially 018 disappointed as 004 to the west returned 165.68m @ 1g/t Au, and 008 to the east showed 54.72m @ 0.88g/t Au. If averaging this, one could arrive at around 100m @ 0.95g/t Au. A total mineralized length of 35m @ 0.24g/t Au is something else of course. When taking this into account, this could shave off 50-70koz Au from my hypothetical estimate, bringing it down to 930-950koz Au. It also shows you that more drilling is needed to establish continuity levels eligible for economic studies beyond a PEA, which can be done on Inferred alone although this is not recommended of course, as Inferred ounces aren’t even considered economic. Notwithstanding this, such limitations don’t hold me back from doing my own guesstimates on potential economics, which will follow later on in this article, as I think it is useful to get a grasp on the potential value of Cervantes.The amount of drilling done is sufficient for an Inferred resource, and part of it could be Indicated as well. When I asked CEO Dyakowski about his goals regarding which category further infill drilling and timelines, he answered: “Our current drill campaing is focused on drilling step out holes around California, California North, and Jasper, as well as 2 deep tests of the IP anomaly underlying the oxide cap.  Follow up drilling whether it is more infill or additional step outs will be planned upon completion and receipt of results from the ongoing Phase 3 core drilling program”.

As earlier reported, hole 017 (see map above) to the north (24.3m @ 0.315g/t Au) signalled further potential for mineralized potential, CEO Dyakowski is planning to set up another drill program at California North. When asked about budget, meters and drill collar positioning, he stated: “The ongoing Phase 3 drill program is budgeted at 10 holes, and 3000 meters, we expect the cost of this program to be in the range of US$1 million, all-in”.

As the mineralization at the California Zone seems to be confined to the higher parts of a ridge, drilling in hole 017 indicated the openness of the targets, between California and a target zone called California North, there could be additional mineralization between the two target zones. The current 10 hole, 3,000m core drill program was announced on July 27, 2022, testing several other targets, including an infill hole between California and California North. Planned drill collar locations can be observed here:

According to the news release, there are three specific targets:

  1. “At the California target, where Aztec previously discovered extensive porphyry gold-copper mineralization (drill intercepts up to 1.002 gpt gold over 165.68m), Aztec will drill 7 step-out holes and one metallurgical hole with 30m to 450m spacings to expand and better define the area of mineralization, including two 625m deep holes to test at depth the strong IP chargeability anomaly that at its top has demonstrated strong sulfides in phyllic alteration with elevated copper - molybdenum - gold values.
  2. At the California North prospect, one hole will step out to the south to test the southern continuity of the gold - copper mineralization found at CAL22-017 (0.315 gpt over 24.32m towards the California target.
  3. At the Jasper prospect, one hole will step out to the northwest to test the continuity of the broad copper - gold mineralization found at JAS22-001 (200.6m/0.117 % Cu).”

It will be clear most of this program is geared towards trying to further expand and delineate a resource at the California target, accompanied by drilling a few step-outs and deep holes in order to hit a potential deep porphyry target, as was the intention from the start. As the deep porphyry would be a very nice wild card and a potential game changer if hit, I will follow this with great interest. As at an earlier stage Dyakowski contemplated a 5,000m program, I asked him why he opted for a 3,000m program instead. He answered “Drilling is starting later in the season due to completing our financing with Alamos, and consolidating ownership of the project, therefore we prioritized the targets to fit the drilling time window”. On a sidenote, I wondered why these new planned collars had different locations compared to the failed deeper holes 018/020/021. According to CEO Dyakowski these earlier holes were drilled from locations lower down the hill in order to try to get more favorable ground for RC drilling. With the current diamond core holes this is no longer needed, and locations more near the top of the ridge were deemed favorable by the geologists.

As management is currently also re-mapping the Estrella ridge, west of California, with the goal of generating drill targets, I wondered what the status of this work is. CEO Dyakowski answered that the mapping and roadcut sampling program is ongoing when there is downtime from drilling.

Having discussed exploration at Cervantes at length, let’s have a look at potential economics now. Since I guesstimated a 930-950koz Au resource, and most of it is located at the higher part of a ridge and open pittable, it seems a simple operation is possible with minimal dilution and strip ratio. I guesstimate the average grade at 0.70 g/t Au. A typical section looks like this:

Lots of drill holes have mineralization starting from surface, and when looking at the 2021-2022 drill results, my estimate for the strip ratio would be about 0.8:1. As usual a peer comparison with projects from competitors is done in order to derive credible assumptions, and for this the following heap leach gold projects were selected:

As always, a peer comparison is of course the most useful if the projects selected are as close as possible on parameters, but as no project is exactly the same, a sub-optimal comparison is the inevitable result directing our assumptions. Although inherently flawed, it provides at least some meaningful guidance, way beyond simple metrics like EV/oz or critically flawed metrics like "gross metal values compared to market cap”. Of course keep in mind that Aztec Minerals hasn’t even established a mineral resource estimate, so everything following here is extremely forward-looking.

There are a few basic assumptions that need to be established first. Since there isn’t defined what ore is oxidized and transitional yet, I assume 80% is oxidized. 80% of 930koz Au is 744koz Au. According to test results, oxidized holes generated extremely good 85.1-87.7% recoveries, and the mixed oxide/sulfide group 77.9%. Mixed oxides include transitional ore, and this last number is actually excellent, as often transitional ore has recoveries around 50-60%. As this is bottle roll leach testing and not exactly heap leaching, but still believe these results are above average, I assume an overall recovery of 70%. With some dilution/ore loss, I expect 900koz to be mined and processed. A minimal life of mine of 8 years generates 112.5koz Au ore per annum, at an average mill feed grade of 0.65g/t Au this would result in 5.38Mt ore mined per annum, and assuming a 350 day operation this would mean a 15,380 tpd throughput. At 70% recovery, Cervantes could produce 78,750oz Au per annum, meaning a LOM production of 630koz Au.

More specific, the capex and opex assumptions will be based on averages while taking into account scale and location, but the current rampant inflation makes any assumption pretty difficult, so I allow for a big margin for error. For capex, 2 of the analyzed peer projects have almost the same size of operation, with 18ktpd throughput. As the South Railroad FS is from February this year, I consider the much higher capex/tpd number (compared to the 2021 FS Camino Rojo study) much more reliable, and as we are almost half a year further down the road, I have no issues increasing the capex/tpd number to US$12,500/tpd. This results in a capex of US$192M.

For mining cost I like to assume a somewhat higher US$2/t as oil consumption is a big part of open pit mining, but the oil price hovers at the same levels like in February at the time of of the South Railroad FS. Mining costs mined, processed and processing is anybodies guess, but overall salaries haven’t increased as much as goods. Overall opex should be significantly lower than South Railroad, as the strip ratio for Cervantes is much lower. Sustaining capital is a difficult one, but I don’t really like to follow the very low number for Camino Rojo, hardly adding to the opex number when arriving at AISC, although labour is extremely cheap in Mexico, and will add some more. Corporate taxes in Mexico are 30%. This all results in the following numbers:

The hypothetical, solid after-tax NPV5 number of US$157M indicates why I think the deal with Kootenay is an absolute bargain for Aztec Minerals (as the deal values Cervantes at around C$10M in total), and this NPV5 number was calculated through this simplified DCF model:

Keep in mind I used conservative amounts for opex and especially capex. When inflation and subsequent pricing normalizes again in the future, capex will probably go down and economics will improve from here. To see a capex higher than NPV5 at gold US$1600 at a good grade/strip heap leach project is highly unusual, so maybe I was a bit too conservative. The IRR was generated through this standard calculation sheet for IRR:

An after-tax IRR of 24.9% isn’t exactly earth-shattering, but it is a good start, and well above the institutional threshold of 20%. Personally I expect a larger resource after all drilling is done, and hopefully Aztec will be able to achieve a resource large enough to transcend the important 100koz Au per annum production number. With a current market cap of C$21.39M in mind, the NPV5 of US$157M equals C$202.5M which would almost be a tenfold NPV, which implies healthy upside potential for me at least. Still early days of course, and although I believe my guesstimates to be conservative, many things can go wrong in the interim, starting with the resource number, inherently to junior mining as it is no exact science.

Let’s see where Aztec Mining would end up across some of its peers, if aforementioned guesstimates were to be realized. Several heap leach gold operations in the Americas were selected, one better suitable than the other as always with peer comparisons:

Most importantly I tried to find peers with fairly recent economic studies:

If Aztec Minerals was to prove up 930-950koz Au, this would give them a EV/oz metric of 22.1-22.5, which is on the high side of their peers with just a resource, but still with lots of room for improvement towards the economic study stage. And don’t forget Cervantes is not the only project in their portfolio of assets, as Tombstone could easily generate at least an economic 600koz Au resource as well in my view. When looking at the economic studies below, it is very likely that most studies need significant updates in the cost department, resulting in lower NPVs and IRRs.

If Aztec Minerals could in fact generate a PEA on Cervantes with a NPV5 close to C$200M, a P/NAV of 0.1 would still be on the low side, except outliers like Kore Mining, which has to deal with California permitting under a Democrat government. All things considered, I like the prospects of Aztec, plus their additional wildcards regarding deep targets at both Cervantes and Tombstone.

On a final note I discussed with CEO Dyakowski the subject of Aztec also planning a drill program for their Tombstone gold-silver oxide project (subject to a 75/25 JV with Aztec as the operator) in Arizona for the summer as mentioned in an earlier article, and I wondered if there are any advanced plans ready to commence. He stated that they are contemplating a Q4 2022 core drilling program at Tombstone, and have been active this year at Tombstone with mapping and modelling programs designed to assist future drilling efforts”.

Conclusion

It seems the Aztec team just made one of the better deals in junior mining land in my view, as Aztec is going to pay about 1/45th of my implied/guesstimated NPV5 value for a 35% interest in Cervantes to Kootenay in order to gain full ownership. And not even in cash but in paper and a small royalty. And all this in a phase of low valuations and negative sentiment, so all I can say this is a very well-timed deal by Aztec Minerals, to acquire the 35% interest at a bottom. Not only does Aztec have all the upside with a 100% owned project now, but this makes it also much easier to advance and sell the project in the future, not having to deal with other parties anymore. As drilling continues, I’m curious if Aztec will be able to meaningfully add more ounces, and who knows, find something at depth at Cervantes.

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

Disclaimer:

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

 

Tectonic Metals Closes C$2.3M Financing; Commences Seventymile Drill Program

Despite increasingly challenging market sentiment, driven by incredible inflation, looming rate hikes, and a Russian “special operation” that isn’t just blocking commodity transport from the Ukraine, and Europe’s natural gas supply but seems to drag China into it as well, since the US would like to see a tougher stance on Russia, Tectonic Metals (TECT:TSX-V; TETOF:OTCQB; T15B:FSE) managed to close their recent private placement at C$2.3M. This was of course less than the intended C$3M, but I still consider this a remarkable feat for a nano cap under the current market conditions, and it shows the support of the likes of key shareholders such as Crescat Capitaland Doyon go a long way. Not only does Crescat do a lot of the heavy lifting themselves, they also draw in other investors because of their reputation. It is also noteworthy that both of these major shareholders are stepping up once again after having participated in previous rounds, but this time increasing their ownerships in Tectonic even more. This injection of fresh cash enables Tectonic to drill their projects, and that is exactly what they are doing at the moment, as drilling commenced at July 7, 2022 at their district-scale Seventymile project , Tectonic’s 40km long greenstone belt located in  Alaska.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

It was good to see that after an extension of the earlier announced financing, Tectonic managed to close the second tranche of the non-brokered private placement financing by issuing 7,183,339 units at a price of C$0.06, for aggregate gross proceeds of C$431k. CEO Tony Reda was pleased with the proceeds:

“As we close our financing, I am humbled by the trust our investors have placed in us despite the current challenging market conditions. Their continued support is a recognition of the exciting opportunities we have at our Alaskan properties and is a reflection of our own enthusiasm for the compelling targets we have identified for the 2022 field season. Thanks to our investors and the hard work and dedication of the Tectonic team, the drills are now turning at Seventymile. We look forward to reporting on our progress at the earliest opportunity.”

This second tranche was part of a non-brokered private placement of up to 50M shares @ C$0.06, with a 2-year half warrant (exercise price C$0.10) for gross proceeds of up to C$3M. The warrants are subject to an acceleration clause, when the share trades at C$0.20 or higher during 20 consecutive trading days. Tectonic was originally looking to close this financing before May 16, 2022, but an extension was granted because of deteriorating market conditions, providing the company with a window of opportunity until July 8, 2022. The first tranche closed May 30, with Tectonic issuing 32,185,666 units at a price of C$0.06, for aggregate gross proceeds of C$1,931,140. Total proceeds for both tranches came in at C$2.36M, and net proceeds after costs were C$2.35M, one of the advantages of doing non-brokered financings.

The Seventymile project is part of an underexplored, fully owned 40km long Greenstone belt, located 270km east of Fairbanks, Alaska. The property is only accessible by air (small aircraft, helicopter), and in the winter by a winter trail. Seventymile is an orogenic gold system (for example Abitibi, Kalgoorlie, Red Lake, Hope Bay, and Las Cristinas) with lode-style high-grade quartz mineralization occurring in shear zones and faults. Drilling highlights are 5.5 g/t Au over 15.0m, 1.1m @ 205.9g/t Au, 6.1m @ 2g/t Au, 19.8m @ 1.37g/t Au and 6.1m @ 4.38g/t Au.

On July 7, 2022, Tectonic announced the details of their recently commenced drill program. Their strategy focuses on testing two concepts with each drill hole within the highly prospective 8km-long Flume orogenic gold trend, located in the northwestern region of the project, consisting of the Flanders, Flume and Alder prospects:

  1. the newly interpreted main gold-bearing shear zone feeding the historically drilled tension veins carrying diamond drill results up to 104.75 g/t Au across 1.52m;
  2. the true width, scale and continuity of the historically drilled, shallowly dipping tension veins, where select historical vertical drill holes intersected multiple stacked, high-grade gold veins;

These three targets are known to contain shallowly dipping, low-angle tension vein swarms, occurring adjacent to interpreted, largely undrilled, controlling shear structures. Limited historical diamond drilling in 1990 and 2000 at these targets demonstrated the presence of high gold grades and significant strike potential.

The following sections provide more detail on the third dimension of the drilling strategy:

And:

The news release of July 7, 2022, elaborated some more on the drilling strategy at the three aforementioned targets:

So the idea is to explore the iron-rich basalt shear zone at Flanders/Flume, as earlier drilling showed it hosts multiple stacked mineralized veins. As this shear zone seems to be starting out small, and widen at depth to about 250-300m, and has a strike length of many kilometers if continuous, it will be clear the potential for something big is there if mineralized and continuous.

CEO Reda couldn’t tell me when the first drill results for Seventymile are expected back from the labs at this moment, as it depends on many things.

As a reminder, Tectonic is targeting district-scale projects in safe jurisdictions, which have the potential to generate multi-million ounce deposits. In some senses, choosing a secure and predictable jurisdiction in which to operate has become the new ESG (Environmental, Social and Governance) standard, as current LatAm developments but also extremely corrupt and dictatorial jurisdictions like Russia could create havoc for mining investments. This is why Tectonic has chosen Alaska, as it is one of the safest pro-mining jurisdictions worldwide to operate in.

The other property to watch this summer is the 100% owned Flat Gold project, Tectonic’s latest acquisition is located 40km north of the 45Moz Au Donlin Gold project, jointly owned and operated by Barrick and Novagold, who are spending $60M at Donlin this year. As you probably know, Donlin is one of the largest undeveloped open-pit gold resources in the world (39Moz @ 2.24g/t Au) and Flat is located in the same mineral belt that produced this behemoth. According to management, Flat is a 92,000-acre district-scale intrusion-hosted gold system with multi-million-ounce potential in the heart of Alaska’s fourth most prolific placer mining district. Historic drilling from 1997 returned interesting highlights, like 24.7m @ 12.5g/t Au, 36.6m @ 1.36g/t Au and 31.7m @ 1.28g/t Au. The priority target, Chicken Mountain, hosts a robust 4km long gold-in-soil anomaly where drilling indicated gold mineralization over a kilometer and is the likely source of the majority of the historic 1.4Moz of placer gold mined in the area. Once drilling is complete at Seventymile, Tectonic will be conducting metallurgical testing on historic Flat core samples in an attempt to corroborate earlier results which suggested the potential for free milling gold at the property.

Finally, Tectonic’s third district-scale property is the fully owned 29,280 acre Tibbs Gold Project located 35km east of the 200koz Au per annum Pogo Mine. High-grade gold mineralization at Tibbs occurs in steeply dipping veins, crossing multiple lower-grade low-angle veins similar to the Pogo Mine, which serves as an analogy. The Tibbs property is close to existing infrastructure and an active mill, and has seen lots of exploration, ranging from soil sampling, airborne and land-based geophysical surveys, trenching to drilling. Drill highlights are 28.95m @ 6g/t Au, 5.3m @ 15.7g/t Au, 5.7m @ 19.1g/t Au, 1m @ 104.5g/t Au and 5.1m @ 12.45g/t Au. These are very substantial results, and the most impressive drill results were obtained at the Gray Lead area:

Phase II drilling already established a 1000m x 350m mineralized zone, where the majority of drill results returned grades over 5g/t Au, and within this high grade, steeply dipping veins with grades up to 127g/t Au. It is still early days, but if we would guesstimate a mineralized envelope of 1000x350x5m x2.75t/m3 density, this would result in 4.8Mt, and at an average grade of say 5g/t this could already result in a hypothetical 770koz Au. And keep in mind that this is only a small part of the entire project. Athough it seems a no brainer to delineate a 1Moz Au maiden resource here pretty easily, Tectonic is focusing on Seventymile now first, in order to see if there could be even bigger potential.

It seems that, despite increasing recession talk and deteriorating market fundamentals, Tectonic is firmly on its way to drill one of the more exciting, larger exploration projects, and looking to explore another one pretty soon. As they are freshly cashed up, they have room to manouevre it seems. The wait is on for incoming drill results.

Conclusion

After raising C$2.3M, Tectonic Metals seems to have recovered somewhat, with their extremely low market cap of C$8M going to C$12M again, trading at financing prices of 6c per share. You have juniors choosing to do absolutely nothing when markets turn into a recession, not able or willing to raise more, saving cash at all costs while grinding lower and lower as investors lose all interest in inactive companies. Not so at Tectonic, as it courageously jumps forward, determined to create value for shareholders regardless of market conditions. And as CEO Tony Reda so often reminds investors, if you are not drilling, you are not finding. Personally, I like the latter type as fortune favors the bold in my view, and in case they create value but don’t get immediately rewarded by it through bad market sentiment, investors will recognize value at all times and will get back as soon as sentiment turns for the better. Let’s see what kind of value Tectonic can create, as we are awaiting Seventymile drill results.

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

Disclaimer:

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

Gold Terra Hits Campbell Shear At Depth For The First Time

It took quite a bit of time before Gold Terra Resource (TSXV:YGT)(OTCQX:YGTFF) (FRA:TXO) released the first results of their much anticipated deeper drilling of the Campbell Shear, but on June 27, 2022 holes 029 and 037 were finally announced. The results weren’t spectacular, but CEO Gerald Panneton indicated that despite the low grades the intercepts confirmed the hitting of the Campbell Shear mineralized zone, and that was the most important. Of course they would have loved to hit high grade gold right away, but when looking at the adjacent Con Mine deposit which was also part of the Campbell Shear, mineralization was also very variable, so it could have been anything from hitting nothing to high grade intercepts. The current result is somewhere in between, and seems to confirm the company is on the right exploration path. Fifteen holes have been completed now, and more assays are expected to be returned from the labs regularly from now on.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

After announcing a series of mostly strong results on the Yellorex and Mispickel targets, Gold Terra was looking to at least equally impress the investor community with good results on the Campbell Shear at depth. As the Campbell Shear is a very large, tilted structure, as is visualized in this 3D image, provided by the company (Campbell Shear in yellow, the Con Mine deposit in red), chances to hit mineralized areas at depth seem high:

After completing 15 drill holes  (holes 027-041) for 8,391m, the assays of the first two deep holes (029 and 037, for 2,833m of drilling) came back from the labs. Assays for hole 041 are pending. The locations of these holes can be seen in the map below:

Hole GTCM22-037 returned 14.57m @ 1.6g/t Au from 1263m, including 6.5m @ 1.97g/t Au and 4.5m @ 2g/t Au. Hole GTCM22-029 intersected 1m @ 3g/t Au from 1308m. Real depth is well below 1,000m now, and the company is looking to go even deeper soon. These are not stellar first drill results, but when looking at the long section below, it can be seen that most of the Con Mine deposit was visualized green, meaning mineralization with gram*metres Au of 5 to 20. The high grade zones with g*m of over 100 certainly would have more appeal to investors, and provide the most economic mineralized pockets, but don’t build the entire resource. Hole 037 hit just that, a low grade g*m of 23 so just in the yellow colored category.

CEO Gerald Panneton was pleased with the hitting of the Campbell Shear zone: “Our drilling program is getting positive results on the Campbell shear at depth, and confirming gold mineralization in the area of historical holes Y-88 and Y-86. At the past producing Con Mine (5.0 Moz @ 15 g/t Au), it was typical to go from low-grade gold (approx. 1-3 g/t Au) to high-grade in the span of 10 metres. For example, we have observed visible gold, and the Campbell shear is present and well altered and mineralized, south of the Pud fault.”

I discussed this a bit further with him, and he stressed the typical pinching and swelling, like any other shear zone. Typical alteration, shearing and sulphides were encountered, sometimes even visual gold, all of it indicating the Campbell Shear itself, and this is exactly what they are looking for. Getting high grades at this early stage is considered by him as a bonus. I was also wondering about historic holes Y86 and Y-96A were all about, as they were mentioned in the news release:

“Hole GTCM22-037 is a deep hole drilled below historical holes Y-88 (13.72 g/t Au over 5.27 metres)* and above Y-86 and Y-96A (8.32 g/t Au over 4.45 metres and 18.11 g/t Au over 0.83 metres respectively).”

Panneton provided me with a section, showing the holes Y88, Y86, Y86-A and Y97:

Also of interest were the D-holes, drilled back in the 1990’s at depth from the 4500 exploration drift, although all at lower grade, except for the surface hole Y-86 with 8.32 g/t Au over 4.45m. The underground program was shortly halted in the late 1990’s by Miramar after weak results. As mineralization seems to be lower grade the further away from Y88, I was wondering if this section is oriented east-west, and if 037 was drilled in order to better determine the limits of the high grade zone indicated by Y-88, more or less infill-drilling between Y-88 and Y-86A.  CEO Panneton answered: “The plan for hole 37 was to repeat the Campbell Shear mineralization between hole Y86 and Y88, and eventually move updip from these very good intersection towards surface.”

The drilling at the Campbell Shear is well underway for quite a while now with 2 rigs aiming for about 35,000m this year. These two rigs at the Campbell Shear target are drilling south of the former high-grade Con Mine, with one big drill rig targeting the Campbell Shear at a depth of approximately 1000 metres below surface and at a 200-metre spacing. Management is also using hole 037 to set up directional drilling on 50-metre spacing. A second drill rig is allocated to test the Campbell shear north of Yellorex zone which was not part of the agreement with Newmont (September 2020).

As a reminder, management is intending to drill up to about 40,000m this year, with the objective of delineating at least a 1.0Moz high grade gold resource at the Campbell Shear at the end of 2022, and eventually a minimum of 1.5Moz high-grade gold the year after. As I have estimated the Yellorex mineralized envelope at over 600koz Au, I am curious if they will be able to delineate at least another 400koz high grade gold at the Campbell Shear.

Conclusion

Although the first results from deep drilling at the Campbell Shear weren’t spectacular, they did indicate the continuation of the Campbell Shear as an extension of the Con Mine mineralization. As such this was a delight to CEO Gerald Panneton, and he is eager to hit high grade mineralization by using wedges or directional drilling at a much closer spacing (25-50m) then used previously. According to him, the Campbell Shear has lenses that are 200m in strike length and have good vertical continuity, despite some very high grade, less continuous distribution of mineralization. The company expects no different by drilling this zone south of the Con Mine. As a big drill program is underway, we can expect many more results this year, and I’m curious if Gold Terra can find high grade gold at depth.

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

Disclaimer:

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

Kenorland Minerals Intersects 3.85m @ 44.95g/t Gold During Regnault 2022 Winter Drill Program, Has Commenced Summer Drill Program

It probably sounds a bit out of context to discuss results of a winter drill program when the summer really is kicking in with tropical temperatures across the globe, with temperatures up to 38C in Toronto a week ago during last PDAC, but Kenorland Minerals (KLD.V)(3WQO.FSE) completed their ice drilling in April at Regnault, part of their Frotet project in Quebec, part of the 20/80 JV with Sumitomo where Kenorland is the operator, and assays have been received from the lab and interpreted as per the latest news release. The absolute highlight was the 3.85m @ 44.95g/t Au at the R1 trend, being a 100m down-dip step-out from known mineralization, potentially adding lots of ounces of gold. It seems that every drill program keeps meaningfully expanding the existing structures, and on top of that also discovers new structures, with most drill holes hitting economic mineralization. Let’s see what kind of beast Kenorland seems to have by the tail here, at a time where inflation, rate hikes, supply shortages and a slowing down world economy spook the stockmarkets.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

With PDAC starting at June 13, 2022, Kenorland Minerals decided this day it was a good time to release the results of the first 20 out of 25 drill holes completed, to have their news out in front of the PDAC audience, amounting to over 17,000 investors, fund managers, experts, country officials etc this year as it cautiously ramps up after two years of COVID measures. A normal PDAC would draw 25,000-27,000 people on average, but this was a good start and from a personal standpoint it was good to see live faces again after a long period of calls, Zoom calls, Teamviewer calls, Whatsapp video calls and whatever other calls you might have. And didn’t we all miss the parties! One thing nobody missed were the Niagara Falls freezing cold temperatures, a household horror around the normal PDAC date, early March. If there is any petition out there to sign in order to change this permanently, please let me know so I can sign it asap. Enough about PDAC, lets continue with the Regnault results.

The current batch of results involved 20 of 25 drill holes completed, containing 8,040m of 10,880m completed in total. The highlights looked like this:

At the R2 and R4 trends drilling was designed primarily to expand the strike extent of mineralized structures, while drilling at the R1 trend was testing the down dip extents and exploring for additional mineralized structures immediately to the south. As these drill holes can all be considered step-out holes, I found these highlights, but also the majority of results, impressive. Just 2 holes didn’t return economic intercepts, and only one hole didn’t return any mineralization (22RDD118). CEO Zach Flood was pleased with the outcomes:

“Initial results from the 2022 winter drill program at the Frotet Project continue to demonstrate the scale and high-grade nature of the Regnault gold discovery.  Most of the drilling this year, including the program currently underway, has been designed to aggressively step-out and expand the mineralized footprint both along strike and at depth of the vein system.  In addition to these step-outs, we have been drilling beyond the known veins which has led to the discovery of multiple sub-parallel mineralized structures, which are now also being followed up on with wide-spaced step-outs.  So far, we are delighted with the success rate we are seeing at the drill bit and the impressive trajectory of this discovery.”

The news release provided the following map with drill collar locations, trajectories and intercepts of the highlights (in green) and a few other strong results:

As the scale of this map does show the overall structures, but is a bit too small for additional detail, fortunately a 3D visualization of the mineralized structures was provided as well:

Into some more detail, highlights of the summer/fall program included:

The discovery of these additional mineralized structures indicates the potential for further sub-parallel structures at depth in the Regnault system. These results along the R1 and R5 structures extend the known mineralization to depths of 400m and 450m below surface respectively, and remain open at depth.

These results confirm and gradually extend the mineralized R1 zone over 950m of strike length, to average depths of 300m, coming from 250m. The R1 zone is in fact a set of layered veins, but for guesstimating purposes this will be calculated as one zone. This results in an updated, very global back-of-the-envelope estimate on the R1 structure, with an average grade*thickness (or GT as Kenorland calls it) of 5*5 = 25, and arrive for R1 at 950 x 300 x 5 x 2.75 = 3.92Mt, at an average guesstimated grade of 5g/t Au this would mean a hypothetical 630koz Au.

No additional results came in for the R2 structure, so my back-of-the-envelope guesstimate stands unchanged at 700 x 200 x 2 x 2.75 = 770kt, at an average guesstimated grade of 9g/t Au this remains a hypothetical 223koz Au.

For the R3 structure it is too early to do any guesstimates, as there haven’t been enough results reported for this particular structure. The R4 structure to the north seems to be consisting of fairly narrow veins as well, 200m long and 225m deep, however not continuous from surface but separate vein structures, so the combined mineralized envelope is guesstimated at 200 x 100 x 2 x 2.75 = 110kt, at an average guesstimated grade of 15g/t Au this could imply a hypothetical 53koz Au. If we do this for the R5 structure as well, which appears to be a combination of 4 different veins, I arrive at a guesstimate tonnage of 300 x 100 x 5 x 2.75 = 412.5kt, at an average guesstimated grade of 5g/t Au potentially resulting in 66koz Au.

In total this back-of-the-envelope guesstimating would lead to a combined figure of 972koz Au, which is very close to the important first threshold of 1 Moz Au in gold exploration. And the good news is the end isn’t in sight yet it seems, as all structures are wide open, especially to depth as the company keeps hitting new structures at depth. As of now, Kenorland has drilled 55,966m at Regnault, and is currently drilling a summer program of 12,000m, as part of up to 40,000m of drilling, which has an approved JV budget of C$12.5M (Sumitomo).

The aforementioned ongoing summer drill program of 12,000m at Regnault has the intention to systematically step-out along known mineralized structures and explore for additional sub-parallel structures to the south. In the meantime, the company is also busy with another target in the Frotet project area called Cressida, and has planned 2,500m of diamond drilling here.

As can be seen, the Cressida target has the second best sampling results besides Regnault. I wondered if the claims in between the Regnault/Chatillon and Cressida/La Fouche claimsets couldn’t be acquired, most likely owned by Troilus. CEO Zach Flood answered, “We dropped much of that ground early on as our regional till sampling had effectively sterilized it.”

The second most important project for Kenorland is Healy (Alaska). After a first drill program returned not very impressive results, management has no immediate plans to explore Healy at the moment, however they are looking at alternative paths forward which could still advance the project.

Another important project for Kenorland is Tanacross (also Alaska), which could have a high likelihood of being drilled during 2022. The current status on drilling is currently on hold, as management is waiting on results from surface exploration including geochemical and geophysical surveys that were completed in June.

Kenorland also completed a VTEM survey at the Hunter project in Quebec (optioned to Centerra Gold), and a LiDAR survey and mapping at South Uchi (optioned to Barrick). The current status on these projects is as follows: at Hunter a property-wide sonic drill-for-till program will be carried out next month. At South Uchi, Barrick will be following up on the 2021 property wide till geochemical survey with further exploration.  Multiple discrete gold anomalies were identified and have been prioritized for follow-up exploration in 2022. For 2022, Barrick has approved a C$1.8M budget to complete infill glacial till geochemical sampling, within the regional As-Sb+/-Au anomaly, on a 350m by 150m spaced grid. The follow-up survey is planned to be carried out between mid-June and mid-August.

Since till sampling, boulder prospecting, airborn magnetics and an IP survey have been completed at Deux Orignaux (Chebistuan), further targeting is on its way. According to CEO Flood, they are still waiting on the final IP data. Once they have that in hand and have completed our targeting, they will propose a program and budget to Newmont.”

Another important project for Kenorland is Chicobi. As a reminder, the Chicobi Project is held under an earn-in option to JV agreement with Sumitomo where they have an option to earn up to 51% interest by funding C$4.9M in exploration expenditures. As the 2,000m of drilling was completed during April, and results are expected to come back from the labs within 2-3 months, I wondered what the current status is here. CEO Flood commented that an update will be provided soon.

The treasury currently stands at about C$6M, and the idea of management is to spend around $1.6M of this on exploration advancing their own projects including funding its joint venture commitment at Frotet, further exploration in Alaska, and additional generative exploration, including advancing projects in Manitoba. The revenue generated from its operations, including management fees as well as cash and equity received from partners, will more than cover the G&A of Kenorland. This is of course a good thing as the money markets these days aren’t the most easy ones to raise cash at the moment.

Conclusion

Kenorland Minerals keeps generating strong drill results at Regnault, and as such the mineralized zones could hypothetically grow to very close to 1Moz Au at the moment. As it still is early days, this could grow much larger. Of course, a lot of work still has to be done, but as JV partner Sumitomo decided to pony up another C$12.5M for Regnault, it seems Sumitomo hasn’t lost interest and has high hopes on further success.  The other projects are more early stage, and will probably achieve more attention when substantial drill results come in. In general, the markets are tough at the moment, and prospect generation is a slow game, benefitting as a minority partner only from large deposits, but since I consider Kenorland the poster child of prospect generators, with excellent projects, management and backers, I view this as the single best opportunity to have exposure to prospect generators, which also have much less downside compared to the usual exploration juniors, and the chart of Kenorland can testify about this advantage against almost every junior in the field.

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

Disclaimer:

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

Gold Terra Keeps Intersecting High Grade Gold At Mispickel And Yellorex

Times are becoming pretty challenging around the world, as inflation gears up to levels not seen in 40 years, as supply chains across the entire economy are increasingly being disrupted through the Russia-Ukraine invasion and COVID-19 related lack of investments, while at the same time demand is recovering after COVID-19. Although interest rates are going up, with the stockmarkets going down as a consequence, gold is still holding around US$1850/oz, creating sound fundamentals for the main metal Gold Terra Resource (TSXV:YGT)(OTCQX:YGTFF) (FRA:TXO) is after. After completing their small winter drill program (6,011m) at Mispickel, the company continues to drill their 30,000m program with 2 rigs at their Yellorex/ Campbell Shear target, part of the Yellowknife City Gold Project, and solid results are released on a regular basis.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

Looking in hindsight it seemed extremely luckily timing by CEO Gerald Panneton, when right before the Russia invasion and inflation running wild, Gold Terra raised C$5.6M at the end of February, with proceeds being sufficient for completing 30,000m of drilling at both the Campbell Shear and Mispickel targets.

CEO Panneton is aiming big at drilling no less than 40,000m this year, so an additional raise would be necessary to fund those extra 10,000m, probably somewhere in Q4. The drilling at the Campbell Shear is well underway for quite a while now with 2 rigs aiming for about 35,000m this year, and regarding Mispickel, the company recently completed a small 19 hole, 6,011m winter drill program with another 2 drill rigs. As a reminder, this last program was intended to be 4,000m, and only if successful it would be expanded. Mispickel appears to be quite an interesting satellite high grade deposit in the making for the 1.2Moz Crestaurum/Sam Otto resource. After 5 holes with several high-grade intercepts near surface were already reported since March, the most recently announced results continue to impress. On June 7, 2022, Gold Terra reported three more holes with significant results, highlighted below:

Again the gold mineralization is located relatively close to the surface, which bodes well for economics. CEO Panneton was pleased with the results:

"These high-grade drill results indicate that the MP-Ryan Zone is developing into a new high-grade gold zone approximately 100 to 150m west of the main Mispickel area. This additional high-grade gold zone is a great indication of a larger system than previously thought in this area and opens up the whole area for other significant high-grade discoveries. The Mispickel area will be part of our updated NI 43-101 resource scheduled to be announced in Q4 of this year. The Mispickel area is situated 20 kilometres north of Yellowknife and complements our flagship Con Mine Property where we are currently drilling at depth along the Campbell Shear south of the Con."

and the location of the latest 3 holes can be seen on this map in purple:

Previously reported holes are 003, 005, 006, 007 with lower grades and located much deeper (mineralization starting below 100m up to 311m depth, intercepts were 5m @ 1g/t Au and 5m @ 1.34g/t, 2m @ 3.86g/t Au, 1m @ 2.1g/t Au and 1m @ 2.4g/t Au, and 7m @ 3.59g/t Au and 4m @ 1.65g/t Au). Interestingly, the first reported hole 002 was much better as the result showed 4m @ 19g/t Au incl. 1m @ 73.9g/t from 20m depth. Ten of the nineteen drilled holes showed visible gold, and eight holes are reported now, all those containing visible gold. Although visible gold usually indicates grades of over 20g/t, it is very well possible that the visible gold in holes 003, 005, 006 and 007 was located in the cut-in-half part of the core that wasn’t sent to the lab, but that is standard QA/QC procedures. CEO Panneton commented: “Although the assay results are lower than expected in some holes with the presence of visible gold, it is more important to intersect the zone, and to keep drilling as we know, this is typical gold behaviour.”

It appears there is a mineralized zone present with a strike length of about 500m. According to Panneton, mineralization is found in structures of multiple, vertically oriented quartz veins. The high grade intercepts (002, 004, 008 and 014) so far confirmed the high grade nature, and the presences of the zones, which means more drilling will be required next winter to follow up, and determined the size of the quartz vein structures.  A bit puzzling to me is hole 005, which didn’t hit anything special, but which appears to be collared on strike with 002 but about 100m to the south. Is this because of fault lines, ending of the vein in 002, or extreme pinching and swelling of quartz veins? According to CEO Panneton, hole 5 was very successful, as other holes it does intersect the zone similar to hole 002.

In order to have a slightly better understanding of this zone, let’s have a look at cross sections of holes 004, 008 and 014:

In addition, here is a cross section of hole 007 (more to the north), and 002 with 014:

It can be seen that the high grade mineralization in 002 doesn’t reappear in 014 at depth with mineralization assuming to be vertical, although there is a good bit of distance between these holes. Although the grades of for example 007 and 009 aren’t always impressive, keep in mind these results are well within typical open pit boundaries (200m depth), and it appears from the sections there is an abundance of 0.1- 1g/t veins, forming a low grade halo surrounding the higher grade veins. This could convert Mispickel into an open pit satellite as part of the intented Sam/Otto mine plan. As I’m always curious about mineralized potential, a very global back-of-the-envelope estimate is something I do as soon as there is some size and tonnage to calculate with. In this case, 8 results is barely enough but I’ll give it a try anyway.

For now, I consider the distance (100m) between 014 and 008 as a continuous vertical vein, as is the distance (50m)between 002 and 004. I can only guesstimate the vertical extent of these veins, but say they are 100m deep, and on average 2m thick and 15g/t Au. This would result in 2 slabs of 100x100x2m and 100x50x2m, which is 30,000m3 which is 82.5kt at a density of 2.75t/m3. At an average estimated grade of 15g/t the estimated mineralization could be 1.2M/31.1=40koz Au. This is just the high grade portion. The low grade halo, if consistent, could be an envelope of 500x200x150m, which in turn would be 41Mt. At an average guesstimated grade of 0.4g/t, this would be 530koz Au.

The total average grade would not exceed 0.5g/t which isn’t economic at current gold prices (I estimate an overall average grade of 0.8g/t Au is needed for this at gold US$1800/oz)), so Gold Terra needs to delineate more high grade if they want to add substantial tonnage and ditto economic ounces. As it is still early days, I certainly don’t rule this out yet. Another option would be to go just for the high grade “core”, which of course wouldn’t have the same potential for ounces, potentially more in the range of 50-100koz Au in my view as the strike length is still limited. CEO Panneton had this to add about this, and what he thinks are realistic goals regarding Mispickel mineralization: “The Mispickel area needs more drilling next winter to better assess the size of each zone, what is very important is we have multiple VG intersects over a strike length of 450m and a corridor that is at least 200m wide, in essence we are just starting to understand the Mispickel area, and we simply need more drilling.

The main drill program is of course targeting the Campbell Shear. The two rigs at the Campbell Shear target are drilling south of the former high-grade Con Mine, with one big drill rig targeting the Campbell Shear at a depth of approximately 1000 metres below surface and at a 200-metre spacing. A second drill rig is allocated to test the Campbell shear, north of Yellorex zone which was not part of the agreement with Newmont (September 2020).

Several results of Yellorex itself have been reported as well, with some of the best intercepts (GTCM21-027/028/030) reported in the April 6, 2022 news release, highlighted by 26.5m @ 6.4g/t Au hit by hole 030. The result of hole 040 which was announced on May 17 was also impressive, as this hole returned two strong intercepts: 11m @ 8g/t Au and 4m @ 14.4g/t. The first deep hole GTCM22-029 was aimed at the aforementioned deep Campbell Shear target, and the result will probably be part of a batch of other deep holes. As a reminder, the first 50m of the hole which hit the nearby Con Shear were assayed in March, the result was nice with 4.55m @ 3.61g/t Au from 37m (including 0.75m @ 15.75g/t Au), the drill targeting 1000m depth at the time.

The drill collar location of 040 can be seen here (hole 031 unfortunately hit just 1m @ 1.36g/t Au, so apparently this hole hit the outer limits of the Yellorex envelope):

Seeing holes 030 and 040 hitting such high grade mineralization was in line with expectations, as both were aimed at filling in of the “purple zone” of the visualized 3D May version of the envelope of Yellorex:

When doing a quick guesstimate on the Yellorex envelope, one could arrive at a 600x200x10mx2.75t/m3 = 3.3Mt. If an average grade of 6g/t would be assumed, 637koz Au would be the guesstimated result for now, which would be an excellent start when building the Campbell Shear resource.

As can be concluded, the mineralized envelope has grown the most between March and April, as the envelope from May is almost the same as April(below left), which was significantly larger than March(below right):

The plan is to follow the mineralization at the Campbell Shear down plunge, and over the next 24 months the strategy is to increase the current extent of drilling mainly south of the original Con Mine below depths of 1,000 metres. As a reminder, see the long section below, representing the Con Mine, Yellorex and exploration targets, with the black star indicating the first drill target at depth (hole 029), the red ones following up on this:

Management is intending to drill up to about 40,000m this year, with the objective of delineating at least a 1.0Moz high grade gold resource at the Campbell Shear at the end of 2022, and eventually a minimum of 1.5Moz high-grade gold the year after, south of the Con Mine.

Also keep in mind that there is a historic resource remaining at the Con Mine of 651koz @ 10.2g/t Au located below 1000m depth, and according to Panneton there could be about 1 Moz Au down there. As this will take a number of very deep holes from surface to convert this to NI43-101 compliance, this will be a goal for the foreseeable future, probably after the targets for the Campbell Shear are achieved.

Conclusion

You don’t see too many explorers treating an already economic 1.2Moz Au resource as a starting point for a multi-faceted drill program, targeting different mineralized zones, each with different potential. I am not sure about the significance of the Mispickel target yet as it is still early days, but the Yellorex envelope appears to be morphing into a robust resource, guesstimated by me over 600koz @ 6g/t Au. And no drill results have been announced yet about any deep targets at or below 1,000m at the Campbell Shear, which might contain the big prize here, analogous to the nearby former Con Mine that produced 5Moz from that same shear. CEO Panneton is chasing success here, looking to complete over 30,000m of drilling at the Campbell Shear alone this year. Stay tuned!

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

Disclaimer:

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

Tectonic Metals Closes First Tranche Of C$3M Private Placement

Although Tectonic Metals (TECT:TSX-V; TETOF:OTCQB; T15B:FSE) launched their $3M private placement under challenging market conditions, their two largest institutional shareholders, well-known Crescat Capital and Alaska’s leading Native Regional Corporation, Doyon, increased their shareholdings in Tectonic to support what both believe to be a transformative year for Tectonic, with lots of new drilling and exploration. Their continued support (Crescat did a strategic investment during last year’s raise while Doyon participated in financings from 2020, 2021 and 2022) enabled Tectonic to close the first tranche of a projected C$3M private placement for proceeds of C$1.93M. This is quite an achievement in current volatile markets as record inflation, upcoming rate hikes and increasing shortages everywhere could cause stagflation and/or a recession. CEO Tony Reda acknowledged this fact, and was delighted with this first tranche:

“Current challenging market conditions in no way reflect or diminish the potentially game-changing, district-scale opportunities Tectonic’s projects offer. The reality is that the Tectonic team has never been more excited to get into the field and drill test some of the best targets the company has generated to date. As we close this first tranche of our financing, I want to express my gratitude for the continuing support of Crescat Capital and Doyon, Ltd., whose commitment and belief in our process and targets provide us with a solid exploration foundation to build upon. We are truly blessed to have great shareholders. As we launch our 2022 field season, we are primed and focused on our mission to find a mine.”

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

The ongoing financing is a non-brokered private placement of up to 50M shares @ C$0.06, with a 2-year half warrant (exercise price C$0.10) for gross proceeds of up to C$3M. The warrants are subject to an acceleration clause, when the share trades at C$0.20 or higher during 20 consecutive trading days. Tectonic was originally looking to close this financing before May 16, 2022, but sharply deteriorating market conditions forced them to take a step back. When talking to CEO Reda, he indicated he considered himself fortunate to have raised almost C$2M but also realizes that the “smart money” adding to their positions or coming on board now recognizes the potential of Tectonic’s projects remains very substantial despite shares sitting at record lows. Right now this round is standing at about C$2.4M in total, and Reda still expects to get to the intended C$3M, which would be a strong vote of confidence for the company.

Largest shareholder Doyon announced their participation on May 24, 2022, and is a robust example of integrating native interests in exploration initiatives. Doyon was pleased to inject fresh capital again, as their CEO Aaron Schutt explained:

“2022 marks the 50th anniversary of the Alaska Native Claims Settlement Act and the formation of Doyon, Ltd.  Since that day, our mission has been clear:  continually enhance our position as a financially strong Native corporation in order to promote the economic and social well-being of our shareholders and future shareholders, to strengthen our Native way of life, and to protect and enhance our land and resources.  Our investment in Tectonic is our mission in action.  As Tectonic Metals’ single largest shareholder since 2020, Doyon recognizes that the Company shares our core values – values that today are embraced as “ESG” principles but which our people have adhered to for thousands of years.  We welcome the opportunity to reinforce our support for Tectonic and are confident that their professional, diligent and respectful exploration process will prove successful.”

As a reminder, if the intended goal of C$3M will be reached, significant dilution will be part of it as well, taking the share count to 211.68M O/S and 298.69 F/D, but keep in mind 64% (partially diluted) of the shares is in strong hands, held by the Tectonic team, their strategic partners (Crescat and Alaska’s leading Native Regional Corp, Doyon) followed by other resource funds as Gold 2000, RCF and Mackenzie Investments. On the other hand, of these F/D shares about 30M warrants are expiring before the end of June 2022 which is soon.

The cash position is estimated at C$2M now after closing of the first tranche, as Tectonic has been deploying funds to execute this year’s exploration program, and hopefully another C$1M could be added soon. As the closing of a second tranche is expected in less than four weeks, exploration plans for the first drill program are scheduled to be announced prior to this second closing, with the first drill rig commencing action the first week of July.

As a reminder, Tectonic is targeting district-scale projects in safe jurisdictions, which have the potential to generate multi-million ounce deposits. In some senses, choosing a secure and predictable jurisdiction in which to operate has become the new ESG (Environmental, Social and Governance), as geopolitical uncertainty has focused investors’ attention on the potential for asymmetric negative shocks that can hit companies tremendously. Examples are new governments which are less mining-friendly, countries exposed to wars such as we are seeing in Ukraine now, or even expropriation such as are currently occurring in Mexico with lithium assets. Alaska is one of the most predictable, mining-friendly jursidictions globally and investors there can take comfort in the consistent and even application of the rule of law.

Tectonic’s fully owned flagship is the Tibbs project, covering 29,280 acres, 35km east of the 200koz Au per annum Pogo Mine. High-grade gold mineralization at Tibbs occurs in steeply dipping veins, crossing multiple lower grade low-angle veins similar to the Pogo Mine, which serves as an analogy.

The Tibbs property is close to existing infrastructure and an active mill, and has seen lots of exploration, ranging from soil sampling, airborne and land-based geophysical surveys, trenching to drilling. Drill highlights are 28.95m @ 6g/t Au, 5.3m @ 15.7g/t Au, 5.7m @ 19.1g/t Au, 1m @ 104.5g/t Au and 5.1m @ 12.45g/t Au. These are very substantial results, and the most impressive drill results were obtained at the Gray Lead area:

Phase II drilling already established a 1000m x 350m mineralized zone, where the majority of drill results returned grades over 5g/t Au, and within this high grade, steeply dipping veins with grades up to 127g/t Au. It is still early days, but if we would guesstimate a mineralized envelope of 1000x350x5m x2.75t/m3 density, this would result in 4.8Mt, and at an average grade of say 5g/t this could already result in a hypothetical 770koz Au. And keep in mind that this is only a small part of the entire project.

Tectonic’s second project is the Seventymile project, part of an underexplored, fully owned 40km long Greenstone belt, located 270km east of Fairbanks, Alaska. The property is only accessible by air (small aircraft, helicopter), and in the winter by a winter trail. Seventymile is an orogenic gold system (for example Abitibi, Kalgoorlie, Red Lake, Hope Bay, and Las Cristinas) with lode-style high-grade quartz mineralization occurring in shear zones and faults. Drilling highlights are 5.5 g/t Au over 15.0m, 1.1m @ 205.9g/t Au, 6.1m @ 2g/t Au, 19.8m @ 1.37g/t Au and 6.1m @ 4.38g/t Au.

The 100% owned Flat Gold project is Tectonic’s latest acquisition and is located 40km north of the 45Moz Au Donlin Gold project, jointly owned and operated by Barrick and Novagold, who are spending $60M at Donlin this year. As you probably know, Donlin is one of the largest undeveloped open-pit gold resources in the world (39Moz @ 2.24g/t Au) and Flat is located in the same mineral belt that produced this behemoth. According to management, Flat is a 92,000-acre district-scale intrusion-hosted gold system with multi-million-ounce potential in the heart of Alaska’s fourth most prolific placer mining district. Historic drilling from 1997 returned interesting highlights, like 24.7m @ 12.5g/t Au, 36.6m @ 1.36g/t Au and 31.7m @ 1.28g/t Au. The priority target, Chicken Mountain, hosts a robust 4km long gold-in-soil anomaly where drilling indicated gold mineralization over a kilometer and is the likely source of the majority of the historic 1.4Moz of placer gold mined in the area.

The currently raised budget will mostly be spent at Tibbs and Seventymile according to CEO Reda, so I’m curious what plans will be announced soon. Tectonic seems to be trading at rock bottom levels at the moment, is cashed up but on the other hand has huge exploration upside potential with their project portfolio, so I’m looking forward to what they can achieve this year.

Conclusion

Although sentiment isn’t positive in the stock markets, and junior mining in particular, Tectonic seems to enjoy the full support of the likes of Crescat Capital and Doyon, as both shareholders made strategic investments in the company, enabling Tectonic to commence drilling very soon. The former Kaminak team has big ambitions and is ready to go, and will announce the extent of their upcoming exploration programs within a few weeks, following the closing of the second tranche of the ongoing private placement. The current market cap of just C$8M is extremely low in my view, as only the management team could very well be worth more, let alone the three district scale projects with two of them already having pretty interesting drill results, and a new drilling season coming up soon.

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

Disclaimer:

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

 

Omai Gold Mines Drills 8.5m @ 5.0g/t Au and 17.1m @ 2.3g/t Au In Wenot Step-out Holes

 

Although the US Dollar index recently broke through levels not seen since 2003, indicating great strength, caused by already announced and anticipated Fed rate hikes to counter the multi-decade high inflation levels, gold is still trading around US$1850/oz. As the Russia-Ukraine conflict is still far from over, and markets are frothy over a potential looming recession, gold as the ultimate fear trade appears to be holding its ground firmly. As an advanced gold explorer, Omai Gold Mines (TSXV:OMG) seems to be looking at the right metal, as they are in the midst of an ongoing trenching and drill program at their Omai Gold project in Guyana, after raising C$2.6M, as a second and last tranche of C$600k was closed on April 27, 2022. Most of this financing came from a large UK gold fund that knows Guyana and recognizes the potential in this stock, jumping in at $0.12/share.  New drill results were recently announced, stepping out 100m to the west at Wenot, and generated economic results, much to the delight of management. As a reminder, Omai Gold Mines already has delineated the Wenot deposit with a 2022 NI43-101 resource estimate (1.64Moz @ 1.5g/t Au, another adjacent mineralized envelope (Fennell) has a historic resource estimate of about 1.5Moz @ 1.5g/t Au, and Omai is now in the process of expanding Wenot.

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

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

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

On May 27, 2022, Omai Gold Mines announced the first results of the ongoing exploration program at their Omai gold project in Guyana. The company already completed 5 diamond drill holes totaling 1,423m west of the Wenot deposit commencing at the end of March, and a sixth hole is underway. Eight drill holes west of the Fennell target for 1,213m and several trenches were also completed during February-April. An overall view of exploration can be seen on this map, with among others the highlight holes 220DD-033/038/039 being featured, also discussed in the May 27, 2022 news release (and this article):

The results of these drill holes were solid:

Although these results were intercepted from significant depths, especially hole 039, this could still be economic ore, as real depth is 110m for hole 038 and 140m for hole 039, due to the inclination of both holes. The drilling for the West extension of Wenot can also be viewed in this section:

CEO Elaine Ellingham was excited about these first two results at Wenot:

“We are very pleased that our drilling has established that the Wenot shear zone extends to the west and continues to host significant gold mineralization. The gold mineralization in these new holes is similar to the main zones at Wenot. We recently deployed the second drill to commence step out drilling on the eastern extension of the Wenot deposit, roughly two kilometers to the east. Our objective is to work towards a revised NI 43-101 Wenot resource, assuming favourable results continue as we explore both the east and west extensions of the Wenot shear. Expanding the Wenot resource into these un-mined areas is significant for an ultimate mine plan as these could contribute to lower-strip-ratio starter pits for the larger Wenot deposit.”

As these two results in itself are hitting gold at significant depth, and would have a substantial strip ratio related to the gold contents, and were drilled under a 50 degree inclination, I wondered if management anticipates more mineralization at lower depth, as part of vertical mineralized lenses as is the typical geological concept at Wenot:

For that, management would have to drill fences perpendicular on the strike direction of Wenot to the west. CEO Ellingham answered: “Not in the short term, as historic drilling tested shallow mineralization in the saprolite layer, and the necessary data for a resource update is available. We will also wait for assays of more holes before determining about fences etc, and the focus is on expanding the strike length of the deposit. We are drilling pretty deep to catch zones at depth, and most zones run upwards to the saprolite anyway.”

Some examples of more near surface historic holes can be seen here (in green):

The full results for holes 038 and 039 are represented in this table:

Hole ID  From To  Interval (m)  g/t Au
22ODD-038 160.0 161.0 1.0 2.92
171.0 176.0 5.0 0.48
215.0  223.5  8.5  5.01 
including  221.8  223.5  1.7  17.80 
22ODD-039 52.3 53.0 0.7 3.81
246.9  264.0  17.1  2.32 
including  246.9  253.8  6.9  3.54 
and  262.9  264.0  1.1  5.58 
277.3 277.9 0.6 1.36
288.8 293.0 4.2 0.56

 

Despite the inclination, the drill bit obviously hit several mineralized layers, often very narrow but clearly indicating a stockwork of veins/lenses. Hole 038 was drilled more to the north, to seek mineralization below a sediment cover into volcanic fresh rock, which was successful. As the geologists put it: “the gold mineralization occurs within quartz-ankerite veinlets and stockworks, some with coarse visible gold and developed primarily in and along the sheared margins of variably silicified sub-vertical felsic dikes at or near the lithologic contact between the andesite-dominant lithologies to the north and lithic wacke sediments to the south.” It was nice to read that the West extension of Wenot was the former site of the mill, service buildings and other mine infrastructure. When asked if the former operator didn’t explore this area before building the mine, CEO Ellingham answered: “The former operators focused entirely on getting the known resource into production as soon as possible, and didn’t explore much after the mine came into production. The area where we are drilling now was covered with haul roads and all of the Omai buildings, so certainly no drilling could be done in this area. Our current exploration offices, core logging facilities and barracks are in this area, but we can drill right around them.  In fact one of the next holes will be between our kitchen and laundry facilities.”

It is good to have solid drill results out right before PDAC, as investors were apparently looking at other opportunities it seems during the last difficult 2 weeks or so:

Share price 1 year timeframe (Source: tmxmoney.com)

According to CEO Ellingham, they have more results from the Wenot west extension drilling coming out soon, probably within 2 weeks, and it is very likely they will adhere to this timeframe this time and make it before the upcoming PDAC, as most lab delays are solved now.

Omai Gold Mines has also completed drilling, trenching and sampling west of the Fennell pit and to the southwest of the Wenot pit. Eight holes have been drilled, and assays were returned for the first 5 holes totaling 1,213m. Drilling at the Blueberry Hill target provided the following results of 3 holes:

22ODD-033    150.6     151.5     0.9     41.73 
22ODD-034    19.5    21.0    1.5      0.53
Incl.    58.0    59.0    1.0      0.81
Incl.    63.0    64.2    1.2      1.80
Incl.    69.5    71.0    1.5      1.71
22ODD-035    46.6    48.1    1.5      1.91

Hole 033 returned visible gold and a high grade intercept, hole 034 hit several low grade veins, and hole 035 hit just one low grade vein. All three holes tested high grade mineralization identified during trenching, where 6 of 11 samples assayed over 6g/t Au. Additional trenching is planned in order to find more vectors before more drill targets can be defined. As the strong trenching results created some expectations with me, I asked CEO Ellingham how she viewed and interpreted these drill results, also in connection to the trenching results and other geophysical data. She stated: “We did hit a very high grade vein, but were expecting additional mineralization. We knew from the trenching that the structural setting is complex, so we will continue to model the data before further drilling. Our Guyana expert Linda Heesterman was recently on site for 10 days and agreed that this area is complex but clearly has significant gold potential.”

At the Snake Pond target, trenching and sampling returned equally impressive results like 1m @ 5.2g/t Au, 5m @ 1.49g/t Au, 5m @ 4.5g/t Au, 5m @ 6.1g/t Au and 5m @ 7.68g/t Au. Two drill holes (040 and 042, which can be seen in the first map in this article) were completed, with assays pending.

The company also drill tested a target south of Wenot with two holes. Diamond drill hole 036 didn’t intercept anomalous gold, and hole 037 (which can be seen in the first map in this article) returned anomalous values like 6m @ 0.67g/t Au, 1m @ 0.77g/t Au and 1m @ 0.96g/t Au. According to CEO Ellingham, this was the first of  tests of the key airborne geophysics targets identified by their consultants. There are a number of such targets, any one of which could host another Fennell or Wenot deposit and these would be game changers for the project. Hole 037 had a few intersections and some core loss around the quartz veining that had anomalous gold. They will likely do a follow up hole in this area as the geology was very favourable.

Last but not least, the historic Fennell resource would take just 4-5 holes to convert it into a NI43-101 compliant resource, so I wondered if this drilling and potentially maiden resource could be completed this year. CEO Ellingham stated: “We need to focus on creating value for our shareholders in the short-term and we see the best use of our funds in exploring the extensions of the Wenot shear, with the goal of advancing to an updated NI 43-101 resource. The Fennell deposit was well drilled with 46 holes totally 27,000 metres, so we are fairly confident that the ounces are there. These holes to upgrade the Fennell historic resource will be long holes that will be slow to complete and more expensive, so in the shorter term, we see more value in expanding into a new area. Also, the areas we are exploring along strike of Wenot have not been mined before and will therefore be near surface and ultimately cheaper to mine.”

Conclusion

It was good to see Omai Gold Mines closing the financing for C$2.6M, which enables them to keep exploring for the remainder of this year. The first step out drill results at Wenot were promising, but need more follow up drilling in order to add significant economic tonnage. Drilling at the Blueberry and Snake Pond targets did return significant gold mineralization as yet, but need a lot more follow up trenching and drilling before delineating eventual satellite deposits. Historic drilling indicated prospective targets, so the search for more gold continues at the former Omai Gold mining camp. Converting Fennell into a compliant resource could instantly double the existing gold resources, so this would be an interesting development as there aren’t too many juniors with over 3Moz Au with market caps hovering at just C$23M.

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

Disclaimer:

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