Hello Guest User, You are visiting this website from a computer with an IP address of 172.68.244.131 with the name of '?' since Wed Oct 9, 2024 at 2:09:38 PM PT for approx. 0 minutes now.
Discovery Watch is a weekly 15-30 minute audio show produced by HoweStreet.com where Jim Goddard interviews John Kaiser about resource juniors with projects that have caught John's attention. The projects will not be limited to companies he has covered through the Spec Value Rating System. Jim and John will periodically circle back to review the projects and if necessary close them out as no longer worth watching. Check out the catalog of KRO Free Stuff. KRO offers a USD $450 Annual Individual Membership. This Discovery Watch session is available via YouTube or Podcast.
Every summer the market gets excited about who might deliver a big discovery in the Golden Triangle. Aben Resources Ltd is one of those juniors which spends a fair amount on both exploration and promotion which means that since 2016 the stock has had a seasonal speculation cycle that enables Aben to reload the treasury every year. Aben does like to provide some variety, but last year's effort at the Chico project in Saskatchewan near the Fisher gold vein project SSR has under option from Taiga ran into surprise opposition from the local First Nations group. So in 2019 Aben is doing a small program on the Justin property adjacent to the 3 Aces property of Golden Predator before returning to Forrest Kerr for another shot at finding a high grade zone that hangs together enough to qualify as a discovery. (Jul 8, 2019)
Alexandria Minerals Corp caught my attention in 2017 when I heard Eric Owens explain his new theory about the orientation of the vein sets within the Orenada 4 Zone on the Cadillac Break property which straddles 35 km of the Cadillac-Larder Lake crustal scale fault east of Val D'Or with which much of Quebec's Abitibi greenstone belt derived gold production is associated. But the main regional fault related to these orogenic vein deposits never has gold in it because it is like a freeway; it is the lesser roads that splay off of it that accumulate the gold, usually a bit of distance from the freeway. Alexandria's Cadillac Break property did have gold zones, but they never reached critical mass makig them worth developing. Owens got his Orenada idea from the Sigma-Lamaque project adjoining north of the western end of the Cadillac Break property where the Integra team was able to show that the Triangle zone was considerably better endowed with goal when drilled so as to intersect the vein sets on a perpendicular. Bay Street bought into the story in 2017 through a series of large $0.05-$0.06 unit financings on top of a capital structure that had already bloated over 200 million shares since the bear market began in 2011. But the overhang kept Alexandria stuck in the mud, which only worsened as crypto and cannabis began to distract Bay Street and its insitutional clients later that year. The financiers behind the 2017 funding tried to engineer an exit strategy through a merger with another considerably more highly valued junior in the area, but Owens, the founder of Alexandria, wanted to do one more major cheap financing to finish the exploration job. This turned into a nasty proxy battle as the no-skin-in-game board members loaned themselves out to the Bay Street thugs who wanted the merger. Owens lost the battle in 2018 and the triumphant board celebrated by telling shareholders that lo and behold Cadillac Break's gold potential sucked and the company was broke because of all the money pissed away on legal fees. With only undertakers in charge Alexandria turned into a DW dud. In 2019 the board took steps to euthanize the junior by offering it up for acquisition by O3 Mining, the new bin for the prospects Osisko Mining was spinning out to prepare Windfall for a buyout. The $0.04 paper bid was trumped by a $0.05 cash or stock bid from Agnico-Eagle, but the board accepted a "superior" offer from O3 Mining which implies $0.07 per share at the $3.88 price O3 is financing itself at. Since O3 is not yet trading we do not know what is the true price at which Alexandria is being euthanizedd. (Jul 11, 2019)
Aurion Resources Ltd caught our attention early 2017 when the company reported a field of quartz boulders on its Risti project in the Central Lapland greenstone belt of northern Finland that included boulders with visble high grade gold. The angular nature of the boulders suggested they had not traveled far but overburden has made it difficult to establish the soruce through mapping and bedrock sampling. Aurion raised $25 million in 2017 but drilling not encounter anything which explained the boulders. No fianncing was done in 2018 but drilling did intersetc short intervals of very high grade gold similar to the boulders. The geological context is that of a younger version of the Timmins camp in the Abitibi greenstone belt of Ontario and Canada, with the Sirrka Shear Zone seen as analogous to the Porcupine Destor Zone. Aurion's properties straddle 80 km of the Sirrka SZ, the western two-thirds of which is farmed out to B2Gold and Kinross, which has sunk over $16 million into Aurion equity. Gold potential resides not in the crustal scale fault zone, but rather is associated with the smaller faults that splay off it within good host rocks that develop even smaller structrures that soak up the gold from fluids that are much cooler than those which create high grade epithermal gold-silver systems. The CLGB has a size similar to the Abitibi but has had only 10 million oz gold identified compared to 90 million for the Abitibi; is this because CLGB is less endowed or has seen considerably less exploration? Aurion has attracted capital because the market thinks it may be on the verge of demonstration that sufficient exploration will reveal the CLGB to have a gold endowment similar to Abitibi, with Risti itself representing the scale of the Timmins district. In 2019 Aurion is starting with a 10,000 m drill program aimed at showing that high grade zones do hang together. This was the initial hope with the Cheechoo project of Sirios that never panned out. A less disappointing outcome would be that Risti is like the Windall project of Osisko Mining which is also billed as a mis-understood Timmins district. The result of more than $200 million poured into Windfall by Bay Street is not what we hope to see Aurion accomplish at Risti. For now we can still dream that Risti is a Timmins district in the making. (Jul 11, 2019)
Azimut Exploration In was introduced to Discovery Watch in September 2016 due to its minority stake in the Eleonore South project in the James Bay region of Quebec which covers the southern half of the Cheechoo intrusion where Sirios Resources Inc caught the market's imagination in early 2016 by rethinking a low grade bulk tonnage gold optionality into a potential high grade underground mineable system. Sirios started drilling the intrusion with NE oriented holes instead of SW holes and while initially this seemed to deliver high grade intervals more consistently, after several years it became apparent that the Cheechoo intrusion did not host coherent high grade zones that would lend themselves to underground mining. Sirios has since reverted to a bulk tonnage model and published a resource estimate in late 2019. Azimut's CEO Jean-Marc Lulin became the champion for Eleonore South which it had staked during the early days of the Eleonore discovery by Virginia. Work by Goldcorp and Eastmain failed to deliver a discovery because it was focused on the margins of the Cheechoo intrusion. JML focused on potential high grade zones such as Moni, but that effort grounded out just like that of Sirios. Today it is clear that Eleonore South and Sirios' Cheechoo needs to be consolidated as one property with a large open pit operation which has the support of Newmont (after acquiring Goldcorp), which is also a major shareholder of Sirios. The stick in the mud resisting a win-win proposal has been Azimut, which stopped funding its share of Eleonore South in 2018 when it decided to violate the PGFO strategy by drilling the Chromaska chromite target with its own money. Chromaska died quietly, and it looked like Azimut was a DW bust on two fronts. But in early 2019 when Midland's Mythril copper discovery ignited hopes for a base metals area play in the James Bay region Azimut's Pikwa project to the west became a DW focus after Azimut was able to swing a deal with SOQUEM to earn back a 50% interest. Mythril fizzled in H2 of 2019 when it became apparent that the very high grade copper mineralization was restricted to thin margins of dykes that weren't spaced closely enough to deliver a bulk mineable resource similar to that of the Aitik copper mine in Sweden. During 2019 Azimut focused on mapping and sampling the 20 km Copperfield Trend which projects SWW from the 10 km trend on Midland's Mythril project and established that there were major copper anomalies in the western and eastern ends of the anomaly. The middle seemed to be a dead zone though it did contain 2 prominent EM conductors, the only such anomalies within this trend. The geochemical dead zone may be due to the presence of a giant esker of glacially transported debris that obscures the bedrock. An IP survey in the East Copperfield portion yielded chargeability highs similar to those on the Mythril property to the east, which raised the question of whether Pikwa hosted more of the same marginal copper mineralization. Azimut decided to extend the IP survey west to include the EM conductors, because these could be part of a "center of gravity" for the mineralizing system where bigger zones may have evolved in this Archean setting. We are still awaiting the outcome of this IP survey and what Azimut plans next for Pikwa. Since December 2019, however, the DW focus has been on the Elmer project in the James Bay region where Azimut has demonstrated that the small 200 m by 80 m Patwon outcrop hosts 3 sets of mineralized gold veins: a set of short NW oriented Riedel type dilational veins, a set of sub-horizontal veins, and a set of NE-SW oriented veins, all occurring within what appears to be a 7 km NE trending shear structure. The high grades within the Patwon zone attracted market attention in January 2020 and Elmer was shaping up as a Discovery Watch success story. The association of pyrite with the gold prompted Azimut to conduct an IP survey which generated multiple chargeability highs of the sort associated with sulphide mineralization. Drilling resumed in late May 2020 with the first update occurring in late June after 29 new holes were drilled. Although the market initially responded positively, driving the stock as high as $3.50, the cautious wording by Azimut and the shifts in the drill location sequences of the two rigs suggested that expansion drilling was not playing out as expected. On July 27 Azimut disclosed results for holes close to Patwon which extended the strike 350 m and confirmed mineralization persists to a depth of 200 m. But it is disrupted to the SW and in the NE direction where holes not discussed are pending and where the IP chargeability anomaly is low rather than high. In fact, early holes drilled in ELM-1 where the IP anomaly is strong were not prioritized for assaying. During July Azimut drilled only 7 more holes, most of them in the other ELM IP anomalies. 18 holes were still being logged and assays are unlikely before September. The DW premise was that the Patwon zone would repeat itself along the 7 km shear, most of which is covered by swamp or overburden, with IP anomalies highlighting targets. It now looks like IP is not highlighting gold zones, so until we learn more about the geology and gold controls, the Elmer play is focused on definition drilling of the Patwon zone for a possible open pit scenario and chasing this style of mineralization deeper for an underground scenario. Elmer qualifies as a discovery, but for now it is not a game changing development for the gold potential of the James Bay region. (Jul 29, 2020)
Balmoral Resources Ltd was introduced to DW in early August 2019 based on a four hole drill program the company did on its Fenelon South property in Quebec. Balmoral owns properties along about 100 km of the Sunday Lake Deformation Zone east of the Detour Lake gold mine on the Quebec side which fall under the general Grasset name. To the west it has the Martiniere deposit for which a resource of 644,000 oz has been outlined and which is currently on hold pending a better market to fund deeper drilling with the goal of doubling the resource. To the east is the Grasset nickel deposit Balmoral discovered and which the recent uptrend in nickel prices is starting to attract attention. The Grasset package surrounds the Fenelon property which Balmoral owned before selling it to Wallbridge because Wallbridge wanted to develop a small resource of high grade quartz veins. Expansion drilling by Wallbridge in early 2019 unexpectedly encountered gold mineralized sulphide vein swarms to the west cutting through adjacent monzonite and sediment units which Wallbridge calls Area 51. This mineralization is very different from the Fenelon Main Zone. Balmoral kept the ground south of Fenelon which straddles the Sunday Lake fault. The ground immediately to the north of the east-west fault is the deformation zone that is prospective for gold zones but in this area it is covered with overburden. Balmoral called the southern projection of Wallbridge's Area 51 rock units Area 52 and drilled several holes close to the border to see if similar mineralization is present. The results reported in September 2019 suggested the mineralization was not as extensive as to the north, but one hole drilled to test an IP resistivity anomaly in the SLDZ swamp through which the Area 52 structure is supposed to cross delivered a blind discovery surprise in the form of 3.23 m of 14.03 g/t gold within a shear vein zone. Balmoral has started a program of 6 closely spaced holes to sort out the geometry of this zone. (Sep 17, 2019)
FPX Nickel Corp has had a Bottom-Fish Spec Value rating since 2017 while the junior worked on over-coming the limitations embedded in the PEA Cliffs delivered in March 2013 for a 114,000 tpd open-pit nickel mine at Decar which required a $9/lb plus nickel price to be viable. Most of this work has been completed and 2020 promises to be a relaunch of the Decar nickel story with an updated PEA expected in September 2020. FPX was introduced to Discovery watch in November 2016 as a different type of discovery in the sense that the Decar deposit, recognized in 2009, is unusual in having a very low 0.12% nickel grade as defined by a Davis Tube assay which only measures nickel recoverable through crushing and magnetic separation. This is different from a fire assay which will yield a similar grade for almost every ultramafic body that is economically worthless because it reflects nickel trapped in an olivine lattice. The Decar nickel is different because it occurs as awaruite, a nickel-iron alloy that is in effect natural stainless steel. The result is a very homogenous 1 billion tonne deposit that can be large scale open pit mined for 40 years without any sulphide related acid drainage and which, thanks to the magnesium content that ends in the tailings, could operate as a carbon sink which could bring Decar close to the holy grail of a carbon neutral mine. The key changes achieved by FPX management headed by Peter Bradshaw and Martin Turenne since buying back 100% ownership from Cliffs in 2015 are 1) replacing gravity separation with a flotation stage that generates a concentrate with 65% nickel that can be fed directly into stainless steel mills, delineation of the SE Baptiste zone that allows front-loading the ore schedule with higher grade ore, and preliminary studies that indicate that the concentrate can be converted directly into nickel sulphate, the form required by the EV battery market. FPX is unusual in that it has been funded by insiders and close associates through private placements that did not include warrants, a sign of strong internal belief that Decar is a winner. A key question the PEA will answer is the cost structure of Decar using the new flowsheet, which will make it easier to assess the potential economic value of developing Decar, expected to have a CapEx of $2 billion or more. The wild card is the future price of nickel which during the past decade has suffered from a glut of low grade laterite ore mined in Indonesia and the Phillipines and shipped as whole rock to Chinise blast furnaces where it is converted into nickel-pig-iron, a feedstock for lower quality stainless steel that meets China's standards. Indonesia no longer allows direct shipping of ore, and the Philippines is rapidly depleting the laterite resources suitable for this NPI market. The FPX PEA will show what nickel price is needed to achieve an NPV at least 50% of CapEx. Given that it will take another $40-$50 million to push Decar through feasibility to a permitted production decision, the speculative question is who might pay what percentage of the NPV at what stage for the privilege of investing another $2 billion to develop Decar as a 40 year mine in a secure jurisdiction that threatens little variation during the life of the mine. A decade ago the FPX team scoured the world in search of similar deposits, but concluded that Decar is pretty much unique. (Jul 22, 2020)
Galway Metals Inc was introduced to Discovery Watch in February 2020 based on its effort to demonstrate that the Clarence Stream gold project in New Brunswick is a multi-million ounce gold district with both open-pittable and high grade underground mining potential. It was a grassroots discovery in 1999 by Mac Watson's Freewest which along with successors never went much beyond the North and South zones for which a resource of 432,000 tonnes of 6.56 g/t gold was generated (about 100,000 ounces). Galway acquired Clarence Stream in 2016 and for the past 3 years has struggled to gain market respect for Mike Sutton's idea that it hosts a district of multiple intrusion related gold systems on both sides of the regional George Sawyer Fault which separates two ages of meta-sediments that have been intruded by younger granites which created the structural setting for gold deposition within veins along their flanks. Key to the optimism are widespread gold in till and soil anomalies north and south of the fault (the North and South zones are on opposite sides of the fault). In late 2017 Galway discovered the trend 7 km southwest of the original North-South Zones defined by the sequence of the George Murphy, Richard and Jublilee zones within a 4 km trend. Due to the complex nature of the vein sets the market has had a tough time connecting drill hole dots to visualize emerging ounce footprints, which was not helped by tight budgets during the past few years. But in 2020 a rising gold price prompted Galway to adopt a more aggressive strategy which now involves 5 drill rigs, 3 of them infill stitching together the Jubilee-Richard-GM segment with infill drilling which will become the basis for a resource estimate in Q1 of 2021, and 2 rigs "wildcatting" at the northern and southern limits of the infill focus. The open-endedness of this district play whose destiny Galway was controlling through geology smarts and drilling appealed to the market against the backdrop of a rising gold price, enabling Galway to raise $17 million in June 2020 at $0.44-$0.64 for common and flow-thru which boosted its treasury to $22 million, more than enough to carry its strategy well into 2021. On June 24 Galway reported 0.5 m of 186.5 g/t gold (6 opt) for hole #38 at the southern end where there seems to be a cross structure associated with a high gold in soil anomaly. On July 29 Galway reported that hole #65 drilled as an expansion hole to the NE of the George Murphy Zone unexpectedly intersected repeated visible gold over 14 m d=near the bottom of the hole. When you look at the geological context, #65 appears to have intersected a new zone parallel to the Jubilee-George Murphy trend which itself flanks the southeastern margin of a granite intrusive which is 400-500 m wide where it outcrops and about 2,000 m long. No holes have been drilled on the northern flank. So for the moment the market is wondering if hole 65's VG interval is evidence of a mirror trend on the other side of the granite intrusive. Although Galway describes its 2 rigs as "wildcatting", this is not the same as testing isolated targets elsewhere on the property, if which there are plenty with geochemical support. These wildcat rigs are groping beyond the known mineralization, which makes it unlikely that Galway will pull a job dropping discovery hole signaling a major new zone. That suits the current market fine, because despite the awakening bull, it remains fearful that all will soon enough end, so a district play undergoing a major rethink that incrementally keeps getting better suits the market just fine. (Jul 29, 2020)
Highway 50 Gold Corp has been featured on DW since early 2017 based on the potential of the 50% optioned Monroe project in southeastern British Columbia to deliver a Sedex type zinc-lead-silver discovery comparable to the 150 million tonne Sullivan deposit about 35 km to the north. The geological drivers behind the Monroe story are brothers John and Gordon Leask for whom this is their second crack at trying to find Sullivan 2 in this area. They are both the underlying owner of the Monroe property and the biggest shareholders of Highway 50. The property has over 50 holes into it, but the last dozen since Highway 50 started in 2017 have been deeper and have vectored in on a target area beneath 700 m which the Leasks estimate has a footprint about half the size of Sullivan. A deposit half the size of Sullivan with similar grades would be a world class discovery worth $1 billion plus. The target's location under Monroe Lake and the bounding faults of the target's sub-basin present technical challenges for angled holes to reach the target. While programs in 2017 and early 2018 beefed up the target, the program in late 2018 failed to reach this "make or break" target. A new round of drilling started in September 2019 missed the target with a successful hole while the second hole was lost well short of the target. Highway 50 will be short $900,000 of the $2.9 million expenditure deadline in May 2020 so there is a risk of default unless the Leasks grant an extension to Highway 50. The Golden Brew project in Nevada was introduced to DW in 2019 when after many permitting delays Regulus was able to test a fairly deep gravel covered horst block to the west of minor gold mineralization in the range front. This play is near the former Carlin-type Quito Mine and is at the southwestern limit of the 42-25 million year Carlin deposition window. Drill results in August 2019 were disappointing and at the end of October 2019 Regulus dropped the option. The Leasks remain convinced that this is the best area for a major Carlin type discovery outside the trends already controlled by the Nevada Gold JV (Barrick-Newmont). Given that Highway 50 will have negative working capital approaching $1 million by 2019 year end, much of it loaned by the Leask brothers who will retain 100% of Monroe unless the deal is modified, Highway 50 for now no longer qualifies as a Discovery Watch junior. (Dec 4, 2019)
Tri Origin Exploration Ltd was inbtroduced to DW in October 2016 based on the South Abitibi project farmed out to Sumitomo. Tri Origin staked this area southeast of Cobalt when it came open after decades of being restricted from staking under the First Nations Bear Island caution. The area is covered by rocks of the Cobalt Embayment which overlies Archean rocks that are an extension of the Abitibi Greenstone belt which is prospective for VMS deposits. These cover rocks host the high grade silver-cobalt veins which launched the Cobalt mining district and which received newed attention from juniors during the cobalt boom of 2016-2018. Tri Origin's strategy was to fly Mag-EM surveys and drill blind targets in the underlying Archean rocks. Sumitomo optioned 50% in 2015 for $4.5 million exploration and spent $2.2 million before dropping at the end of 2018. The drilling confirmed the depth of the Archean basement but failed to deliver any discoveries. In 2019 Tri Origin gave De Beers permission to drill its own geophysical targets as potential kimberlites, with a commercial farmout to be negotiated if De Beers finds something. So far De Beers has drilled but not found any kimberlites. This area is south of the New Liskeard area where many kimberlites have been found, a few of which are barely diamondiferous. In 2019 Tri Origin reduced its property holdings to focus on the Sky Lake project near the Pickle Lake district in western Ontario, the North Abitibi project on the Ontario side of the Casa Berardi trend, and the South Abitibi. An attempt to finance below $0.05 in late 2019 failed, so in Q1 of 2020 CEO Bob Valliant got approval for a rollback up to 10:1 as a prelude to a $2 million financing which will allow Tri Origin to drill Sky Lake and North Abitibi, both of which host high grade gold systems that have strike and depth expansion potential. Valliant finally settled on a 5:1 rollback which was done on August 20, 2020. On Aug 24 Tri Origin announced to raise $2,125,000 through a private placement at $0.35 for common and $0.43 for flow-through that is also open to non-millionaires under the existing security holder exemption that allows individuals to buy up to $15,000 per company per 12 month period if they already own a share when the private placement is announcement. This requirement to already own shares is a mis-guided attempt by the regulators to protect retail investors from buying stock with a 4 month hold restriction because supposedly already owning shares makes you smart enough to buy more that are restricted for 4 months. The Tri Origin private placement does not include warrants, so there is no incentive for retail investors to by the common stock at $0.35 which allows them to buy only 42,000 shares which can be readily done in the open market. So under the logic of the Canadian regulators a non-millionaire who already owns 100,000 shares bought in the market can only buy 42,000 more shares by giving $15,000 directly to the company so that the money does something useful in the value creation department, but then reach into the market to buy as much as he or she wants. Or blow themselves up by buying as many lottery tickets from the government as they can. Are the Canadian regulators hypocritical, cynical, really fucking stupid, or all of the above? (Aug 28, 2020)
NioBay Metals Inc was introduced to DW in February 2019 after the junior was granted a drill permit for the James Bay niobium deposit in northern Ontario near the First Nations town of Moosonee. This didn't solve the problem that the tribal council chief was opposed to mining in principle and refused to consult with NioBay as required, and, when the Ontario ministry granted the permit anyway, filed for a judicial review of the decision claiming that NioBay never consulted with the Moose Cree FN. That pissed off the other MCFN tribal council members who resigned and forced an election in July 2019 rather than as scheduled in 2020. The anti-mining chief was not re-elected and most of her anti-mining allies on the council were replaced by members prepared to listen NioBay. That process finally led to a "protection agreement" which plugged the MCFN into NioBay's exploration plans and gave them comfort that this was not going to wreck their backyard. It allowed NioBay to conduct a drill program in Q1 of 2020 which it got done before Covid-19 shut down everything. The drilling deepened and extended the footprint of the carbonatite which led to an updated resource estimate in early July 2020 that boosted the indicated+inferred resource 19% to 63.5 million tonnes at a grade of 0.52-0.53% N2O5. That, however, is not so important because the critical milestone is a PEA which describes a plausible mining scenario and what its economic value might be. The niobium market is dominated by supply from Araxa in Brazil which is five times richer and five times bigger than James Bay. Niobium is a $3 billion market controlled 85% by the CBMM family which has set the niobium price at a level which allows 2 other mines to be viable, one in Brazil owned by ChinaMoly and Niobec in Quebec owned by Magris. Niobium demand has being growing at a CAGR of 6.5%, though this will be lower during the pandemic. But James Bay wouldn't be in production until 2025 or beyond. The deposit was discovered during the 1960's and taken to feasibility by Bechtel, but never developed because of its remote location. NioBay's goal is to make it the world's fourth major primary source of niobium and to do that James Bay needs to be viable at the price set by CBMM. NioBay is working on a PEA it hopes to have out before October 2020. It will present an underground only as well as open-pit/underground hybrid scenarios with a 6,000 tpd processing facility. The market has a hard time quantifying the size of a niobium prize, so I have created a SC 6,000 tpd UG scenario OV within the ShareCollective using a resource of 40 million tonnes at 0.53% N2O5 and the spot ferroniobium price. Its after tax NPV outcome is USD $576 million which translates into a potential future stock price of $13.19 if there is no further dilution. That is quite an impressive target even when you assume 100% dilution to drive James Bay through feasibility. The 43-101 PEA will thus be a critical milestone for the market's perception of the upside for NioBay, and it will also become the basis on which the MCFN will have to decide on what terms, if any, they support a major niobium mine in their backyard. (Jul 15, 2020)
Opus One Resources Inc was introduced to DW in March 2017 as a proxy for a potential area play surrounding Osisko Mining's rethink of the Windfall gold project in the Urban-Barry area of Quebec. Although a greenstone belt this area unlike the Abitibi was not know for robust orogenic gold systems. Windfall was as an erratic gold system which yielded high grades but the zones did not hang together well. The Osisko team felt that Windfall was in fact a mis-understood Timmins style system, and undertook a massive drilling campaign which figured out the plunge of the vein systems, chased them deep, and eventually delivered a 6 million oz plus resource. Osisko started this during a bear market and there was a flurry of activity in adjoining juniors, but that didn't answer the question of whether Osisko had turned Windfall into something new and important on a regional scale rather than a local scale. Osisko had staked land to the east, surrounding the Fecteau project which Opus had optioned because of its apparent VMS potential. Opus itself was created to host a group of properties optioned from Adventure Gold before Probe Metals absorbed Adventure to get at the Val D'Or East project. The lack of visible skin in the game by the board of Opus was because they were custodians for hidden Quebec players. I turned Opus into a canary that served as a local proxy for the Windfall area play and a broader proxy for the Quebec resoruce sector. Opus One went from a tweety bird to near dead canary when Windfall failed to excite beyond Osisko and results of work done at Fecteau failed to excite the hidden shareholders. In early 2019 Opus optioned the Noyell project on the Casa Berardi Break east of the old Vezza Mine where Opus owned the Vezza North and Extension properties. Opus One's geologist Pierre O'Dowd was behind this project; a decade ago he had worked on it for a junior that used it as stepping stone for something "better" in Africa, and pulled the plug on the exploration strategy. Opus resumed that strategy in March 2020 with a 10 hole drill program but only got 2 holes done before Quebec pulled the plug on exploration due to Covid-19. This was a big disappointment because the Noyell target can only be drilled in winter when the swamp is frozen. When the holes were reported in early July and showed that the iron formation system was robust at depth and continued to the east if the IP survey is to be trusted, this near dead canary dragged itself off the cage bottom. Fecteau will only get some till sampling this summer, and even if it gets a couple holes to spend the flow-thru money, it would be very lucky to tag into a VMS zone right away. So this stock's market action will be about the resumption of drilling in January 2021 at Noyell, and thus it is now serving as a proxy for the awakening of a resource junior bull market. (Jul 15, 2020)
92 Resources Corp was featured on DW during the maiden drill program conducted by Midland in March-May of 2019 on the Mythril copper play in the James Bay region of Quebec which had all the earmarks of a potential great Canadian area play. What was missing was confirmation that a world class discovery underlay the copper showings which would have had an immediate impact on Azimut's on trend Pikwa property and a secondary impact on 92 Resources Corp as the most leveraged proximity play. When Midland failed to confirm a major discovery market interest in a James Bay area play evaporated though the potential for something big remains plausible. Midland began an expanded summer program in June 2019 which could yet set James Bay on fire, so 92 Resources Corp remains alive as a DW junior. (Jul 8, 2019)
Midas Gold Corp has been a regular Discovery Watch feature since January 2017, not because there was any new mineralization to be discovered at the Stibnite gold-antimony project in Idaho, but rather because we were curious to discover if CEO Stephen Quin with John Paulson's financial backing in early 2016 could overcome the market's glum view that Idaho would never permit an open pit mine in an area that was turned into an environmental disaster zone by mining for antimony to support the World War II effort, and later by gold miners who were no longer around when Nixon invented the EPA in the 1970's. And boy oh boy, has it ever been a journey of discovery with regard to regulatory incompetence led by the Forest Service as the timeline for a draft Environmental Impact Statement kept slipping into the future like that Steve Miller song. Midas as of the end of 2019 has spent USD $53 million on permitting out of $210 million overall, and CEO Stephen Quin has suggested to me the total will be $70 million when a mining permit is finally granted. The last economic study was a PFS in December 2014 which was lousier than the 2012 PEA because certain parts of the deposits lacked the drill density needed to support a PFS calibre ore schedule, so half the antimony output disappeared, as did a good part of the high grade front loading of the ore mining schedule. The outcome of the PFS was not impressive because it used a $1,350 gold price as a base case to support an after tax NPV of US $832 million and 23.4% IRR using a 5% discount rate. The IRR was fine, but the NPV not so good because CapEX was $970 million thanks to a pressure oxidation unit needed to deal with the refractory sulphide ore. But even worse, gold was below $1,300 most of the time until mid 2019 when it finally began to rise as the world became uncertain about America's leadership role in a world where China under emperor for life Xi Jinping had since 2012 embarked on a course that clearly dashed any hope that China's prosperity would eventually make it "just like us", even as the US under its own leadership was setting America on a path to become just like "them". One reason the timeline for a draft EIS kept being extended was that the Forest Service simply lacked the processing infrastructure to permit a mine that would produce 350,000 ounces gold annually and involved reclamation of a Superfund site, turning this into a learning how to properly approve a mine on the fly experience. The draft EIS, which includes 5 scenarios (the first was submitted by Midas in 2016, the second in 2019 by Midas after adapting to feedback to the first scenario, and 3 alternatives the USFS had to invent by law and are really straw men which illustrate the desirability of scenario 2) was finally filed by the USFS on August 14, 2024, kicking off a 60 day public comment period that ends October 13, 2020. Once the USFS has compiled the comments and provided responses to them, if there are no serious issues Midas hopes to publish a feasibility study before the end of 2020. The USFS will work on the Final EIS based on the chosen scenario which is expected to be filed in Q2 of 2021 along with a Draft Record of Decision, followed by a 30 day objection period open only to submitters in the draft EIS comment period who feel their concerns were not addressed by the USFS. This should lead to a Final Record of Decision in Q3 of 2021 which will allow the final permits to be secured by the end of 2021 so that construction could begin by 2022. At $1,900 plus gold Stibnite will be very much in the money, even if CapEx expands 30%, and if you dare to dream $3,000 gold, you are looking at a $10-$15 future price target. (Aug 28, 2020)
Sonoro Resources Corp was assigned a Bottom-Fish Spec Value rating on December 14, 2018 based on the company's plan to advance the 100% optioned Cerro Caliche gold-silver project in Mexico as an open-pit, heap leach operation that would start at a small scale with the dual purpose of demonstrating the recovery model and generating sufficient cash flow to fund future expansion of a much larger scale operation. Tracker April 11, 2019 describes the recent history of Sonoro, in particular the role of John Darch who emerged in late 2018 after a decade long sabbatical from the resource sector to take on the funding and marketing role at Sonoro after Gary Freeman unexpectedly passed away in early 2018. Sonoro was introduced to Discovery Watch in May 2019 based on management's rather unique plan to attract a Chinese "engineering, procurement and construction" (EPC) entity to fund and build a small open pit heap leach mine focused on a maximum 200,000 ounce resource. If this "pilot" operation was successful, Sonoro and the EPC would negotiate a deal for an expanded operation that tackles ten or so zones which have a tonnage footprint approaching 100 million tonnes, which, if definition drilling confirms the expected 0.4-0.6 g/t gold range with a 3-4 g/t silver kicker, would represent a 1.5-2.0 million ounce gold resource. In May 2019 gold was still below $1,300, so the Cerro Caliche plan clearly was an optionality bet on higher gold prices which hoped to minimize dilultion while demonstrating the mining plan plan with the help of the EPC. Gold began an uptrend in H2 of 2019 that remains intact today, so the original plan to mine 0.5 g/t ore is no longer an optionality story at $1,800 plus gold. But the arrival of Covid-19 in Q1 of 2020 sabotaged the ability of the Chinese EPC staff to travel to complete their due diligence of this project in Mexico's Sonora state. This created an existential crisis for Sonoro which needed to make staged property payments to keep title intact, which was accomplished by selling a royalty in another property and insiders loaning money to the company while allowing payables to accrue, resulting in an ugly balance sheet of a $1.3 million working capital deficit. To make matters worse, while the Chinese remained stranded offshore, Bay Street continued to sneer at a 0.5 g/t open pit heap leaching plan in Mexico. Management, noting that Bay Street was attracted to discovery exploration plays involving the rethink of existing gold systems, undertook a geological review of Cerro Caliche which included alteration studies of the ten or so zones that had been indentified within 200 metres of the surface. These zones consist of veinlets which individually can have high grades but when averaged deliver 0.4-0.6 g/t. The review led by Mel Herdrick concluded that most of the drilling of this low sulphidation epithermal system took place above the boiling zone where the veins tend to coalesce and bonanza gold-silver grades develop. The team also took heart from the Mercedes system 10 km to the southeast which was generated by the same intrusive center, which started as a low grade open pit operation, and which Prmier Gold was now mining underground for much higher grade ore. In late June 2020 Sonoro started marketing the idea of a USD $2 million financing for a 20 hole core program designed to test all the zones at a 150-350 m depth for bonanza grades, clean up the trade payables, and create a reserve for the next round of property payments in Q1 of 2021. Sonoro thus transformed itself from a low grade gold optionality play nobody but the Chinese wanted which would benefit from higher gold prices, into a dual play with bluesky high grade discovery potential that tapped into the dynamic driving the awakening resource junior bull market. Securing that financing will be critical to Sonoro's success potential. (Jul 22, 2020)
The main focus of Discovery Watch is to highlight the potential for a new exploration discovery or spotlight an unfolding discovery, and in that sense Verde Agritech Inc should not be featured on DW. But NPK's story is different type of discovery, namely the discovery that the multi-billion tonne "verdete slate" resource in Brazil, a potassium silicate compared to the salt based evaporite beds in Saskatchewan and eastern Europe from which the fertilizer potassium chloride is recovered, could compete with conventional KCl in Brazil. The assumed problem with the verdete slate is that without heat treatment in a rotary kiln which alters the chemical bonds of the silicate, the potassium is not available for plant update. NPK spent much of the decade studying the ThermoPotash process for converting the verdete slate into a whole rock fertilizer running 9%-11% K2O compared to the 60% K2O of KCl, and even developed the Cambridge process for converting the green rock into conventional KCl which proved subeconomic below $300/tonne where KCl ended up. But in late 2015 the scientists running the agronomic studies to prove the efficacy of ThermoPotash compared to KCl (which proved successful), noticed that the control plots fertilized with ground up, untreated verdete slate did just as well. Closer investigation revealed that while the silicate was indeed inert when exposed to water, it was being broken down in the presence of the secretions formed through a complex interaction between soil micro-organisms and plant roots. CEO Cris Veloso "discovered" that the verdete slate only needed to be quarried, crushed and milled to produce a natural whole rock product that he decided to market as Super GreenSand, both in small lots via Amazon in western markets to organic gardeners, and in large truckloads to Brazilian farmers. A PFS with a small CapEx for a staged internally funded expansion scenario from 300,000 tpa to 25 million tpa was completed in 2017. It has a wild and crazy $2 billion plus NPV which the market has ignored because the additional discovery it is watching for is Brazilian farmer adoption of SGS as an alternative to KCl. Quarrying permits arrived in mid 2018, so NPK missed part of the July-November planting and fertilizing window in the Brazilian crop cycle but did get a good demand response. Commissioning problems in 2018, however, hurt NPK's ability to fulfill all its orders. In 2019 NPK stumbled when a marketing campaign failed to generate enough orders to sell out the 170,000 tpa for which the phase I facility is currently permitted. 2020 is a key year because NPK has addressed initial operational and marketing issues. Will its pricing model, which is linked to fixed costs and the price of farm delivered KCl, be acceptable to farmers so that the internal cash flow funded expansion scenario outlined by the PFS becomes plausible? Will the farmers observe that the SGS fertilizer is just as effective as KCl in the plots they risked for this experiment, and come back in 2020 with much bigger orders? If NPK succeeds with its Super GreenSand marketing strategy it will be transformational for Brazil's current 90% import dependency on potassium chloride. The covid-19 crisis, with its potential to temporarily disrupt potash mining and shipping, creates a new urgency for Brazil's agricultural sector to adopt Super GreenSand as an alterative to imported potash.If NPK fills its permitted capacity order book and delivers the goods in 2020, while at the same time securing approval for a separate expanded quarrying permit, the stock will capture the market's attention. (Mar 27, 2020)
Wolfden Resources Corp was introduced to DW in August 2018 based on the intriguing story of Maine reforming its mining code and re-opening itsef to exploration after more than a decade of no trespassing signs. Wolfden was a first mover to do a deal on the Pickett Mtn VMS system which Getty found and explored during the 1980's. Since then we have been watching to see if Wolfden can expand the existing resource. This was accomplished with the January 2019 resource estimate for the West-East lenses after drilling pushed the West Lens deeper. 2019 was supposed to be the year Wolfden discovered new lenses in the Footwall Zone and in fold limbs parallel to the West-East lens limb. But technical drilling problems turned the campaign into a bust except for a teaser stringer zone in which the last hole was lost. But during 2019 Wolfden flew geophysical surveys, not just on the property, but also on a 30 km by 10 km grid covering geology similar to that which hosts the Bathurst Camp in New Brunswick and Buchans in Newfoundland. To avoid equity dilution Wolfden raised USD $3.5 million January 2020 by selling timber rights. It also filed for land use rezoning from logging to industrial for a 500 acre parcel that would be the site for mining infrastructure. This rezoning is necesaary for a mining permit application and they hope to get it by Q1 of 2021. In early Q3 2020 Wolfden will publish a PEA for a 1,000 tpd UG mine which was the basis for the rezoning application. I created a SC 1,000 tpd scenario OV in the ShareCollective which yields a USD $135 million after-tax NPV that implies a future CAD $1.24 stock price, but that is a worst case scenario. Much more interesting is the exploration potential to boost the existing resource to 10 million tonnes at the same grade so as to support a 2,000 tpd scenario with a 10 year mine life. The SC 2,000 tpd scenario is much more interesting at USD $464 million NPV with a corresponding CAD $4.26 stock price. Wolfden began a 5,000 m drill program in July 2020 designed to test multiple new targets at Pickett Mtn whose EM conductors represent potential tonnage footprints of 15-20 million tonnes. The DW hope is that Wolfen turns one or more of these targets into satellite massive sulphide zones that boost the resource towards 10 million tonnes. Failing that, Wolfden is negotiating with landowners for deals on some of the sourrounding area it flew in 2019. If successful, the play turns into a regional quest for Buchans scale VMS clusters. On July 13, 2020 John Kaiser conducted a Zoom Interview with CEO Ron Little and Expl VP Don Dudeck. (Jul 15, 2020)
Zephyr Minerals Ltd has been a KRO Bottom-Fish Spec Value rated company since late 2017 based on the Dawson-Green Mountain gold project in Colorado where the junior has a small 111,300 oz resource for which a PEA supporting a small 300 tpd underground mine was published in early 2017. This resource in the Dawson segment has been outlined only to a depth of 275 m because it dips into a mountain and it is not practical to drill deeper. The idea is that if a small scale mine were developed a much bigger resource could be delineated by drilling from underground. The upside for the Dawson segment thus hinges on a gold bull market to bring in the required CapEx. In 2018 Zephyr acquired the Green Mtn segment to the west where it hopes to establish a similar system. Zephyr was introduced to DW in May 2019 on the basis of a Broken Hill type zinc-lead-silver target that emerged in 2018 within the El Plomo segment, a down-dropped block between the Green Mtn and Dawson segments. It features a high grade Zn-Pb-Ag horizon that was tested to a shallow depth decades ago but given up on because although it strikes for 3 km it is narrow. In the Broken Hill model metamorphism will have folded and remobilized such a system to create structural thickening and higher grades. Regional geochemistry suggests such a process could have taken place, so during the summer of 2019 Zephyr conducted an airborne Mag-EM survey over the property to see if there is a magnetic anomaly associated with the El Plomo trend that supports the hypothesis that a much thicker Broken Hill type deposit exists at depth. In September 2019 Zephyr revealed that there is such a magnetic anomaly worth drilling from 4-5 locations along the trend.An analog which fits the target's tonnage footprint is the Cannington deposit in Australia, a smaller but richer version of the original Broken Hill deposit. A KRO Cannington Clone Outcome Visualization indicated such a deposit would be worth more than CAD $7 billion at current metal prices, which, if Zephyr could avoid dilution beyond its current 74 million fully diluted, implied an ultimate price target of $100. Further support for the BHT model emerged when an electronprobe study revealed that silver occurs within a rare mineral uniquely associated with BHT deposit. Testing this target, however, was not simple because El Plomo is bighorn sheep habitat where drilling is restricted to July 1 to Oct 31. Zephyr's plans to drill during the 2020 summer were nearly disrupted when an anti mining NGO appealed the drill permit. The appeal was heard on July 22 and unanimously dismissed. Drilling started in August and progressed slowly due to difficult rock conditions and rig breakdowns, taking twice as long as expected. On August 28, 2020 Zephyr was halted to announce that the first hole at El Plomo had failed to intersect significant mineralization. Only 2.9 m of "sulphide mineralization" was intersected at the depth where the magnetic anomaly blossomed, with no obvious explanation for the anomaly. Although the news did not mention zinc or lead sulphides, it is implied by the observation that these BHT systems can pinch and swell. However, the geophysics suggested that the zinc-lead horizon encountered in 1971 by the shallow holes GC 8 & 9 underwent thickening as a result of folding, with the bunched up pyrrhotite creating the magnetic bulge. The 2020 drill hole showed that this was not the case, and although the mineralized zinc-lead-silver horizonappears to be present at depth, its tonnage footprint is too small to support an underground mine unless something special is going on closer to surface. No further drilling is planned for El Plomo in 2020. The BHT expert Paul Spry will review the assay data when it is available.The market reacted very negatively to the disappointment, dropping to $0.25. Zephyr did encounter disseminated sulphides within mafic bands occurring beneath the BHT horizon, and these will be assayed for gold. For now Zephyr is shifting its attention back to the gold potential, in particular the Green Mountain segment to the west optioned a couple eyars ago and which has potential for the mesothermal gold lode zones in the Dawson segment to the east where a high grade resource of 130,000 oz cannot be expanded because the zones dip into a mountain. If such gold zones are present at Green Mtn this problem may not be a limiting factor. There are no sheep habitat restrictions on the Dawson segment and only the northern end of the Green Mtn segment is affected, so drilling can be done year round on most of the land with gold potential. If the gold trend stays strong strong Zephyr may consider funding a decline at Dawson which would allow expanding the gold zones through underground drilling. (Aug 28, 2020)
