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 Wed Feb 24, 2021
Tracker: Spec Value Rating for Endurance Gold Corp (EDG-V)
    Publisher: Kaiser Research Online
    Author: Copyright 2021 John A. Kaiser

Endurance Gold Corporation (EDG-V: $0.295)

Tracker - February 24, 2021: Spec Value Rating for Endurance Gold Corp (EDG-V)

Endurance Gold Corp was made a Bottom-Fish Spec Value rated Favorite at $0.05 on December 31, 2019 for the 2020 Edition and continued as a Bottom-Fish Spec Value rated Favorite on December 31, 2020 for the 2021 Edition. The primary reason was the orogenic Reliance gold project in the Bralorne district of southern British Columbia optioned 100% in late 2019, and the secondary reason was the 100% owned intrusion related gold system Elephant Mountain project in Alaska held since 2012. The stock has been a market orphan over the past decade despite just over 50% of its stock being held by 2 wealthy Americans, Ross Arnold and Richard Gilliam, who backed Endurance since it listed on the TSXV on August 4, 2005 following a $2 million Haywood IPO organized by Duncan McIvor. A month later EDG optioned the Pardo project in Ontario where work by other juniors had established low grade nuggetty gold mineralization within a Proterozoic conglomerate setting that raised hopes of finding higher grade reefs similar to those of South Africa's Witwatersrand system. In 2009 Endurance optioned Pardo to B>Inventus Mining Corp, eventually ending up with a 35.5% working interest. McIvor succumbed to cancer in April 2010 at the age of 52, and Robert Boyd, who had been a director since 2007, took over as CEO.

Among his first acts was to option the Bandito project in southeastern Yukon from True North in late 2010 as REO Mania 1.0 was getting underway. Bandito hosts a 6 km by 3 km nepheline syenite intrusion called the Red Syenite which was discovered during the 1970s through a radiometric anomaly. It has been sporadically explored for uranium, rare earths, niobium, and even a nickel-copper zone outside the intrusion which appears to be unrelated to the Red Syenite. Boyd initially saw Bandito as an IOCG system but after spending $780,000 in 2011-2012 he saw it as a peralkaline intrusive body with rare earth and niobium enrichment similar to the Nechalacho and Strange Lake complexes. EDG's work included soil sampling the southern part of the Red Syenite, and trenching of a couple light rare earth enriched fenite zones in the country rock which formed during the emplacement of the Red Syenite. By 2013 REO Mania 1.0 had ended but Boyd liked Bandito enough to negotiate a deal that secured 100% for EDG. The project has been dormant since 2013 but in early 2021 it began to attract attention as it became clear that the electric vehicle buildout had become an unstoppable trend, accelerated by the 2020 US election of Joe Biden.

Although lithium, cobalt and copper commanded the market's interest in "clean energy" metals in recent years, the market began to remember that rare earth based permanent magnets are an essential part of the EV future, which gave legs to REO Mania 2.0 in late 2020. Bandito's Red Syenite is relevant to rare earths because sampling by EDG showed 3% plus TREO grades that were over 75% heavy rare earths which is unusually high grade for an alkaline intrusion. The Red Syenite has evidence of zonation which opens the possibility that high grade HREO enriched zones are present. Certain heavy rare earths, dysprosium and terbium, are critical to the permanent magnets in EVs, and this is a looming global supply problem because they currently come from China's ion adsorption clay deposits which may be insufficient for the electrification of the world's future car fleet. The Red Syenite has never been drilled and has the scale and indicated mineralization to potentially host the world's biggest and richest HREO supply. Drilling is unlikely before 2022 due to permitting needs and seasonal constraints, but EDG may mount a 2021 summer program of additional sampling and trenching to better define HREO enriched targets within the Red Syenite. So in early 2021 Bandito is threatening to steal Plan B status from Elephant Mountain which is believed to host the source of placer gold mined downstream since 1898.

Except for a brief blip above $0.30 in early 2011 in response to Bandito, EDG spent the past decade slumbering below $0.10. The Pardo JV degenerated into disputes over spending allocation related to adjoining ground owned 100% by Inventus which was not resolved until late 2016 when Endurance sold its Pardo stake for 25.5 million Inventus shares. Since then Endurance has used the Inventus stock position as a piggy bank, selling a block in early 2020 that leaves it with 13 million Inventus shares that could become a source of future financing. The Reliance project was optioned in September 2019 for $300,000, 4 million shares and $3 million exploration over 6 years. It is located 13 km north of the Bralone Mine, a system of 30 veins discovered in 1897 which yielded 4.2 million oz gold from 7.3 million tonnes at 17.7 g/t. Production ceased in 1971 and the project came under the control of Lou Wolfin (Levon) and Lew Dillman (Veronex) who entertained investors with high grade drill results. Eventually Wolfin's silver miner, Avino, ended up in control when it absorbed Bralorne Gold Mines Ltd in 2014. Talisker Resources Ltd purchased Bralorne from Avino in November 2019 for $8.7 million and a 9.9% equity stake partly bankrolled by the Osisko group, a windfall development for Endurance which a few months earlier had acquired Reliance in what was a moribund exploration district. Bralorne is an orogenic system which differs from epithermal systems such as the Shovelnose project of Westhaven in the Spences Bridge gold belt in that it only hosts gold and can have high grades over substantial vertical extent compared to epithermal systems whose high grade range is vertically constrained by a near surface boiling zone linked to the water table. Orogenic systems also form at depths of 3-20 km so require erosion to be accessible at surface. Talisker will deploy the brute force drilling model the Osisko crowd has applied at Barkerville and Windfall in an effort to show that there is lots of mineable high grade gold left at Bralorne.

Reliance is a different story in that sophisticated exploration geology is needed to demonstrate that it hosts a Bralone clone. This area was once blanketed by crown grant claims during much of the 20th century which all lapsed during the seventies, enabling a prospector to stake the Reliance property in the early eighties. In 1985 one of the juniors in a stable run by Charlie Boitard, Menika Mining Ltd, optioned the Reliance claim. The property had never been drilled but did have workings in a target area called Imperial where stibnite veining (antimony) had been found. Boitard attacked this target with his bulldozer and in early 1987 mounted a drill program that yielded high grade gold intersections that sent the stock up ten-fold. Boitard, not a geologist, was an unusual character who saw himself as a douser, though not the usual kind that runs around with a forked stick until it dips to reveal the target. Once when he visited my research office he showed me how he did it. He laid out a map of the Reliance property, placed a compass on it, closed his eyes, and with his hand moved the compass around until he stopped and declared, "this is where we need to drill". My office was a 4 hour drive from the property. The company went on to drill a total of 53 holes from which it generated a "historic" resource of 453,800 tonnes of 5.96 g/t gold or 78,796 oz. Within a few years Menika was off chasing other projects but in 2003 it returned to Reliance and mounted a 3,000 m drill program in 2008 that included more holes in the Imperial area and several to the southeast into an MMI anomaly. In 2013 a new group took over Menika as a shell, and Charlie Boitard passed away in August 2018. Somewhere along the way the successor to Menika allowed the Reliance claims to lapse, and in mid 2019 Robert Boyd, who in his Homestake days had looked at the Reliance project, was reintroduced to this old story.

Boyd's due diligence helped him realize that the helter skelter nature of the project's exploration history had never done justice to its gold potential. In his view the mineralization at Reliance is of an orogenic nature associated with northwest oriented shear structures that underwent multiple mineralizing phases related to the same Late Cretaceous hydrothermal event that produced the Bralorne gold system. Key to this event was the emplacement of the Bendor Pluton 68-64 million years ago to the southwest of Reliance and northeast of Bralorne. The key difference is that mineralization at Reliance is typical of the upper part of an orogenic system whereas Bralorne is in the middle. That would help explain why the old-timers didn't find anything worth mining at Reliance while the haphazard approach of the Charlie Boitard era prevented a proper geological understanding of the Royal Shear structure from emerging. EDG undertook a systematic re-evaluation of Reliance in 2020 which identified the Eagle Zone to the southeast of the Imperial Zone. A property wide soil sampling program was hampered by a thick layer of pumice ash from the eruption of Meager Creek 200,000 years ago, so EDG undertook a biogeochemical survey that involved testing douglas fir needles for arsenic. The results released in mid February 2021 show that a 350 m wide structural corridor defined by the Imperial and Treasure shears has elevated arsenic along 2,000 m of strike from Carpenter Lake up the mountain; it is not known if the end of the arsenic anomaly is caused by topography or the end of arsenic in bedrock. The structural corridor has a potential length of 3 km.

The importance of the biogeochemical arsenic anomaly became apparent after EDG received the results of a shallow RC drill program it conducted in late 2020. Due to covid related glitches EDG did not get a drill permit until October, so it decided to conduct an RC program of up to 60 holes to test the highly altered, heavily oxidized bedrock within the structural corridor which does not yield good core samples. EDG managed to get 16 holes done in the Eagle and Imperial areas before being chased out by winter. The junior took arsenic readings of the chip intervals with an XRF unit which yielded high arsenic values in all but two of the holes. Assays for the first 5 holes received in February yielded high gold values that correlated well with arsenic values, which validated the relevance of the biogeochemical arsenic survey. We can also expect the remaining 3 holes in the Imperial area and 6 in the Eagle area to yield good gold values. Equally important was the surprise recognition that the mineralized zones have a shallow 35 degree southwesterly dip and so far exhibit a true width up to 15 metres. Given the assumption of sub-vertical, vein like controls, this helps explain the confusing results of past drilling strategies. The shallow dip partly tracking the topography opens the possibility of open-pit mining.

The 2021 plan is to resume RC drilling in April to "map" the shallow part of the 2,000 m by 350 m structural corridor between the Royal and Treasure shears which are believed to be bounding faults for the fluids that cooked the rocks in the corridor. This would be followed up with core drilling to chase the zones down dip, better define the controls of this orogenic system, and test for deeper stacked zones within the corridor. The key milestone for Endurance Gold Corp is raise $2 million plus to kick off this program, ideally from parties which have the capacity to raise $10 million plus later in the year if the initial RC and core drilling confirms that Reliance is on track to delivering a 1 million oz plus resource of medium grade gold. The property is road accessible from Vancouver and can be explored year round, so there is no seasonal constraint to interrupt discovery delineation drilling. The emergence of the Bandito heavy rare earth exploration play should help EDG raise capital, enough to include a modest summer program at Bandito and justify a First Nations consultation process in pursuit of a 2022 drill permit. The combination might even enable EDG to raise the $5 million needed to mount a credible drill program at Elephant Mountain during the 2021 summer. The Bottom-Fish Spec Value rating would be replaced by a Fair or Good Spec Value rating once the Reliance project is properly funded for discovery delineation in 2021.

*JK owns shares in Endurance Gold Corporation


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