RE: The next Malartic?SAN FRANCISCO – “This is a 3 to 5X.”
When I hear asset managers say that, I recall 2003, when commodities equities ran briefly, then stumbled and fell.
This time around, projections of wealth creation based on drill assays unnerve me. I am one of those researchers who “buy fear and sell hope,” and I transact only with miners, engineers, execs and geos I know personally. And on properties I have walked, climbed or gone underground.
Thus, in these accelerating and high-risk commodities equities markets, when I look at a prospector that is already on a run, I have to get my nerve up. There are several worth perusing. One of them, Gold Canyon Resources (TSX: V.GCU, Stock Forum), is sitting on sizeable gold grades across significant meters in the Red Lake Mining district of Ontario.
Investors have stepped up to the plate in the past two weeks after seeing the Springpole assays. A summer drill program is striking fairly consistent grades of gold and silver in breccias-hosted pods and veins. Still, Gold Canyon stock is now at three times its $50 million market capitalization of August.
To believe the momentum continues is to believe further assays due in December will show lengthy intercepts of significant gold grades at this alkaline intrusion deposit. If you are doing the math, Springpole might hold as much as eight million ounces of gold. Thus, even with a lowly peg of $100-per-ounce in the ground, Barrick Gold (TSX: T.ABX, Stock Forum) or another large miner would need to spend about $800 million on a purchase. On a fully-diluted basis, the $2 stock one day could be worth $7 or more. Gold Canyon has other projects as well.