June 14 2013 - TekInvestor’s Fundamental EvaluatioTekInvestor’s TekTraders Fundamental Evaluation:
Metals Creek Resources (TSXV: MEK) Q2 2013 - UPDATE
June 14, 2013
Business Focus: Gold exploration in politically-safe, world-class gold camps.
Flagship Asset:Ogden Project 50/50 joint venture with Goldcorp featuring 8KM of strike length of the Porcupine-Destor Break, Timmins Ontario.
Developing Asset: Squid East joint venture with GTA Resources in Matson Creek area of Yukon.
Listed TSXV: MEK
Listed OTC: MCREF
Shares Outstanding: 98.5 M
Cash and Marketable Securities (March 31, 2013): $2,759,206
52-Week High: $0.08
52-Week Low: $0.0035
Price June 13 2013: $0.035
Market Cap: $3.55 million
Telephone: 709 256 6060
MetalsCreek.com
Twitter.com/MetalsCreekRes
2013 has been a tough year for the gold market, senior gold mining companies and especially for junior gold explorers. The 52-week charts of many companies in the TekTrader Advisories Portfolio are not pretty. Case in point, the chart for Metals Creek Resources (TSXV: MEK) shows a stock testing supports while searching for a meaningful base. It’s a surprise, really, considering the company’s strong fundamentals and recent news releases including 49.96 g/t gold over 9.0 m April 10 2013, 3.91 g/t gold over 11.4 m May 1, 2013, and especially 210.19 g/t gold over 12.53 m May 22, 2013, which together suggest Metals Creek may be a few intercepts away from a major gold discovery in Timmins. Despite (or perhaps because of) how the chart compares to the company’s excellent fundamentals, we continue to accumulate along support lines, anticipating news from Squid East shortly and the flagship Ogden Project throughout Q3-Q4.
Flagship Asset Update – Thomas Ogden Zone (TOG):
The Thomas Ogden Zone occurs along the Porcupine-Destor Break within a zone of albitized sediments and strongly silicified felsic porphyries with associated pyrite and arsenopyrite mineralization. The gold zone is near surface and consists of porphyry-style mineralization with associated pyrite, strong silicification and visible gold, and few sulphides present. This zone has been traced over 400 m on surface, and this anomalous area is open along strike, to the east, west, and at depth. Deeper porphyry-style mineralization is present as well, with associated arsenopyrite, pyrite and silicification. A second zone of deep gold mineralization is also present at the northern ultramafic contact within the sedimentary rock. Both types of mineralization are open along strike and at depth. As seen in the graphic below, the zone features two parallel porphyry units.
Thomas Ogden Porphyries
Thomas Ogden Zone News Update:
Recent news (May 22, 2013) from the Ogden Project concluded with very positive drill results that significantly expands known gold mineralization at the Thomas Ogden Zone. The company’s eight-hole drill program successfully tested the on-strike and down dip extent of previously defined gold mineralization. Highlights from recent drilling includes TOG-13-27 which ran 49.96 g/t gold over 9.0m, and TOG-13-25, which returned a bonanza-grade gold intercept of 2,732.6 g/t gold over 0.93 m. This intercept was part of a broader zone of high grade mineralization with an uncut intercept of 210.19 g/t over 12.53 m.
Mineralization in hole TOG-13-25 is described as strongly albitized and silicified conglomerate and porphyry units containing 1 - 8 % finely disseminated pyrite with local arsenopyrite. Hole TOG-13-25 was a 30 m under-cut below previously released 9.46 g/t gold over 18.55 m hole TOG-12-10, which returned a down hole intercept of 2.25 g/t gold over 12.95 m. Most importantly: Visible gold was noted in 9 different locations within TOG-13-25.
Thomas Ogden Gold Horizon May 22 2013
This horizon is located within a package of variably folded mafic and ultramafic volcanics and the high grade sub-zones exhibit a strong correlation with the interpreted fold hinges. Metals Creek’s most recent drilling was designed to better define the orientation of these fold structures. The fold hinges strongly correlate with high grade gold mineralization, which suggests continuity of the high grade zones.
Near-Term Catalysts & Future Plans – Thomas Ogden Zone:
Metals Creek’s 2012-2013 exploration activities have focused on drill testing down dip and along strike with recent emphasis (and striking success) when intersecting fold hinges. It appears that these fold hinges are functioning as collection units for significant clusters of gold mineralization. As such, Metals Creek is in the process of interpreting and incorporating recent results into a revised model of the zone to prepare drill targets. In all respects, the company’s recent eight-hole program was a success: Grades are among the highest seen in many years in the Timmins Camp, and mineralization remains open at depth and along strike. The company’s go-forward plans will no doubt consist of robust follow-up drill programs to establish the geometry and size of the potential resource sometime in late summer and early fall of 2013.
Developing Asset Overview - Squid East, Yukon:
Metals Creek acquired Squid East through staking in the Dawson Range gold district in 2011 and there are no underlying royalties or other interests on the property. Three of the claim blocks are located in the Matson Creek area, close to the Matson Creek placer gold camp, and the fourth block is located west of the Yukon River, 40 KM north of Kinross Gold’s White Gold property. The claims were staked to cover a number of gold geochemical anomalies that favorably compare with those found overlaying recently discovered gold deposits in the White Gold camp.
Squid East News Update:
In July 2011, Metals Creek initiated an exploration program consisting of prospecting and soil sampling. A total of 924 soil samples were taken on these claim holdings, mainly along “ridge and spur” and contour lines. Five separate gold-in soil anomalies were defined on the two most western claim blocks near Matson Creek where anomalous values ranged between 10 and 178 ppb Au. These gold trends were the focus of the 2012 program of detailed sampling and prospecting. The work was carried out in August of 2012 and consisted of detailed soil sampling on 100 to 200 m spaced line with soils taken every 25 m resulting in a total of 988 samples being collected. The 2012 soil results delineated a strong northwest trending gold plus pathfinder element anomaly located on the Squid East claim block.
Exploration activities on Squid East for 2013 so far consist of trenching and drilling programs funded by GTA Resources (TSXV: GTA). The planned trenching program will test several highly prospective soil anomalies discovered over the last two field seasons and will be followed up by drill programs in August, 2013.
GTA Resources can earn from 51% up to 70% of the project interest over a five year period. To earn an initial 51% interest, GTA must make cash payments of $60,000 over three years ($20,000 due upon regulatory approval), issue a total of 2,000,000 shares over three years (200,000 due upon regulatory approval) and incur work expenditures of $2,000,000 over three years ($500,000 firm including a minimum 400 meters of drilling by 1st anniversary) with Metals Creek remaining the operator during the earn-in period. Once a 51% interest is earned by GTA, either a 51/49 joint venture will be formed, or GTA may elect to earn an additional 19% interest to bring its total property interest to 70%. GTA may increase its interest from 51% to 70% with an additional payment of $210,000 and 400,000 shares within 120 days of the 3rd anniversary date and incurring an additional $1,000,000 in exploration expenditures by the 5th anniversary. GTA would assume operatorship once it had earned a 51% interest.
Near-Term Catalysts & Future Plans – Squid East:
So far, anomalous values have been exceptionally continuous between sample locations with gold ranging from 15 ppb to 1086 ppb. Associated with the gold assays are strong pathfinder elements that include Silver up to 78.5 parts per million (ppm), Lead up to 4493.5 ppm, Arsenic up to 50.9 ppm, Antimony up to 241.2 ppm, Barium up to 2370 ppm, and Mercury up to 36.32 ppm. The anomaly has minimum dimensions of approximately 450 m long by 200 m wide and is coincident with a distinct northwesterly trending magnetic low. Most importantly, the strength and size of this newly discovered anomaly is comparable to soil anomalies overlaying recent discoveries in the White Gold District, with associated pathfinder elements typical of these new discoveries, making this a first-tier target.
Summary & Investment Case:
Metals Creek’s 2013 drill programs have validated mineralization on strike and down dip at the Thomas Ogden Zone, which is only a small portion of the company’s Ogden Gold Project, featuring 8 KM of strike along the Porcupine Destor Break. Predictability of gold mineralization at the TOG Zone certainly appears to be improving at depth, with camp-leading, bonanza-grade intercepts found at fold hinges. So there is a strong potential for a significant gold discovery during drilling in Q3 – Q4 of this year.
Metals Creek’s Squid East Yukon gold project features soil anomalies that compare quite favorably in terms of size and strength with those found overtop a number of new gold discoveries in the White Gold Camp. Most notably, the company’s targets feature the requisite associated pathfinder elements typical of these discoveries. Exploration news is pending and we should expect assays, including drill results throughout Q3 – Q4 of 2013.
Metals Creek remains a well funded and well run company. Management is prudent to reduce risk and cost via joint ventures during this current, challenging market. The company’s stock is highly liquid, which gives investors a shot at profitable trading without the risk of being trapped offside. Shares are moving briskly at the 52-week low of $0.035 with a cash-per-share value is nearly $0.03 cents. Fully-funded exploration activities on Squid East will soon be followed by extensive drilling on the company’s bonanza-grade, Thomas Ogden Zone. With these financial facts and impressive exploration potential in mind, we estimate Metals Creek’s shares are a bargain at current prices, especially in the context of the current market. We are pleased to accumulate at these levels in anticipation of news soon and look forward to profitable trading throughout the remainder of 2013.
To good trading and even better investing,
Adam Greene
TekTrader Advisories Inc.
Adam “TekInvestor” Greene is an investment educator with a passion for analysis and discussion of all types of money-making ideas. TekTrader Advisories Inc. manages private equity portfolios that enhance growth through speculative investing in TSX-V and OTC listed junior stocks in the natural resource and tech sectors. A credentialed scientist and member of the Market Technician’s Association, Adam regularly publishes stock technical updates and freely shares his personal investment strategies with followers and subscribers. The TekTraders Speculative Portfolio is hosted on Stockhouse.com.
Disclaimer: Adam “TekInvestor” Greene is not a certified financial analyst, licensed broker, or qualified investment professional. Nothing within any report, technical update, blog, commentary, website, interview, email, text, online content and all other types of private or instant communications constitutes investment advice or an offer or solicitation to transact securities listed or otherwise. All reference information is obtained from public documents and content available on company websites, regulatory filings, various stock exchange websites, and stock information services. While the information is provided in good faith and believed to be reliable and accurate, no guarantees are implied. Information may not be complete or correct and is provided without any legal responsibility or obligation to provide future updates. Adam Greene and TekTrader Advisories Inc. accepts no responsibility, or assumes any liability for any direct, indirect or consequential losses arising from the use of the information. The information contained in any report, technical update, blog, commentary, website, interview, email, text, online content and all other types of private or instant communications is subject to change without notice, may become outdated, and will not be updated. All reports, technical updates, blogs, commentaries, website postings, interviews, emails, texts, online content and all other types of private or instant communications reflect Adam Greene’s personal opinions and nothing more.