Winston Gold Corp WGMCF

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Winston Gold Fast Tracking Its Way to Gold Production

Spurred on by uncertainty surrounding the coronavirus pandemic, 2020 was a fantastic year for gold with the nearly 25% price appreciation the best in almost a decade. The precious yellow metal further set a new all-time high in August while trading at an average of $1,769 per ounce for the year, despite having to recover from a sharp sell-off in March at the hands of COVID-19. With the economic recovery still shaky and the fiscal stimulus faucet still wide open, the outlook is bright for gold, which benefits from political and economic uncertainly and a weak U.S. dollar.

 

Seeking to capitalize on this favorable gold environment, investors are looking for companies that are making strides to reach production in the near term. For example, Steppe Gold (TSX: STGO) last year rocketed from a low of 63 cents in March to over $3.00 in July based upon a $15.0 million capital raise, moving into production at its flagship Altan Tsaagan Ovoo mine in Mongolia, an 80/20 JV with the Bayankhongor provincial government targeting 60,000 ounces of gold production annually during the first phase. The mine ATO was brought to production efficiently with a solid strategy and about $20 million in capex.

 

Closer to home, Winston Gold Corp. (OTCQB: WGMCF)(CSE: WGC) has a similar goal with its eponymous project outside of Helena, Montana. Winston CEO Murray Nye has a stated goal to spend less than $10 million in capex to produce 50,000 ounces annually at the formerly past producing mine. The project is enticing enough that Joe Carrabba, the former Chairman, President and CEO of Cliffs Natural Resources (NYSE: CLF) and Director at Newmont Goldcorp (NYSE: NEM)(TSX: NGT) came out of retirement after less than one year, made a significant investment with his own money and joined the leadership team at Winston as Executive Chairman.

 

Winston is not pursuing the typical path of a mineral explorer that usually involves a lengthy and expensive process of exploration, NI 43-101 and other reports and assessments. Management is confident in the gold in the ground and decided a faster and less expensive strategy is to “drill for structure” (prove the veins systems continue on strike and at depth) and then “mine for gold” (develop underground access and test mine vein systems to prove grade potential). 

 

In other words, they’re fast-tracking their way to a mine. The only real downside is that by not creating an NI 43-101 resource report and preliminary economic assessment, it becomes more difficult for investors and analysts to put a value on the asset. That said, it’s arguable the C$0.10 per share is arguably too low considering what is known to date.

 

They’re right on track and moving towards that end goal of 50,000 ounces annually, recently reaching development milestones, including advancing underground work at the mine and producing the first gold concentrate as it nears commissioning its Paradine Mill.

 

Winston Gold Corp. (OTCQB: WGMCF)(CSE: WGC)

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A High-Grade, Narrow-Vein Project

Located 22 miles southeast of Helena in the prolific Winston Mining District, the 205-acre Winston Gold project hosts two past producing mines, Custer and Edna, that were in production until 1955. Historic data indicates 42.52 grams per ton (g/t) gold was being produced at the time mining activity ceased. The district has a rich history of mining dating back to 1867, with an estimated total district production of 100,000 ounces of gold from 150,000 tons of ore (an average grade of 0.67 ounces/ton or 22.8 g/t gold). The property is complete with all infrastructure for mining operations, including power lines and roads.

 

Winston has a huge database of 630+ holes drilled as part of $12 million in exploration on the property demonstrating the high-grade nature of the mineralization while helping to define the mineralized body. At the time of the closing, the Custer Mine underground workings were to a depth of approximately 820 feet and 16,000 feet in length producing primarily gold with secondary silver.

 

Both veins remain open along strike and at depth.

 

The Custer Vein, which connects at its southern end with the Edna trend, was mined continuously for over 732 meters (2,401 feet) on five primary levels. Very little mining was done below 400 feet. Back at that time, mining was a bit of a “smash and grab” strategy where secondary shafts were driven into the ground to access high-grade ore as quickly and inexpensively as possible rather than constructing a main shaft and drifts. While effective, it left a lot of gold in the ground.

 

Owing to the geology of the Winston deposit, management believes that the Custer Vein extends a minimum of 500 feet deeper than anything previously mined. Confirmation drilling is needed to validate the contention that the Custer Vein potential measures 2,400 feet laterally and 500 feet vertically at an average width of 4 feet.

Winston Gold Corp. (OTCQB: WGMCF)(CSE: WGC)

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Those Aren’t the Only Veins Rich in Gold

Over the past few years, Winston has completed drilling programs that have identified additional veins beyond Custer and Edna. Dubbed Block 93 and Parallel and only 150 feet apart, the assay results from these veins align with the high-grade nature of historic data. 

 

Last year, the company completed a 900-foot tunnel, named the Carrabba tunnel, to connect the Parallel, Block 93 and Custer underground workings. This provides a bevy of benefits, including added ventilation, a secondary escape route, an area for an underground drill station and access to Custer mineralization.

 

Underground drilling in September in the Block 93 vein hit a 2.5-foot drill interval that averaged 78.65 grams per ton (g/t) gold within a wider, 7-foot interval averaging 39.39 g/t. To provide just a sample of other intersects from this drilling, consider an intersect returning 2.0 feet averaging 31.13 g/t gold as part of a larger cut of 8.0 feet grading 9.22 g/t gold; and a 7.0-foot interval averaging 39.39 g/t gold, including 2.5-feet averaging 78.65 g/t gold.

 

Drilling in October was designed to test the western extension of the Parallel vein system, with a hole drilled 105 feet ahead of and 87 feet below the current development face on what is called the 4637 level. The combined average weight of the drill intercept was 22.77 g/t gold and 107.65 g/t silver, indicating that that gold mineralization continues to the southwest and at depth.

 

Follow up drilling 100 feet ahead of and 40 feet below the current development face of the Parallel vein on the 4637 level intersected 39.92 g/t gold over 5 feet, including 2 feet grading 98.63 g/t gold.

 

Nye commented that the recent drill holes improve the continuity of gold mineralization in the Parallel vein, adding that while still not clear on the full extent of the Custer and Parallel veins as they step out to the west, the systems “keep surprising us and surpassing our expectations.” 

 

Winston Gold Corp. (OTCQB: WGMCF)(CSE: WGC)

Stockpiling Gold and Dialing-In the Mill

Nye isn’t exaggerating, as it seems gold abounds at the Winston Gold project. As the company’s news feed shows, there is a steady flow of mine development and exploration activity, albeit underground drilling, advancing drifts or preparing stopes. With this work, gold-bearing rock is hauled to surface and stockpiled for milling. 

 

By mid-October, Winston had already hauled to surface 4,200 tons of mineralized rock at an average grade of 7.54 g/t gold. This amounts to 924 ounces of gold, with a value of approximately $1.66 million at current prices.

 

In November, the Paradine Mill upgrades were completed, including installation of a new crushing circuit. The mill is just 35 miles by paved road from the Winston Gold project. The mill has a nameplate capacity of 150 tons per day and hosts a ball milling circuit as well as both a gravity and flotation circuit. Crushing and testing at the mill commenced in December, followed by the first test concentrate being produced this month. 

 

The company isn’t running the premium ore through the system yet; it is tweaking and calibrating to maximize gold recovery. To that point, part of the mineralization that has been brought to surface is lower grade that is being milled for the optimization process. Even still, the first test concentrate averaged 1.73 ounces per ton (49.04 g/t) gold and 30.5 ounces per ton (864.44 g/t) silver.

 

Those are impressive grades for “low-grade” material with less-than-perfect recovery rates.

 

The mill also recovered 1,050 pounds of gravity concentrate with an average grade of 6.76 opt (191.64 g/t) gold and 14.81 opt (419.86 g/t) silver.

 

Moreover, Paradine will also soon feature a Wilfley Table, which will enable fine particles to be processed to improve overall gold and silver recoveries from the gravity circuit. 

 

As the refinement of the mill is completed, mineralized material is being stockpiled from underground activity, where two headings have been mining the mineralized Custer West vein systems, generating 90 tons of material each day. A secondary I-drift is now being developed along the Parallel West Vein system. This will bring the total daily mining rate to 120 tons.

 

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Full Coffers

As aforementioned, analysts may have a little more difficult time pinpointing a valuation on an explorer that doesn’t have a resource estimate. That hasn’t stopped savvy investors from showing their confidence in Nye, Carrabba and the results so far at the Winston Gold project. Since the start of December, Winston has closed private placements raising $5.76 million, including the most recent being led by Canadian Resource Merchant Bank Palisades Gold that added $2.43 million to the corporate coffer.

 

Given what Steppe Gold did in 2020 with a $15.0 million raise and a 60,000-ounce annual target, Winston Gold is well positioned with its recent capital infusion as it keeps checking the boxes moving the company towards its goal of 50,000 ounces each year.

 

Winston Gold Corp. (OTCQB: WGMCF)(CSE: WGC)

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