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| Free Whisper - July 21 2021 | |
Newfoundland Gold Play: The Area Play List
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By Daniel T. Cook
Contributing Writer
These are some of the best drill holes I've seen in a decade of covering the resources industry -- 150.3 g/t gold over 11.5 m, 146.2 g/t gold over 25.6 m, and 124.4 g/t gold over 17.7 m.
"These numbers are crazy-crazy good. Better than any hole ever drilled at Fosterville (Australia)." -- Eric Sprott
Crazy-crazy good. Assays like those are almost too good to be true. As a result New Found Gold (NFG, TSX-V) commands a market cap of nearly $2 billion, really rare for an exploration stage company. NFG shares have climbed 200% year to date, from $4 to $12 dollars. Great gain and despite a recent pullback NFG is still a long way from where it traded last year (below $2). | |
What direction is NFG headed next?
Speculators, with billionaire Eric Sprott leading the charge, are betting prices will keep climbing. Sprott, plus his many followers, are using a Roulette-like strategy placing chips on NFG and exploration companies across Newfoundland!
Should you be getting in on the action, doubling down, or wait for things to cool off a bit?
Positives:
-This is the biggest gold rush in Newfoundland since 1988. Between now and year's end 150,000+ soil samples will be taken, generating new drill targets (25,000 samples was previously the most ever taken in one year).
-"When you find gold in soil samples the likelihood of finding gold in bedrock (below) is better than average." --Shawn Ryan
-Geologists are applying the Fosterville exploration model with increasing success rates.
-Newfoundland ranks top 10 globally for mining investment attractiveness.
-The Gander area (specifically) is hot-hot-hot right now!
Negatives:
-The Gander area is ground zero for Newfoundland's gold rush, it's hot-hot-hot right now.
-Stocks, in some cases, are already priced for discovery.
The Investment Thesis
Top geologists Dr. Quinton Hennigh and Richard Goldfarb PhD say central Newfoundland is similar (analogous) to the Victorian goldfields of Australia. Exploring Newfoundland's belt now would be like exploring for gold in Canada's Abitibi in the early 1900s. Since then 190 million ounces have been found.
Both belts cover a strike length of 100 kilometers, yet only 10 million ounces have been discovered in Newfoundland so far--95% less than the Abitibi!
New Found Gold's (NFG, TSX-V) recent drill results (150.3 g/t gold over 11.5 m and 146.2 g/t gold over 25.6 m) prove the geologic potential for high-grade multimillion ounce deposits.
An unprecedented 150,000+ soil samples between now and year end will shine light on new frontiers for discovery.
Already ranked Top-10 globally for mining investment attractiveness, Newfoundland's government recently went even farther by streamlining the permitting process. Now, any explorer with a gold-in-soil anomaly immediately gets a permit for RAB drilling. This exponentially speeds up the exploration process, and the discovery process.
Now I'm going to highlight four stocks, largest to smallest (by market cap), that are located in or near ground zero of Newfoundland's gold belt. Eric Sprott has invested into all 4.
Quick Facts for New Found Gold (NFG, TSX-V)
OTC Trading Symbol: NFGFF
Share Price Today: $12.42
Shares Outstanding: 152 million
Market Capitalization: $1.9 billion
Working Capital: $82 million
Project Area: 150,000 hectares | |
Nice slide.
I like it. Wanted you to see it because the slide shows New Found Gold (NFG, TSX-V) is not an overnight success story. They did extensive soil (till) sampling year after year in coordination with other exploration tools before starting a big drill program in August.
NFG was trading below $2 per share to this point.
NFG was not the talk of the town.
Interesting to know though, they had already hit 92.9 g/t gold over 19 m at the Keats zone (late 2019). This allowed them to raise money at a go-public valuation of $200 million.
Shortly after going public and raising $31 million they increased the drill program to 100,000 metres. Months later they doubled it to 200,000 metres (8 rigs)! At $300 to $400 per metre all-in costs diamond drilling isn't cheap but monies spent multiply upon hitting "Crazy-crazy good numbers" (as Sprott likes to say).
True economic discoveries climb a wall of worry, as do stock prices.
Starting off, people were skeptical, and they should be. The odds of going from soil anomaly to a gold mine are like 1 in 1,000.
In those rare circumstances when drilling results keep getting better and better skeptics become converts. Since going public almost every news release from New Found Gold wowed the market. With each set of numbers -- 41.2 g/t gold over 4.7 m, then 22.3 g/t gold over 41 m., then 45.3 g/t gold over 15.1 m, and then ultimately 146.2 g/t gold over 25.6 m! – NFG has successfully climbed the wall of worry.
Either way, whether NFG continues climbing or not, the corporation has been a monster of a success already. They and enterprising prospector Shawn Ryan, mushroom picker turned multimillionaire, have officially placed Newfoundland on map as an exploration frontier for discovery worldwide.
Quick Facts for Labrador Gold (LAB, TSX-V)
OTC Trading Symbol: NKOSF
Share Price Today: $1.52
Shares Outstanding: 151 million
Market Capitalization: $229 million
Working Capital: $35 million
Project Area: 7,700 hectares | |
At the outset, one of the positives, I noted the Gander area is hot-hot-hot right now!
Depending on your perspective that positive is also a negative because some stocks are already priced for discovery. Labrador reached a market cap of a quarter billion (now $229 million) before making a New Found Gold-like discovery.
Bulls would argue they're getting close though, and they will (hence the generous valuation). During the month of June Labrador has hit 20.6 g/t gold over 3.6 m and 50.4 g/t gold over 1.8 m.
The drill program underway was increased to 50,000 m.
Targets include a 300 m soil anomaly and a quartz vein (Big Vein) traced over 400 m.
20.6 g/t gold over 3.6 m and 50.4 g/t gold over 1.8 m are encouraging results, for sure, but to keep a market cap near $250 million and push beyond Labrador Gold will need to hit 1+ ounce over 10+ metres. Otherwise LAB, who's run from 30 cents to $1.50 since March, runs a risk of rolling over.
Consolidating such a large advance in a short period of time wouldn't be a bad thing longer term for LAB.
Shawn Ryan and Quinton Hennigh are technical advisors to the Company.
Sprott has a 12.4% equity stake in LAB. New Found Gold has a 8.6% equity stake in LAB.
Quick Facts for Exploits Discovery (NFLD, CSE)
OTC Trading Symbol: NFLDF
Share Price Today: $1.16
Shares Outstanding: 100 million
Market Capitalization: $116 million
Working Capital: $8 million
Project Area: 211,000 hectares
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Exploits' land, shown in red, covers extensions of main fault structures (Dog Bay Line, Appleton, and GRUB line) to the north and south of New Found Gold.
Soil sampling, geophysics, machine learning, and good ol' fashioned prospecting has defined 5 target areas.
All necessary permits have been received.
Exploits' maiden drill program at the Schooner target started late May (12 holes / 3,000 m).
With 211,000 hectares Exploits has the most ground in this land play.
Is "closeology" and lots of land worth $116 million? Or more? Maybe less? Valuation will ultimately be determined by exploration success and drilling results.
Sprott has a 14.6% equity stake in NFLD. New Found Gold has a 13.1% equity stake.
Quick Facts for Gossan Resources (GSS, TSX-V)
OTC Trading Symbol: GSSRF
Share Price Today: $0.26
Shares Outstanding: 56 million
Market Capitalization: $15 million
Working Capital: $2 million
Project Area: 10,950 hectares | |
Of the 4 Gander gold plays I'm betting on Gossan.
It's my only long position of the bunch right now.
Shown in red, Gossan's ground sits atop the GRUB line adjacent east to New Found Gold. This well situated property has seen almost zero exploration and prospecting work thus far -- Gander Gold is truly a grassroots stage project.
Smartly, the Company optioned it on favorable terms in September.
Gossan's summer exploration program will include soil sampling, airborne, and trenching (based on results).
Worth noting -- GSS has been trading since the late 1990s. Its share structure remains tight, with 56 million outstanding, and the stock's never been rolled back.
In addition to Gander Gold Gossan has a diverse portfolio of projects offering exposure to Silver, Zinc, PGMs, Vanadium, Titanium, and Iron.
Sprott has a 14.2% equity stake in GSS.
Quick Facts for Canterra Minerals (CTM, TSX-V)
OTC Trading Symbol: CTMCF
Share Price Today: $0.39
Shares Outstanding: 53 million
Market Capitalization: $21 million
Working Capital: $5 million
Project Area: 24,300 hectares | |
The same geology, structural setting, and on trend with Marathon Gold's (MOZ, TSX) multi-million ounce Valentine project.
Naturally this does not mean Canterra's property hosts a multi-million ounce deposit. But similarities do warrant a thorough examination. Canterra already identified gold in core samples with the same quartz veining as Marathon. Thus far widths just haven't been as impressive as Marathon's, topping out at 17 m of 1 g/t Au.
On the northeastern end Canterra'a Noel-Paul property borders Sokoman (SIC, TSX-V), who's market cap is $125 million. So good neighbors on both sides.
More robust follow-up drilling is what's needed now. Canterra has enough money on hand to drill about 5,000 metres this summer.
Sprott has a 19% equity stake in CTM. Michael Gentile, professional speculator in the resources sector, owns 14%.
Quick Facts for Canstar Resources (ROX, TSX-V)
OTC Trading Symbol: CSRNF
Share Price Today: $0.40
Shares Outstanding: 86 million
Market Capitalization: $34 million
Working Capital: $4.5 million
Project Area: 62,200 hectares | |
Golden Baie is an under-explored area of the gold belt expected to heat up significantly over the summer (lots of new staking and sharply increased activity).
Drilling to date has focused on the Kendell target, located in the central portion of the project. To date 22 drill holes have been completed at Kendell for a total of 1,200 m and visible gold was observed in quartz veins in 8 of the 12 holes logges thus far.
The drill rig has now moved to the Hillside target, located approximately 950 m north-northeast of Kendell.
Rob Bruggeman, President and CEO, stated: “I’m very pleased that the initial drill holes contain visible Gold in quartz veins within broader intercepts of arsenopyrite, which tends to be associated with disseminated Gold mineralization on the Golden Baie Project. This is a great start to the program and gives us the confidence to double the planned meterage. We look forward to getting the assay results from the drill hole samples and reporting those to our investors and the market.”
Canstar now plans to drill approximately 5,000 m this summer based on positive visual observations of drill core in completed holes to date. Initial assays are expected later this month.
Sprott has a 12% equity stake in ROX.
Quick Facts for Sassy Resources (SASY, CSE)
OTC Trading Symbol: SSYRF
Share Price Today: $0.71
Shares Outstanding: $45 million
Market Capitalization: $32 million
Working Capital: $5 million
Project Area: 225,700 hectares
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What's in a name?
Sassy says they've got the people, the property and the pizzazz to become a powerful wealth creator via a "Sassy" approach that drives new discoveries.
Having optioned several projects from Shawn Ryan, and staking some of their own, Sassy compiled one of the largest land packages in central Newfoundland (225,700 ha).
No surprise then, Sprott's in it. He invested $1.6 million into Gander Gold Corp., a wholly owned subsidiary. This summer Sassy will do tens of thousands of soil samples. They'll be moving as fast as possible toward drilling the best anomalies generated from the soil sampling program.
In particular, Sassy's Gander North project is located next to GRUB Line (a major structure). What Shawn Ryan sees here is a whole new GRUB Line (a parallel structural corridor) to the vastly under-explored east where there are plenty of potential “traps” for gold deposition.
Jumping out is a massive 4 x 8 km-wide magnetic high trending NE for more than 10 km, sitting directly under regional anomalous gold in till. This unit also features NE and NW cross-cutting structures, indicating it was structurally prepared before or during the mineralizing gold event. Rocks are very prospective – the right type to carry gold.
Sprott has a 17.3% equity stake in Gander Gold.
I suspect Sassy will look to spin-out Gander Gold at some point.
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Quick Facts for Matador Mining (MZZ, ASX)
OTC Trading Symbol: MZZMF (no Canadian listing, yet)
Share Price Today: $0.36
Shares Outstanding: 211 million
Market Capitalization: $75 million
Working Capital: $5 million
Project Area: ?? hectares | |
One of the world's highest grade open pittable projects (an estimated 837,000 ounces grading 2 g/t Au), plus exploration upside.
120 km of continuous strike length, only 12% drilled so far.
Permitting, licensing, and development work are advanced and ongoing.
Matador's summer drill program was recently expanded from 20,000 to 45,000 m.
The company’s Scoping Study from 2020 outlined an initial potential 7-year mine life at Cape Ray with a forecast IRR of 51% (post-tax), rapid payback of 1.75 years, and LOM AISC of $776 (U.S.). The 2021 drill program is aimed at extending the Gold mineralization footprint at the known deposits while testing multiple new greenfield targets, all within 15 km of existing resources.
According to public records Sprott has no position in MZZ.
THIS IS A GREAT LIST for your library.
I'll be keeping you updated on this, the #1 Gold Play of The Year, as material drill results come in from all these companies. Until next time,
Daniel T. Cook | | | | | | |