Aston Bay Holdings Ltd V.BAY

RE:Awesome Info . Tom Speaks , Hole 10 And More . Long Read .

[Goldy63]

Goldy63 wrote: “The one thing that I want people to understand is that the 68m of sulfide mineralization intercepted in the last drill hole (ST22-10) is confirmation of the geologic model that predicted the presence of mineralization at depth. We intercepted the margin of the conductive anomaly. Although the grades at the margin are low grade, the cores of mineralized zones at the surface at Storm have been large and high grade, so this points to some exciting discovery potential for this EM anomaly and others down the road.” (Tom Ullrich, conversation at VRIC, January 30, 2023) Reader warning: This is long. I’d done a detailed review of $BAY in November 2021 (https://ceo.ca/bay?e7385cc0db8d) that includes a lot of detail on the Virginia properties and another relatively detailed review in June 2022 (https://ceo.ca/bay?527470d5d4d0). That info will be helpful with respect to the Virginia properties, as I won’t be addressing them in any detail in this update. Summary: Although $BAY would like to return to Virginia to pursue its Brownfields Gold Belt properties, its Buckingham Gold property and its base metals projects, the reality is that it does not currently have the funds to pursue any of those projects. In the absence of any surprises, the market interest in $BAY in the near-term will be driven by Storm in the context of both the shallow Cu targets and the deeper “move the needle” potential stratiform Cu targets that could ultimately capture the attention of the majors. The block is under option to American West, and American West can earn an 80% interest in the block. American West, hopes to be on site for ground EM and gravity programs in March. A RC rig is being contracted for the 2023 work season, with the intention to try to drill about 10,000m of the shallow targets at 2750N, 4100N, 2200N and (lesser priority) 3500N. They are hoping for about a 12-week program with the RC rig. They are hoping to advance a future potential direct shipping ore (DSO) project for the shallow targets, and a contractor (Ausenco) has been engaged and commenced work on defining a potential project and initiating the permitting pathway. That could potentially see an accelerated permitting process for a low footprint, environmentally benign project that could see direct shipping of a Cu concentrate in the 50-55% range to generate significant cash flow several years out at a relatively modest capital exposure. They are hoping for about 2,500m of “deeper” drilling using the diamond drill to pursue the exploration targets, with that program commencing at some point in June. They are also expanding the exploration program into several new areas (Blizzard, Tornado and Tempest). No near-term work is planned on the zinc targets at Seal. Disclosure: I have a material position in $BAY. I have spoken with Tom at a number of shows. I have consistently found him to be a straight shooter, intelligent and very accessible, and he has been very generous with his time when I have been working on my periodic updates. Definitely one of the good guys, who many of us hope will be rewarded in due course. For additional context on my comments, I'm just capturing some notes and personal observations that should not be taken as investment advice, and I do not have a geotechnical background. For clarity, I have no commercial relationship of any sort with any company on which I comment beyond being a shareholder or potential investor. I’m also quite transparent about my material holdings on my profile page on ceo.ca, although, like most, I have been crushed since the spring of 2022. My profile page also includes some very expensive “lessons learned” from my “RecklessThen” phase that may be useful for those new relatively new to this sector or who dabble in it infrequently. A collection of my more recent detailed write ups on companies I own can also be found here at #BeCautiousNow (For Profits Later). Share Structure: ~178.5MM outstanding; ~207.2MM FD. The FD includes 14.96MM 12 cent warrants, of which about 93% expire in late December 2023, with the balance expiring in early April 2024. (A large number of warrants expired in 2022.) Treasury: Very low-certainly not sufficient to conduct any work programs in Virginia. Tom had personally advanced a large amount to the company from the “bank of Tom” as an unsecured loan at a 9% per annum interest rate to keep things going. The limited treasury raises a potential issue about a consolidation in due course if and when they decide to try to go to the market again. Recent exchange changes have eliminated the minimum 5 cent PP requirement, though, which makes a consolidation less of a given than would otherwise be the case. From prior discussions, there is not a lot of appetite to pursue a consolidation for the sake of doing a consolidation, and it was apparent in those discussions that there was no appetite at all for the typical 10:1 consolidation that we have seen far too often as shareholders. If there were one at some future point, it would most likely be in the 3-5:1 range, but only if and when it was apparent that there would be ongoing newsflow sufficient to mitigate the typical slippage often seen after a consolidation AND it otherwise was something that made sense at the time. American West Deal-Storm and Seal: $BAY entered into an earning agreement with American West (AW) in the spring of 2021. AW is a very active Australia based company that is not yet listed in NA. They can earn an 80% interest in those areas by incurring an aggregate of $10MM in qualifying expenditures over nine years, including $2MM over the first two work seasons. $BAY would be carried up to a mine decision, which would presumably be an expenditure level much greater than the specified $10MM earning threshold. $BAY also received a $500K cash payment at closing. BAY’s 20% retained after earned interest could be converted to a 2% NSR if its interest were diluted below 10% in due course. There is a buyout right on a portion of the NSR. With the major expenditures made last year and the large expenditures forecast for 2023, AW could hit the $10MM earning expenditure threshold this year. That would see it earn its 80% interest in Storm and Seal. Although AW will have earned its interest at that point, it is very important to remember that there is an ongoing obligation as a condition subsequent to continue to carry $BAY to the “mine decision point”. That would normally be relatively straightforward, such as completion of a bankable feasibility study, in the context of a more typical mine. The potential DSO project throws a bit of a twist into the “mine decision point”, though, as it is unlikely that a fast tracked, low footprint, low CAPEX project like a DSO project would ever see an associated bankable feasibility study. Complicating matters further is that this might happen at a time when high risk exploration is still ongoing for the deeper move the needle type of targets. Perhaps they agree that in the case of a DSO project that the carry applies through the permitting phase to the point at which the project AFE for the DSO is presented for approval in the context of the known regulatory requirements and approvals? Another potential twist might be to treat the DSO as a separate election point, so that the normal bankable feasibility study type trigger applies to a more conventional development-particularly if a major is in the mix at some point on the deeper targets? I guess we’ll see how the DSO plays out and continue to see the carry through at least this work season. Storm Work Programs: AW has an aggressive work program planned for 2023. AW’s vision is outlined in their most recent quarterly report linked here: https://www.americanwestmetals.com/site/pdf/c31e6690-4c34-4ffa-9d20-fe61fa797945/Quarterly-Activities-and-Cashflow-Report.pdf. AW do a much better job of describing the work program and targets than I can possibly aspire to in this update, so I highly recommend that investors with an interest in $BAY read the applicable portion of that update. They plan to be on the ground for ground EM and gravity in March, and will use that data to help plan their drill programs. They are adding a shallow focused RC rig (ideally track mounted) for an approximate 10,000m program on the shallow targets at 2750N (surface to ~100m), 4100N (~35-75m), 2200N and (lesser priority that needs more work) 3500N. They are hoping for about a 12-week program with the RC rig because it does not require salt. AW is permitted to say things in their NRs that $BAY cannot under Exchange rules. AW’s January 24 includes a passage after the 400,000m2 reference that $BAY was unable to include in its parallel NR: "The footprint of near-surface, high-grade copper mineralisation at Storm has been defined over an area of approximately 400,000m2, with an average thickness of mineralisation of 24m @ 2.15% Cu (weighted average grade from 32 drill holes)." The additional info from the shallow targets is very important in the context of the potential direct shipping ore (DSO) project that might be pursued on an accelerated basis. The favourable test results that showed a ready to ship Cu concentrate of ~53% could see a low CAPEX, low footprint, environmentally benign project permitted and constructed on an accelerated basis in the next 2-3 years. A contractor (Ausenco) has been engaged, and has commenced work on defining a potential project and initiating the permitting pathway. Given the remoteness of the project area, the benign footprint, that there are no residents on the island, that there is little or no wildlife, that the project would produce copper and the desire of the Canadian government to demonstrate sovereignty in the far north, it is quite possible that a DSO project could be permitted on an accelerated basis, possibly with some government assistance. They are hoping for about 2,500m of “deeper” drilling using the diamond drill to pursue the exploration targets, with that program commencing at some point in June. (Note-the deeper targets are not expected to be really deep.) They are also expanding the exploration program into several new areas (Blizzard Tornado and Tempest). AW describes the “emerging sedimentary copper system” as follows on page 16 of the PDF linked above: “The recent discovery in drill hole ST22-10 (see ASX announcement dated 28 September 2022: New copper system confirmed at the Storm Project, Canada) suggests that known copper prospects at Storm may be related to a large, sediment hosted style copper system below the near-surface deposits (Figure 9). “The interpretation of the geochemical and geological data from drill hole ST22-10 indicates that the hole has intersected the margins of a mineralised system (The conceptual location of drill hole is indicated in Figure 9). This interpretation is supported by a series of coincident electromagnetic (EM), induced polarization (IP) and gravity anomalies that are over 5km long, and are associated with the 4100N Zone (Figure 10). “The other near-surface copper occurrences at Storm (2750N, 2200N and 3500N Zones) are also associated with large geophysical anomalies, which further supports the potential association between the two types of mineralisation.” The quote above looks like it might be code for something like “ST22-10 is much more significant than those of you who aren’t geologists think it is.” No work is planned on the Seal zinc property at this time. Virginia: My earlier updates reviewed the Virginia properties in detail. The only point that I’ll make in this update is that $BAY are currently in serious discussions to add another property that is prospective for both Cu and cobalt. Market Presence: They know they need to get out there more fully. Keep an eye open for some videos, perhaps one as early as next week. They also need to go in and have a holistic review and update of the website in conjunction with implementation of a market awareness strategy. This is just me talking: From the outside looking in, I think that it would be mutually advantageous for $BAY and AW to explore doing a business combination of some sort for at least the northern properties, possibly in conjunction with a spinout of the Virginia assets to the $BAY shareholders on some basis like one share for every 3 or 4 held. This would offer AW a simple path to a NA listing, potential access to accumulated tax pools, access to the Canadian super flow through funding for critical metals and access to any grants associated with the Canadian critical metals strategy, while simplifying the ownership of the asset for any subsequent negotiations with a major on the deeper targets. If a deal were worked out that made sense to $BAY, it would offer $BAY a much more meaningful position than what might be a bought down 1% NSR on the project, the possibility of a buyout in due course as part of AW in the event of a major discovery and a path forward to conduct work in Virginia with a much tighter share structure and an easier path to finance those programs. It would be surprising to me if AW weren’t already thinking about something in this regard. Conclusion: The potential at Storm seems to be greater than the market currently perceives, although the majors are presumably already watching in the context of hole ST22-10. The very active work program in 2023 could potentially answer a lot of questions about Storm and set $BAY and AW up for a very interesting 2024. Meanwhile, I’ll be sitting on the dock of the $BAY.

The spew bashers buried this post and now on page two . Excellant info and insite from CEO Tom and more . Long Read but well worth it . Long Bay.