Gold mining investors are weary. It’s been a long grind since the previous 10+ year bull market for gold came to an abrupt end in 2011. Indeed, conditions in the gold market today are very reminiscent of right before gold began its epic bull-run.
A recent article on this sector pointed to sentiment among precious metals traders being at a 27-year low. Sentiment today is worse than when the price of gold was below US$300 per ounce and gold was about to begin the longest, strongest bull market for any commodity this century – other than silver.
Experienced investors recognize such generational lows in sentiment as opportunity. Many (most?) of the most-explosive bull markets have emerged from such absolute troughs in investing sentiment. Where did gold investors find the biggest gains in the last bull market? In gold mining stocks.
However, because of the bear-market conditions, it’s important for investors to be selective in choosing gold mining companies for their portfolios – especially for the exploration component. Having operations located in the hottest gold camps/jurisdictions is crucial. This is where most of the best and largest discoveries are made.
Then comes geology: identifying and acquiring properties that exhibit the geological properties to maximize the odds of exploration success. One junior gold exploration company that is providing a huge asset package (and opportunity) at a micro-cap price is Nexus Gold Corp. (TSX: V.NXS, OTCQB: NXXGF, Forum).
(Drilling for gold at Bouboulou)
Like its peers, Nexus has been punished by the brutal market conditions for junior gold mining companies. But this hasn’t stopped the NXS management team from assembling an enormous package of land concessions (> 250 sq. km) – in what is arguably the hottest jurisdiction for gold exploration today: Burkina Faso, in West Africa. Exploration to date has already uncovered exciting mineralization potential. A previous Stockhouse full-length feature on the Company provides more information here.
Stockhouse recently posed some questions to the President and CEO of Nexus Gold, Alex Klenman, to get an update on its Burkina Faso operations.
The company has been drilling all summer and released an update towards the end of august confirming a 15km gold trend between two of its large concessions: how important is this confirmation and what does it say about the potential of the area?
Very significant in terms of the mineralized footprint. There are three established 5km trends on Bouboulou. Visually, we felt there was a good chance one or more of those extended on and through the Rakounga concession. The soil grid confirmed our theory and ultimately shows a significant trend of gold mineralization occurs across a broad path on the combined concessions. If we can now selectively drill the 9km gap between the known gold zones at Rakounga and those at Bouboulou, the footprint becomes even more meaningful and compelling. The goal is to establish a resource there, and this work contributes significantly to that goal.
For the readers unfamiliar with the mineralization prospects of West Africa, can you explain the significance of this area and how Nexus is working towards capitalizing on this?
Burkina Faso is one of the more prolific gold producing countries in Africa. There are several multi-million-ounce mines and deposits, and some big companies doing business there. It is a small country, about the size of Colorado or Nevada. And within this space you have Endeavour, IAMGold, B2 Gold, Semafo, Teranga and others. For a small company to work highly prospective land with obvious upside, in a neighbourhood with so many mid-tiers and majors, we feel that’s an attractive proposition.
Sandstorm Gold holds a 17.3% equity stake in the company. Please explain the significance of having institutional support from one of the most astute players in the gold mining industry.
Sandstorm evaluates a lot of deals that would potentially provide them with future streaming revenues. They conduct due diligence on the technical side and make their decision to invest based on what they conclude. One would presume therefore that if they greenlight an investment into a company like Nexus, their conclusion meters toward ‘probable’ rather than ‘improbable’, in terms of the potential of earning a future royalty. Of course, nothing is a guarantee in exploration, it is a tough business. But you would have to think for them to invest in project development they feel the likelihood of future revenue is more favourable than not. We see that as an endorsement of the project merit and we are certainly pleased with their involvement.
What does the company have planned in the coming quarter and when can we expect the next round of drill results to be released?
We drilled over the rainy season in Burkina and will begin to see those results soon. We intend to get back on the ground there before the end of the year and into 2019 to continue to build the data to support the eventual establishment of a resource. We are committed to that goal and we feel we can get it done sooner rather than later. All the work done to date is pointing us in that direction.
A focus of NXS’s exploration is the Sabce Shear Zone, in its Niangouela Concession. For Canadian investors, is there a geological parallel to this with which they would already be familiar?
Similar to the Cadillac Break in Canada, shear zone gold deposits occur proximal to these major structural faults. The Sabce is one of those well-known structural faults on the planet that had a lot do with where many gold deposits ultimately formed and came to rest in West Africa. It is certainly a prolific area in terms of gold deposition, and to be along active greenstone belts and well-known faults like the Sabce, it simply increases the odds of success.
In May of 2018, Ian Stalker was appointed to the Board of Directors. Could you expand upon his background, especially his depth of knowledge of gold mining in West Africa?
Ian is a great guy, first and foremost. He is knowledgeable and experienced and has been involved with taking early stage exploration projects to PEA and mining stage, all over the world. Today he is well known in the uranium and lithium space, but his background is most definitely gold. He spent many years in Ghana, West Africa, just next door to Burkina, as managing director for Ashanti Goldfields. Ashanti merged with AngloGold in 2004 and today s the third largest gold producer in the world. His experience and guidance at this stage for Nexus is particularly invaluable. We’re very happy he likes the projects and is involved with the direction of the company.
How will the recent drilling results help define existing and new mineralization footprints through the Rakounga concession?
Everything we do, from sampling, geochemical work, to drilling, at Bouboulou-Rakounga, will contribute critical data to the goal of establishing a compliant resource. We are really just beginning to understand the ground, and the relationship between the eight mineralized zones. 15 kilometers is a substantial area. How much of that area is economic, how much is measurable, are questions we’re going to answer in the next year or so.
Over the longer term, please provide your vision for Nexus Gold for investors
There is no doubt we’re in the right area. Bouboulou has become a bigger project with the addition of the neighbouring Rakounga concession, and the recent positive soil-grid results. We’re going to have some misses and some wins as we drill this out and understand what lies beneath the surface, that’s the nature of exploration. But ultimately, we’re confident we will bring a resource to market. Eight zones have been drill-tested up to this point, and we feel the ground has a lot more to give. If we can arrive at a compliant resource, with a workable share structure, we feel will have positioned the company for success and our evaluation should reflect that. $1400 gold would help, too…
Finally, anything else that you would like to add?
Burkina Faso is a gold rich country, and we’re happy to have established ourselves as an active and prominent explorer there. We have the requisite experience and our team has a history of success. We have some excellent partners, our market cap is attractive, and we are committed to delivering a strong return for our investors. We tick a lot of boxes and I urge anybody who believes in the metal to keep an eye on us.
nexusgoldcorp.com
FULL DISCLOSURE: Nexus Gold Corp. is a paid client of Stockhouse Publishing.