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Goldshore ticks all the boxes

2021.10.01
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I’m Rick Mills, editor of aheadoftheherd.com. Today I’m speaking with Brett Richards, CEO Goldshore Resources.
Rick Mills: Can you give…

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This article was originally published by A Head of the Herd

2021.10.01

Hi

I’m Rick Mills, editor of aheadoftheherd.com. Today I’m speaking with Brett Richards, CEO Goldshore Resources.

Rick Mills: Can you give us an intro to Goldshore Resources Inc. (TSX.V:GSHR) and a bit of the history of its Moss Lake project, why it was so attractive?

Brett Richards: It all started with a discussion of a number of guys on our advisory board we had around this time last year, we were talking about what’s next in the gold space. I was just coming off a project for a private equity client, where they said “we love the space, we got a great return on this project you helped us with, let’s look for something else.” They wanted leverage to the gold price because they believe that gold is going to trade north of $2,000 for an extended period of time, we’re just in a new place right now, given the macroeconomic outlook and current and future outlook of the world.

So I shared that view with some guys in Vancouver and one of them, David Garofalo [former CEO of Goldcorp] said we’ve been talking about this project Moss Lake. It’s low grade but big tonnage and it’s got a lot of potential. Would you take a look at it? We need somebody to run it.

I did a very deep dive on it and we entered into discussions with Wesdome. We put together a team of supporters and everybody writing checks at the to finance this.

After a couple of months we successfully acquired 100% of the Moss Lake project from Wesdome, the deal was signed on Jan. 26 2021. On Feb. 26 we went out and marketed the deal and our strategy, and we were able to quickly put together a $25 million financing, $15M in hard dollars, $10M in flowthrough.

Rick Mills: Why it was so attractive, to you, to investors?

Everybody was asking “why do you like this project, what’s so good about it”? My answer then, and still is, take a look at the history of Detour Gold. Detour had, back 8 or 9 years ago, a very similar profile to where Moss Lake is today. Now they’re a 750,000 ounce a year producer.

Detour Lake is highly leveraged to the gold price because you’re moving so much volume. The NPV (net present value) of these projects, because you’re producing so much, really gets pulled forward and accelerates with a rising gold price. Every $100 increase in the price of gold advances the NPV of these project significantly, in some cases like Detour’s $200 million for every $100 of gold price increase. That’s what Moss Lake represented to me, to us.

That’s why I got involved, that’s why we got involved. Of course the fact that it has a 4Moz historical resource, it’s been explored by prospectors since the 1900s, it’s had a lot of formal prospecting and exploration work done on it by Falconbridge, Noranda, by the Tandem and Storimin JV, played a huge part as well. Several land packages have been bolted onto this and we started 100,000 meters of drilling to take us where we are today.

Note that’s 4Moz on the largest land package in northwestern Ontario for a mining company. I thought not only is the size and scale there, but the potential to grow the resource is also there, those are game-changing statements and quite frankly I believe in them, and that’s why I, and others, wrote big checks to get into this company.

RM: I can see the company is moving at quite a pace, since February you’ve put in a camp and core shack, you’ve got one drill going. A second is starting soon, in November you’re going to have four drills turning. A 100,000 meters of drilling through the winter into August or so of 2022, you’re trying to hit 400m a day target.

You’ve done a VTEM survey and it looks like you’ve got several smaller faults but a big fault system running 20 km end to end of the project. It looks possible to extend Moss Lake along strike and to depth because it’s only drilled to 250m, there’s been a lateral step-out and you’ve got a magnetic coincidence matching the magnetic coincidence where the resource is.

Can you tell us a little bit more about your approach? Why such a warp speed program? It’s not often you see a company get off to such a fast start and have so much accomplished in such a short time.

BR: I’m a big believer in speed to market. I think there’s a lot of things that we’re doing to not only accelerate development, but accelerate decision-making points down the road for whomever it is we partner with and I say that very openly because realistically the team at Goldshore are probably not going to build the Moss Lake deposit into a gold mine. Somebody will, but chances are good it won’t be us.

I just want to make sure that we’re able to, not just by adding ounces but adding value. Value can be perceived in a number of ways, a potential partner or suitor is going to say “Hey Brett why did you do the environmental baseline study so early?” Well we did it because we’re going to shave off about a year, maybe a year and a half off permitting, which gets you into construction and production a year and a half sooner, which pulls forward $150 million or $200 million of NPV. That’s real value that we’re creating.

Why are we engaging so deeply with our First Nations host communities? Because we want to get to an agreement to de-risk the project for whomever comes in at the end of the day.

And it’s under-drilled. The historical drilling goes down to 250m but this deposit (historically) is 2 km long and about three quarters of a km wide, and we see significant expansion potential in every direction.

We will expand the resource at depth but of course there are limitations to doing that. If you look at Detour’s mine plan or other big low-grade, high-tonnage-deposit mining operations, given the lateral size of the pit shell you can probably get down to 400-450m over the life of the mine. You go much deeper than that and there’s just no return on it because it’s not mineable product, it doesn’t really come into the contained gold input of a PEA.

The next thing is we are wide open at strike as you can see on our VTEM survey this fault system is significant and it goes on for quite a distance. We could theoretically add several kilometers of this laterally. That’s going to take a lot of drilling so what we want to do is test it, we’ll know soon with our first drill results, because that’s the orientation of how we’ve drilled the first few holes. When we understand the lateral extension, we will drill it to be able to bring these results into our resource statement.

The detailed infilling and the detailed step-outs will have to occur down the road but now we’re talking about a massive resource we’re talking about a Detour-sized project in both capex, production profile and size of resource, that is what we’re aiming for. I’m trying to look at those types of deposits in and around Ontario, we’re trying to replicate that.

RM: You do have some copper prospects, you’ve got Coldstream and Hamlin, big high magnetics. In your corporate presentation you talk about future copper optionality, could you explain that?

BR: We did some IP (induced polarization) and some high-mag resonance at either end of our land package which is Coldstream and Hamlin Lake.

There are several historic drill holes at Hamlin and there are several up in the North Coldstream, East Coldstream, Iris Lake area. We have all the core for validation, but we need to test with our own drill holes to see whether or not if these are substantial copper anomalies.

Because we have already sent some samples to the lab we know there are gold, copper, silver and moly in some of these holes. We know there’s going to be multiple elements in there, we simply need to test them with our own holes. We’re not running a scout drilling program, we already have mineralization. Now it’s all about definition drilling, understanding the parameters of the deposit, whether it’s the IOCG (iron oxide copper gold) style deposits at Hamlin, or whether it’s the big VMS up at Coldstream. We need to understand it and we can hang something together.

The optionality I speak of is whether the results from Hamlin, North Coldstream, East Coldstream and the Iris Lake area are material enough to do a copper spinco down the road, for the lack of a better name call it Coppershore Resources. Is there a Coppershore Resources down the road with these targets? That would be great optionality for Goldshore shareholders.

RM: Yes it’s interesting you’ve got gold, copper and copper-gold. You’ve also  got cash of $11 million, your market cap is roughly $62 million, what’s the insitu value for indicated gold Brett?

BR: It takes about $20 to find, and turn, an ounce of gold into an inferred oz, it takes about $35 to $40 to find indicated ounces and it takes about $120-140 to bring them up into proven and probable. Just looking at the insitu valuation of our historic resource you can easily get to a magnitude of about $80-90 million without putting a drill hole in the ground.

If you multiply two and a half by $20 or $25, you get $60 million and if you’re going to take the balance of 1.5 million ounces at $35 or $40, you’re easily going to get another $20 million. I don’t think it’s a stretch to say the insitu value is anywhere between $80 million and $100 million today.

RM: With cash in the bank of $11 million and market cap of $62M at the time of this talk, that’s undervalued. Let’s remember the numbers and take a look at what are your peers trading at for an ounce of gold in the ground.

BR: I talk about this quite regularly because our market cap to attributable ounces of resource we trade at about $15 per oz. That’s obvious @ $15 X 4Moz gets us to a $60M market cap.

The following numbers are put together by banks, this is not cherry picked or hand-picked by Goldshore in any way. Our peers range from a number of companies that all operate in Tier 1 jurisdictions — Ontario, Quebec, US, Maritimes — and they’re all at a similar stage, whether that’s resource development or PEA or early PFS. And they all have a maiden resource of 2Moz or greater.

Click for larger image

So our peer group has all the same relative risk, the same relative attributes, and all have low-grade deposits in and around a gram. Some under, some 0.8 some 0.7 some 1.1 and in some cases 1.5 or 1.72. The average insitu gold oz value is roughly $46 today, the mean is a little higher at $50. That is an industry-chosen peer group calibration, currently we’re sitting at the bottom of the fourth quartile.

There is no shame in that, we’re only a three-month listed company. Post covid vacations became the norm this summer because nobody had vacations last year and the market pulled back quite significantly in the this summer as did gold. The market will eventually wake up and think we should be recalibrated so there’s opportunity here. Goldshore and Moss Lake should be rated on a per ounce basis certainly much higher. So to our shareholders getting in today that’s a multiple just getting up to a mean or the average of our peer group. That’s before we put anything in the ground, I see it as an opportunity.

RM: I agree the market’s been a little tough for awhile now on gold companies and being a new one, I think what you’ve managed to accomplish, the raising of $25 mil, getting the camp and the coreshack, doing the deal for 100% ownership shows the quality of management.

You’re drilling 100,000m, in your corporate presentation you say that will be done by next August and you are immediately going to do a resource estimate update and revise the PEA on the new RE, on a new gold price, plus the copper and the copper-gold potential to the north and the southeast. That’s a lot to look forward to, could you speak about the current resource update and the PEA?

BR: I can, first I need to caveat this, a lot of the things I’ll share with you are my view, and they have to be supported by results. We’re going to have some results going out into the market starting in a couple weeks time, our first drill results. They are going to start to paint the picture, hopefully back up the story I’m telling.

But if I just take the historic resource at what the base case was back in 2013, and let’s remember gold in Canadian dollars was at par, $1,546 oz, the NPV of the project was $353 million pre-tax. If we sensitize that now up to $1,700 and I make inflation adjustments for capax, opex and forex, at a $1,700 gold price today the NPV of this project pre-tax, before we do anything, is $1.032 billion. So this is a billion-dollar project before we get started and it’s just under $600 million after tax NPV (5% discount) so this is a 32% IRR (internal rate of return). This is a real project.

Our job is to increase the quality of it, increase the quantity of it, and keep all of these factors in the back of our mind about how do we manage a big capex from blowing out, how do we look at things differently, laterally, to decrease capex as we go forward, how do we make this work and optimize it?

RM: Can we talk about management? Besides yourself you’ve got some stellar people on the board could you talk about each of the guys?

BR: Absolutely. The first guy I’ll talk about is the guy I brought on to be our VP Exploration, Pete Flindell. Pete and I were just together on site, Pete has the same years of experience as I do, we both have 35 years in this business and ironically we both cut our teeth with majors, Pete started out for 14 years with Newmont I started out with Kinross, then we both spun off into a number of directions. The takeaway is Pete and I have worked together for almost 18 years now on the last nine projects. We’ve had early-stage exploration, we’ve had development projects like this, we’ve done feasibility studies, we have built mines both in Africa and in southeast Asia, and we’ve taken existing mines and taken them through a rehab, a refinancing, we’ve done a lot of things together.

I put a lot of faith in Pete’s experience and his view of things. When I brought him into Goldshore he was more excited about this project than he’s been about anything over the last 10 or 15 years, he’s very excited about the size, of the scale, how this can grow. Pete’s hour QP (qualified person) and he knows what it’s going to take to be able to develop the Moss Lake project that’ll be suitable for a transaction with a major or mid-tier.

About my board I’ve got a balance of guys and they’re all participants in the financing. Our board starts with Galen McNamara who’s the Chairman, then we have Doug Ramshaw, Brandon Macdonald, Shawn Khunkhun and Victor Cantore. And we just brought on Joanna Pearson in the summer, and we have two Wesdome appointees, Mike Michaud and Heather Laxton. Galen and Doug and Brandon and Shawn these guys are all CEOs of junior or mid-tier mining companies in their own right, anywhere from a $50M valuation up to $150-200M, they all are very active in the space on boards etc., Victor has a large company Amex Exploration doing very well in Quebec, so these guys know what it takes to be successful. Joanna Pearson is a colleague that I spent a lot of time with in West Africa, I got to know the guys from Endeavour Mining quite well and she’s the current CFO of Endeavour Mining. She’s Canadian but living in London, she brings a skill set that we wanted and needed to our board and she is the chair of our audit committee. Mike Michaud is the VP of Wesdome and Heather Laxton is the chief governance officer at Wesdome, they’re just quality people. With Wesdome as a 30% shareholder we want to keep them engaged as well.

And then we move on to another level of support, our strategic advisory board. These are guys who elevate us to the next level. The board is led by David Garofalo, David being the former CEO of Goldcorp, who transacted with Newmont last year, and is now the CEO of Gold Royalties. David’s very active in this space he’s probably one of the top five CEOs in the gold mining space in Canada and he is well renowned and needs no introduction. He likes this project, he’s participated in this project and he’s got his shoulder behind this as well. Craig Parry is the current Chairman of Skeena, he was the CEO and founder of IsoEnergy again another quality guy, Bryan Slusarchuk, the names keep going on here, Leo Hathaway of Lumina Gold, Daniel Kunz who’s the CEO of Prime Mining and Adrian Rothwell’s the CEO of Angold.

RM: As equally impressive as your management and advisory board is your share structure.

BR: Yes we have a pretty tight share structure, we’ve got 100 million shares out and the way we structured the $25m financing was that Wesdome got $19.5 million of shares or 30% of the total float. We also agreed Wesdome would lock up all of their shares into escrow, they would be released 15% every six months for the next three years. Of course all of the Goldshore shareholders have the same policy, so there are no common shares from the 63.8 million share tranche. Only 21 million shares are in play right now, it is the current flow-through. So we’ve got like 21% of our shares trading today everything else is locked. Yes, they come unlocked but over a gradual period of time which makes it much easier for the market to absorb. So it’s a very tight cap [capital] structure.

RM: We’ve had a pretty good talk. Would you like to say anything in conclusion?

BR: Rick I really appreciate your time and everybody’s time to read this interview, you know we tick a lot of boxes. It’s not just a singularity play here, we have a very large land package in a very good jurisdiction. We have already identified we have 4Moz of historical resource and we’ve already identified a number of targets along strike and a 20-km known mineralized trend. We have been gifted a very good starting point, we’ve got a lot of guys pushing from the board level, and we’ve got a tight share structure. When you start looking at all of this put together you can see how this could easily attain a higher value within our peer group and become more closely valued to the historic insitu value of our gold resources. I’m excited this is a great entry point for shareholders, thanks for your time Rick.

RM: I 100% agree with you. I see us going into a rising gold price environment and historically the greatest leverage to a rising gold price is a quality junior. I do agree Goldshore ticks all the boxes, thank you for your time, we’ll speak again soon.

Richard (Rick) Mills
aheadoftheherd.com
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Author: Gail Mills

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Base Metals

LIG Assets, Inc. (OTCMKTS: LIGA) Powerful Run into Copper Land as Real Estate Developer Goes Pink Current & Reports Record Q3 Revenues

LIG Assets, Inc. (OTCMKTS: LIGA) is making an explosive move up the charts quickly transforming into a volume leader in small caps as it moves into copper…

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LIG Assets, Inc. (OTCMKTS: LIGA) is making an explosive move up the charts quickly transforming into a volume leader in small caps as it moves into copper land. The stock is getting noticed by some big players in small caps and at current levels has plenty of room to grow. Currently under heavy accumulation LIGA is looking to blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension – Tesoro went to multi dollars – LIGA is moving up with power with intraday highs at $0.0117; a break over and its blue skies ahead for LIGA. 

LIGA has been making big moves in recent months going pink current and recently reporting record revenues of $6,585,263 and net income of $ 3,084,656 in Q3, 2021. The Company is also virtually debt free. LIGA recently closed on the sale of Bella Serra for $7,037,549 in an all-cash deal. On August 13 the funds were posted to LIGA’s Bank account. This closing is truly a Landmark event for LIGA, and Management is ready to get to work putting these funds to use. The Company plans to start finishing the projects that are currently in progress and new deals that will soon be announced, including; Sustainable buildings and products, Joint Ventures and Acquisitions that make sense from a revenue standpoint and play a role in the big picture at LIGA, and Livestore/Liveship partnership projects. The stock has momentum, huge liquidity and legions of new shareholders bidding up the price as LIGA makes a powerful move into copper land. 

LIG Assets, Inc. (OTCMKTS: LIGA) is a multi-faceted worldwide investment company that focuses on real estate, media, and the seafood industry. LIG Assets, Inc. in association with Robert Plarr is the emerging “Leader in Green Assets” — focused on exclusive green, renewable energy and sustainable homes, living systems, technologies and components to be utilized in residential and commercial real estate.The company owns 60 acres of land in Brentwood TN and plans to build a hurricane survivable model home in Panama City Beach FL. The company plans to enter the ‘green’ drywall business which is a rapidly expanding market. Wholly owned subsidiary LIG Developments will concentrate specifically on the burgeoning light gauge steel framing industry.  

LIGA Homes unique residential and commercial developments utilize specially designed and manufactured recycled “element resistant” steel framing, in addition to toxic free magnesium oxide building materials and panels that are 100% mold, fungus, termite and rot resistant and fire resistant against temperatures up to 3500 degrees Fahrenheit as well as famed environmentalist Robert Plarr’s exclusive “maximum rated” R-60 insulation — combining to create disaster resistant materials and structures that can withstand up to a 7.5 magnitude earthquake and sustained gale force winds up to 175 MPH while negating damage caused by rain and flood exposure. With the addition of Plarr’s green and renewable systems and products, LIGA Homes is now capable of providing affordable, fully sustainable and disaster resistant living environments – LIGA Homes is at the forefront of this new and improved direction for the green, sustainable and construction sectors. 

To Find out the inside Scoop on LIGA Subscribe to Microcapdaily.com Right Now by entering your Email in the box below

LIGA

Microcapdaily first reported on LIGA on August 30, 2019 stating at the time: “In February LIGA launched the Company’s Joint Venture where the team of LIGA and real estate franchise leader EXIT Realty Elite have negotiated a two-part deal to purchase a beautiful 60.19-acre tract along the hillsides of Brentwood, Tennessee. First phase of the acquisition on Bluff Rd., which officially closed with Smart Title & Escrow, Franklin TN, January on 30, 2018 entails the purchase of 30 acres for the price of $1,000,000 with first option to purchase the remaining 30.19 acres for an additional $1,000,000 within 12 months of the originally executed purchase agreement. The residential subdivision project for the first 30 acres will consist of 42 upscale single-family residences ranging in price from $599,000 to $1,000,000+ with square footage beginning from 2800 square feet and up, bringing the projects gross revenue potential a minimum of $28,000,000 once completed. 

The Company has been making big moves; in August they returned to PINK CURRENT status with OTC Markets. At the same time the Company removed Aric Simons from the BOD and voted in Marvin Baker in as the new Chairman of the Board at LIG Assets to add to his current role of President. LIG also closed on the sale of Bella Serra for $7,037,549 in an all-cash deal. On August 13 the funds were posted to LIGA’s Bank account. This closing is truly a Landmark event for LIGA, and Management is ready to get to work putting these funds to use. The Company plans to start finishing the projects that are currently in progress and new deals that will soon be announced, including; Sustainable buildings and products, Joint Ventures and Acquisitions that make sense from a revenue standpoint and play a role in the big picture at LIGA, and Livestore/Liveship partnership projects. 

Last week the Company hosted the LIGA 2021 – 5th Annual Sustainability Impact Conference at the Buck Lake Ranch. LIG Assets CEO Dakota Forgione, President Marvin Baker, Partner and Renowned Environmentalist Robert Plarr, and various Strategic Partners and Joint Venture partners spoke at the conference.  

For More on LIGA Subscribe Right Now!

LIGA is making an explosive move up the charts quickly transforming into a volume leader in small caps as it moves into copper land. The stock is getting noticed by some big players in small caps and at current levels has plenty of room to grow. Currently under heavy accumulation LIGA is looking to blaze a path along the likes of Enzolytics or Tesoro and break out into a whole new dimension – Tesoro went to multi dollars – LIGA is moving up with power with intraday highs at $0.0117; a break over and its blue skies ahead for LIGA. LIGA has been making big moves in recent months going pink current and recently reporting record revenues of $6,585,263 and net income of $ 3,084,656 in Q3, 2021. The Company is also virtually debt free. LIGA recently closed on the sale of Bella Serra for $7,037,549 in an all-cash deal. On August 13 the funds were posted to LIGA’s Bank account. This closing is truly a Landmark event for LIGA, and Management is ready to get to work putting these funds to use. The Company plans to start finishing the projects that are currently in progress and new deals that will soon be announced, including; Sustainable buildings and products, Joint Ventures and Acquisitions that make sense from a revenue standpoint and play a role in the big picture at LIGA, and Livestore/Liveship partnership projects. The stock has momentum, huge liquidity and legions of new shareholders bidding up the price as LIGA makes a powerful move into copper land. We will be updating on LIGA when more details emerge so make sure you are subscribed to Microcapdaily so you know what’s going on with LIGA.

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Disclosure: we hold no position in LIGA either long or short and we have not been compensated for this article.

The post LIG Assets, Inc. (OTCMKTS: LIGA) Powerful Run into Copper Land as Real Estate Developer Goes Pink Current & Reports Record Q3 Revenues first appeared on Micro Cap Daily.



Author: Boe Rimes

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Precious Metals

Long-Bond, Big-Techs, & Black-Gold Bid As China Stocks Chunder

Long-Bond, Big-Techs, & Black-Gold Bid As China Stocks Chunder

While yesterday was dominated by more macro moves – gold, yield curve,…

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Long-Bond, Big-Techs, & Black-Gold Bid As China Stocks Chunder

While yesterday was dominated by more macro moves – gold, yield curve, and equity indices – today’s headlines were more focused on idiosyncratic moves in stocks…

TSLA gave up its early gains…

FB tumbled after running stops last night after earnings…

DWAC pumped and dumped…

And BKKT puked back a lot of yesterday’s post-close gains…

And finally BITO fell back below its launch price…

Small Caps were the laggards on the day but after a big rotation at the open, Nasdaq fell back, trending lower with the rest of the market. The Dow ended unch, giving up its gains with a weak close…

And while US Tech stocks rallied today, China Tech chundered hard after its recent dead cat bounce (dumping almost 4% today, the biggest loss in a month)…

Source: Bloomberg

The opening saw yet another huge short-squeeze but that appeared to flush out the last remaining bears on this move and “most shorted” stocks tumbled for the rest of the day…

Source: Bloomberg

VIX spiked above 16.5 intraday today before vol-sellers re-appeared…

Credit markets refuse to follow stocks lead to new highs…

Source: Bloomberg

Treasuries were mixed, flip-flopping again to this time seeing the long-end bid (30Y -3bps) while the short-end yields rose 1-2bps, all of which left the curve 1-2bps lower in yield overall…

Source: Bloomberg

The yield curve reversed to flattening once again, back near crucial support once again…

Source: Bloomberg

The dollar ended very marginally higher on the day but remains stuck in its recent narrow range…

Source: Bloomberg

Crypto ended mixed but only marginally changed with Bitcoin finding support lower around $62k…

Source: Bloomberg

And Ethereum holding above $4200…

Source: Bloomberg

Gold was dumped back below $1800…

And WTI rebounded from yesterday afternoon’s slide to close just below $85 ahead of tonight’s API data…

And finally, remember the taper is coming soon…

Source: Bloomberg

Tyler Durden
Tue, 10/26/2021 – 16:01

Author: Tyler Durden

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Energy & Critical Metals

Explorers and Developers Targeting Cobalt Projects

By Ellsworth Dickson Historically, the metal cobalt was a by-product of mines that were mainly…

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By Ellsworth Dickson

Historically, the metal cobalt was a by-product of mines that were mainly concerned with other metals, for example, silver. That was the case for the1903 silver rush around the Town of Cobalt in northeastern Ontario. The hundreds of veins in the camp featured high-grade silver values accompanied by several cobalt minerals.

The silver rush was slow to get started but by 1906 there were 263 mining companies in the Cobalt district. Many famous mines were built such as the Coniagas, Nipissing 407, Agaunico, Silverfields, O’Brien, Glen Lake Mines, Deer Horn Mines, Agnico, Temiskaming, Trethaway, Hi-Ho, Cart Lake and more.

Silver mining continued into the 1980s with cobalt still of secondary interest. The Cobalt area mines lay dormant until about 2017 when the rising price of cobalt resulted in a staking rush with both cobalt and silver of interest. Since 2017, there have been a number of activities in the Cobalt camp – exploration and drill programs, staking, new discoveries, consolidations, changes of plans, and so on. The initial fever has naturally given way to people in it for the long haul. (more later on)

Cobalt is used to make superalloys, high-temperature alloys, cutting tools, magnetic materials, petrochemical catalysts, pharmaceuticals, steels and glaze materials. Back in the 1990s, only 1% of cobalt demand was from its use in rechargeable batteries.

Today, the cobalt market is largely being driven by “new economy” drivers, including lithium-ion batteries, consumer electronics, Electric Vehicles (EVs) and Energy Storage Systems (ESS) that are the dominant uses for lithium-ion batteries, representing 64% of cobalt demand in 2020.

Various world governments have actually mandated the manufacture of EVs and the tapering off of internal combustion engines, resulting in an EV sales growth forecast of 30%. Consequences of the COVID virus have sometimes affected the cobalt marker but that will eventually end. Cobalt is currently trading at US$24.03 per pound, up about 57% from a year ago. Consequently, cobalt explorers and developers have targeted projects in various locales around the world.

Cobalt, being a fairly rare metal, means that there are not that many cobalt projects or mines – either as a primary commodity or as a secondary product, usually with copper, nickel or silver Cobalt is not like, say, the gold or copper sector that generates many projects and mines.

Commodity trader and miner Glencore Plc [GLEN-LSE] recently said it will restart operations at the world’s largest cobalt mine, Mutanda in southeast Democratic Republic of Congo (DRC), towards the end of this year and return to production in 2022.

The DRC (Kinshasa) continues to be the world’s leading source of mined cobalt, supplying approximately 70% of global mine production. The use of child labour at artisanal mines is a big problem.

According to the United States Geological Survey, 2020 mine production was DRC: 95,000 tonnes; Russia: 6,300 tonnes; Philippines: 4,700 tonnes; Canada: 3,200 tonnes; China: 2,300 tonnes; U.S.: 600 tonnes; and Australia: 5,700 tonnes. In 2020, total global production in 2020 was 140,000 tonnes with world reserves pegged at 7.1 million tonnes.

The 2021 diamond drilling program at the Fortune Minerals NICO Project, NWT.

Thanks to the burgeoning EV industry, cobalt demand is expected to steadily increase as manufacturing ramps up which bodes well for the cobalt sector.

Besides northeastern Ontario, there are not a great number of other cobalt projects in North America. One company that stands out is Fortune Minerals Limited [FT-TSX] that has attracted investor interest because its flagship NICO project in Canada’s Northwest Territories that is one of the most advanced cobalt development assets outside the Democratic Republic of Congo (DRC).

Fortune is one of only a handful of global companies that could emerge as a possible supplier of “ethical cobalt” to consumers seeking an alternative to the DRC, currently the source of over 60% of the world’s production.

Amnesty International has warned electric car companies to seek out alternatives to the DRC, which is well known for its mineral wealth, but also civil wars and corruption.

However, Fortune is more than just a play on cobalt. The unique metal assemblage of the NICO deposit includes open pit and underground proven and probable reserves of 33 million tonnes, containing 1.1 million ounces of gold, 82 million pounds of cobalt, 102 million pounds of bismuth, and 27 million pounds of copper.

According to a 2014 feasibility study and recent optimizations, that material could support average annual production for the first 14 years of a 20-year mine life (2020 mine plan), including 1,800 tonnes per year of cobalt in battery grade cobalt sulphate, 47,000 ounces per year of gold in doré bars, 1,700 tonnes per year of bismuth in ingots and oxide and 300 tonnes per year of copper in cement precipitate.

The study suggest that ore can be extracted from a proposed open pit and underground mine and mill that will produce a bulk concentrate for shipment to a refinery that the company plans to construct in southern Canada.

The products that would be produced at the proposed refinery include cobalt chemicals used to make high performance rechargeable batteries, bismuth metals and chemicals, as well as gold.

It is worth noting that the company has received environmental assessment approval and key permits to construct and operate the NICO mine and concentrator in the Northwest Territories.

Fortune also owns the satellite Sue-Dianne copper-silver-gold deposit, located 25 kilometres north of the NICO mine site and other exploration projects in the Northwest Territories, and maintains the right to repurchase the Arctos anthracite coal deposits in northwest British Columbia that were previously bought by a British Columbia Crown corporation.

A helicopter prepares a diamond drill pad at the Fortune Minerals NICO Project, NWT.

Fortune sees Sue-Dianne as a potential future source of incremental mill feed that could extend the life of a NICO mill and concentrator

Sue-Dianne hosts an indicated resource of 8.4 million tonnes grading 0.80% copper, 3.2 g/t silver and 0.07 g/t gold. On top of that is an inferred resource of 1.62 million tonnes of grade 0.79% coper, 2.4 g/t silver and 0.07 g/t gold.

“Cobalt has a critical role in the accelerating transition to e-mobility, and advanced assets like our NICO Project are needed to help satisfy the growing demand and diversify the supply chain,” said Fortune President and CEO Robin Goad.

The NICO project is located 160 kilometres northwest of Yellowknife and 50 kilometres north of Whati, a First Nations community in the North Slave region

Due to the remote location, the Tlicho Highway, under construction for the NWT government, is a key enabler for the NICO development and is nearing completion and expected to open to the public later this year. The $213 million, 97-kilometre all-season road to the community of Whati, together with the spur road that Fortune plans to construct, will allow metal concentrates to be trucked from the mine to the rail head at Hay River or Enterprise, NWT for railway delivery to the company’s planned hydrometallurgical refinery.

Fortune has talked about a total project cost of around $775 million. But the focus now is on various optimizations and refinery sites aimed at delivering a more financially robust project compared to the one envisaged in the 2014 feasibility study.

In keeping with that effort, Fortune recently launched a 3,000-metre drill program to test for a potential expansion of the NICO deposit at the east end of the deposit. It said exploration crews will also test up to four additional targets defined by previous geology and geophysics programs.

Fortune recently raised almost $542,000 from a private placement offering of 3.9 million issued that were issued at 14 cents per unit. It also received a grant of $144,000 from the Government of the NWT.

On October 22, 2021, Fortune shares were trading at $0.13 in a 52-week range of 27 cents and $0.06, leaving the company with a market cap of $47.58 million based on 366 million shares outstanding.

Other companies within the cobalt mining space worth mentioning include:

Canada Silver Cobalt Works Inc. [CCW-TSXV; CCWOF-OTC] recently reported high-grade cobalt assays from its Castle East discovery located 1.5 km from its 100%-owned, past-producing Castle Mine near Gowganda in the silver-cobalt district northeast of the Town of Cobalt where the company has completed 42,000 metres of a 60,000-metre drill program aimed at significantly increasing its 43-101 resource estimate. Canada Silver Cobalt Works recently discovered a major high-grade silver vein system at Castle East. The company also has a pilot plant and processing facility.

Kuya Silver Corp. [KUYA-CSE] has given notice of intention to exercise an option to earn a 70% interest in all of First Cobalt Corp.’s [FCC-TSXV; FTSSF-OTCQX] remaining mineral rights in the Cobalt camp. Kuya previously acquired a 100% interest in a property package surrounding the Kerr Lake area for $4-million.

First Cobalt owns a hydrometallurgical cobalt refinery in the Town of Cobalt. The refinery has the potential to produce either a cobalt sulfate for the lithium-ion battery market or cobalt metal for the North American aerospace industry or other industrial and military applications.

With permits and building infrastructure already in place, the First Cobalt Refinery will be operational as early as 2022. Once operational, the Refinery will produce 25,000 tonnes of battery-grade cobalt sulfate per annum, representing more than 5 per cent of all cobalt produced around the world.

Cruz Battery Metals Corp. [CRUZ-CSE; BKTPF-OTC; A2DMG8], formerly Cruz Cobalt Corp., completed a three-hole, 837-metre diamond drill campaign at the Hector Silver-Cobalt property. The company is a large mineral land holder in the Cobalt area and also includes the Bucke, Coleman, Johnson and Lorraine prospects.

Fuse Cobalt Inc. [FUSE-TSXV; FUSEF-OTC; 43W3-FSE], formerly Lico Energy Metals, recently reported that the government of Ontario announced a joint $10-million investment in the First Cobalt refinery in Cobalt Ontario. Significantly, this refinery is located approximately 1,500 metres west of the company’s cobalt exploration property. Fuse holds the Teledyne Cobalt property in Bucke and Lorrain Townships as well as the Glencore Bucke property located on the west boundary of the Teledyne property.

Brixton Metals Corp. [BBB-TSXV; BBBXF-OTCQB] has 100% interests in the Langis-Hudbay silver-cobalt project near the Town of Cobalt. The Langis Mine produced 10.4 Moz silver at 25 oz/ton and 358,340 lbs of cobalt between 1908 and 1989. Between 1903 and 1953 the Hudson Mine produced 4 million ounces of silver and 185,570 lbs cobalt.

iMetal Resources Inc. [IMR-TSXV; ADTFF-OTC] reported grab sample values of 67.9, 29.6 and 11.3 g/t gold from its flagship Gowganda West property.

The Eagle mine of Lundin Mining Corp. [LUN-TSX; LUNMF-OTC; LUMI-Sweden] in Michigan produces a cobalt-bearing nickel concentrate.

Jervois Global Ltd. [JRV-TSXV, ASX; JRVMF-OTC] is constructing the Idaho cobalt project (ICP) about 40 km from Salmon, east-central Idaho. It is a primary cobalt deposit with production estimates of 1,200 tons per day of super-alloy grade high-purity cobalt metal over a 7-year mine life.

The company has committed more than US$30-million toward equipment, materials and labour costs, both on-site and for detailed engineering. Construction, procurement and engineering schedule is on time with plan and commissioning of the mine expected from mid-2022. Currently, underground construction has commenced.

The company said that this historic step marks the first time in decades that the United States will have a primary cobalt mine within its borders.

Bryce Croker, CEO of Jervois, said, “Cobalt is a crucially important material for both defense and civilian applications. The electrification of the United States and global transportation sectors are currently and expected to continue driving exceptional cobalt demand growth.”

Some analysts are predicting a 17% increase in cobalt demand this year over 2020 and even more demand in the future due to the electrification of the world’s vehicle fleet. For example, the Ford Motor Company [F-NYSE] recently announced a US$11 billion investment to build electric vehicles in Tennessee and Kentucky, creating 11,000 new jobs. News doesn’t get much better than that.

 

fortune minerals limited

Author: Resource World

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