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Who got copper?

Vancouver-based Max Resource Corp. (TSXV:MXR, OTC: MXROF, FSE:M1D2) continues to make significant progress at its flagship CESAR project, situated along…

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This article was originally published by A Head of the Herd

June 15, 2021

China’s Belt and Road Initiative (BRI), first proposed by President Xi Jinping in 2013, is a “belt” of overland corridors and a “road” of shipping lanes. The grand design consists of a vast network of railways, pipelines, highways and ports that would extend west through the mountainous former Soviet republics and south to Pakistan, India and southeast Asia.

So far over 100 countries have either signed onto BRI. According to a Refinitiv database, more than 2,600 projects at a cost of $3.7 trillion were linked to BRI, as of mid-2020.

The Belt and Road Initiative is seen by proponents as an economic driver of proportions never seen before in human history. It would not only allow Asia to relieve its “infrastructure bottleneck” ie. an $800 billion annual shortfall on infrastructure spending but bring less-developed neighboring nations into the modern world by providing a growing market of 1.3 billion Chinese consumers.

Opponents argue that is naive and the real intent of BRI is to carve new Chinese spheres of influence in Asia that will replace the United States, in-debt poor nations to China for decades, and restore China to its former imperial glory.

It is the latter view that is driving some of the world’s richest nations besides China, to develop an alternative to Belt and Road that incorporates Western values and investment.

This past Saturday, the G7 comprised of Canada, France, Germany, Italy, Japan, the United Kingdom and the United States, agreed during a meeting in southwestern England, to counter China’s BRI with an infrastructure plan of their own.

B3W vs BRI

The Build Back Better World (B3W), initiative is “a values-driven, high-standard, and transparent infrastructure partnership led by major democracies to help narrow the $40+ trillion infrastructure need in the developing world,” according to a June 12 statement from the White House.

Through B3W, the United States and its allies would mobilize

private-sector capital in areas such as climate, health and health security, digital technology and gender equality.

A statement by a senior official in the Biden administration, quoted in a news article, suggests the bold infrastructure plan is a rebuke against China’s growing assertiveness and economic/ military rise over the past 40 years:

“This is not just about confronting or taking on China. But until now we haven’t offered a positive alternative that reflects our values, our standards and our way of doing business.”

China is already the world’s largest consumer of commodities. Why does it need to build a belt and road? There are a few reasons. The first as mentioned is to build infrastructure such as railways, roads and bridges. China would also construct 50 “special economic zones” modeled after the Shenzhen Special Economic Zone, first launched in 1980 under economic reformer, President Deng Xiaoping.

BRI would allow China to expand the use of the Chinese currency, the yuan, as the global influence of the US dollar as the world’s reserve currency wanes.

According to the Council on Foreign Relations, BRI is also a central tenet of Xi Jinping’s pushback against Obama’s “pivot to Asia” (contain China by extending US ties to southeast Asia), and distancing himself from his predecessors who followed Deng’s philosophy “bide your strength, bide your time.”

For Xi, the waiting is over: the time for imperialist expansion is now.

An Asia geopolitical expert says that, while the BRI satisfies a number of economic goals for China, including expanding its supply chains, accessing overseas labor, and preventing massive layoffs when companies run out of infrastructure to build, the over-riding goal is regional influence.

Richard Javad Heydarian, author of ‘Asia’s New Battlefield: The USA, China, and the Struggle for the Western Pacific’, writes:

“Above all, however, it allows China to lock in precious mineral resources and transform nations across the Eurasian land mass and Indian Ocean into long-term debtors. A leading credit rating agency recently warned that the OBOR is “driven primarily by China’s efforts to extend its global influence”, where “genuine infrastructure needs and commercial logic might be secondary to political motivations.”

The result is what one observer aptly described as “debt-trap diplomacy”, since some nations end up piling up unsustainable debts to China…

Although it is not yet clear how B3W would work, or how much capital would be allocated to it, the White House communique said the government will “work with Congress to augment our development finance toolkit with the hope that, together with the private sector, other U.S. stakeholders, and G7 partners, B3W will collectively catalyze hundreds of billions of dollars of infrastructure investment for low- and middle-income countries in the coming years.”

Not coincidentally, the G7 leaders followed up the B3W announcement with an agreement to collectively continue fiscal stimulus programs rolled out to deal with the covid-19 pandemic.

“There was broad consensus across the table on continued support for fiscal expansion at this stage,” an un-named source told Reuters, adding that Biden, British Prime Minister Boris Johnson and Italy’s Mario Draghi expressed particular support.

Drain on copper

2,600 projects costing $3.7 trillion are linked to BRI, as of mid-2020. Think about how much metal that would entail — in particular, copper, necessary for construction wiring, plumbing and telecommunications, along with renewable energy, 5G and vehicle electrification. 

Research commissioned by the International Copper Association, quoted by Mining Technology, found that Belt and Road projects in over 60 Eurasian countries will push the demand for copper to 6.5 million tonnes by 2027, a 22% increase over 2017 levels.

That much copper equates to nearly a third of the 20Mt of copper produced in 2020 — new copper supply that would need to be either mined from existing operations or discovered.  

The research, jointly presented by the International Copper Association and the International Wrought Copper Council, in a 2018 workshop entitled, ‘Copper: The Building Block of the Energy Transition’, also says that, during the first five years of the Belt and Road Initiative, 1.25Mt of copper was used to build a network of power generation and grids, highways and railroads — about 5% of world supply.

BHP, which operates the world’s largest copper mine, Escondida in Chile, reportedly estimated in 2018 that BRI is already seven times larger than the Marshall Plan, undertaken by the United States to rebuild Europe following World War II.

The firm told Reuters the initiative could boost copper demand by 1.6Mt, roughly 7% of annual demand at the time.

That’s for Belt and Road. Now consider: the United States and its G7 buddies want to match what the Chinese are spending on infrastructure with a similar plan of their own, ie., trillions in infrastructure spending in developing countries, to counter China’s growing influence. If the International Copper Association is right, and BRI demands 6.5Mt of additional copper supply by 2027, and G7 countries get their act together and begin rolling out big infrastructure projects through their new B3W initiative, we can probably count on another 6.5Mt. That would mean finding, in the next six years, an extra 13Mt, on top of current mine production of 20Mt.

This, in addition to what these countries are promising to spend in their own countries, to kickstart economies that have been battered by the pandemic. Plus the huge amount of copper that is going to be required for electrification/ decarbonization.

In 20 years, BloombergNEF says copper miners need to double the amount of global copper production (20Mt), just to meet the demand for a 30% penetration rate of electric vehicles. That means an extra million tonnes a year, over and above what we mine now, every year for the next 20 years! The world’s copper miners need to discover the equivalent of two Kamoas, (referring to the Kamoa-Kakula mine in the DRC that just entered production) at 500,000t, each and every year, while maintaining current production of 20Mt.

The continued move towards electric vehicles is a huge copper driver. In EVs, copper is a major component used in the electric motor, batteries, inverters, wiring and in charging stations. An average electric vehicle contains about 4X as much copper as regular vehicles. Electrification includes not only cars, but trucks, trains, delivery vans, construction equipment and two-wheeled vehicles like e-bikes and scooters.

The latest use for copper is in renewable energy, particularly in photovoltaic cells used for solar power, and wind turbines. The base metal is also a key component of the global 5G buildout. Even though 5G is wireless, its deployment involves a lot more fiber and copper cable to connect equipment.

In the United States, President Joe Biden has centered his $2.3 trillion American Jobs Plan around shoring up America’s crumbling infrastructure, while investing in clean energy. (the plan has recently been scaled back to $1.7 trillion to appease Senate Republicans)

Biden wants to get more electric vehicles on the road,  pledging to slash greenhouse gas emissions by nearly half over the next decade.

As part of its aggressive climate change goals, the US is looking at a $174 billion spending over the next eight years in an attempt to “win the EV market.” This includes building more charging stations and more incentives for consumers (ie. “point of sale” rebates) over that time span.

According to the US Department of Energy, there are about 100,000 public charging outlets nationwide today, but the goal is to increase that to 500,000 by 2030.

How much copper is all of this going to use? We don’t know but you can see from everything discussed so far, that demand for copper is going to go absolutely bonkers. Yet we have a problem, Houston. As demand rapidly expands, the world’s copper supply is tightening, amid long-term structural supply issues including lower ore grades, existing mine depletion and a lack of new discoveries, that are only going to make matters worse (or better, if you’re a copper miner/ explorer).

A report by Roskill forecasts total copper consumption will exceed 43 million tonnes by 2035, driven by population and GDP growth, urbanization, and electricity demand. Total world mine production in 2020 was only 20Mt. 

The demand pressure about to be exerted on copper producers in the coming years all but guarantees a market imbalance, resulting in copper becoming scarcer, and dearer, with each ambitious green initiative rolled out by governments, whose backs are against the wall due to negative fall-out from global warming.

A recent report by resource investment house Goehring & Rozencwajg Associates found stagnating supply is a key factor pushing “copper prices far higher than anyone expected.”

According to the Wall Street firm,, the number of new world-class discoveries coming online this decade “will decline substantially and depletion problems at existing mines will accelerate.”

Also, geological constraints surrounding copper porphyry deposits, a subject few analysts and investors understand, will contribute to the problems, the report said.

By 2015, the industry’s head grade was already 30% lower than in 2001, and the capital cost per tonne of annual production had surged four-fold during that time — both classic signs of depletion.

According to the Goehring & Rozencwajg model, the industry is “approaching the lower limits of cut-off grades,” and brownfield expansions are no longer a viable solution.

“If this is correct, then we are rapidly approaching the point where reserves cannot be grown at all,” the report concluded.

It also shines a light on the importance of making new discoveries in establishing a sustainable copper supply chain. Over the past 10 years, greenfield additions to copper reserves have slowed dramatically, with tonnage from new discoveries falling by 80% since 2010.

Trouble in copper land

To this we can add the most recent trouble to visit the copper market, ie., resource nationalism in South America and the Democratic Republic of Congo (DRC) surrently the focal points of global copper mining.

With the copper price soaring on tight supply and heavy demand, as the world’s biggest economies revive following a year of coronavirus-related restrictions, the temptation for producer nations to cash in on more valuable copper reserves to pay for social programs is proving hard to resist.

Chile and Peru, the number one and two producers, are both seeking to raise the royalty tax on copper miners, while in the DRC, Africa’s top copper-mining country, the government has just slapped a ban on the export of copper and cobalt concentrates — an action almost identical to what has happened in Indonesia with nickel.

Adding to these events, potential strikes at BHP’s Spence and Escondida mines in Chile are seemingly always fueling concerns about copper supply.

In Chile, presidential hopeful Daniel Jadue, who leads in polls ahead of the November election, wants to align mining rules with Peru, Argentina and Bolivia, so they don’t compete for investments, he said last week in an interview.

The Communist Party President would also renegotiate with foreign companies to take stakes in their assets, in what Bloomberg describes as the industry’s biggest disruption since U.S.-owned mines were nationalized to form Codelco in the 1970s.

The South American nation is fast becoming a liability for copper miners.

Triggered by the worst social unrest in a generation, anchored in rampant inequality, the country reportedly has just elected an assembly that will place responsibility for writing a new constitution in the hands of the left wing.

The reforms could give more power to indigenous communities and expand water rights, including a potential ban on mining in areas where there are glaciers, along with increased state ownership of water desalinated by mining companies.

There is also proposed legislation that, if approved by the Chilean Senate, would impose a royalty as high as 75% on sales of copper, if copper is above $4 like currently.

In a May note, Goldman Sachs said the new law could put at risk 1 million tonnes of annual copper supply representing about 4% of global output.

The future looks equally grim for miners in neighboring Peru, where left-wing candidate Pedro Castillo appears all but certain to become the country’s next president, following a too-close to-call June 6 election. 

Among his campaign promises, Castillo has vowed to take up to 70% of mining companies’ profits, and introduce new royalties on mineral sales.

The copper-mining country, second only to Chile in terms of output, has 46 mining projects representing a potential investment of $56 billion in the pipeline.

With so much at risk, it seems insane for Peru, and Chile, to be moving in an anti-mining direction, especially considering that foreign mining companies could pull their investments from South America, meaning a substantial loss in revenue to government coffers.

It also begs the question, at the risk of repeating myself, what is going to happen to copper supply, amid all of this resource nationalism? Will copper miners ramp up output even though doing so could mean a bigger chunk of profits goes to the state? Remember, if Chile’s law passes, mining companies will hand 75% of their profits to the government, as long as copper stays above $4 a pound, as most analyst expect it to.

Who needs that?

With resource nationalism putting a vice-like grip on the copper mining industry not only in Chile and Peru but in the top two African copper producers, the DRC and Zambia, it may beehove miners to go elsewhere.

One jurisdiction they should take a look at, a place where governments have not been influenced by leftists intent on grabbing a larger slice of the resource pie, is Colombia, where Max Resource Corp. (TSXV:MXR, OTC: MXROF, FSE:M1D2) is developing a huge copper deposit in the northeast of the country.

Max Resource Corp.

Vancouver-based Max continues to make significant progress at its flagship CESAR project, situated along the world-famous Andean Copper Belt.

In May, the company reported more promising assay results from the copper-silver property, increasing the area of the newly discovered CONEJO zone at the CESAR North target by a substantial 500% — six times its previous size!

The high-grade CONEJO discovery spans 1.6 km by 0.6 km, is open in all directions, and lies along the CESAR North Kupferschiefer-type sedimentary exhalative (sedex) copper-silver mineralization in the region.

The discovery is considered to be a new type of copper mineralization related to the sediment copper-silver system, but hosted in an igneous (volcanic) unit, which enhances the company’s steadfast belief in CESAR as a district-scale project with several pulses of mineralization.

The latest set of assays expanded the CONEJO zone to an area covering 3.2 km by 1.6 km. It remains open in all directions, lying along the mid-portion of the 80 km-long CESAR North copper-silver belt.

Meanwhile at another new discovery, the URU zone located 30 km to the south, the mineralization is “very similar” to that of CONEJO, CEO Brett Matich said. According to a June 10 news release, 15 rock channel samples over widths of 10 meters along a 4-kilometer-long strike, returned greater than 1% copper, with highlight values of 5.7% and 14 g/t Ag (silver).

URU sample locations

Over the past 18 months, the Max team has significantly extended the CESAR North target area, consisting of multiple new discoveries spanning over 80 km of strike, demonstrating a district-scale sediment-hosted copper-silver system.

The most recent discovery, called the SP zone, was announced in late April. Following the aforementioned CONEJO and URU discoveries, and the AMS and AMN discovery zones of 2020, SP became the fifth copper zone discovered along the continuous copper belt at CESAR North.

The latest discovery at URU, depicted as a red square, joins four previous discoveries in an 80-km section, shown on the map below lining up as URU, CONEJO, SP, AMN and AMS.

Along with pointing out the potential of five potential copper deposits along an 80-km strike, German website goldinvest.de makes some interesting observations about CESAR in a recent post.

The first is concerning the grades. The site points out “we are talking about high grade copper with peak values of >5.0 percent copper near surface!”, while tempering its enthusiasm by noting Max is still in the early stages of exploration.

Second, there is the observation that the URU zone is located within magmatic host rocks that cut through the sedimentary mineralization. “Thus, one does not appear to be dealing with a classic copper shale,” goldinvest.de writes, referring to the “Kupferschiefer” (copper shale, in German) group of rich copper-silver deposits covering Germany and Poland.

Third and most important, imo, is the site’s conclusion, “that the 200-km CESAR basin in northeastern Colombia has many of the characteristics of a world class copper destination.”

While such a statement might be considered vague, goldinvest.de backs it up with some solid arguments:

  • Unlike most copper explorers these days, the focus of Max is not on low-grade porphyry deposits at depth, but predominantly sedimentary deposits that outcrop near surface. The copper grades of this type of deposit are significantly higher than those of porphyry deposits due to their natural pre-concentration. Instead of extending to depth, these deposits extend laterally along their depositional layers. Finally, they are former marine sediments. 
  • The recent discovery in URU now seems to prove that secondary copper mineralization of volcanic origin is present in addition to these copper shales. It will be interesting to see what else is to come.
  • To be sure, Max is still far from a resource estimate, which perhaps explains the lack of interest in the market. But it is also clear that discoveries of this magnitude are not common. To put this in perspective: It’s about as if the entire European copper shale basin has just been rediscovered. We are keeping our fingers crossed for Max Resources as it continues its work. There could be something really big here. The big mining companies that are already in the country are likely to follow Max Resource’s work very closely.

To the above I would add another very important point concerning the land base that Max has acquired in Colombia and Peru, where the company is developing its RT gold project.

In both countries, Max has the support of the local communities that own the land, this is a necessary requirement for exploration and moving mining projects forward. Community buy-in, the support of the local landowners in Colombia and Peru paves a smooth road for access and exploration activities.

So ‘Who got copper?’

Max Resource Corp.
TSXV:MXR, OTC:MXROF, FSE:M1D1
Cdn$0.29, 2021.06.14
Shares Outstanding 90.6m
Market cap Cdn$26.2m
MXR website

Richard (Rick) Mills
aheadoftheherd.com
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Today’s News

Phoenix Gold Resources Intersects 47.79 M of 0.85% Copper Successfully Completing Initial Drilling Phase

Vancouver, British Columbia – TheNewswire – October 12, 2021 – Phoenix Gold Resources Corp. (the "Company") (TSXV:PXA) (OTC:PGRCF) (Frankfurt:5DE)…

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Vancouver, British Columbia – TheNewswire - October 12, 2021 – Phoenix Gold Resources Corp. (the "Company") (TSXV:PXA) (OTC:PGRCF) (Frankfurt:5DE) is pleased to provide initial assay results from 100 of 300 samples collected from the core in diamond drill holes YH21-04, -06, -08 and -09 selected for obvious massive sulphide mineralization.  The diamond drill holes were completed as part of the Company’s successful first phase of drilling on the York Harbour Copper-Zinc-Silver Project situated 27 kilometres west of Corner Brook, Newfoundland.

Highlights intersections from initial assay results:

  • - YH21-04 with 9.51 m of 1.69% copper, 125.14 gpt cobalt, 0.13% zinc, and 1.43 gpt silver

(including 1.54 m of 5.2% copper, 287.12 gpt cobalt, 0.07% zinc, and 2.57 gpt silver)

  • - YH21-06 with 47.79 m of 0.85% copper, 91.82 gpt cobalt, 0.57% zinc and 1.53 gpt silver

(including 1.60 m of 9.39% copper, 645.44 gpt cobalt, 0.18% zinc, and 6.9 gpt silver)

(including 5.80 m of 3.52% copper, 283.03 gpt cobalt, 0.09% zinc, and 2.80 gpt silver)

  • - YH21-08 with 6.6 m of 0.62% copper, 66.92 gpt cobalt, 0.65% zinc and 3.37 gpt silver

    - YH21-09 with 9.54 m of 1.69% copper, 238.73 gpt cobalt, 0.11% zinc and 2.83 gpt silver

The drilling program was successful in validating historical drilling results with 6 of the 9 drill holes intersecting massive sulphide mineralization and suggesting even further mineralization extending beyond the historical ‘A’, ‘G’ and ‘H’ zones. Two diamond drill holes encountered a wide fault zone, and a third hole intersected a section of the 400 Level adit and was not completed to its intended depth.  

Drill hole YH21-09 is especially significant since this drill hole was collared to intersect the 'A' zone at depth, but immediately intersected massive sulphide mineralization at the bedrock surface. This intercept indicates that there is significant exploration potential for discovering additional massive sulphide mineralization both along strike and beneath the upper mined portion of the 'A' zone.

The following table summarizes the intervals and weighted average grades for the 100 samples that were selected for their identified massive sulphide mineralization within the 4 drill holes.  Results for the remaining 200 drill core samples that include further visual sulphide mineralization are anticipated in the next few weeks.  

DDH

From

To

Interval

Copper

Cobalt

Zinc

Silver

Target Zone

No.

(m)

(m)

(m)

(%)

(gpt)

(%)

(gpt)

 
                 

YH21-04

180.03

189.54

9.51

1.69

125.14

0.13

1.43

H Zone

including

180.03

182.00

1.97

3.68

257.80

0.08

3.59

 

including

188.00

189.54

1.54

5.20

287.12

0.07

2.57

 

and

196.38

198.12

1.74

0.49

57.26

1.63

0.84

 

DDH
(No.)

From
(m)

To
(m)

Interval
(m)

Copper
(%)

Cobalt
(gpt)

Zinc
(%)

Silver
(gpt)

Target Zone

YH21-06

146.26

194.05

47.79

0.85

91.82

0.57

1.53

H Zone

including

146.26

148.06

1.80

1.19

67.00

5.09

13.47

 

including

152.53

154.85

2.32

0.46

48.29

5.06

2.65

 

including

178.35

179.95

1.60

9.39

645.44

0.18

6.90

 

including

178.35

184.15

5.80

3.52

283.03

0.09

2.80

 

including

179.95

193.20

13.25

1.30

127.01

0.06

1.19

 
                 

YH21-08

122.30

128.90

6.60

0.62

66.92

0.65

3.37

G Zone

including

122.30

125.25

2.95

0.81

103.12

0.50

3.34

 

including

127.25

128.90

1.65

0.61

36.34

1.20

4.95

 
                 

YH21-09

5.00

14.54

9.54

1.69

238.73

0.11

2.83

A Zone


The above intervals are drilling lengths, not true widths, because the true orientation of the mineralization has not yet been established.

It is interesting to also note that there are significantly elevated cobalt values, ranging from less than 100 to 918 ppm, commonly associated with the higher copper grades.  More studies will be carried on this valuable accessory element once the balance of the Phase 1 analytical results have been received.

Andrew Lee, President and CEO commented “As we hoped, the preliminary assay results from our Phase 1 drilling program have successfully demonstrated the copper potential at York Harbour and validated near-surface mineralization. The results from the remaining 200 drill core samples which are expected shortly, will further enhance our knowledge and understanding of the project as we enter Phase 2 drilling.”

QA / QC Comments

Three hundred Phase 1 diamond drill core samples of sawn core have been collected from core lengths usually varying from 0.3 to 1.50 m depending upon geological and mineralogical constraints.  Of this total, one hundred core samples were initially delivered to Activation Laboratories (“ActLabs”) in Ancaster, Ontario, an ISO/IEC-accredited laboratory.  There they were crushed to a nominal minus 2 mm, split into representative sub-samples and then pulverized to at least 95% minus 105 microns before collecting sub-sample pulps from each of the core samples.

All sub-sample pulps were initially analyzed for 36 elements using ICP QC procedures which included fusing with Na2O2.  The fused samples were then dissolved in purified water and acidified with concentrated nitric and hydrochloric acids. The solutions were then measured by an ICP.  Samples are analyzed with a minimum of 10 certified reference materials, and every 10th sample was prepared and analyzed in duplicate plus a blank is prepared every 30 samples and analyzed.  In addition, a 5 g sub-sample pulp for each core sample was analyzed for gold using fire assay fusion techniques with an atomic absorption finish (‘FA/AA’).  On each tray of 42 samples there is two blanks, three sample duplicates and 2 certified reference materials, one high and one low (QC 7 out of 42 samples).

Based upon the initial ICP results, any element returning predetermined over-limit values, specifically for copper, zinc, silver and gold, were automatically assayed using conventional assay procedures.  There were no over limit gold values but there were several copper, zinc and silver over- limit ICP results.  For each of these samples a 5 g sub-sample was split and assayed using conventional fire assay procedures with an atomic absorption finish (‘FA/AA’).  The laboratory QA/QC procedures for these samples were the same as for the previous gold FA/AA analyses.

J.D. Blanchflower, P. Geo. is a qualified person in accordance with National Instrument 43-101 and has reviewed and approved the scientific and technical information contained in this news release.

For further information contact:

Andrew Lee CEO, President and Director

Telephone: 778-302-2257 | Email: [email protected]  

Website: www.phoenixgoldresources.ca  

1518 – 800 Pender Street W, Vancouver, BC, Canada V6C 2V6

 

Cautionary Statement Regarding Forward-Looking Information

 

This news release may contain “forward-looking information” and “forward-looking statements” within the meaning of applicable Canadian securities legislation. All information contained herein that is not historical in nature may constitute forward-looking information. Forward-looking statements herein include but are not limited to statements relating to the prospects for development of the Company's mineral properties, and are necessarily based upon a number of assumptions that, while considered reasonable by management, are inherently subject to business, market and economic risks, uncertainties and contingencies that may cause actual results, performance or achievements to be materially different from those expressed or implied by forward looking statements. Except as required by law, the Company disclaims any obligation to update or revise any forward-looking statements. Readers are cautioned not to put undue reliance on these forward-looking statements. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this press release.

 

Copyright (c) 2021 TheNewswire - All rights reserved.

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Marvel positioning itself as a major landowner in Exploits Subzone of Central Newfoundland

2021.10.16
Marvel Discovery Corp. (TSXV:MARV, Frankfurt:O4T1, MARVF:OTCQB) is a company on the move, with active projects in the Exploits Subzone of Central…

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2021.10.16

Marvel Discovery Corp. (TSXV:MARV, Frankfurt:O4T1, MARVF:OTCQB) is a company on the move, with active projects in the Exploits Subzone of Central Newfoundland and the Atikokan gold camp in northwestern Ontario where the junior has been reporting visible gold at its Blackfly project.

Marvel’s business strategy is fairly straightforward: identify virgin ground that has been “passed over” by larger companies, acquire the claims and begin exploring, first running geophysics to identify targets, then drilling them.

An example of this tactic is what Marvel has been doing in Central Newfoundland.

Exploits Subzone

The Vancouver-based company has assembled a sizeable land position, over 100,000 hectares, right in the thick of the Exploits Subzone of Central Newfoundland — potentially one of the world’s last easily accessible, district-scale gold camps. 

It is known to contain deep-seated gold-bearing structures of the Dog Bay-Appleton Fault — GRUB Line deformation corridor, and is home to the high-grade Keats Zone of New Found Gold (TSX:NFG).

See below for Marvel’s map of the area including the major faults shown as heavy black lines.

The Exploits Subzone of Central Newfoundland

This past summer, Marvel was busy snapping up claims and adding to its land package.

The Victoria Lake project is among the most prospective of Marvel Discovery Corp.’s seven Newfoundland properties.

Located within the Exploits Subzone, the property is bolted onto Marathon Gold’s 4-million-ounce Valentine gold project, which is Atlantic Canada’s largest undeveloped gold resource.

Victoria Lake and Valentine exhibit a similar style of gold-bearing veins and have structural and geological settings in common. Preliminary work on Victoria Lake identified several quartz-arsenopyrite veins returning grab samples ranging from 15.5 to 24.9 g/t gold and 18.6 to 139.3 g/t silver.

In 1995, grab samples from Vein #3 featured 162.7 g/t gold and 220 g/t silver.

Marvel’s Victoria Lake project is bolted onto Marathon Gold’s 4Moz Valentine gold deposit.

In mid-September Marvel acquired an additional 53 mining claims at Victoria Lake comprising 1,325 ha, increasing its land position to 7,650 ha. The company says the acquisition is located along the Exploits Subzone and covers a large, highly prospective structural zone proximal to the Valentine Lake Shear Zone hosting Marathon Gold’s (TSXV:MOZ) Valentine Gold Project with  resources of 4M oz. of gold…

Victoria Lake Gold Project is host to interpreted extensions of the Valentine Lake Shear Zone and two major thrust faults, a wide structural corridor interpreted to play an integral part in the Marathon Gold Deposit.

In fact the claims, acquired via an option agreement with a vendor, contain the highest regional gold-in-till sample — 785 parts per billion (ppb) Au. This high-grade surface gold area was never followed up with additional exploration, making it a juicy target for Marvel Discovery Corp.

“These claim additions were a strategic move, not only in expanding the size and potential, but tying up ground with the highest gold till-in-soil samples in the province of Newfoundland,” Marvel CEO Karim Rayani commented in the Sept. 14 news release. “This shows we are in the right place for a potential discovery adjacent to what will likely become Newfoundland’s next and largest gold mine.”

An important part of Marvel’s Newfoundland narrative is the ground it has acquired near Falcon Gold (TSXV:FG), a sister company to Marvel Discovery also headed by Rayani.

Combined, the two juniors are the largest landowner next to Marathon Gold’s monster 4Moz Valentine gold project, and they each have claims on the Hope Brook gold project.

At Hope Brook, Marvel’s land position straddles both the eastern and western extents of recent land acquisitions by the Sokoman/Benton JV partnership, with Marvel now controlling areas of considerable structural complexity marked by large-scale fold and fault structures, which provide important structural controls (traps) for gold mineralization.

Rock lithologies and structures on the property are also related to those associated with Marathon Gold’s Valentine gold deposit, Sokoman’s Moosehead gold project and New Found Gold’s Queensway gold project — the first mover in the highly prospective Central Newfoundland Gold Area Play.

Marvel’s Hope Brook gold property is contiguous to First Mining and the Sokoman-Benton joint venture.

The Hope Brook mine was in production from 1987 to 1997, producing 752,163 oz. Coastal Gold outlined 6.3Mt at an average grade of 4.68 g/t Au, for 954,000 oz in the indicated and inferred categories.

In a phone call with me on Thanksgiving Monday, Rayani positioned the expanded Hope Brook project (19,075 ha now owned by Marvel) in relation to its neighbors:

“To the north you have Matador which I believe is 800,000 oz, to the south you have another deposit by First Mining optioned to Big Ridge which is another million oz of identified [gold], and we have all of the ground right in the middle so we’re tied onto major structures, we’ve got ground at Valentine Lake, we’ve got ground on three of the largest systems out there.”

He emphasized, “Our objective is to cover off whatever is not covered by government mag [magnetic survey] and fly the rest of it ourselves, then package it up and see what we’re going to do. I would like to try and do as much of the work ourselves and then make a decision as to what we’re going to drill.”

Initial permits have been filed for a first phase of exploration at Hope Brook which includes high-resolution magnetic gradiometry surveys that help to sort structural complexities in geological terranes. The company will also be sending prospecting crews to begin baseline prospecting to determine if the magnetic trends highlighted in regional government surveys are due to similar mineralized structures as those hosting the nearby Sokoman/Benton lithium discovery — the first documented occurrence of lithium in the province of Newfoundland-Labrador.  

“Marvel and our sister company Falcon Gold have made a lot of noise as of late not only in acquiring sizable land positions tied on to major structures but also following the structures to find what we believe are hidden gems that have been overlooked and passed by. Sokoman-Benton’s new Lithium discovery is less than 10 km away and is a testament to our business model,” Rayani stated in the Sept. 20 news release.

Blackfly

The Atitokan gold camp in Ontario is one of the country’s most prolific, and the Blackfly project is one of the camp’s earliest gold occurrences, dating as far back as 1897.

The property is in a highly enriched gold neighborhood, located within the Marmion Lake fault zone about 14 kilometers from Agnico Eagle’s Hammond Reef gold deposit, which hosts an estimated 3.32 million ounces of gold in reserves.

Marvel’s Blackfly project is 14 km from Agnico Eagle’s Hammond Reef gold deposit, with 3.32Moz in gold reserves.

Marvel’s mission is to see whether the historical exploration around the Blackfly mine has more to offer. So far the results look promising.  

Drilling commenced on June 24, with nine diamond drill holes out of 16 completed to date for 1,116m. Drilling has concentrated around the historical shaft area with four holes drilled at the Blackfly Northeast Zone.

Visible gold has been discovered in a number of surface samples and in multiple drill holes, a very good sign that MARV may have hit upon a gold system of yet to be determined size. Four sub-parallel gold mineralization trends have been confirmed by drilling.

Specks of visible gold in hole BF21-19 drilled at the Blackfly Northeast Zone.

“We’re just waiting on the final numbers.” Rayani told me, adding that there is a new zone he expects will report better results than former operator Terra-X.

According to Terra-X’s assessment report, the lineament containing the Blackfly vein has alteration and mineralization traceable over a 4.4-km strike length, as shown by the distribution of samples collected along it.

The best gold values from this lineament occur within the historical work, where Terra-X’s grab samples included results of 167 g/t and 85.6 g/t Au.

Conclusion

Marvel represents an intriguing opportunity for investors looking for an undervalued junior in one of the most exciting gold plays on the planet, the Exploits Subzone of Central Newfoundland.

Larger players like New Found Gold and Marathon Gold have seen success at the drill bit and their market capitalizations have grown accordingly. NFG currently trades at $8.82 per share with a market cap of $1.3 billion while MOZ has a market value of $734 million @ a share price of $3.02. Most of the money here, imo, has already been made. Penny stocks like Marvel offer much better opportunity for share price appreciation.

Central Newfoundland is shaping up to be a classic area play, with over a dozen companies having established a presence there, either buying up claims around the big gold deposits, like Queensway and Valentine, conducting exploration programs or in the case of Marvel Discovery Corp., both. Marvel has applied for exploration permits at Hope Brook and has significantly expanded its land position at Victoria Lake.

I wouldn’t be surprised to see further consolidation in the Central Newfoundland Gold Area Play. If a company like NFG, backed by big money, with Eric Sprott and merchant bank Palisades Goldcorp owning a combined 51% of the shares, were to start making acquisitions, the boost to smaller juniors like Marvel could be dramatic.

Over at Blackfly, Marvel’s mission is to see whether the historical exploration around the Blackfly mine has more to offer. So far the results look promising.  

Nine diamond drill holes have been completed to date for 1,116m. Drilling has concentrated around the historical shaft area with four holes drilled at the Blackfly Northeast Zone.

Visible gold has been discovered in a number of surface samples and in multiple drill holes, a very good sign that MARV may have hit upon a gold system of yet to be determined size. 

Marvel Discovery Corp. has everything we like to see in a gold junior, starting with a great property in an established gold jurisdiction. However, the company understands it’s never a good idea to put all your eggs in one basket. Management has acquired claims close to the big players in the Exploits Subzone of Central Newfoundland. The company already has one of the best prospecting teams in the province, and from what I’ve seen so far, great management that understands the lifeblood of a junior is a steady flow of news. Rayani hinted there will be more announcements from MARV before the year is out. Stay tuned.

Marvel Discovery Corp.
TSXV:MARV, Frankfurt:O4T1, OTCQB:MARVF
Cdn$0.10, 2021.10.15
Shares Outstanding 73.8m
Market cap Cdn$7.9m
MARV website 

Richard (Rick) Mills
aheadoftheherd.com
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Economics

5 Canadian metal stocks to buy

Highlights Over 43 per cent of the global mining firms are listed on the Toronto Stock Exchange and Toronto Stock Venture Exchange A stock mentioned…

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Highlights

  • Over 43 per cent of the global mining firms are listed on the Toronto Stock Exchange and Toronto Stock Venture Exchange.
  • A stock mentioned here surged by 104.8 per cent in the past year.
  • One of the companies listed earned a gross profit of US$380.2 million in Q2 2021, an increase of US$238.1 million year-over-year.

The Canadian headline index surged by 201 points or 0.97 per cent before closing at C$ 20,819. 94 on Thursday, October 14. Base metals, information technology, and the industrials sectors traded in the green.

Over 43 per cent of the global mining firms are listed on the Toronto Stock Exchange and Toronto Stock Venture Exchange. Here’s a compilation of five TSX-listed metal stocks to consider.

Also read: Top 5 TSX value stocks to buy

  1. Teck Resources Ltd (TSX: TECK)

Teck Resources is engaged in the development and mining of mineral properties. Its business units are focused on zinc, copper, coal, and energy.

Its gross profit increased to C$ 233 million in Q2 from the steelmaking coal business segment.

The company posted an adjusted EBITDA of C$989 million in the second quarter of fiscal 2021, up by 104 per cent year-over-year. Its liquidity as of July 26, 2021, stands at C$6.1 billion.

The stock trading C$ 39.10 apiece holds a P/E ratio of 106.10 as of October 15. The stock’s one-year growth stands at 104.8 per cent and nearly 56.3 per cent YTD.

  1. First Quantum Minerals Ltd (TSX:FM)

The stock worth C$ 27.68 apiece grew by nearly 125 per cent in the past year and 21.13 per cent year-to-date. First Quantum Minerals produces gold, zinc, nickel, copper, and cobalt.

It has mining operations in Australia, Africa, and Latin America.

Also read: Top 3 Canadian smallcap stocks to buy this fall

Its cash flows from operating activities of US$679 million in Q2 2021 were US$524 million higher than Q2 2020.

First Quantum stocks hold a P/E ratio of 46.70, as per TMX data.

The mining firm had US$1.79 billion in net unrestricted cash and cash equivalents at the end of the quarter.

  1. Labrador Iron Ore Royalty Corporation (TSX:LIF)

In the second quarter of fiscal 2021, the investment company posted a royalty revenue of C$ 78.8 million, compared to C$ 46.2 million a year ago.

Its equity earnings from Iron Ore Company of Canada were C$66.2 million in Q2 2021, compared to C$28.7 million YoY.

The steel firm’s stocks surged by nearly 40 per cent in the past year, with a P/E ratio of 7.10.

The company pays a quarterly dividend of C$ 2.10 per stock, with a three-year dividend growth of 39.51.

Also read: This TSX oil & gas stock skyrocketed 285% in a year!

  1. Lundin Mining Corporation (TSX: LUN)

The mining firm’s stocks traded C$10.28 at close on October 14. The diversified base metals producer has operations in Chile, the US, Sweden, Portugal, and Brazil.

Lundin Mining’s gross profit for Q2 2021 was US$380.2 million, an increase of US$238.1 million year-over-year.

The Canadian mining leader had cash and a net cash balance of nearly US$250 million and US$ 190 million as of July 28, respectively. The firm has a return on equity (RoE) of 15.07 per cent and its current dividend yield of 3.5 per cent.

The stocks surged by over 34 per cent in the past year and over 12.8 per cent quarter-to-date.

  1. Turquoise Hill Resources Ltd (TSX:TRQ)

The firm through its principal asset, the Oyu Tolgoi copper-gold mine, is engaged in the exploration, development, and mining operations.

The international mining company posted US$ 317.8 million in revenue from the operating segment for the three months period ended June 30.  The stocks delivered an ROE of 4.63 per cent and a return on assets of 3.25 per cent on October 15.

The scrips have added nearly 80.37 per cent of growth in the past year. It closed at C$19.12 on October 14.

Also read: The Best Cryptocurrencies of 2021

Bottom line

With inflation looming, gold and base metals prices could hold steady or grow. However likely this is, it’s not a given.

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