Gold’s renaissance in recent weeks amid growing concerns of an “unchecked inflation” cannot be overlooked.
US inflation data for the month of October showed a headline rate of 6.2%, the highest in over three decades. This inspired another series of sharp movements in bullion, which was also helped by 10-year Treasury yields falling to a record low at one point.
Following its latest rally, gold is now trading near its highest in nearly 6 months, as soaring inflation combined with a market-wide perception that the Federal Reserve will refrain from hiking interest rates continues to fuel safe-haven demand.
Looking ahead, there’s optimism that rising price levels could offer further support for the precious metal.
In their latest outlook report, Swiss investment bank UBS sees risks of further strength in CPI in early 2022, which could stoke even stronger demand for gold.
Furthermore, recent hawkish comments by Fed officials have caused a flattening of the US yield curve, which UBS analysts believe will only add to gold’s shine.
And while UBS still expects the pace of inflation to moderate, this process may take longer than some had anticipated. As such, it has raised its end-of-March target price to $1,800/oz, up from $1,700/oz, and its year-end 2022 target to $1,650/oz (from $1,600/oz).
“We also acknowledge the risks are skewed to the upside in the short run, and temporary price moves above $1,900/oz shouldn’t be ruled out,” the bank added.
However, should the Fed become dovish and introduce another round of quantitative easing measures, or it allows inflation to overshoot by delaying the tapering timeline, then this would once again support investment demand for gold.
In such an upside scenario, UBS has given a June 2022 target of $1,950-2,050/oz.
In a recent Bloomberg interview, Nicky Shiels, head of metals strategy at MKS (Switzerland) SA, said inflation — which she believes is “not transitory” — has injected some bullish momentum into gold.
Although it remains to be seen whether this year’s inflation can be regarded as a transitory phenomenon, the bond market has been favoring one side of the debate.
A key measure of bond market expectations for inflation over the coming decade recently rose to its highest since 2006, which is keeping Treasury yields in check. This is important as historically Fed officials tend to monitor signals in the bond market when deciding what to do with interest rates.
“The market saw this as evidence that the pickup in inflation will not be as transitory as the Fed had hoped,” John Briggs, bond market strategist at NatWest Markets, told The New York Times.
Meanwhile, across the Atlantic, Bank of England Governor Andrew Bailey told the House of Commons Treasury Committee on Monday that he was “very uneasy about the inflation outlook”, having surprised investors by keeping interest rates untouched when most were anticipating a rate hike.
In the near term, analysts feel there’s more upside for gold as markets gear up for the Fed’s December monetary meeting, with more inflation and employment data coming into play.
“Inflation is a big one for me. If we see inflation expectations outperforming the move in yields. That’s what I’m looking for at that year-end rally. And it is in the cards. I am very bullish at this point,” DailyFX analyst Warren Venketas said in a recent interview with Kitco.
“There is a very strong case for the year-end gold rally,” Venketas added. “That second-round impact of the price increases will last into the second half of 2022. Inflation is here to stay for the next six months or so.”
For as long as the inflation worries stick around, gold will receive a healthy boost in value. So too will gold mining companies, in particular those holding advanced-stage projects in low-risk jurisdictions.
In the gold mining state of Nevada,( ) (OTCQB: GGLDF) is completing a Phase 1 4,000-meter drill program on its flagship Fondaway Canyon gold project, on its way towards a major resource update.
The program was designed to verify the company’s new geological model through sufficient infill drilling, thus allowing it to upgrade the project resource beyond the current 1.1 million oz estimate. Getchell is also continuing to step out from known gold intercepts to expand the geological model.
“The near-term objective is to continue to expand and define the gold mineralization at Fondaway and maximize the inherent value upon which we will be starting from next year,” Getchell’s president Mike Sieb stated in a news release dated Oct. 20.
Fondaway Canyon Overview
Acquired by Getchell early in 2020, Fondaway Canyon is an advanced-stage, past-producing gold project comprising 171 unpatented lode claims located in Churchill County, Nevada.
The property has been the subject of multiple exploration campaigns dating back to the late 1980s and early 90s, with nearly 50,000 meters of drilling completed. It covers 12 known veins, including five mineralized areas — Colorado, Halfmoon, Paperweight, Silica Ridge and Hamburger Hill.
The latest technical report on Fondaway Canyon (2017) gave an estimate of 409,000 oz indicated gold resources grading 6.18 g/t Au and 660,000 oz inferred grading 6.4 g/t Au — for a combined 1.1 million oz.
Up to 80% of these ounces are within Colorado, Paperweight and Halfmoon, with the remainder found in parallel veins or splays off the main veins.
Mineralization at Fondaway Canyon is contained in a series of steeply dipping en-echelon quartz-sulfide shears outcropping at surface and extending laterally over 1,200 meters, with drill-proven depth extensions to greater than 400 meters.
Drilling in late 2020 by Getchell successfully demonstrated that the mineralization is thick and broad, including sizable high-grade gold shear structures that are key contributing characteristics at the Fondaway project.
Six holes totaling nearly 2,000 meters were drilled as part of that program, five of which intersected significant gold intercepts within the Central Area, considered to be the “nexus for the gold-mineralizing system” observed at Fondaway.
The target area represents a 1,000 x 700m highly mineralized NE-SW extensional zone within the central portion of the 3.5 km long Fondaway Canyon gold-mineralized corridor (see below).
To follow up on these excellent results, Getchell is executing a drill program that’s twice the size this year, designed to conduct infill and step-out drilling to further delineate and expand on the mineralization discovered in 2020.
New Geological Model
In an exclusive interview with AOTH last month, Getchell president Mike Sieb recalled how last year’s drilling was “the culmination of a lot of desktop work” wherein a detailed analysis of the historical drill data revealed that the mineralized system was larger than previously thought.
“In the sea of [~735] drill holes we inherited, a significant portion of that drilling was focused on certain historic occurrences and deposits,” said Sieb, who went on to explain how the company came up with its new geological model for the Fondaway Canyon project:
“In 2002 and 2017, they started to test a little deeper so for example the Central Area encompassing an approximately 1 km x 1 km area, there was a handful of these drill holes that if you aligned them with the geology you could actually draw a line from one dot to another dot, across half a kilometer, and they lined up.
“Of course, that’s only two points, but when you start to take into account the entire picture and those disparate intercepts that didn’t quite align with the historical thought process, and you drew new lines, you thought aha! If you redesign the geological model they all potentially line up.”
And that’s the inspiration behind Getchells’ new 3D model.
“We picked the intervening areas between these widely spaced dots and said ‘there’s absolutely no drilling here, this is where we think the mineralization should be,’” Sieb told AOTH over the phone.
The 2020 drill program they came up with was designed to test the “more expansive mineralization” thesis with a set of widely spaced holes.
2021 Drill Results
This year, Getchell has gone ahead with an even bigger drill program at Fondaway to confirm its new geological model, with the ultimate goal of elevating the project’s resource estimate.
“We’ve been proving the continuity amongst the drilling as well as continuing to expand upon our discoveries in 2020, so every drill hole is adding to the picture and that was the objective in 2021 — to truly understand and interpret the orientation of the geological as well as the mineralization model,” Sieb said during our interview.
A key finding is a better understanding of the three new zones discovered during the 2020 drill program.
The Juniper zone looks to be a high-grade, thick swath of near-surface mineralization that is open in most directions. The Colorado SW and North Fork zones run directly underneath the canyon floor and down-dip gently for about 800 meters. So far they remain open on strike and at depth.
“Some of the furthest holes on that trend, the mineralization does not appear to be weakening,” says Sieb. “That’s a key attribute, as we drill we haven’t determined the extent of it yet.”
The 2021 program once again focuses on the Central Area, following up on the discovery of the Colorado SW, Juniper and North Fork gold zones. Six holes for a total of 2,600 meters have been completed so far.
By late October, Getchell had already reported assays for three holes, each returning highly remarkable gold intercepts.
These were highlighted by FC21-08, which intersected the Colorado SW zone for over 200 meters, with mineralized intervals that included 4.2 g/t Au over 27.5m, 2.8 g/t Au over 24.5m, 1.4 g/t over 30.7m and 1.3 g/t Au over 16.8m.
It also pierced the Juniper zone, returning 4.7 g/t Au over 25.9m, including 11.4 g/t Au over 5.5m, within 100 meters of surface.
FC21-08 is the most northwesterly of those drilled in the area, meaning the zone remains open to the NW.
FC21-09, which tracked along the upper limits of the North Fork zone, also reported several mineralized intervals, including 1.3 g/t Au over 13.1m and 4.1 g/t Au over 5.4m. A broad section of gold mineralization grading 1.2 g/t Au over 32.6m was found at a higher elevation than projected.
Best Gold Intercept
More drill results came in this week, this time for FC21-10, which tested the North Fork zone up-dip from FC21-09.
FC21-10 intersected the North Fork mineralization over 82.2m that included quite a few notable drill intercepts, highlighted by 3.0 g/t Au over 41.6m that included 47.0 g/t Au over 1.5m. This was the highest-grade gold intercept in the 40+ year drilling history of the project.
The hole also intersected North Fork up-dip from last year’s FCG20-04, which graded 2.5 g/t Au over 58.0m.
These results further prove that Getchell is sitting on a very large mineralized system; the North Fork zone remains open in most directions, and therefore certainly warrants follow-up. More drilling is planned next year to delineate the mineralized body.
“The latest results are a prime example of why the gold mineralizing system at the Fondaway Canyon gold project is so compelling,” Sieb was quoted in a Nov. 17 news release.
“The project is host to an enviable setting comprised of very high-grade gold-bearing structures that are themselves hosted within broader and thicker zones of mineralization. The grades and thicknesses that have become apparent at Fondaway Canyon rival many of our peers in a world-class gold district,” he added.
Assays are still pending from two remaining holes, all drilled at extremely promising targets.
FC21-11 targeted the Colorado SW and Juniper zones with a down-dip step-out of FC21-08’s impressive gold intercepts.
FC21-12 is a down-dip step-out of last year’s FC21-05, which had substantive intercept grading 1.8 g/t Au over 90m, including a higher-grade core of 3 g/t Au over 35m.
Another hole, FC21-13, is currently being drilled into the Colorado SW zone, where Getchell is hoping to confirm the continuity of the mineralization to surface.
Drilling there will continue as long as weather conditions allow, at which point the crew will move out of the canyon and mobilize to the pediment area, another exciting drill target.
“This planned last drill hole [of 2021] testing the Pediment target zone is going to be quite telling.” Sieb said during our phone call, adding that the pediment area “is completely untested” apart from the two holes in 2002 that hit Carlin-style mineralization, referring to the disseminated gold common in Nevada. “It’s potentially a whole new target area.”
Having solidified the mineralization model that is expected to allow Getchell to undertake a new resource estimate, next year the company is moving forward with “a more aggressive, bigger and better program,” according to Sieb. Two drills are expected to be turning 24/7 “to really attack the area”.
“Fondaway Canyon really warrants a major drill program and a major usage of funds to continue to expand and basically tell the world how good the project is,” he said.
While there are plenty of gold properties being developed globally, none has really caught our attention like Getchell’s Fondaway Canyon did. In just over a year, the company has redesigned the project’s geological model and gone on to steadily verify it.
The exploration results, too, have been highly encouraging, continuing to show that the mineralized system at Fondaway may be far bigger than expected. As a testament to Getchell’s drilling success, consider this: the company has only drilled 13 holes since acquiring the property in early 2020, yet every hole but one has come up with the goods.
That’s impressive. It shows a very strong aptitude for drill targeting especially considering that the company started out with a database of over 700 historical drill holes from which they had to “separate the wheat from the chaff.”
More results from the 2021 program are still to come, but by the looks of things now, it’s very likely those won’t disappoint either. In your author’s opinion these will allow Getchell to significantly upgrade the resource base at Fondaway beyond its current 1.1Moz total.
As president Mike Sieb said during our interview: “At the end of this year it’s not just ourselves that’ll know where this project is going, everybody will. There’s going to be more eyes on the project and the company, and that’s going to be beneficial to ourselves and our shareholders.”
And with the way the gold market is seemingly headed, it’s a good time to be a Getchell shareholder.
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Looking for Leverage? Silver Sands at a Sub $10 Million Valuation Offers the Highest Leverage Drilling Play Around
Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile. Eric Sprott is the largest shareholder…
Nearing the end of a phase III drill program, this high-leverage silver/gold play couples enormous upside with an unusually low risk profile. Eric Sprott is the largest shareholder.
Veteran analysts predict gold and silver are on the cusp of another bull run, with some speculating that after a year of consolidation we may see prices rise to $50 per ounce for silver and $2,500 per ounce for gold near term. A further leg up is forecast, and some say precious metals will hit unheard of levels over the next few years as the US dollar staggers. This is big news considering that past silver bull markets have delivered gains ranging from 330% to 900%.
Which brings us to and why its Phase III drill program currently underway makes it the best high leverage silver junior around. ( ), SAND started out with a silver resource of 15 million ounces at its Virginia project in Argentina last year and this is their third round of drilling. Their goal is to have grown that to 50 million ounces by the time Phase III is finished, on their way to 100 million.
But that’s the low-risk part. The leverage comes from drilling the silver/gold Santa Rita vein field in the northern part of the property first explored by Mirasol and Hochschild in 2007. Surface sampling and channel sampling highlights included 340 g/t silver and 5 g/t gold. Mirasol put 7 green field exploratory drill holes into the structure and came up with mineralization in 6 of 7 holes before Hochschild dropped it to focus on their San Jose discovery (now mine).
Silver Sands largest shareholders areand Eric Sprott, who has invested twice – increasing his initial investment by 300%. Commenting on the silver market, Sprott said:
“There’s going to be a shortage of silver. We get information from dealers looking for supply and paying premiums, which is almost unheard of. And when I look at the amount of silver going into ETFs and India, we know a shortage is on its way. The last time silver had a breakout, the price went up 10-fold. Do I think that could happen again? Absolutely.”
Sprott is not the only one with Silver Sands on his radar. In his Gold Newsletter, well-known precious metals expert Brien Lundin firmly put the company into the buy column, reiterating his previous buy recommendation. Speaking to the high leverage nature of Silver Sand’s Virginia project, he described the company as “a great ongoing lever on …… silver.”
SAND is near the end of a Phase III exploration program at its Virginia project located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. Virginia started out with a silver resource of 15 million ounces, and the goal is to grow that to 50 million ounces by the time Phase III is complete.
The right people, place, and resource
Silver Sands hits the mining trifecta of people, place, and resource. The company is overseen by market veteran Keith Anderson who brings to the mix a successful 20-year history of structuring and financing resource companies. Leading a deeply experienced management team, Keith has brought in a top-class investor, executed operations under budget, and delivered a clear roadmap towards the development of a significant resource.
The company’s flagship Virginia project is located in mining-friendly Santa Cruz, Argentina, in close proximity to four producing precious metal mines. This year, Argentina was rated the 5th most attractive region in the world for investment, and a global top 10 of silver mining jurisdictions. Furthermore, Santa Cruz ranks above Mexico on the investment attractiveness index.
Following up on highly successful Phase I and II exploration programs, Silver Sands is nearing the end of its Phase III program which comprises 2,685 metres of drilling across more than 16 holes. The program is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect.
Overall, the Virginia property has the markings of an exceptionally large epithermal vein system yet only a tiny fraction outcrops at or near surface. Silver Sands has just started to scratch the surface of the property’s potential. By the time Phase III is completed, the company believes it will have grown its resource from 15 to 50 million ounces, on the way to 100 million plus.
Phase III will comprise 2,685 metres of drilling across 16 holes and is targeting seven silver vein structures along with the high priority Santa Rita silver-gold prospect. This will all be driven by a low-risk model that involves mostly drilling gaps and extensions between high-grade intercepts along known vein structures.
Adding ounces on the low-risk journey to massive upside potential
The 59,750-hectare Virginia project is a low to intermediate sulphidation epithermal silver deposit nestled in the mineral-rich Deseado massif, roughly 100 kilometres south of Newmont’s Cerro Negro Mine, one of the largest gold mines in the world.
Through initial discovery in 2009 and four follow up drill programs between 2010 – 2012, defined an indicated resource of 11.9 million ounces of silver at 310 g/t and an inferred resource of 3.1 million ounces of silver at 207 g/t, which were documented in an NI 43-101 technical report filed in 2014. Mineral resources are contained within seven conceptual open pits including Naty, Julia North, Julia Central, Julia South, Ely North, Ely South, and Martina.
Phase I and II drilling subsequently identified four new conceptual open pits – Ely Central, Ely North Extension, Julia South Extension, and Martina NW. Drilling confirmed the Ely structure can be traced over 2.3 kilometres in strike length from north to south, open along strike and at depth. The Naty-Julia structure now extends to over 3 kilometres in strike length, open to the north and south, and at depth.
Phase I focused on exploring new high-grade silver zones to expand on the existing NI 43-101 and consisted of 2,831 metres across 18 drill holes along with 80.5-line kilometres of IP surveying. Phase II followed up and yielded some impressive results, testing several new prospective zones through 3,104 metres of drilling across 20 holes. New discoveries were made in areas of lower IP chargeability, showing potential for strike extensions of known veins, as well as new discoveries within previously untested linear trends of lower intensity.
Phase II also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012. Furthermore, drilling intercepted high-grade silver mineralization at the Ely North, Martina, and Julia South targets.
Highlights from Phase I and II exploration programs include:
• 639 g/t Ag over 9.60m
• 625 g/t Ag over 10.80m, including 1,110 g/t Ag over 5.70m
• 560 g/t Ag over 9.98m, including 1,578 g/t Ag over 2.87m
• 476 g/t Ag over 4.0m, including 929 g/t Ag over 1.85m
• 198.5 g/t silver over 33.5m
• 123.43 g/t silver over 8.5m, including 168.34 g/t silver over 3.9m
Phase II encountered phenomenal grades at shallow depths. It also led to the discovery of a new high-grade zone at Ely Central, where drilling intersected strong and continuous Ag grades in four drill holes over a 200-metre strike length that lies within a 580-metre untested gap from original drilling in 2012.
A New Vein Field Target That Looks Like Virginia
Adding to the positive results, an IP survey to the northeast of the existing vein field identified 17 targets with a chargeability response similar to known veins in the main field, suggesting that a new vein field akin to Virginia has been discovered. The 37.5-line kilometres of IP surveying has since been worked up for drill targeting.
“In Phase II, we hit some of our best holes ever and encountered phenomenal grades at shallow depths – this is pretty big stuff, indicating tremendous upside potential,” said Keith Anderson. “Our main goal with Phase III is to climb to 50 million ounces, on our way to 100 million plus. Nothing is set in stone, but it’s definitely within the realm of possibility, especially when you consider the size of our property.”
In addition to identifying new mineralized zones and a key target area for expansion, Virginia’s potential is unique in that the property has never been explored to depths greater than 150 metres, while surrounding miners have successfully encountered mineralization to depths as low as 450 metres.
Furthermore, silver veins in the south and east portions of the Virginia property do not outcrop to the surface and require deeper drilling than what’s been endeavored so far. If Silver Sands encounters mineralization at lower depths the resource potential could very well double or triple.