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Low Risk, High Reward: The Best Way to Profit When Gold Goes Higher

Low Risk, High Reward: The Best Way to Profit When Gold Goes Higher

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This article was originally published by The Gold Report

Source: Gwen Preston for Streetwise Reports   08/31/2020

Troilus, HighGold, and Revival Gold are drilling great discoveries and offer significant low-risk upside through splashy drill results, growing resources, and initial mine plans, writes Resource Maven Gwen Preston.

The gold bull market has arrived. And strong gold markets give investors the opportunity to make great returns without taking on much risk. Here I'll explain why—and outline three stocks I own that offer up exactly this opportunity.

Gold was already gaining before COVID, based on low real rates, economic uncertainty, high stock prices and geopolitical questions.

Then a global pandemic poured fuel on that smoldering fire.

COVID hammered interest rates, pushing real rates well into negative territory. It shuttered the global economy, creating deep uncertainty about growth going forward. Central banks around the world turned up their printing presses in support, handing cash directly to individuals while also buying oodles of debt, both government and corporate.

It has created an absolutely perfect storm for precious metals. The fact that gold marched up through US$2,000 an ounce in early August to reach a new all-time high like it was nothing is proof.

Two questions now matter:

  1. How much higher will this market go?
  2. What stocks are the best bets for those wanting to play this opportunity?

On the first question, I can't quote a number but I can say that gold is going a lot higher. The forces that move gold are all aligned in its favor and none are likely to change any time soon. Can you imagine any central bank in the world raising interest rates? Do you see COVID easing soon and economic confidence around the corner? Do you think the risk that a richly valued stock market will correct is going to disappear? Do you see calm coming from the remainder of Trump's term and the pending presidential election?

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Patterns from past bull markets also say we've got a lot of ground yet to gain. I love this chart from analyst Martin Roberge at Canaccord. It shows that every gold bull market goes through two stages, with a setback in between. We met the mark for Phase 2 just in April. On average, the second phase of a gold bull market generates 160% gains over 650 days. We're some 120 days in and only about 45% up.


Source: Mid-Week Market Observations, Canaccord Genuity Capital Markets Research, 29 July 2020

I could spend the entire article going through the gold-bull evidence but I'd instead like to focus on the second question: what should investors who want to profit from this market buy?

It's a tricky one because the best stock for me isn't necessarily the best stock for someone else. I love explorers drilling for new discoveries but those stocks carry a lot of risk and require a lot of attention. You might like the safe leverage of a royalty company or the leverage-plus of a mid-tier producer with organic growth ahead.

As this gold bull gains strength, all of these options will do well.

But some will do better than others, and sooner.

I want to highlight three stocks today that I think will outperform the gold sector—and will do so without carrying a lot of risk.

Importantly, these companies already have gold. They aren't trying to make a discovery; they're demonstrating the scale and economics of discoveries already in hand. And I see a huge amount of upside ahead as they do so.

And that's really the key point here: in a rising gold market you can get exposure to significant upside without taking on immense risk. It doesn't have to be High Risk for High Reward: this is the Low/Medium Risk, High Reward train and you should get on board.

Below I outline three stocks that I own for exactly this reason: they offer strong potential for big rewards but do not bear major risk. All three have good discoveries already in hand that they are drilling to expand; all have exploration targets near their defined deposits that offer potential for splashy discovery; two of the three will put out initial mine plans shortly to prove that their assets would make good economic sense as mines already.

These stocks offer the perfect balance in a rising gold market. Their projects are advanced enough to attract the generalist dollars that fuel a gold market but they also offer significant exploration potential. When the gold market goes you don’t need to take on high risk to get high reward—you just need stocks like these.

HighGold Mining Inc. (HIGH:TSX.V; HGGOF:OTCQX)

HighGold checks all the boxes on a Medium Risk, High Reward checklist:

  • High-grade gold project with recent "discovery" that is getting its first full season of work right now
  • Major discovery potential on the rest of the project
  • Great jurisdiction (Alaska)
  • Top notch board, management and technical abilities
  • Tight share structure and lots of cash in hand ($23 million)
  • Momentum—still new, strong shareholder registry (including a major mining company), and lots of eyes watching
  • Additional good assets in Ontario

HighGold was born a year ago when Constantine Metals (TSX.V: CEM) spun it out to focus on Johnson Tract. CEM had acquired the JT project not long prior, when the Cook Inlet Region Inc. (CIRI), an Alaska Native Corporation, approached Darwin Green about a gold asset they'd been sitting on for years.

Green has worked in Alaska for two decades. When he saw the JT data he could barely believe that such a strong gold system had been forgotten for so long.

CIRI's goal is to monetize the mineral potential of their lands, in a responsible way. Green's reputation meant they chose him to work JT. It's another example of why it pays to follow good people—in this case, because they can lead you to incredible projects.

JT is close to tidewater on Cook Inlet, about 200 km from Anchorage. It saw work from 1981 to 1995 when Westmin drilled out the JT Main deposit. The resource wasn't big but its super high grades meant Westmin pushed it rapidly towards development, completing a pre-feasibility study on a mine at JT that simply shipped ore to Stewart for processing.

That plan looked good but not great because shipping ore elsewhere for processing is always hard. Then the price of gold started to fail and Westmin shifted focus. The project reverted back to CIRI and then sat untouched for 23 years, until CIRI approached Green.

By the time the deal settled, HighGold had only a short window last summer to drill…but they pulled some very high-grade results:

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HighGold combined its results with historical data to calculate a resource estimate for JT. It's not big but the grades are stellar. The gold grade puts JT in the top 10% of undeveloped gold projects in North America.

Let me emphasize something here. Grades like this are usually found in vein deposits, which are often narrow and discontinuous. JT is different in the best possible way: it offers vein-like high grade mineralization but in a steep, wide sheet of rock with consistent mineralization. Steep and wide (the JT deposit is 20 to 50 meters wide) are ideal for mining. The JT deposit looks like it was designed to be mined.

Now HighGold is drilling again. It will do 15,000 meters testing five targets:

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This list represents a fantastic mix of high likelihood expansion drilling and riskier drilling for new discoveries. Expanding the JT deposit will grow value for HIGH. Hitting into new discoveries that are at all similar to JT at another target would vault the stock's value.

The JT project is highly unusual. The mineralization is super high grade and doesn't really fit into a common geological bracket. The best analogue is the Hod Maden deposit in Turkey, where a private company is building a mine to tap into ore averaging 8.9 g/t gold and 1.4% copper. Hod Maden is not huge in terms of tonnage but grades like that create a lot of value quickly: Hod Maden carries a $1 billion NPV and should generate a 50% internal rate of return (those are very strong numbers!).

JT is not going to become Hod Maden this summer…but it has that kind of potential. And as the first full season of drilling, this year's work program should start to prove it up.

Drill results will start to flow in mid-September. Lots of eyes are watching HIGH. The share structure is tight and the registry of investors is long and strong. And the gold market is keen for new discoveries, which is what HIGH could well announce If they hit into new zones near the JT deposit.

The JT deposit is designed to be mined. With a standout deposit already defined and likely to grow, oodles of adjacent discovery opportunity, and management driven to make the most of this market, HighGold Mining is designed to perform in this bull market.

Troilus Gold Corp. (TLG:TSX; CHXMF:OTCQB)

Troilus is named after its project, the Troilus mine, in Quebec. The company bought the project three years ago and have increased the gold count dramatically since—to the point that Troilus now hosts over 8 million ounces of gold.

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That's 8 million ounces after already being mined: Troilus operated from 1996 to 2010. The operator, Kennecott, was a copper company; they built and ran a gold mine because surging interest in gold meant the market was giving gold companies higher valuations than copper companies. So they added a gold mine to their portfolio to capture that valuation gap.

Since Kennecott only wanted the project to tick the "gold mine" box, the company did essentially no exploration. They bought a defined deposit, built a mine, mined the known gold, and then shut it down. Lots of juniors exploring near an old mine will say the old operator left lots of gold behind but it really is true in this case—Kennecott did not drill any holes more than 100 meters from the deposit.

When the gold bear market ended in 2016 a group of investment bankers and geologists who had worked together on various deals for years decided to form a company and find an asset perfectly suited for the bull market they saw coming. The old Troilus mine fit the bill.

The asset was available to buy because at first glance it didn't seem to offer much. It had a resource but one that was small and low grade for the underground mining needed to tap it. The apparent lack of good defined ounces was the weakest link; other than that, the project had lots going for it.

It's road accessible. It's in Quebec, a great province in which to explore and build and operate mines. It has high-voltage power lines running directly to site, where a recently upgraded 50MW power station is ready to go. It is very much a brownfields site, which eases the permitting hurdle, and it has a big tailings facility that still has a fair bit of capacity and can be expanded. The local First Nations supported the old mine and were immediately interested in the idea of a restart.

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On top of all that, the new Troilus team saw all kinds of reason to believe the Kennecott had left a lot of ounces behind.

That Troilus has grown the resource 142% in three years proves they were right. Importantly, most of the "new" ounces are near surface and so would be open pittable, which erases the project's other perceived stumbling block—the need for any new Troilus mine to be an underground operation. You can see in the 2016 image below how a lot of the resource was in lens extending down from the bottom of the old Z87 pit. Now, with a new team having drilled 85,000 meters in search of near-surface ounces, the resource starts at surface and stretches along almost 3 km of strike.

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I mentioned "perceived stumbling blocks" above because they matter with old assets. And fair enough. Many a company has promoted the undiscovered potential of an old mine...for the potential to actually fall flat or for the issues that ended the old operation to resurface. So investors are often hesitant to believe that an old mine is indeed a good new opportunity.

It's up to the new management to prove their point: to find lots of new ounces and to demonstrate that the community is supportive and the metallurgy works and permitting will be ok.

Troilus has made great strides in this regard, starting with that huge ounce count increase, but I think the key step is coming: a preliminary economic assessment (PEA) that wraps a mine plan around the new ounces and shows that a new Troilus mine would make a lot of economic sense.

When that study comes out later this year, I think it will outline a large operation with a long mine life and low costs, all sitting in one of the best mining jurisdictions in the world. Some investors have already seen this shaping up, which is why TLG shares have more than doubled in recent months from their pre-COVID level.

But I think a PEA outlining just how large and profitable a new Troilus mine would be will attract a lot more attention to this stock. That's why I think the share price is set up to perform in the second half of 2020.

Then there's the exploration upside, which is significant, and the potential for a takeout, which is strong. Miners want big, long-life mines in good jurisdictions that are simple and relatively inexpensive to operate. It's tough to find projects that meet all of those criteria but Troilus does. As such I think Troilus will attract a takeover bid from a major miner during this bull market.

A big, open-pittable deposit in a top jurisdiction with ample infrastructure should support a very strong PEA. A strong PEA based on a big gold resource that just keep growing will reverse any lingering questions around reviving this old asset. That reversal will solidify Troilus' position as one of few big deposits that could—indeed should—get built this cycle. And that will boost TLG's value way above where it currently sits.

Revival Gold Inc. (RVG:TSX.V; RVLGF:OTCQB)

I like the Troilus story for its known gold, potential for scale, great jurisdiction, existing infrastructure, and ample exploration upside.

There are very few assets that check all of those boxes…but Revival Gold's Beartrack-Arnett project is another one that does.

Beartrack-Arnett sit close to the Idaho-Montana border, near the town of Salmon. The Beartrack side of the asset operated as an open pit, heap leach mine from 1995 until 2000, producing 600,000 ounces of gold.

It shut down because gold prices tanked. The project then sat untouched for 16 years, until Revival came along.

Revival saw Beartrack as a project that deserved much more exploration attention around the mined pits and along strike to the south. And the team saw the opportunity for something bigger by adding on the Arnett side of the project, which has great prospective geology but had long been divided among a few families.

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The project is in tan. Yellow on the map marks defined gold. The orange-brown areas are exploration targets. What's key to note is that the past operator only had the Beartrack (right) side of the project and only cared about oxide mineralization right around the known deposits. That means no one has looked for deeper sulphide gold anywhere on the property or for oxide gold on the southern half of Beartrack. At Arnett, meanwhile, fractured ownership means there has never been any big-picture exploration.

And yet this exploration opportunity is on ground on which 3.5 million ounces have been produced or delineated to date. Another unknown amount has been pulled from placer operations along its creeks.

The best place to find gold is where there's already gold. It's cheesy but it's so true. And that is what Revival is doing at Beartrack-Arnett.

Revival started by using a smattering of deeper historic holes and its own initial drilling to demonstrate the abundance of gold still at this asset. The resulting resource is below:

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There are open pit oxide ounces, open pit sulphide ounces, and underground sulphide ounces. It's not ideal to have three different "kinds" of mineralization in one resource but this resource wasn't meant to capture how much gold there is at Beartrack-Arnett.

The resource is just a starting point. And the exploration opportunity suggests there is way more gold to be found.

For instance, with a small drill program Revival outlined 200,000 ounces of oxide gold at the Haidee target on the Arnett side of the project, in rock averaging 0.6 g/t gold. That's a nice grade for oxide gold and it's pit constrained. In short, those are real ounces—and RVG just kicked off a second, a much larger drill program designed to expand that resource.

Then there's the sulphide situation. Beartrack already offers almost 2 million ounces of open pittable sulphide gold around the old pits. And, just like at Haidee, that's just the start of the sulphide opportunity. RVG defined that resource by testing safe targets right beside known or mined gold. Now, with time and groundwork under their belts, they are testing other targets along the gold-bearing shear zone that have never been drilled.

Rabbit is the first and it is getting tested right now. Rabbit is 2 km south of defined gold along the key Panther Creek Shear zone. It's never been drilled, or even sampled because the rocks don't outcrop, but geophysics and structures all point to it as a prime gold target.

Then there's Haidee. Revival is drilling to expand the oxide at Haidee now but there's also an enticing magnetic target just below (sulphide gold would show up that way).

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Those are some of the targets. There is also strong opportunity to define ounces between the known deposits, test the 2 km of prospective strike between those deposits and Rabbit, probe the Twin Long-Italian Mine trend that runs parallel to Haidee, and keep drilling under the known gold at Beartrack.

In short, this project has produced gold, currently hosts over 2 million ounces of gold, and has oodles of potential for more gold. And it's being explored by a team that has every ability to turn this old asset into something great—and perhaps more.

Hugh Agro leads the Revival team. Agro is a mining engineer who spent 12 years as executive vice president of strategic development for Kinross. The impact here is significant: with operational leadership for growth initiatives, Agro was part of the executive team that grew Kinross from $1.7 billion to $17 billion in value in 12 years. He saw hundreds of projects in his time there…and Beartrack-Arnett is the one he chose for this mining cycle.

He chose it for geology, for sure, but also for jurisdiction (miners are in love with Idaho at the moment) and because this historical mine offers oodles of infrastructure and active permits.

The mine left behind a functional ADR plant (the facility that pulls gold from leach solution onto carbon columns and, after a few steps, turns it into gold bars) with an active cyanidation permit. There's a power line with inexpensive power and a well-maintained road. There's a huge core logging and storage facility. There's space and plans for a new heap leach pad. And the waste dumps and old heap leaches have been nicely rehabilitated, enough that they are often covered in grazing elk.

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And the area is keen for the mine to restart. There's not a lot of economic activity in this part of Idaho save ranching, hunting and recreation. I asked people I encountered while there how they would feel about the Beartrack mine starting up again and got only positive responses.

This is an old mine where the legacy is indeed a major advantage.

And for all of this, you even get a tight share structure and a full bank account. RVG has only 70 million shares outstanding and has $15 million in the bank.

Finally: the team at RVG are miners and entrepreneurs who want to build another mid-tier mining company. Agro is open to being taken out, buying another asset, merging with a synergistic partner, or some other M&A deal—as long as it creates value for shareholders in this rising gold market. If you trust that vision, this is an inexpensive entry point into a company being built on one strong asset but with a larger view to grow with this gold market. Whichever way this plays out, I see ample low-risk upside in the Revival story.

Wrap Up

One of the great things about a strong gold market is that investors do not have to take on immense risk to get great rewards. As the gold price rises the market evolves: investors flock to companies with standout deposits, exploration upside and strong management for their growing tangible value and their takeout potential.

It's a low risk, high return setup, which is the ideal investment. Such stocks and projects are hard to find, of course, but they share certain traits:

  • Known gold: exploration is to grow a good, known discovery and to test nearby targets.
  • Scale: major miners buy big assets.
  • Simplicity: miners like straightforward mines. Discoveries that can be open-pitted and then processed using conventional methods are preferred.
  • Stable, pro-mining jurisdiction: Idaho, Quebec and Alaska in the right parts are just about as good as they get.
  • Catalytic events ahead: HIGH is drilling to expand an incredible deposit and hopefully makes another discovery. Troilus is pushing towards a PEA to demonstrate that a new Troilus mine would make a lot of sense (and money), while drilling non-stop to keep growing the resource. Revival just kicked off its largest drill program (by far) at Beartrack-Arnett and will simultaneously prep a PEA that shows how economic the asset is already. These events are pending…which means the stocks are not fully valued yet.
  • A rising gold market means increased M&A: major miners are short on ounces in the future. A focus on balance sheet strength means they haven't done a lot of deals yet…but when it starts the M&A action will ramp up as operators compete for the best projects. This will push investors into stocks they think majors will target.

Get the best of both worlds—growing foundational value and exploration excitement—from projects offering the suite of characteristics that majors want, that define clear value, and that are hard to find.

Gwen Preston is the Resource Maven. Her independent letter chronicles her thoughts, buys, and sells in the world of mineral exploration, development, and mining. Gwen has a strong network of contacts, almost 15 years of site visits and due diligence under her belt, a solid grasp of macroeconomics and how they shape metals price moves, and a track record of finding opportunity and managing risk in the metals and mining sector. Click HERE to sign up for a free trial subscription.

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Disclosure:
1) Gwen Preston: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Troilus Gold, HighGold and Revival Gold. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Resource Maven disclosures above.
2) The following companies mentioned in this interview are billboard sponsors of Streetwise Reports: Troilus Gold, HighGold and Revival Gold. Click here for important disclosures about sponsor fees. An affiliate of Streetwise Reports is conducting a digital media marketing campaign for this article on behalf of Troilus Gold, HighGold and Revival Gold. Please click here for more information.
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( Companies Mentioned: HIGH:TSX.V; HGGOF:OTCQX, RVG:TSX.V; RVLGF:OTCQB, TLG:TSX; CHXMF:OTCQB, )

Articles

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
subscribe to my free newsletter

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Precious Metals

Mountain Boy Minerals awaits assay results on seven holes drilled at American Creek, surface sampling returns high grades

2021.10.16
Drilling at Mountain Boy Minerals Ltd.’s (TSXV: MTB) (OTCQB: MBYMF) (Frankfurt: M9U) flagship American Creek property in British Columbia…

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2021.10.16

Drilling at Mountain Boy Minerals Ltd.’s (TSXV: MTB) (OTCQB: MBYMF) (Frankfurt: M9U) flagship American Creek property in British Columbia is progressing well so far, with a total of seven holes completed from two drill pads.

Five of the holes were completed in the High-Grade zone, with the remaining two on the High-Grade extension. Core samples have been shipped to the lab, with assays pending.

The drill has since been mobilized to the third pad at the Maybee zone, where drilling is currently underway.

Results from surface sampling of the property earlier this season have also been received, with assays of up to 3,444 ppm Ag (Maybee zone), 6.166% Cu (High-Grade zone), 15.26% Pb (Mann zone) and 17.57% Zn (High-Grade zone).

The recent work by MTB included mapping and sampling along the cliffs north of the old mine, an area that had not previously been examined due to the difficult access.

Geologists skilled in rock climbing traced the structure hosting the High-Grade mineralization approximately 400 m to the north, identifying an area now referred to as the High-Grade extension, where the initial two holes were completed.

Geological work is continuing, focusing on the area between the High-Grade zone and the Maybee zone, a 2 km long corridor within the 33 sqkm property. Multiple veins in that area remain underexplored to this day.

The intent of the current program is to improve the geological context with the intent of identifying further drill targets.

“Silver and base metal mineralization has been identified over multiple kilometers and includes some exceptional grades. We are working systematically toward an understanding of this extensive and robust mineralizing system which we firmly believe has the potential to host the kind of deposit for which the Golden Triangle is renowned,” Mountain Boy CEO Lawrence Roulston commented in a news release dated August 16.

American Creek Overview

The American Creek project is centered on the past-producing Mountain Boy silver mine, located 20 km north of Stewart in BC’s Golden Triangle.

The property has favourable host stratigraphy, including rocks from the Lower to Middle Jurassic Mount Dilworth formation and Lower Jurassic Hazelton Group. Recent geochronology also confirmed the presence of Early Jurassic intrusions on the property.

Geology of American Creek

There is abundant evidence pointing to large, continuous regional and property scale faults, folds and shear zones, which are often related to mineralization in the region. Significant alteration and mineralization have already been observed along these structures forming the American Creek corridor.

Therefore, Mountain Boy Minerals considers the area to have “real potential to host one or more deposits.” While it holds a significant land package, with a variety of targets identified, much of the project area remains underexplored.

Mapping and prospecting on the project so far have already led to multiple discoveries, including a new area of gold-silver-base metal mineralization on Bear River Ridge, a silver and base metal intermediate epithermal system along an approximate 2 km trend, and — more importantly — an Early Jurassic latite porphyry intrusion below the epithermal system.

This previously unrecognized intrusion is similar in age to the many Jurassic Intrusions that are related to several deposits in the area, including the Premier porphyry, which is directly related to what was once considered North America’s largest gold mine.

Ascot Resources is currently focused on restarting the historic Premier mine, which has produced over 2 million ounces of gold and 45 million ounces of silver.

The Stewart mining camp — where American Creek and many other MTB projects are found — is part of the larger Stikinia Golden Triangle and is known to contain well over 200 mineral occurrences.

“The presence of numerous nearby past producers, an evolving understanding of the geology and encouraging results and discoveries in the region all support the highly prospective nature of the area,” the company commented on its flagship asset.

2021 Exploration Program

For this year’s program, detailed structural mapping has concentrated around the many mineralized showings on the American Creek project, including the High-Grade zone.

Results from this mapping suggest that the High-Grade zone mineralization is related to an interpreted shallow westward dipping thrust fault and east-west steeply dipping cross-cutting structures.

It is postulated that the best mineralization occurs at the intersection of these two structures, and this year’s drilling will test this hypothesis.

Geologists have been working with a mountain guide mapping the cliffs around the historic silver mine. This has resulted in the discovery of several new mineralized showings to the north. The mineralization appears to be within the same stratigraphic horizon as the High-Grade zone and is cut by similar steeply dipping cross structures.

Drilling last year demonstrated that the shallow structures intersected in drill holes are rich in base metals and likely represent one of several mineralizing pulses in the epithermal system.

Guided by additional mapping results, the company has turned to steeper cross structures and localized ore shoots during this season’s drilling.

The 2021 drill program is specifically targeting four areas: the High-Grade zone, the newly discovered extension of the High-Grade zone, the Four Bees zone and the Maybee zone to the north.

Drilling of the High-Grade zone occurs at a different azimuth with the intent of testing the intersection of the shallow westward dipping thrust fault and the east-west cutting cross structures.

In 1999-2000, 51.6 tonnes of material were extracted from the High-Grade vein and sent to the Cominco smelter in Trail, BC. The documented grades of 13.6 tonnes of this material were 18.854 kg/t Ag, 1.1% Zn and 2.5% Pb.

These exceptional grades demonstrated why this is still such a compelling target to drill.

BA Project Update

Elsewhere in the Golden Triangle, Mountain Boy is also moving forward with a drill program on the BA silver-lead-zinc VMS project, located 18 km northeast of Stewart.

The 10,658-hectare BA property was acquired by Mountain Boy in 2006 following the discovery of the Barbara zone, where initial sampling yielded assays of 5.24% Zn, 0.66% Pb and 55.2 g/t Ag over 1.7 m, and 2.17% Zn, 0.41% Pb and 13.5 g/t Ag over 1.2 m.

Drilling continued at the Barbara zone over a three-year period, with a total of 13,570 m in 93 holes completed from 55 different drill pads. Significant silver, lead and zinc mineralization was encountered both in drilling and on surface.

A joint venture was later formed with Great Bear Resources to conduct an aggressive exploration program of the Barbara zone and its surroundings, which brought the total drill count to 178 holes (28,484 m).

A preliminary resource (2016) of the Barbara zone on all the drilling (excluding surface trenching was) showed 8.93 million tonnes of ore at 0.96% Zn, 0.017% Cu, 0.30% Pb and 36.77 g/t Ag, for a total of 188.6 million pounds of zinc equivalent (1.96% zinc equivalent).

The current drill program is designed to target the northern extension of the mineralized horizon at the Barbara discovery that was drilled between 2007 and 2010.

The historic drilling delineated substantial near-surface silver-lead-zinc mineralization extending over 610 m, striking north-northeast. Since then, receding glaciers at the northern end of the zone have exposed further mineralization at surface.

This mineralization has subsequently been sampled in three channel sampling campaigns extending the zone of mineralization to at least 700 m. Assays of up to 601 g/t Ag, 1.98 g/t Au, 3.31% Pb and 9.96% Zn have been returned from these programs.

Silver Rebound

Mountain Boy’s drilling of two highly prospective silver properties comes just as the precious market is experiencing a rebound due to re-emerging inflation concerns around the global economy.

For the month of September, the US consumer price index rose by more than forecast, which underscored the mounting inflation pressures in the world’s #1 economy. This in turn has driven up investor demand for assets that serve as inflation hedges such as gold and silver.

Source: Kitco

Coming off a record year, silver prices have somewhat pulled back in recent months, but the latest economic indicators are suggesting another rally is in the works, especially with the US Federal Reserve looking to tighten its stimulus measures very soon.

Daniel Briesemann, an analyst at Commerzbank AG, wrote in a Bloomberg note that he expects the tapering to be announced at the next meeting early in November, he said.

“The market is now seeing a major pivot here as far as how inflation is showing more signs of being persistent than transitory, and that’s likely to force the Fed’s hand to deliver a rate hike well in advance of what people were anticipating,” Oanda’s senior market analyst Edward Moya told Reuters this week.

The anticipated Fed tapering has so far led to a retreat in 10-year Treasuries and the greenback, both of which are traditionally investment alternatives to safe-haven metals.

In silver’s case, the outlook is particularly bright given its strong industrial demand on top of the monetary driver. In fact, much of silver’s value is derived from industrial demand and supply fundamentals. It’s estimated around 60% of the metal is utilized in industrial applications such as solar panels and electronics, leaving only 40% for investing.

A report by BMO Capital Markets shows that silver consumption by the solar industry alone could grow by 85% to about 185 million ounces within a decade.

In addition, silver demand for “printed and flexible electronics” is forecast to increase 54% over the next nine years, rising from 48Moz in 2021 to 74Moz in 2030.

Then there are the automotive and 5G sectors, which are likely to become even bigger demand drivers in the future. A comprehensive report by Sprott titled ‘Silver’s Clean Energy Future’ found that three areas of growing demand for silver — solar, automotive and 5G — potentially account for more than 125 million ounces in 10 years.

The question is whether the world will have enough supply of the metal by then.

According to the 2021 World Silver Survey, global demand for silver in 2021 is expected to outpace supply by 7% (+8% supply vs +15% demand), at which rate a significant market deficit will begin to surface.

Conclusion

In an article earlier this year, we showed the world has already reached peak mined silver. At the moment, there are simply not enough projects in development to generate the kind of production to match an accelerating demand.

When it comes to mining precious metals, the prolific Golden Triangle of British Columbia has never disappointed. Having consolidated a large property position within the region and integrated a wealth of exploration results, Mountain Boy Minerals could be well on its way to making an important silver discovery.

At American Creek, which is centered on a past-producing high-grade silver mine, work to date has supported the hypothesis of a large mineralized system capable of hosting deposits of the same scale as many others in the Triangle.

This year’s drilling at American Creek will test the true extent of this geological system, which, by the end of the program, could be demonstrated to extend over a 2 km length, containing several areas of silver-rich mineralization.

The fact that MTB compares this geological setting to the Premier camp, an important historic gold-silver producer, is also encouraging.

Mountain Boy Minerals Ltd. (TSXV: MTB) (OTCQB: MBYMF) (FSE: M9UA)
Cdn$0.16, 2021.10.14
Shares Outstanding 54m
Market cap Cdn$8.64m
MTB website

Richard (Rick) Mills
aheadoftheherd.com
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Any AOTH/Richard Mills document is not, and should not be, construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment.

AOTH/Richard Mills has based this document on information obtained from sources he believes to be reliable, but which has not been independently verified.

AOTH/Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness.

Expressions of opinion are those of AOTH/Richard Mills only and are subject to change without notice.

AOTH/Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission.

Furthermore, AOTH/Richard Mills assumes no liability for any direct or indirect loss or damage for lost profit, which you may incur as a result of the use and existence of the information provided within this AOTH/Richard Mills Report.

You agree that by reading AOTH/Richard Mills articles, you are acting at your OWN RISK. In no event should AOTH/Richard Mills liable for any direct or indirect trading losses caused by any information contained in AOTH/Richard Mills articles. Information in AOTH/Richard Mills articles is not an offer to sell or a solicitation of an offer to buy any security. AOTH/Richard Mills is not suggesting the transacting of any financial instruments.

Our publications are not a recommendation to buy or sell a security – no information posted on this site is to be considered investment advice or a recommendation to do anything involving finance or money aside from performing your own due diligence and consulting with your personal registered broker/financial advisor.

AOTH/Richard Mills recommends that before investing in any securities, you consult with a professional financial planner or advisor, and that you should conduct a complete and independent investigation before investing in any security after prudent consideration of all pertinent risks.

Ahead of the Herd is not a registered broker, dealer, analyst, or advisor. We hold no investment licenses and may not sell, offer to sell, or offer to buy any security.

Richard does not own shares of Mountain Boy Minerals (TSX.V:MTB). MTB is a paid advertiser on his site 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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