The Maven Letter: October 22, 2020

Catching Up With (and buying more)…Newcore Gold (TSXV: NCAU). Maven Bought: Norra Metals (TSXV: NORA). The Other Opportunities: Uranium. Full Portfolio Table & Portfolio Updates from Benchmark, Brigadier, Canasil, Fosterville, HighGold, IsoEnergy, Kodiak Copper, Marathon, Nevada Exploration, Outcrop Gold, Revival Gold, Tarachi Gold, Troilus, ValOre.

Sorry for the day delay. I actually fell asleep at my desk trying to get this out the door last night!

Gold has been sideways for weeks now. Months even. It’s a bit boring but it makes sense, as everything is currently in limbo awaiting the election.

It’s not that the winner really matters. Analyses abound at the moment: stocks have performed better when the incumbent wins, Democrat presidents have a slightly better stock market track record, volatility rises up to the election, contested outcomes are terrible for markets, and so on. The past does usually help predict the future…but this time the most important factor by far is stimulus: how much, what forms, and when.

And both presidents will provide. The details will differ but they will both do whatever is needed to support the economy and drive inflation during this pandemic (and trade war and period of major social unrest).

And so stimulus will happen, whether before the election, right after the election, or in February. And stimulus will drive the stock market higher, for reasons that make sense and don’t. And that should encourage inflation, though the lethargic velocity of money is a problem (people aren’t spending like they do in normal times, be it on homes or taxis or computers or trips). Against a zero interest rate policy, any inflation puts real rates into negative territory and – voila! – we have a gold bull market.

I think stimulus, when it happens, will boost stocks and drive inflation expectations, which will help gold (while holding the US dollar at bay). The worst outcome, I should note, is government divided (president, House, Congress in varying red and blue) such that any decisions are very slow. That would delay stimulus, for instance, and add uncertainty.

Bottom line: I am comfortable that gold will do well once we get out of this period of suspended animation and so I would rather think about stocks than go in circles contemplating what might happen. And so today I have a second look at Newcore Gold (TSXV: NCAU; used to be Pinecrest) and run through my investment rationale for Norra Metals (TSXV: NORA).

I also offer up the second article in my The Other Opportunities series. This week I revisit uranium, the bull market that is building and will happen…at some point.

I also realized, belatedly, that I totally forgot to include the full portfolio table last week! I am sorry. I simply forgot to paste it in before sending.

I did remember it this week and have added all the buys of late. And we have portfolio updates from Benchmark, Brigadier, Canasil, Fosterville, HighGold, IsoEnergy, Kodiak Copper, Marathon, Nevada Exploration, Outcrop Gold, Revival Gold, Tarachi Gold, Troilus, ValOre.

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Catching Up With (and buying more)… Newcore Gold (TSXV: NCAU)

I first drew attention to Newcore Gold back in May when the company essentially came back to life after a quiet period. It was called Pinecrest Resources then, though the transition to a new name, new team, and new energy was underway.

I called the price action wrong then. The share price had doubled in the preceding few weeks because a financing announcement had reminded people that (1) the company existed and (2) it was backed by some very strong names. When a strong team re-invigorates a quiet company, you can be sure there’s a solid plan ready to roll out. I should have had more confidence in that!

Instead, I bought a third of my desired position at that point. I set stink bids for the next third, in the hopes the price would ease when the highly popular financing closed…but that didn’t happen. Instead, the price has just climbed since.

Calling price action wrong not only leaves you without the position you want but also makes it hard to change your mind and enter at a different level. That has been my struggle with Newcore since – the price kept climbing and I ended up watching because I wanted a pullback that never happened.

What happened since I entered?

CEO Luke Alexander has taken over. Dedicated leadership has been integral to achieving the following…

Newcore now has 6 institutions invested, up from zero in May. In a double win, Newcore arranged for some of these funds to buy their positions from Kinross, which wanted to sell (rotate from disinterested to engaged shareholders)

Attracted coverage from five analysts

Updated the Enchi resource estimate

Maven Buys

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That 8,000-metre drill program is two-thirds complete

Raised $15 million in an upsized and very popular financing

All of that activity in a strong gold market kept the stock rising. Now the price has been sideways for a few months, for a few reasons: the gold market calmed down, Newcore completed its needed re-rating, and the company needed to finance.

The financing – announced at $10 million and immediately upsized to $15 million – is almost closed. Once that’s done the plan is to take the story to the next level by announcing a 50,000-metre drill program, which I think will send a clear message that Newcore is ramped up and ready to see just what the Enchi project has to offer, and fast.

The Enchi Project

Pinecrest had been around for years and for years had been focused on the same asset: the Enchi gold project in Ghana. All through the bear market, though, the company had done very little. (Remember how I said this was a very good group of people? They don’t try to push water uphill.)

Enchi is in Ghana, which is the top gold-producing nation in Africa and home to two prolific gold belts.

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One of those belts is the Bibiani shear belt, which hosts multiple large gold deposits. Enchi stretches along 40 km of that belt; with splays the property covers almost 100 km of strike. Kinross’ Chirano mine is 40 km to the north.

The project already offers 1.2 million inferred ounces, in rock averaging 0.72 g/t gold. Newcore updated the resource estimate just last month, incorporating 180 core holes, 226 RC holes, 319 short RAB holes, and 169 trenches. The count covers three deposits.

An old PEA on a smaller resource outlined a mine kicking out 61,000 oz a year for almost 9 years after a capital investment of US$84 million. It was an ok study, with an after-tax IRR of 25%.

But a dream team like the people at Newcore don’t own an asset for numbers like that. They own it for the upside, which they are working on now.

In August Newcore kicked off an 8,000-metre drill program testing six targets: expansion at the three defined deposits, further drilling at two drilled targets that need more holes, and first-pass drilling at the Nkwanta soil anomaly.

We’ve seen a few results already. At Boin, for instance, drills are testing along strike and in resource gaps and have, so far, returned hits just like the deposits they are beside (such as 16 metres of 0.69 g/t gold. 32 metres of 0.92 g/t gold, and 21 metres of 1.19 g/t gold).

Then we got today’s results, which highlight the other key expansion direction: down. Past drilling at Enchi focused on the top 50 metres; drills reached to 150 metres maximum. At the Chirano mine 40 km to the north, the rocks look and grade pretty similar on surface…but there are clear shoots of high-grade mineralization extending to hundreds of metres depth.

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Testing at depth is a sizeable task but Newcore dedicated some of the holes in this initial program to this challenge because the depth question is so important. Today’s results support that move: hole KBRC159 returned 0.73 g/t gold over 62 metres, including 7 metres of 3.18 g/t gold. The cross section puts the results in context:

Important points:

The mineralized shear appears to widen at depth.

Hole KBRC159 returned sulphide gold, including a short interval with much higher grades than the overlying oxide rock.

The ‘deep’ sulphide intercept is still only 175 vertical metres below surface.

One good sulphide hit by no means guarantees that other deep holes will also return wide, high-grade hits, but it’s a start.

The areas of interest at Enchi are many. Newcore’s chief geologist, Greg Smith, has worked this project on and off for a decade and has reasoned targets along strike and at depth for each deposit and zone.

But there’s more than the six zones being tested right now. In total, Newcore has 25 targets at Enchi that it wants to drill. This is a big property on a prospective belt that hasn’t seen focused exploration like this before.

Newcore will tackle that opportunity. They started with an 8,000-metre program. With the $15 million recently raised they will follow that program immediately with another 50,000 metres.

The concept is scale. Chirano has been a highly successful mine because there were enough oxide ounces near surface in a few zones to attract solid interest…and once attention was focused, the project revealed how much more it had to offer between zones and at depth. There’s ample reason to believe Enchi could do the same.

OK, so where does that leave us right now? Should interested investors buy Newcore today despite the stock having already tripled?

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I held off for too long, as the stock chart clearly shows, but after catching up with CEO Luke Alexander last week I’ve decided to get over my mistake and buy the rest of my position. I can think of half a dozen stocks that I liked but didn’t buy because I thought they’d gotten away from me…only for the stock to keep rising and rising.

There are no guarantees, of course, but given the people involved, the tight share structure, the number of targets, the depth potential, and the recent popular $15-million financing, I think Newcore has a good chance of continuing up from here. The stock is paused at the moment, bouncing between $0.70 and $0.90 while the company wraps up the financing. That’s almost done; soon the team will get out and talk up what they plan to do with $15 million.

I keep mentioning people but let me elaborate a bit. The team behind Newcore brought us Calibre Mining, which has grown from an exploration-stage company to a multi-asset gold producer in less than two years and already returned 500%-plus to shareholders. They brought us Newmarket Gold, a standout success story that grew from a $10-million shell to a $1.2-billion takeover by Kirkland Lake Gold in 14 months. They brought us Integra Gold, which Eldorado bought for $600 million. And they backed Northern Empire, which bought an old mine for $10 million, demonstrated its ongoing potential, and got taken out for $90 million in 18 months.

It’s one of the best track records in mining. That matters – these people know what assets work and how to sell the story. And management and insiders own 39% of the count. That’s alignment. To boot, the stock has only 80 million shares out.

I will buy the rest of my desired Newcore position over the next few days.

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Maven Bought: Norra Metals (TSXV: NORA)

I have been picking up shares in Norra Metals (TSXV: NORA) over the last two weeks, since noting my intent to do so in the Oct 7th Maven Letter.

The price has been sideways (until dropping a bit last two days), holding its ground after a solid run from $0.05 to $0.18.

Why enter after that run?

The stock still only carries market cap of $9.4 million. This thing remains cheap – not as cheap as it was, but inexpensive relative to peers and the potential at its assets

The company is ready to go: projects are ready for drilling and marketing is underway

The targets are zinc-lead-copper-silver-gold. Polymetallic targets are harder to market (investors like simplicity) but they also work well in inflationary environments, when commodity prices often rise broadly. The targets here have good precious metal grades, which should help attract attention in the near term, but they are primarily base metal targets, which has the potential to work well in the medium term.

Norra’s two projects are in Norway, which is where the story has to start. Norway has a long history of mining but there was little exploration from about World War I until 2017. First the wars took priority, then the country’s geologists shifted focus to oil after the huge North Sea oil reserves were discovered.

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The country’s mineral laws didn’t help. Until 2010 the system allowed owners to hold projects as long as they wanted without any need to explore. That left most of the country stuck in old, unactive hands. The system changed in 2010, when the government made permits expire after seven years unless work commitments were met.

Lots of owners remain inactive, which means swaths of ground came available in 2017 when the first seven-year period ended. EMX Royalty (TSXV: EMX), which knows the geology of Sweden and Norway well, swooped in and picked up an entire portfolio of projects.

Norra was the first company to go through EMX’s portfolio. Two projects stood out: Bleikvassli and Meraker.

Bleikvassli is a former zinc-copper-lead-silver-gold mine that tapped a massive sulphide deposit, producing 5 million tonnes of ore over 40 years. Mining stopped in the late 1990s when low metal prices rendered the operation uneconomic.

When it shut down the mine had 720,000 tonnes of delineated resource left in the ground averaging 5.17% zinc, 2.7% lead, 0.27% copper, 45 g/t silver, and 0.2 g/t gold. Those are the tonnes they estimated but the operators drilled a much larger area, testing down to 480 metres even though mining only got to 280 metres.

The mine also focused on base metals, not pursuing the gold-silver that was reported in veins and disseminated through the wall rock.

The first opportunity at Bleikvassli is best captured in this 3-D model of the mine. Blue lines are drifts, raises, and shafts (25 km of underground development); red shows ore mined out. The yellow arrows mark notable un-mined drill intercepts.

The opportunity to find more of the same kind of mineralization is apparent. While doing so Norra will also pay attention to the gold-silver opportunity in the wall rock, which would add nicely if it is in fact present. And the drilling to do this is straightforward: this is Norway so the project is road accessible and the targets are not deep.

So step one at Bleikvassli: drill along strike and under the old mine to confirm and expand the historic resource. If that’s successful, the task will continue as long as mineralization keeps cropping up.

The other project, Meraker, is in northern Norway, in the Roros region where mining dates back to the 1600s but the focus was always copper. That worked, as the region is well endowed with copper-rich VMS deposits, but the focus on copper means zinc-rich VMS’s were ignored. In fact, historic mine dump piles are often stuffed with zinc-rich rock.

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In addition, the area basically hasn’t seen modern exploration. Since historic mines simply followed the obvious ore down to limited depths, there are also good opportunities to explore under cover and at depth.

Meraker hasn’t seen much work but rock samples have returned high zinc and copper grades while VMS exposures can be tracked along kilometres of strike.

Meraker is not yet drill ready but it’s not far off. This project represents a second opportunity to hit into high-grade VMS mineralization near surface in a mining friendly region.

Why Now?

Norra has tripled in the last few months. Why enter now? Because drilling will get underway shortly and the hits that are likely to emerge should earn Norra a market cap beyond $9 million, perhaps well beyond.

Importantly, Norra has spent the last year getting ready to drill Bleikvassli. They digitized reams of historic data, built models, and relogged drill core.

I will also point out that Norra gets to take advantage of EMX personnel, to some extent. Norra is earning into the projects from EMX, which has one of the best technical teams in the business. Some members of that technical teams are based in Sweden and Norway or spend a lot of time there; Norra gets to tap into their knowledge and use them to run exploration and drill programs. This represents a significant leg up.

Norra is in ok shape in terms of share structure. The company has 81 million shares out, with 25% with insiders and 8% with EMX. I do expect the company to finance again soon as they raised only $1.4 million in September, which is not enough to fund all the drilling they have planned at Bleikvassli.

This is a bet that high-grade mineralization on the road in a pro-mining region and country will attract attention no matter the precious metal content. It looks pretty darn likely that drills will hit into some good mineralization around the old mine. How extensive the system will be I don’t know, but strong zinc or copper grades in a region with lots of smelters means only a few million tonnes could start to make sense to mine – and should be worth significantly more than $9 million.

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The Other Opportunities: Uranium

About 10% of the world’s electricity is produced by 440 nuclear power reactors, and some 50 more are under construction, equaling about 15% of current capacity.

The planet needs more electricity every day and nuclear provides 24-hour baseload clean-air energy. The baseload part is important – nuclear reactors provide steady power, which sets them apart from wind or solar.

According to the World Nuclear Association, last year saw near-record nuclear power generation at 2657 TWh. And that will grow considerably over the next 20+ years.

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Supply Balanced Against Demand…For Now

Utilities have to secure uranium to feed their reactors. Historically they secured most of their uranium through long-term supply contracts but that has shifted in the last 10 years for two reasons.

First, the last uranium bull market was driven by a supply shortage. Utilities got nervous and signed a slew of long-term contracts at high prices. Then they watched prices fall dramatically over the next ten years…while they were stuck paying high set contract prices.

Then the Fukushima catastrophe flooded the spot market, which hammered prices. That was salt in the wound – utilities might have been OK paying higher amounts if alternatives were not available but instead there was oodles of cheap uranium in the spot market.

As a result, as long-term contracts ended utilities did not sign new deals but instead bought spot. And there was lots of spot to buy because Japanese demand was down and the Kazaks were still producing as much as possible in an effort to secure market share, even though they were depressing the price with every pound.

That whole setup has had several results:

Excess spot market supply kept prices depressed until producers changed tact. The world’s major producers (led by Kazatomprom and Cameco) collectively decided to reduce output in order to strengthen the market and it is slowly working, especially since demand keeps rising consistently

Spot supply is drying up, though the process takes time. As obvious spot supplies shrink, traders looking to profit from the carry trade (buy today, hold for months to years, and then sell) have been prying supplies loose from less obvious places, such as Japanese stockpiles. These new supplies are keeping the spot market viable but they are finite

The end game was always going to be the same: utilities having to go back to contracts to secure supplies before the supply gap hits. Shrinking spot supplies was drawing this eventuality nearer…and then COVID hit. COVID shutdowns and reductions have erased 50% of the pounds that would have been produced in 2020, pulling the end game closer.

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When utilities return to contracting, the power shifts. Having survived a very tough decade, producers will demand good prices in any long-term contracts – they will have the upper hand and the uranium narrative will have shifted, from oversupply and low prices to supply gap looming and strong prices. (We aren’t here yet but it’s coming.)

The bear market also gave producers time and reason to try to support the sector in other ways. US producers petitioned the government to make uranium a critical security concern, based on America’s reliance on ‘unfriendly’ Russia and Kazakhstan for 40% of its U needs, and in response to use quotas or similar to require US utilities to buy US uranium. That did not happen but the US government is expected to spend $150 million buying uranium to develop a US uranium reserve. Details on timeline and who they will buy from remain unclear, but this could well trigger a flurry of buying from US producers. (Meanwhile, uncertainty over what the government would do in response to this petition likely discouraged utilities from signing contracts, in case quotas were coming.)

When I say that contracting is coming, it’s because it simply has to. US utilities are the largest group of uranium buyers and have uncovered demand of roughly 21.5 million lbs. U3O8 in 2022. This is about 12% of expected consumption that they haven’t secured for next year.

Will they be able to find it in the spot market? Maybe but maybe not. The spot market keeps shrinking, especially because Cameco (TSX:CCO) and Kazatomprom have themselves also been buyers in the spot market for the last several years to meet their customers’ needs.

And COVID impacts still matter. Kazatomprom is a major uranium producer. In response to COVID they stopped drilling new wells (Kazak uranium is recovered via in-situ leaching.) Active wells continued to produce but now, with no new wells for half a year, output is falling off in a big way.

Uranium Outlook

In May last year, the International Energy Agency’s “Nuclear Power in a Clean Energy System” report said nuclear power remains crucial to energy security and climate change goals. In October, the International Atomic Energy Agency (IAEA) recognized the vital role increased nuclear power plays in reducing greenhouse gas emissions. And in November, the EU recognized nuclear energy was necessary to meet its 2050 net zero emissions plans.

All of this makes the anticipated upside for uranium all the more inevitable. We know demand will be ramping up in a serious way over the next few years. Utilities typically lock up uranium supply years ahead since there are multiple steps involved in turning yellowcake into nuclear fuel rods. And they simply can’t risk running out of fuel – reactors can’t be put on pause.

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According to UxC, a leading industry market researcher, there are about 1.5 billion pounds of U3O8 to the end of 2035 that have yet to be contracted longer term by US utilities.

The US EIA’s data suggests utility inventories are already nearing levels that could put supply security as risk. As a result, although the timing is unclear, demand is primed to rise.

Consider that the spot uranium price is actually up 25% year-to-date, to $30/lb. That’s a 69% increase over 2016’s November low of $17.75/lb.

According to Red Cloud Research forecasts, uncovered demand will rise considerably over the coming years. The annual supply deficit takes hold this year and quickly worsens over the next decade.

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There’s no shortage of very compelling reasons why uranium simply has to move higher.

China is planning to triple its nuclear power capacity over the next decade. India is planning 21 new reactors by 2031. UAE has one completed reactor, 3 under construction, and 4 more being considered. The UK is upgrading its fleet. Russia is busy building 36 reactors for other nations. And the US is completing two new AP-1000 reactors in Georgia.

We know that spot supply is drying up, with a potential deficit materializing already this year. And yet, as the following chart shows, quarterly spot volumes have surged lately to their highest levels in 30+ years. Are producers scrambling to cover those 2021 needs? What will they do if (when) spot supplies just aren’t available?

This set up simply can’t last. Utilities need uranium and producers won’t produce it at a loss, at least not for long. Despite a bit of weakness in the past few months, the spot uranium price has been trending upwards since late 2016.

Insiders are saying that (unconfirmed) long term price contracts are being signed in the $40/lb. range, an encouraging sign. But true price discovery needs to take place. When it does and utilities are actively buying, producers will be able to start setting a healthy price.

When It Goes…

The fact is, when uranium really starts to move, related equities catch fire. This chart demonstrates what I mean.

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Uranium explorers and producers saw their share prices move up dramatically. Rick Rule likes to say that the worst uranium stock in his portfolio gained 800%. Others, as the chart shows, soared thousands of percent in just a few years.

Those huge gains happen for two reasons. First, utilities tend to move en masse. Once one utility announces a long-term contract, you can bet the rest will start competing with producers for deals. It’s like musical chairs: they’re all happy going round and round, dipping into the spot market for supply as needed, but no one wants to be left out when the music stops and spot supplies are exhausted.

That is exactly what happened in 2005. And the rush of demand sent the price up 1,250% in four years.

The second factor that makes uranium bull markets so intense is a lack of stocks. Uranium bear markets are long and hard. Leading up to that 2004-2008 run, spot uranium had languished around US$10 per lb. for decades. It’s very hard to produce that cheaply; it’s harder yet to fund exploration when the commodity is worth so little.

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As a result, when the supply gap started to loom there were almost no projects with any momentum and there were very few uranium stocks in which one could invest. Everyone who wanted exposure had to jump into a short list of options.

And today we find ourselves in the same place. The bear market was not decades long but it did last a decade, which is long enough to erase most uranium companies. At the peak of the last bull market there were 500+ uranium explorers, developers, and producers. Today there are perhaps 50 publicly-listed uranium companies, of which half are interesting (in my opinion).

And so when uranium starts to run, investors will have to buy from that short list…and those stocks will soar.

For now, the timing remains unclear. When COVID hit and erased 50% of production, I said I expected the bull to get going within a year. I might have been a bit keen, as I’m not sure we’re quite within 6 months.

We might be. Or it might take a bit longer. But when a uranium market starts to go, it doesn’t wait for anyone. As such I’m positioned and just waiting, as I really believe that preparation and patience will be rewarded.

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Full Portfolio Table

Stock in bold are those I am buying right now.

Stocks shaded in green are expected to release news soon

Company Ticker Entry Date Entry price

Cost base %

position Price today

Change

Mine Developers

Orezone Gold

ORE.V, OTC: ORZCF

13-Jun-18 $0.81 100 $0.93 15%

Development-ready gold project with scale and strong economics, and a team that has successfully built many mines. Value gains ahead whether ORE builds or gets bought

Pure Gold Mining

PGM.V 15-Nov-18 $0.51 $0.56 (COVID) 100 $2.29 349%

Building a high grade gold mine in Ontario (fully funded). Drilling to keep demonstrating mine plan & exploration upside. Near-term production re-rating & takeout target

Uranium Energy

UEC.NYSE 21-Jun-15 $1.72 100 $0.94 -45%

Ready to ramp up low-cost output into developing uranium bull market that will likely offer a premium for US output. One of few clear bets for uranium

Feasibility-Stage Projects

BSR.V 27-Jan-18 $1.45 $1.425 (COVID) 100 $1.96 35%

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Bluestone Resources

Steadily moving towards formal production decision. Expect value growth with market and project advancement. Takeout target

Erdene Resources

ERD.T, ERDCF.OCT

08-Jan-17 $0.86 $0.36 (add @ $0.24, COVID)

200 $0.46 28%

Advancing dual tracks: develop BK (first gold by late 2021) and keep exploring. Exploration ongoing and returning new high-grade zones!

Advanced Assets (PEA or Pre-feasibility)

Fireweed Zinc

FWZ.V 01-Jun-17 $0.80 -$0.57 (sold half $1.67; COVID)

25 $1.05

Mac Pass is a standout zinc project. Summer drilling returned long intercepts from Boundary zone (potential game changer) while also expanding deposits and testing new targets

Generation Mining

GENM.V 20-Nov-19 $0.19 $0.10 50 $0.49 385%

Unique PGM asset: large resource in great location with grade and scale upside. PEA returned robust numbers. Feasibility study underway (due early 2021); exploration too. Price rising as investors rotate back to PGEs after COVID scare

Integra Resources

ITR.V; IRRZF: OTCQB

06-Nov-17 $0.90 $2.58 (COVID;

rollback) 100 $4.36 69%

PEA outlined good, large mine already. Favoured jurisdiction, strong treasury, exploring for high grade, updating PEA with much bigger mine plan

KORE Mining

KORE.V, KOREF.OTC

27-Mar-19 $0.23 $0.29 (COVID) 100 $1.25 331%

Advanced heap leach Imperial project (permitting story) plus two exploration-stage projects with exciting potential. Fundamental value, potential for splash, lots of news

Kuya Silver

KUYA.C 08-Oct-20 $1.42 33 $1.28 -10%

New company pushing the Bethania mine in Peru back into production, with plans to expand. Low cost, near term silver producer; strong team; tight stock. Stink bids at $1.27 and $1.20

Marathon Gold

MOZ.T 25-Mar-20 $1.14 100 $2.29 101%

Large, advanced Valentine project in good jurisdiction. Simple mine plan, strong economics. Potential to gain value alone or as takeout target

Tinka Resources

TK.V 01-Nov-17 $0.66 $0.72 (add at $0.32; COVID)

100 $0.17 -324%

Strong advanced zinc project in Peru. Cash in bank to outlast weak zinc market.

Tristar Gold

TSG.VTSGZF.OTC 24-Jun-20 $0.30 100 $0.34 13%

Hybrid gold opportunity. (1) PEA outlines a robust low-cost open pit mine with 43% after-tax IRR at $1250 gold and pre-feas due out in early 2021 will be markedly better. (2) Renewed exploration effort very likely to find more of the same mineralization (1 g/t average) and could find a high-grade zone.

Velocity Minerals

VLC.V 20-Aug-17 $0.32 100 $0.45 41%

Rapidly and successfully advancing projects in Bulgaria towards 100,000 oz/yr+ operation with multiple deposits feeding partner's existing plant.

Exploration

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Benchmark Metals

TSXV: BNCH, OTCQB: CYRTF

12-Aug-20 $1.23 100 $0.96 -22%

Big drill program to define a big initial resource at Lawyers project in BC. Splashy grade plus scale. Pushing project ahead rapidly. Still under-recognized story

Brigadier Gold

TSXV: BRG, USOTC: BGADF

12-Aug-20 $0.39 100 $0.30 -22%

Just acquired Picachos project in between GRSL's Plomosas and VZLA's Panuco. Similar: high-grade historic mines, underexplored. Area play and project potential for splash.

Canasil Resources

CLZ.V 13-Jul-20 $0.15 100 $0.12 -20%

First results from Candy vein a technical success; market wanted more. First test of promising structure with high-grade samples and historic mining records.

Compass Gold

CVB.V 10-Apr-19 $0.34 $0.355 (COVID) 100 $0.24 -29%

Farabakoura discovery developing. Multiple other targets getting first pass testing.

Eclipse Gold Mining

EGLD.V, EGLPF.OTC

18-Feb-20 $0.75 100 $0.75 0%

Strong team, backing, and marketing means lots of eyes on this Nevada exploration story. First results good if not amazing. Now drilling again

EverGold

EVER.V 04-Oct-19 $0.20 $0.22 100 $0.49 145%

First results from Snoball disappointed (narrow). Still potential for discovery success at Golden Lion; results soon and several targets mean higher chance of success

Fosterville South

FSX.V, FSXLF.OTC

21-Sep-20 $3.20 100 $2.51 -22%

Exploring south of Fosterville mine, applying methods/ideas that discovered uber high grade gold there. From one of the strongest capital markets groups in mining; spinning out projects into new company mid-October

Genesis Metals

GIS.V 19-Feb-20 $0.35 100 $0.23 -34%

Financed for 8000 m drilling in two programs, enough to start demonstrating the potential at Chevrier. First few holes failed to impress.

GFG Resources

GFG.V 18-Oct-19 $0.18 $0.21 100 $0.21 0%

Multiple drill discoveries at Pen project, all deserving attention. Drilling just re-started. Alamos bought in.

GGL Resources

GGL.V 08-Oct-20 $0.18 100 $0.24 31%

Getting set to start drilling the high-grade oxide gold zone at Gold Point in Nevada. Opportunity to extend known high-grade shoots, explore around old stopes, and test other veins/areas. Strong technical team, tight share structure.

Grande Portage Resources

GPG.V, GPTRF.OTC

29-Jan-20 $0.16 $0.19 100 $0.50 161%

Drilling high grade Herbert project in AK this summer for first time in years. Strong contender for standout drill results.

Great Bear Resources

GBR.V, GTBAF.OCT

11-Dec-17 $0.29 $0.48 (sold half to $0, COVID)

50 $16.83 3406%

GBR doing 300-hole program to define first resource at LP Fault as fast as possible. 10M oz. is likely. Race to resource before getting taken out

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GR Silver

TSXV: GRSL, USOTC: GRSLF

12-Aug-20 $0.73 100 $0.57 -22%

Drilling silver-gold veins at Plomosas project, benefitting from First Majestic's unfinished work. Significant vein strike potential; high grades. Also advancing similar adjacent San Marcial project

HighGold Mining

HIGH.V, HGGOF.OTC

Spinout or $0.45

$0.45 $0.41 (COVID) 100 $2.25 449%

Cashed up to test multiple targets at JT project. Goal: show there's significantly more potential than the current resource, through expansion AND multiple new zones. Strong contender for standout drill results (already some)

IsoEnergy

ISO.V, ISENF.OTC

12-Dec-18 $0.40 $0.44 (COVID) 100 $1.33 202%

Only junior with a high grade U discovery as uranium bull market gathers momentum. Tight structure amplifies response to news. Hitting high grade ahead of maiden resource

Kodiak Copper

KDK.V 18-Dec-19 $0.35 $0.42 (COVID 50 $1.93 360%

Major gold-copper porphyry discovery in second drill program at MPD!

Libero Copper & Gold

LBC.V 07-Aug-19 $0.12 50 $0.13 4%

First pass drilling on several exciting high grade gold targets in BC. Results coming. True grassroots gold exploration!

Liberty Gold

LGD.V, LGDTF.OTC

13-Apr-20 $1.15 100 $1.93 68%

Rapidly growing a good oxide gold resource in Idaho. Well capitalized, good momentum

Nevada Exploration

NGE.V, NVDEF.OTC

11-Oct-17 $0.33 $0.30 (COVID) 100 $0.16 -47%

Stalking big gold under cover in Nevada. Have found what looks like a massive system; need to find the hot spot therein. Drilling now underway

Norra Metals

NORA.V 08-Oct-20 $0.18 100 $0.16 -14%

Will soon start drilling around and under the Bleikvassli mine in Norway to verify and expand historic resource. Moderate success would garner a market cap well above current $9M

Northstar Gold

NSG.C 29-Apr-20 $0.35 100 $0.25 -29%

Miller project: gold in multiple rock types and structures. Drills hitting known high grade veins, disseminated intrusions that hadn't been tested, and vertical veins not previously known. Doesn't fit a tidy model so market doesn't know how to value...but there's a good amount of gold

Oro X Mining

OROX.V 08-Oct-20 $0.80 100 $0.74 -8%

Exploring Coriorcco project in Peru, where historic mining tapped high-grade gold in veins. Only 2 of 17 veins mined and not to depth; the rest remain, as do any veins under younger cover rock to the east. Good share structure, supported by Paul Matysek.

Osino Resources

OSI.V 13-Apr-20 $0.69 100 $1.36 97%

Gold discovery in Namibia under till. Potential for deposit of scale essentially at surface. Strong shareholder registry and team.

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Outcrop

OCG.V, MRDDF.OTC

12-Feb-20 $0.11 $0.10 (COVID) 100 $0.37 265%

Well funded to hammer Santa Ana with holes, aiming to demonstrate good density of high-grade shoots along 14 km vein extent. Share price being pressured by $0.28 free trade date.

Newcore Gold

TSXV: NCAU 27-May-20 $0.36 Adding

currently… 100 $0.77 114%

Advancing the PEA-level Enchi gold project in Ghana. Neglected asset getting focused attention for first time. Top tier management.

Precipitate Gold

PRG.V 25-Sep-19 $0.16 $0.135 (COVID) 100 $0.26 93%

Optioned flagship PG project to Barrick (strong deal if it indeed hosts a discovery). Pivoted to explore nearby Ponton project; targets look good.

Prime Mining

PRYM.V 14-Aug-19 $0.15 $0.20 (COVID) 100 $1.75 775%

Decision to postpone construction and focus on exploration being well received by market seeing potential at project. Funded for big exploration push. Drill results soon

Pucara Gold

TORO.V 8, 14-Oct-20 $0.80 66 $0.78 -3%

Strong team exploring a strong high sulphidation epithermal target in Peru.

Heliostar Metals

HSTR.V 30-Jul-20 $0.09 $1.35 (rollback) 100 $1.69 25%

Strong potential for high-grade results that demonstrate scale of opportunity at the flagship Ungi project in Alaska; drilling underway .

Revival Gold

RVG.V, RVLGF.OTC

30-Oct-19 $0.51 100 $0.99 94%

Strong team advancing historic asset to production in Idaho. Tight structure, strong capital markets capacity, looking for additional acquisitions. Upsized summer exploration plans after raising $13M - potential to demonstrate scale if raft of targets work.

Reyna Silver

RSLV.V 23-Sep-20 $1.05 66 $0.97 -8%

Top tier technical and markets team with portfolio of Mexican silver assets. Two projects will be drilled 2021; potential for big success

Ridgeline Minerals

RDG.V 17-Aug-20 $0.55 100 $0.40 -28%

New company with three high potential Nevada gold projects. Selena showing promise for surface oxide gold; Swift and Carlin East are deep, high-grade targets. Well funded, strong backers, tight structure, cheap drill contract

Sassy Resources

SASY.C 08-Oct-20 $1.08 100 $1.02 -6%

Bought ahead of drill results from Westmore discovery at Foremore project in BC. New company, tight structure, great target, visible gold in core in lab.

Scottie Resources

SCOT.V 18-Sep-19 $0.20 100 $0.30 50%

First pass drilling in 2019 hit good results; drilling this summer has potential to return same AND build story with scale. Cashed up. Drill results pending

Sitka Gold SIG.V 02-Oct-19 $0.10 0.05 (COVID) 50 $0.19 280%

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Drilling at RC, a big prospective project in Yukon. Also drilling moonshot target at Alpha project in Nevada; exciting results unlikely (vectoring). Tight structure, funded.

Strategic Metals

SMD.V 19-Jun-19 $0.33 $0.295 (COVID) 100 $0.57 93%

Summer drilling at Hinton likely to generate strong results. Still inexpensive relative to cash, share holdings, and project portfolio. Drill results in weeks

Summa Silver

SSVR.V 30-Sep-20 $1.45 100 $1.08 -26%

Hughes property: exploring under and for the offset strike extension of an historic high grade silver mine in Nevada.

Sun Peak Metals

PEAK.V 17-Aug-20 $0.90 100 $1.12 24%

Portfolio of VMS projects in Ethiopia being explored by a team that has made two major VMS discoveries in the same rocks in neighbouring Eritrea. Tight structure, strong backing, cashed up, many strong targets

Tarachi Gold

TRG.V 08-Oct-20 $0.40 100 $0.39 -4%

Mexico gold-silver explorer that just bought the Magistral tailings and process plant - path to near term production, to create cash flow. Right team for the task

Troilus Gold

TLG.T; CHXMF:OTCQB

19-Jun-19 $0.69 $0.765 (COVDI) 100 $1.26 65%

Large open pittable gold resource at historic mine. PEA captured value; now keep expanding resource and testing regionally for additional discoveries. Clear Leverage-Plus stock in this bull market

ValOre Metals

VO.V 20-Nov-19 $0.24 $0.26 (COVID) 100 $0.29 12%

Good starter PGE resource at Pedro Blanco project in Brazil. Major exploration potential; drilling will start in 2020

Vizsla Resources

VZLA.V 09-Oct-19 $0.41 100 $1.55 278%

Exciting high-grade silver discovery underway at Panuco project in Mexico. Multiple veins to test. Strong team, cashed up, momentum, 4 drills means constant news.

Royalty Companies

Ely Gold Royalties

ELY.V, ELYGF.OTC

28-Sep-16 $0.23 80 $1.24 439%

Growing Nevada-focused royalty company that uses deep state knowledge and network to consolidate projects, free up lost royalties, and do hard deals.

EMX Royalty

EMX.V, NYSE 14-Nov-14 $0.86 $0.98 100 $3.54 261%

Assessing investment opportunities (royalties, stocks, properties - if it makes sense!). Cash flows cover operations. Tight shareholder registry

Portfolio Updates

Benchmark Metals (TSXV: BNCH; USOTC: BNCHF)

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More results came in this week from the 100,000-metrer drill program BNCH is conducting at its Lawyer’s project. The latest assays come from the AGB target, an area with historic underground workings. The 61 holes that the company has completed at AGB so far have been designed to step out and infill the 600 metres of known mineralization there. Best results from this latest batch include Hole 4, which cut 41.9 metres of 1.5 g/t gold and 106.8 g/t silver (or 2.8 g/t gold-equivalent).

The grades on Lawyer’s AGB zone appear to be increasing at depth.

The target remains open in all directions and drilling has been helping to infill mineralization down to 270 metres depth. The solid, broad intersections of bulk-mineable gold and silver from these latest assays (which are marbled with higher-grade intervals) bode well for AGB’s ability to contribute significantly to the resource estimate management is targeting for 2021.

Brigadier Gold (TSXV: BRG; USOTC: BGADF)

Visual inspection of the core of Hole 1 drilled on Picachos’ San Agustin vein indicate the drill hit five metres (true width) of silver-gold mineralization 65 metres below the El Carrito adit. The hole was collared at the adit and drilled easterly.

Brigadier is testing the continuity of the San Agustin vein at depth. XRF readings indicate elevated silver levels between 64 and 94 metres depth in veins and veinlets that lie above and below the vein itself. A second hole is being drilled to hit San Agustin 25 meters below Hole 1. Meanwhile, assays for Hole 1 are back at the lab.

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This story has moved fast, largely because Michelle Robinson had been preparing this asset for drilling for 10 years and that load of background work and thought might now be paying off. We won’t know the assays for weeks yet but companies release ‘visual’ results when what they’re seeing really stands out.

Canasil Resources (TSXV: CLZ; USOTC: CNSUF)

The slow labs are causing results to come trickling in from drill programs. Case in point are the partial assays received from Holes 3 and 4 drilled on the Candy vein at Canasil’s Nora silver-gold project. Hole 4 provided the bigger hit of the two, cutting 3.7 metres of 3.7 g/t gold and 489 silver, along with 0.53% copper and trace amounts of lead and zinc.

That’s not the uber-high-grade hit I was hoping for, but it’s a significant result for sure. Drilled to hit Candy at a lower elevation than Hole 1, Hole 4’s interval is relatively wide and the grades are solid. Hole 3, drilled to hit a lower elevation than Hole 2, cut a narrower 0.36-meter interval grading 8.7 g/t gold and 116 g/t silver.

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Providing some intrigue for the next round of assays are Hole 5 and 6, drilled 200 metres and 400 metres north of Holes 1 and 4. Candy remains open to along strike to the south as well, and this is the first systematic drilling that Nora has seen. With the originally planned six holes completed at Candy, the rig has moved to the Nora vein. We’re still waiting on a home run here but the assays from Hole 4 at suggest there definitely a bit of fire at Candy.

The market was nonplussed, I think for a few reasons. First, surface samples at Candy have returned much higher grades and so investors were likely hoping for more. Second, I think we’re in a bit of a hybrid state in the market right now where only really strong results get rewarded (while middle-of-the-road results get sold) yet the multitude of projects being tested and the outlook for several years of gold-silver opportunity mean it is not only the best of the best that will succeed.

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In the sideways market of 2016 to 2019, only the very best projects and teams could raise money and explore. As a result, investors were conditioned to only buy or hold incredibly good results.

Now that we’re in a rising market with a good outlook, it’s not only projects that immediately generate the very best results that will work. Other avenues will lead to success, such as if it takes a few holes or rounds of drilling to hit into the good stuff or if the discovery isn’t standout for grade but has other attributes (location, metallurgy, strategic interests).

But the market isn’t yet ready to reward companies in those situations. Canasil is in that boat: I think there remains a good chance that the Candy and Nora veins host notable mineralization but it will take some time and drilling to figure it out and, in the meantime, the high-bar-to-impress market is disinterested.

I will hold for further results from Nora (I am interested to see what holes 5 and 6 return, though I’m not holding my breath since CLZ only drilled one holes from set drill pad…) and then for the drill program at La Esperanza.

Fosterville South Exploration (TSXV: FSX; USOTC: FSXLF)

FSX has received exploration licenses for key areas within its Walhalla Gold Belt and Providence Gold projects.

On the former project, the Enochs Point license will allow the company to follow up on historical, high-grade gold production (21,769 oz. at 13.8 g/t). The gold at Enochs Point has seen only a small amount of drilling by BHP and another owner.

Reedy Creek, meanwhile, is part of Providence Gold and it too has a history of high-grade mining (20,620 oz. at 56 g/t at Langridge’s Mine and 13,341 oz. at 51 g/t at Doyle’s Mine). The target covers 16.5 kilometers of a mineralized corridor and has seen little in the way of modern exploration.

These new licenses raise FSX’s odds of success by giving it a few more kicks at the can in terms of exploration. With C$28.5 million in cash, the company has the ability to work multiple projects at once.

As a side note, Fosterville South’s AGM got moved to Nov. 13, so the spinout of its Avoca and Timor projects into Leviathan Gold will take place five days afterward (about a month later than expected).

HighGold Mining (TSXV: HIGH; USOTC: HGGOF)

HIGH released another round of assays from JT last week, with Hole 96 providing the best results (20.1 metres of 11.5 g/t gold, 4 g/t silver, 0.5% copper, and 3.1% zinc). Hole 95 cut 41 metres of 5.9 g/t gold-equivalent (1.8 g/t gold, 6 g/t silver, 1% copper, 3.8% zinc, and 0.3% lead). Both holes are on the edge of the current 750,000-oz. gold-equivalent resource at JT.

Also of interest is the mineralization Hole 96 hit in the Footwall Copper zone below the outlined gold resource. As you can see from that cross-section below, the hole hit two intervals of good copper grades (14.2 metres of 2.7% copper and 11.9 metres of 1.8% copper).

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Hole 96 managed to hit a wide interval of high-grade gold in the mineralized area at JT and two intervals of mineable-grade copper in the Footwall zone.

Importantly, these results from Hole 96 represent a 45-metre step out from Hole 89, which initially “discovered” this copper-rich area in 2019 with 20.7 metres of 2.4% copper, 4.9% zinc, and 32 g/t silver. We’re still in the early stages of defining what size resource this area might hold, but this is definitely something that could be pretty easily mined.

Returning to the gold-intensive mineralized area at JT, Holes 96 and 95 aren’t going to add hugely to the resource there but, with grades well in excess of the 4 g/t gold-equivalent cutoff used for the current resource, they could add ounces to the next estimate. Holes currently back at the lab that tested outside the resource area (the green dots in the graphic below) could help tell us how much HIGH can grow the resource with this program.

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Note that Holes 110 and 113B are considerable step-outs from the resource. I’ll have my eye out for those assays in particular, as they’ll help tell us whether this program has a real shot at pushing the resource at JT well past the million-oz. gold-equivalent level.

At the Northeast Offset target, the results were less robust but were still promising and helpful for a new target. Hole 94 hit a narrow interval of high-grade copper (1.2 metres of 15.2% copper, 173 g/t silver, and 0.8 g/t gold) and two other intervals of lower-grade stuff (4.3 metres of 0.2 g/t gold, 7 g/t silver, 1.2% copper, and 0.4% zinc and 1.0 metres of 3.5 g/t gold and 1.2% copper). The other hole returned no discernible mineralization.

As important as the numbers, though, was what the core showed: “…alteration and mineralization similar to that found in proximity to the JT deposit. This includes anhydrite alteration and deeper, footwall-style copper-silver rich veins.” With new targets, a home run off the bat is great but uncommon. Instead, geologist really hope for the core to tell them they’re in the right area and

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indicate which way to test next. That is exactly what these holes did for HighGold at the Northeast Offset target, which sits 500 to 800 metres northeast of JT.

Note that these were the first of eight holes drill thus far at Northeast Offset. If HighGold didn’t think the rock looked promising they wouldn’t have drilled another 6 holes.

I’m keen to see results from those holes, and of course for all the stepout holes at JT (marked in green on the long section above). If half of those holes hit good mineralization there’s clear potential to grow the gold-intensive mineralization at JT Main considerably, and for deeper drilling to hit into more mineable-grade copper below. If you are not positioned in this exciting explorer, current weakness represents an opportunity.

IsoEnergy (TSXV: ISO; USOTC: ISENF)

The mineralization on the western side of Hurricane continues to edge southward. The latest evidence of that came from scint results reported from three holes drilled on the area’s South Extension. Holes 68, 69 and 72 all hit significant widths of uranium mineralization as measured by areas of anomalous radiation in the core. Holes 70 and 71 returned more modest zones/responses of radioactivity.

The key here is that these latest holes continue to outline high-grade mineralization on the southern side of the main target at Hurricane. Note that only the northern side of the high-grade zone, marked in dark orange oval in the drill hole map above, existed before this year’s drilling. It’s all pointing to the prospect that ISO is outlining a tightly-packed but sizable uranium deposit at Hurricane.

Kodiak Copper (TSXV: KDK)

The one advantage of publishing this letter a day late is that I get to include a comment on Kodiak Copper’s drill results out this morning.

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Like everyone, Kodiak is struggling with slow labs. The lab had promising to provide assays for Hole 5 by October 10…but it’s now October 22 and nothing.

Well, not nothing – Kodiak did get results for the rest of Hole 4 and all of Hole 2 and so they released those.

It was the high-grade core of Hole 4, released Sept 3, that send KDK’s share price soaring. That assay came in at 282 metres grading 1.16% copper equivalent (0.7% copper and 0.49 g/t gold), including 46 metres of 1.4% copper and 1.46 g/t gold.

Kodiak sent that part of Hole 4 for rush assay because they so liked the look of it. Teck liked the results so much that they invested $10.5 million to take a 9.9% stake in KDK.

The ‘like’ is because high-grade copper-gold porphyries in good locations (easy access, gentle terrain, mining region) are valuable and rare. That segment of Hole 4 suggests that the Gate zone at Kodiak’s MPD project could be one such porphyry.

To get there, though, the high-grade core has to show some scale. That’s what Kodiak is testing now.

The results today are not really part of that work. As I noted, Kodiak provided assays for the rest of Hole 4 and for Hole 2. Overall, Hole 4 returned 535 metres of 0.48% copper and 0.29 g/t gold (0.76% copper equivalent). That means the 250-odd metres on either side of the high-grade 282-metre interval averaged 0.24% copper and 0.07 g/t gold.

Those ‘residual’ numbers aren’t exciting – but they are basically in line with what neighbouring mines are tapping, so they are fine.

Hole 2 returned 642 metres of 0.21% copper and 0.06 g/t gold – more unexciting numbers that are fine if proximal to a high-grade core.

The market didn’t like the release, sending KDK down 15% to $1.93. I think there are two things going on.

First, traders were expecting to see results from Hole 5. Hole 5 was drilled from the same drill pad as Hole 4 but at a steeper angle. And Kodiak has said publicly that the core from Hole 5 looks very much like that in Hole 4, so the market now wants to see results like those from the best part of Hole 4 or better.

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Instead they got the residuals from Hole 4 and results from Hole 2, which was drilled 100 metres to the north under (steeper than) Hole 1…which KDK already reported as having only weak mineralization.

So I think a reasoned approach to the news says: results as expected from Hole 2, where we didn’t expect much, and from the rest of Hole 4, which we just needed to be mineralized to some extent.

Instead I think some traders saw the headline intercept – a long but low-grade hit – and sold without taking the time to realize this is NOT the result from Hole 5.

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The second thing that is going on relates to my comment that we just needed the rest of Hole 4 to be mineralized to some extent.

Good, mine-able porphyries have strong cores and lower-grade halos. The more metal the better, whether you’re talking about the core or the halo, but a good core really carries the day. The halo may or may not get mined, depending on the shape of the deposit and the topography in which it sits, which determine whether to underground or open pit the thing.

For Kodiak, what matters right now is the core. There are very early days but it looks like a fairly vertical pipe. The surrounding halo of copper and gold may or may not play a role in an potential future mine plan, but the core will carry the day. So the results that matter are those that tell us the scale and grade of the high-grade core.

We have only one such result so far – the hot part of Hole 4 – plus a description that Hole 5 looks similar. Certainly Teck would have seen Hole 5 before investing (that’s the benefit of a data room access!) and I dare say they would not likely have invested based on just one hole but were motivated to move when they saw the second looking similar – and giving them some confidence in scale and grade.

What will happen to KDK from here? In the near term it all depends on what Hole 5 kicks out. If it reports an intercept similar to that in Hole 4 KDK will retake the ground it lost today. If it’s better, it will go higher. If it’s worse, the market could lose interest quickly (I can’t count the number of porphyry discoveries that grabbed attention for an initial result but then faded away when follow up holes failed to outline scale).

Teck’s investment here matters. I don’t know if they saw core beyond Hole 5 but they would have seen whatever was out of the ground at the time. Investing $10.5 million so soon after the discovery hole was a bold move. It’s certainly possible they also saw core from Hole 6 (same pad, shallower) and/or hole 7 (same pad, deeper).

Also, Kodiak is currently drilling Hole 8…and they are still drilling from the same drill pad. To me, that says they like what they are seeing; if they didn’t like it they would have moved to test the same core from another direction or to test another target (they have several good targets).

Based on all that, I am happy to hold my remaining KDK stake (I sold a third on Sept 4 to take my cost base to zero). If you do not have exposure to this stock, I think there are fairly good odds that hole 5 will generate a good result (based on KDK’s continued drilling and Teck’s investment) and, if that happens, then KDK will rebound at least to the mid-$2 range, or higher depending on the numbers.

Marathon Gold (TSX: MOZ; USOTC: MGDPF)

Infill drilling on the Berry zone at Valentine is hitting consistent gold, with the highlight from the latest batch of 14 holes coming from Hole 873 (85 metres of 2.61 g/t gold, including 21.7 g/t over 2 meters and 13.9 g/t over 2 meters). Other assays of note came from Hole 875 (3.4 g/t over 10 metres) and Hole 870 (2.8 g/t over 12 metres).

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The Berry zone could help improve Valentine’s “out year” economics

As I’ve said in past Marathon updates, the value of Berry lies in its ability to boost the economics of the out years for the planned operation at Valentine. Infill drilling like this, especially related to a target that will likely be used to supplement mill feed in the mine’s later years, isn’t going to move the needle much for MOZ’s share price.

But it’s nice to have some resource upside in its back pocket as it continues to move Valentine towards feasibility and (hopefully) an eventual takeout at much higher prices. Given the project’s significant, easily mineable resource (in a top-tier jurisdiction no less), suitors are almost bound to materialize for this project at some point.

Nevada Exploration (TSXV: NGE; USOTC: NVDEF)

NGE has grown its Awakening gold project in Nevada, adding another 25 square kilometres of claims. Here, the company is looking for gold mineralization similar to that at Paramount Gold Nevada’s Sleeper mine to the south (1.7 million ounces produced between 1986 and 1996 with a remaining measured and indicated resource of 3.1 million oz.). The mineralization at Awakening is largely under post-mineral cover, which makes it a good candidate for the geochemistry-based exploration methods NGE has honed in the state.

For now, though, the focus will remain on drilling underway on South Grass Valley’s East Golden Gorge target. In the short term, that’s the program that could provide some legitimate splash for NGE.

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Outcrop Gold (TSXV: OCG; USOTC: MRDDF)

We got another update from drilling on Santa Ana last week, with the highlight assays coming from some of the 20 holes OCG has completed on the Megapozo target. To date, this area has been outlined for 300 metres along strike and up to 310 metres down-dip. The best result from the latest round of assays came from Hole 38 (1.16 metres of 1,191 g/t silver-equivalent). These results support the notion that Megapozo is besting Santa Ana’s La Ivana discovery in terms of grade and average thickness.

Results are pending from Roberto Tovar, where management notes initial drilling hit multiple veins near historic drilling and sees potential for another large continuous shoot a la Megapozo. With 6,483 meters completed so far at Santa Ana in Phase 1 (and another 5,500 metres still to be drilled), OCG won’t lack for news flow as we move towards 2021. The company anticipates moving quickly into Phase 2 on the project and drilling 1,600-1,800 metres per month through the first half of next year.

You’ll note the stock has fallen in the last week. It’s yet another free trade date pressure – Outcrop raised $5.75 million in mid-June at $0.28 per unit, which each unit comprising a share and half a warrant exercisable at $0.42 for two years. Those $0.28 shares came free to trade a week ago, hence the share price sliding.

Revival Gold (TSXV: RVG; USOTC: RVLGF)

Two rigs have completed 4,900 metres of drilling in 30 holes on the Haidee target at RVG’s Beartrack-Arnett project. The step-out and infill program was designed grow the oxide resource contained at Haidee. And while these latest assays have extended the resource 100 metres to the northwest and 50 metres to the southeast, the grades came in a little below the target’s average grade. The best results included a couple of relatively wide, albeit lower-grade hits – Hole 43D cut 22.9 metres of 0.63 g/t, and Hole 42D intersected 0.38 g/t over 41.0 metres.

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With the work at Haidee complete, RVG has moved those two rigs to Beartrack, where one will test the Rabbit area (located 3 km south of the resource) and the other will probe for extensions of mineralization between the North and South pits. A third rig has already tested the Panther Creek Shear Zone between these pits. Assays from that hole (226D) and from the remaining 23 holes at Haidee are back at the lab, and that third rig is now probing the Joss target.

Overall, the Haidee results aren’t flashy but they do indicate the oxide resource there can grow. With the current drill program ongoing and a PEA on the oxide portion of Beartrack-Arnett’s multi-million-ounce resource on the way, Revival is well-positioned to provide leverage on rising gold prices as we move into the new year.

Tarachi Gold (CSE: TRG; USOTC: TRGGF)

I was confident that Tarachi would be active on the deal-making front, and they proved me right last week by signing an LOI on assets associated with the Magistral del Oro tailings processing plant.

The deal covers a fairly modern 1,000-tonne per day process plant, the tailings deposit, and a disposal facility for the tailings from processing the tailings. It’s all permitted and the operation has support from local ejidos.

The idea: produce cash flow. The tailings deposit at Magistral contains some 1.3 million tonnes grading 2.1 g/t gold (historic estimate), in tailings accumulated from hundreds of years of mining in the area. Recoveries were not great for many of those years, which is why the tailings still carry so much gold.

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I don’t love small-scale production to make money for exploration but there’s some important context here. For one, there’s no geological risk! Second, TRG has done weeks, if not months, of work on this opportunity already, including metallurgical studies and deep data reviews. That means they are comfortable with what is (tonnes, grade, and minimum recoveries) and optimistic about what could be (better recoveries).

The resource isn’t large (~80,000 oz.) but that should generate more than enough revenue to justify the cost to get into production (which will be small – the facility already exists; it just needs modifications) and the grade is high for tailings.

Also, this is a mining region so there’s a pretty good likelihood they will find other tailings that they can mine and truck to the mill, if not ore from small miners.

The permit and facility are good for 1,000 tonnes per day. If they do that, and if we assume 70% recovery, TRG would produce about 1,000 oz. per month for four years on the tailings there. It’s very hard to estimate cash flows without more information, but it’s certainly possible that Magistral de Oro kicks out $10 million or more in annual cash flow.

The cost is US$4.5 million, 16 million TRG shares, and a 15% net profits interest. Most of the shares and half the money is payable after production starts and targets are met. Overall, that’s not a cheap deal but the terms are reasonable given the plant was built only 10 years ago and everything is fully permitted.

I don’t always like quick-to-production stories but this deal has several points in its favor:

1) The simplicity of the resource

2) The fact that TRG CEO Lorne Wagner is an experienced mine builder/rebuilder

3) The engineering and costs needed to get to production are fairly minimal

4) The potential for this fairy simple operation to produce notable cash flow

In short, I like this deal, especially in a market that has shown a fondness for near-production, even small, Mexican gold and silver stocks.

Troilus Gold (TSX: TLG; USOTC: CHXMF)

Results keep coming in from TLG’s property-wide sampling program on the 90,000 hectares of the Frotet-Evans Greenstone Belt it picked up this year.

The latest samples came from the newly defined Testard target located 10 kilometres south of the resource area at Troilus. The highlight sample from Testard was bonanza grade for sure, returning 203 g/t gold, 2,440 g/t silver, and 4.4% copper. Other samples of note included 52.2 g/t gold, 34.9 g/t gold, 13.6 g/t gold, and 8.4 g/t gold.

Samples were collected from a mapped zone of brittle deformation and quartx vein swarms 35 to 45 metres wide and TLG has found similar mineralization 400 metres away along strike. That’s notable scale, especially given that soil covers lots in this area.

It’s worth noting that the silica flooding and brittle features noted at Testard are very similar to the rocks at the Troilus mine and the Southwest zone.

The addition of Testard to the other recent targets TLG has identified through this program demonstrate the district-scale potential here.

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The newly discovered Testard zone yielded a truly bonanza grade sample within a target just 10 km south of the main resource area at Troilus

Not to say we should lose focus on the development-level story TLG has built here, but this steady stream of high-grade results from this sampling effort indicate there’s quite a bit of opportunity here for upside splash.

ValOre Metals (TSXV: VO; USOTC: KVLQF)

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Phase 1 drilling is wrapping up at Pedra Branca with holes targeting potential extensions of the Trapia 1 zone. Assays are currently at the lab for 12 holes drilled on the Cedro, Golden Goat, Esbarro East, Cana Bava, and C-04 targets and a two-rig Phase 2 drilling program has begun. That latter program will help complete the work at Trapia 1 and then test the Trapia 2 and Santo Amaro targets.

The goal, of course, is to find more of the near-surface 2PGE+gold mineralization that already hosts a million oz. inferred resource. Supplementing drilling is mapping and sampling on the northern side of Trapia 1 and follow-up soil sampling on the three geophysical targets outlined at Mendes North. Management is also doing some preliminary met work and testing historical assays for rhodium content.

I’m especially focused on the drilling along the southern end of Trapia 1, as success there could significantly grow Pedra Branca’s overall resource. Palladium stories haven’t yet had their day in the sun in this precious metals bull market, but the looming supply deficit for this component of catalytic convertors suggest that day may come sooner rather than later. The good work VO is doing on this project has a good chance of paying off.

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