Gold was dealt What For last week, taking out major support, trading at levels not seen in over eight months.

The culprit of this recent carnage was a major sell-off in bonds pushing the yield on the US 10-year note to 1.5% (yields were a mere 0.5% only six months back).

Though current yields represent one-year highs, Gold, with its negative correlation to bond yields, is still holding above the lows printed last spring.

In my last installment of Highballer, and more recently in an (expanded) piece over at Chris Parry’s Equity Guru, I emphasized the following to fortify our rationale for owning gold and gold-related equities. It’s worth repeating, especially now—convictions tend to waver when our screens bleed red…

I suspect we’re in the early stages of a bull market in precious metals, base metals, battery metals, and all things mining—a bull run that will prove epic in scale.

I’ve seen this movie before. It has a rather riveting, albeit volatile plot.

Bolstering this belief, central banks around the globe, in maintaining extremely accommodative monetary policies, are debasing their currencies at a rate that is difficult to fathom.

On this side of the pond, Biden is intent on injecting $1.9 trillion worth of additional stimulus into the US economy—for starters. That’s welcome news to the millions of Americans who desperately need the support, but this accelerating debasement in the greenback opens the door to higher inflation and a dramatic loss in purchasing power.

Earlier this month, cognisant of the (currency) risk in the offing, Tesla announced the purchase of $1.5 billion in Bitcoin.

According to its recent SEC filing, Tesla stated:

“As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term.”

Note the reference to gold.

Has Tesla lost faith in the US Dollar? I suspect they’re not alone. Large companies all around the globe are sitting on piles of cash.

According to a recent Gold-Eagle article:

Alphabet’s (Google) pile is $137 billion, Microsoft’s is $132 billion, Apple has $77 billion, Amazon $84 billion, and Facebook is sitting on $62 billion.”

How many of these large entities see the risk? Well, if they weren’t thinking about it leading up to Elon Musk’s Bitcoin grab, they surely are now.

Not to diss crypto, but if a conservatively run company is looking for an alternative to fiat paper, gold’s long-standing role as a safe haven asset should draw greater attention.

This could be the catalyst that pushes gold to where it should be trading—well north of $2,000.

John Hathaway—portfolio manager at Sprott Hathaway Special Situations Strategy and co-portfolio manager of the Sprott Gold Equity Fund— has some good, well-considered thoughts regarding the metal and where it may be headed.

Hathaway believes that interest rates will need to stay low—that much is clear, considering the state of the global economy. He believes bonds—widely used as a hedge against stock market uncertainty—can no longer be relied upon. This will force large pools of capital to seek a more effective hedge against equity risk, and gold is the only asset that will offer such protection.

Hathaway estimates there’s roughly $100 trillion worth of assets currently under management—pension funds, mutual funds, sovereign wealth, private wealth—and gold does NOT factor into the equation in any meaningful way.

If a mere 1% of that total—$1 trillion—were to move into gold over the next few years, that would represent six years of new mine supply. That’s how under-owned gold is.

$1 trillion entering the gold space would push prices to levels difficult to imagine, to perhaps five times the metal’s current trading range.

If this current rout hasn’t already run its course, I suspect we’re close—a few weeks away at most.

The headlines…

Pure Gold Mining (PGM.V)

  • 394.09 million shares outstanding
  • $729.07M market cap based on its recent $1.85 close

Pure Gold poured its first gold back in December, on budget, and on schedule.

The Company is now ramping up towards commercial production—a milestone they should reach before Q1 is done.

The PureGold Mine has a 2.1-million-ounce Indicated resource (7.2Mt at 8.9 g/t gold) and a 0.5-million-ounce Inferred resource (1.9Mt at 7.7g/t gold).

Reserves, included in the above resource, stand at 1 million ounces grading 9 g/t Au.

According to the Company’s Our Story page…

PureGold’s Phase One mine has started pouring its first million ounces of high-grade gold. At the exceptionally low projected life of mine all-in-costs of USD $787 per ounce

This one million ounces of ‘low-hanging fruit’ will generate over $2.3 billion in revenue over the next decade. More than $1.2 billion in pre-tax free cash flow. And, based on a gold price of just USD $1,800 an ounce, delivering an exceptional pre-tax margin of more than $1,350 per ounce.

A Feb. 17th headline:

Eric Sprott Announces Holdings in Pure Gold Mining Inc.

Eric Sprott has an appetite for high-grade production plays.

Mr. Sprott now owns and controls 47,868,421 common shares and 21,925,000 warrants representing roughly 12.1% of the issued and outstanding common shares on a non-diluted basis, and roughly 16.8% on a partially diluted basis.

The following (very recent) vid captures the fundamentals underpinning this Red Lake production/exploration story, with Coppola-like production values. Note the reference to Goldcorp’s history in the Red Lake camp—it was a well-positioned drill rig that transitioned the once struggling Jr Producer to a Major entity in the production arena.

Defense Metals (DEFN.V)

  • 59.6 million shares outstanding
  • $31.59M market cap based on its recent $0.53 close

Defense Metals’ flagship Wicheeda Project has a current Indicated resource of 4,890,000 tonnes averaging 3.02% LREO (Light Rare Earth Elements) and an Inferred resource of 12,100,000 tonnes averaging 2.90%.

Recent headlines out of the Company regarding pilot-plant level processing, metallurgy, and strategic partnerships highlight an REE resource that could begin commanding some compelling economics.

If all goes by the numbers, we’ll get our first hint of Wicheeda’s economic potential when a PEA drops in mid-April (that is a best-guess estimate).

A Feb. 22nd headline:

Defense Metals Completes Quarterly Baseline Environmental Monitoring Work At Its Wicheeda Rare Earth Element Carbonatite Deposit

Some might characterize this as ‘soft news’ but it’s an important step in keeping on schedule as the push continues towards development.

This just in…

Defense Metals Pre-Pilot Hydrometallurgy Achieves High Impurity Removal With Minimal Rare Earth Element Losses From Wicheeda Flotation Concentrate

The Company continues to fine-tune the processing of material from a 30-tonne bulk sample collected back in 2019.

Highlights from this infill hydrometallurgical test work (centered around optimizing gangue leach test conditions) are as follows:

  • Gangue leach optimization resulted in increased manganese rejection from ~40% (pH 4) to ~85% (pH 3) from the flotation concentrate resulting in only minimal REE losses of approximately 1% (image below);
  • Increased concentrate weight reduction from <10% gauge loss to >20%

Craig Taylor, Defense Metals’ CEO:

“Defense Metals is extremely pleased with rapid advances being made in our pre-pilot hydrometallurgical optimization. We continue fine-tune our gangue leach, via milder conditions versus base case3, with an eye to striking the optimal balance of high front-end impurity rejection with minimal REE losses. The results announced today speak to the success of these efforts.”

Once again, a solid push along the development curve.

HighGold Mining (HIGH.V)

  • 54.19 million shares outstanding
  • $60.19M market cap based on its recent $1.12 close

Despite the weak share price performance over the past two months, a lot is going on behind the scenes here.

The Company’s district-scale Johnson Tract Project (JT) in coastal southcentral Alaska is the flagship.

The project has an Indicated resource of 750,000 ounces AuEq at a grade of 10.93 g/t AuEq and an Inferred resource of 134,000 ounces AuEq at a grade of 7.16 g/t AuEq.

Though JT currently bears flagship status, the Company continues to add to its land position around its Munro-Croesus Gold Project in the Timmins gold camp of Ontario.

The Timmins camp is located in the heart of the Abitibi greenstone belt, a prolific mining jurisdiction with over 200 million ounces of historical gold production.

A Feb. 22nd headline:

HighGold Mining Acquires Three Additional Gold Properties at Munro-Croesus Project, Timmins Region, Ontario

Here, the Company announced the acquisition of three additional mineral properties surrounding Munro-Croesus.

These acquisitions are part of an ongoing effort by the Company to assemble and consolidate claims in the region. The Company’s land position now measures 32 km2 (3,187 hectares) in size.

Darwin Green, HighGold’s CEO:

In the past year we have completed 10 separate property acquisitions surrounding Munro-Croesus for a ten-fold increase in the size of the Project area. The continuing assembly and consolidation of these claims has allowed HighGold to establish one of the dominant land holdings in this highly prospective and productive region of the greater Timmins gold camp.”

As a reminder, assays from 12 drill holes are still pending from the 2020 JT campaign.

Final drill results are also pending from the late 2020 campaign at Munro-Croesus.

Cartier Resources (ECR.V)

  • 215.88 million shares outstanding
  • $64.77M market cap based on its recent $0.30 close

Cartier—focused on the prolific Val-d’Or mining region of northwestern Quebec—has two projects that are due to deliver headlines in the coming days/weeks.

The Company’s flagship Chimo Mine Project is due for an updated resource estimate, a potentially significant price catalyst that could drop at any time.

The current resource at Chimo sits at 585,190 ounces grading 4.53 g/t Au (Indicated) and 597,800 ounces grading 3.82 g/t Au (Inferred).

The Company also recently launched Phase-1 of a 30k meter drilling campaign at its Benoist Project where results should begin to flow shortly.

The current resource at Benoist’s Pusticamica deposit currently sits at 134,000 ounces grading 2.87 g/t AuEq (Indicated) and 107,000 ounces grading 2.30 g/t AuEq (Inferred).

There’s more under the hood here. Cartier’s project pipeline also includes the Fenton Project.

Fenton property highlights:

  • the Fenton Property hosts the Fenton gold deposit (next paragraph);
  • the mineralization could rapidly outline high-tonnage mineralization.
  • the easily accessed Fenton property is located near a number of mills including Langlois and Bachelor, and the future mill of Osisko Mining’s Windfall Project.

According to Cartier’s project page, the Fenton property has a historical resource (non NI 43-101 compliant) of “426,173 tons grading 4.66 g/t Au correspond to 63,885 oz Au of which 23,643 oz Au are located in the first 50 meters below the surface“.

A Feb. 23rd Fenton-related headline:

Cartier Signs Letter of Agreement with SOQUEM to Own 100% of the Fenton Property

Here, Cartier announced the execution of a binding letter of agreement with SOQUEM Inc to acquire the latter’s 50% share in the Fenton property (a group of 14 mining claims currently held under a 50-50 joint venture agreement).

The price tag for SOQUEM’s 50% is $700,000, payable in cash and shares ($300,000 in cash – $400,000 in Cartier common).

Cartier’s share price has held its ground through this current rout.

The pending Chimo resource update could be a significant driver for the stock, one that could ultimately lead to a takeover offer from a resource-hungry producer.

Assay-related newsflow out of the Benoist project also represents a potential price catalyst.

Banyan Gold (BYN.V)

  • 171.52 million shares outstanding
  • $33.45M market cap based on its recent $0.195 close

Banyan’s flagship asset is its 173 sq km AurMac Project—a project highly prospective for structurally controlled, intrusion-related gold-silver mineralization.

AurMac is located 30 kilometers from Victoria Gold’s Eagle Project and adjacent to Alexco’s Keno Hill property.

The two zones contained within AurMac—Airstrip and Powerline—support an Inferred (pit constrained) resource of 903,945 ounces grading 0.54 g/t Au.

The Company’s Hyland Gold Project has an Indicated resource of 236,000 AuEq ounces and an Inferred resource of 288,000 AuEq ounces at a grade of 0.85 g/t AuEq and 0.83 g/t AuEq respectively.

A Feb. 24th headline:

Banyan Gold Drills 0.92 g/t Au over 63.5 m at Airstrip, Further Expanding Gold Mineralization by 300m from Existing Resource, Aurmac Property, Yukon

Here, the Company released a final batch of assays from its 2020 drilling campaign at the Airstrip zone.

Highlights include:

  • 0.92 g/t Au over 63.5 metres from 106.0 metres in MQ-20-86;
  • 0.89 g/t Au over 59.2 metres from 111.0 metres in MQ-20-87;
  • 0.62 g/t Au over 59.8 metres from 63.7 metres in MQ-20-93.

Tara Christie, President and CEO:

Successful step-out drilling along strike to the East, West and down-dip has shown that 2020 drilling added significantly to the mineralized volume of the Airstrip Deposit and defined continuity of mineralization in all directions. Significantly, MQ-20-66, MQ-20-67, MQ-20-86 and MQ-20-87 have identified the continuation of the Airstrip mineralized trend which remains open down-dip to the South and, in particular, to the West where the mineralization is showing consistent higher grade. We look forward to 2021 as a transformative year for the Company. Drilling is slated to begin early in March 2021 and it will be a very busy year for Banyan.

Overall, results from the 2020 campaign extended the strike length of the zone by roughly 300 meters to the West, and down-dip within the conceptual pit limits used to constrain the 2020 Airstrip resource estimate.

The western strike extent of the Airstrip Deposit, where a higher-grade trend is interpreted to exist, will see multiple probes with the drill bit this coming field season.

“Drill hole MQ-20-84, an approximately one km step-out along the interpreted eastern strike extension of the favourable mineralized unit, successfully identified anomalous gold mineralization from surface to a depth of approximately 30 m, confirming the Company’s geological interpretation with the intersection of the target calcareous unit (>200 m in width). There has been almost no exploration to the east of the Airstrip Zone, and the results of hole MQ-20-84 confirms Banyan’s interpretation that the eastern strike extension of Airstrip has the potential to host additional near-surface gold mineralization and warrants additional exploration follow up.”

Forum Energy Metals (FMC.V)

  • 140.09 million shares outstanding
  • $49.03M market cap based on its recent $0.35 close

Forum’s 38,250 hectare Janice Lake Cu-Ag Project, located in north-central Saskatchewan, is the Company’s flagship asset.

The Fir Island Project, another property in the Company’s extensive project portfolio, is 14,205 hectares of highly ground located in the prolific Athabasca Basin.

The drills are turning at Janice Lake.

In mid-February, the Company announced that partner Rio Tinto Cda had commenced drilling with two drill rigs at the Rafuse target, a 2.8-kilometer (priority) target of surface copper mineralization developed during a mapping, prospecting, and geophysical campaign last summer.

The market will be following this program closely, watching for any hint of a significant copper discovery (RIO is only interested in projects demonstrating world-class potential).

Drilling at Fir Island, where two rigs were mobilized last month, should be underway by now. This 6,000 meter (24 hole) campaign will also be watched closely.

And then there’s Love Lake, a wholly-owned early-stage Ni-Cu-PGM project encompassing some 30,836 hectares located 60 kilometers northeast of the Company’s Janice Lake project.

Love Lake, where the Company is defining a number of compelling targets for an upcoming drilling campaign (image below), bears geological similarities to North American Palladium’s Lac Des Isle deposit in the Thunder Bay region of Ontario, and Chalice Gold’s Julimar discovery in Western Australia.

A Feb. 24th headline:

Forum Announces $500,000 Private Placement and Stock Option Grant

Here, the Company announced a $500,000 raise by way of a PP consisting of 1,351,351 units priced at $0.37. Each unit is comprised of one flow through common share and one non-flow through warrant (each warrant has a strike of $0.42 and is good for 3 years).

“Proceeds of the Offering will be used to incur qualifying expenses under the Income Tax Act on the Company’s mineral exploration projects in Saskatchewan. Forum has increased its budget for drilling at its 100% owned Love Lake Nickel/Copper/Platinum/Palladium project and will conduct exploration on its Wollaston and Northwest Athabasca Joint Venture uranium projects.”

2021 is shaping up to be busy, and potentially transformative, for this expertly run Saskatchewan-based ExploreCo…

Prime Mining (PRYM.V)

  • 85.93 million shares outstanding
  • $184.75M market cap based on its recent $2.15 close

Prime is targeting near-term gold production at its 6,300-hectare Los Reyes Project located in the mining-friendly state of Sinaloa, Mexico.

Los Reyes is a district-scale low sulfidation epithermal gold-silver project where previous operators spent over $20M on exploration, engineering, and prefeasibility studies.

In April of 2020, Prime announced a Measured and Indicated (pit-constrained) oxide resource for the project totaling 19.8 million tonnes grading 1.0 g/t Au and 26.2 g/t Ag for 633,000 oz Au and 16.6 million oz Ag, plus an additional 7.1 million tonnes of Inferred material grading 0.78 g/t Au and 30 g/t Ag for 179,000 ounces gold and 6,831,000 ounces of silver.

Project development, once hindered by weak precious metals prices, can now be fast-tracked to production in this current price environment.

Slide 19 on the Company’s pitch deck

But it’s the resource expansion and exploration upside that intrigues me most about this project—the open extensions of known deposits, multiple untested (high priority) exploration targets, and the fact that only 40% of the known structures were systematically explored… leave a full 10 kilometers of untested strike length.

Recent headlines…

Prime Mining Named to TSX Venture Exchange “Venture 50”

On Feb. 24th, Prime was named to the 2021 TSX Venture 50, an annual ranking of top-performing listed companies from five industry sectors including, Mining, Oil & Gas, Clean Technology – Life Sciences, Diversified Industries, and Technology.

The 2021 Venture 50 top performers were selected based on year-over-year performance across three equally weighted criteria: market capitalization growth, share price appreciation, and trading volume for the year ended December 31, 2020.

Daniel Kunz, CEO of Prime Mining:

We are extremely honored to be recognized and selected by the TSX Venture Exchange within the top 10 of Mining Companies. The past year has seen Prime Mining evolve on many fronts, namely the advancement of our high-grade gold silver deposit in Sinaloa Mexico, and the addition of a strong, experienced management and technical team and strategic shareholders Trinity Partners and Pierre Lassonde. We are very excited about the future as we continue to diligently work on unlocking value at Los Reyes. On behalf of our Board of Directors, I would like to extend our appreciation to the team at Prime Mining for their hard work and dedication and to our shareholders for their support along the way.”

The next day, on Feb. 25th, the Company dropped the following headline:

Prime Mining Adds 5th Core Drill at Los Reyes

To say the Company is aggressively probing Los Reyes’ subsurface layers might be an understatement.

Here, Prime provides an update on its 15,000-meter Phase-1 diamond drill program that began in December.

“The drill rig count at the Project has been increased to address logistical, geographic and COVID-19-related challenges, so that the Company can maintain its previously communicated goals of completing Phase 1 drilling before onset of the rainy season in mid-August, completion of a new geological resource model during the rainy season hiatus and then initiate an aggressive Phase 2 drilling program in Q4 2021.”

CEO Kunz:

With five drill rigs now on site, we expect to quickly make up for initial delays in drilling progress that occurred at Los Reyes. To-date, ten core holes have been completed and are at various stages of preparation and analysis. Shipments of new drill core are now being made weekly to the assay lab.”

The Company states that two drill contractors are operating two man-portable drills, two track-mounted drills, and one rubber-tire-mounted drill rig. The two track-mounted drills are equipped with tools designed to extract oriented drill core.  This rig will help geologists determine the localized strike and dip of structures controlling the mineralization.

The following is a plan map of historic, proposed, in-progress, and completed Phase 1 drill hole locations for the eight known resource areas at Los Reyes…

Referring to the above map, six of the completed core holes are located in the Zapote South deposit and range in depth from 65 to 190 meters.

These six holes are designed to:

  • expand the in-pit resources along strike and down dip;
  • deliver geological data from core, where only RC data currently exists;
  • infill areas to convert Inferred material to the higher confidence Measured and Indicated categories;
  • provide silver assay data absent from parts of the historic database.

Drilling continues at Zapote South.

Three core holes have been completed in the Noche Buena deposit and range in depth from 150 to 160 meters. This drilling is designed to expand the in-pit resources along strike and down dip.

Drilling is continuing in the Noche Buena area.

Drilling recently began at the San Miguel East deposit, where the first drill hole is testing mineralization at depths of up to 300 meters (the depth potential at Los Reyes—below 200 meters—remains largely untapped).

A single deep drill hole has been completed in the Guadalupe East deposit area and a second drill hole from the same pad is currently underway.

Drill holes targeting this deposit are planned to exceed 350m in depth, with the first hole ending at 467m. This drilling is designed to target deeper sections at Guadalupe East for higher grade material. It is believed that historic drilling in this deposit failed to intersect the interpreted optimum boiling level stratigraphy for higher-grade zones that can occur in deposits like Los Reyes. This region offers great opportunity for underground resource potential.”

Ongoing work with this first phase of drilling includes field mapping, trench sampling, rock alteration analysis-interpretation, and re-logging of all historic drill core.

The goal is to develop a comprehensive geological and structural model to be used in the next resource update.

Additional work in support of this exploration program includes:

  • increasing access to new areas by rehabilitating existing access roads and trails;
  • outlining new areas for exploration by mapping and sampling areas that exhibit high-grade gold and silver potential;
  • increasing the land position at Los Reyes;
  • building infrastructure for securing water sources;
  • providing logistics and drilling support.

“The Company has created the foundation to support the five-drill program including construction of logging and sampling facilities and training of geologists for oriented-core logging.”

Lots going on at Los Reyes. Lots coming down the pike.

If you’re new to Prime and this district-scale project, the following interview with Andrew Bowering, published four weeks ago, offers some unique insights…

A chat with Prime Mining’s (PRYM.V) Exec VP Andrew Bowering – Pierre Lassonde increases stake in the company to 11.85%

END

—Greg Nolan

Full disclosure: Forum Energy Metals and HighGold are Highballer clients. The author owns shares of Pure Gold, Defense, Cartier, Forum, and Prime.

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