An October 4th roundup I published over at Equity Guru—Unabated selling, dry powder, the upside of buying when you’re the only bidder in the room…—generated a fair amount of positive feedback:
The above tweet is courtesy of Blackrock Silver‘s CEO, Andrew Pollard. Blackrock is a Nevada-based explorer/developer currently active with four drill rigs in a 70k meter campaign at its flagship Tonopah West Project. A maiden Tonopah West resource estimate is expected by Q4 of 2021…
“Life-changing” moves are possible in this high-risk/high-reward arena. It’s the reason we’re all here. An excerpt from this October 4th roundup:
Blackrock, highlighted in these pages on March 6th, 2019 in a roundup titled Gold opportunities in the mother of all mining jurisdictions: 21 Nevada ExplorerCo’s for your consideration, climbed from its lowly sub-nickel ($0.04) pre-Andrew Pollard price levels to a high of $1.60 a year and a half later.
Blackrock was a classic setup. $1k invested immediately prior to CEO Pollard taking control of the Company could have fetched up to $40k within 15 months—proof positive that management matters in this wild-west of an arena.
Aside from examining the potential for a significant bottom in the junior exploration arena, this October 4th roundup also exposes the risks I see in this current environment.
In these uncharted waters—in this era of difficult-to-comprehend debt, negative bond yields, over-heated monetary expansion, and the likelihood that inflation is not as “transitory” as the Fed would have us believe—caution is advised.
It might also be advisable to keep some powder dry.
One more excerpt from this Guru roundup:
The purpose of highlighting the above success stories is to demonstrate the enormous potential underpinning this high-risk/high-reward arena.
That potential is amplified when sentiment is in the crapper and share prices are driven down to extremes.
But with the very real threat of continued market volatility, it makes sense to keep some powder dry. If general equities break down in a big way and gold stocks get taken down with them, extraordinary bargains will emerge, perhaps similar to those witnessed in late 2018 / early 2019.
Even without a broad market sell-off, if these explorers/developers fail to stage a rally over the next month or so, year-end tax-loss selling could exact a toll as many are pressing their 52-week lows after being cut in half in recent weeks/months. Dry powder would prove useful here too (big understatement).
Though we’re not at the (extreme) levels registered in early 2019, some of the companies I track are getting close—there are a number of high-quality entities trading at sub-$10M, even sub-$5M valuations… valuations that strike me as absurdly low.
In my next report, I plan to highlight one such company.
In the meantime, several companies we follow closely in these pages are reporting significant developments at their flagship projects.
Defense Metals (DEFN.V)
On September 23rd, Defense Metals dusted off its Athabasca Basin uranium projects in light of the recent activity in the spot uranium market—activity I highlighted when we took a close look at Skyharbour Resources, an Athabasca Basin land baron.
Saskatchewan’s prolific Athabasca Basin is to uranium what the Carlin Trend is to Gold.
Defense Metals Revaluates Its Athabasca Basin Uranium Projects
The 1,233-hectare Geiger North and 8,130-hectare Klaproth projects are located roughly 35 kilometers northwest of the McClean Lake mine and mill, and adjacent to the Wollaston-Mudjatik transition zone—a major crustal suture related to most of the major uranium deposits in the eastern Athabasca Basin.
This area of the Basin is largely under-explored.
The Company is currently initiating a detailed review of all historical exploration conducted on the two properties (diamond drilling, ground/airborne geophysics, and geochemical surveys).
“The expectation is that results of the data review will form the basis for go-forward justification for renewed exploration up to and including commissioning of project wide airborne electromagnetic geophysical surveys to identify prospective basement conductive anomalies.”
I expect the company will be seeking joint venture partners to push these two projects further along the exploration curve. There’s certainly an appetite for this Basin-based real estate.
JV-related newsflow might be in the offing.
Craig Taylor, CEO:
“The renewed interest in uranium has prompted Defense Metals to reassess its considerable land position in the prolific northeast Athabasca Basin. While the Company’s focus remains on advancing it flagship Wicheeda REE Deposit near Prince George, British Columbia, we look forward to further capitalizing on the shareholder value brought by the Geiger North and Klaproth Projects.”
On September 29th, the Company released the following headline updating progress at its flagship Wicheeda REE project where a highly anticipated PEA is expected by mid-November of this year…
Defense Metals Provides Wicheeda Rare Earth Element Project Economic Scenario Analysis Update
Site visits for SRK qualified persons are taking place as I type this piece.
The following work has been completed by SRK as this (economic) study nears completion:
- Detailed data review (completed at sufficient detail to ensure no fatal flaws);
Scenario definition (complete); - Evaluation of mineral processing, hydrometallurgy, and separation costs (complete);
- Pit optimization (complete); and
- Mine scheduling (in preparation).
More recently, on October 4th, Defense announced (welcome) news of an acceleration in its current drill campaign at Wicheeda.
Defense Metals to Mobilize Second Drill to Wicheeda Rare Earth Element Project
1,500 meters have been drilled to date in eight diamond drill holes. This is excellent progress.
Rig #1 is expected to continue drilling on the north end of the deposit. Rig #2 is expected to commence coring a series of infill holes within the central deposit area by mid-week…
CEO Taylor: “We are extremely pleased to have secured a second diamond drill to expedite completion of our Wicheeda REE Deposit resource expansion and delineation program. With this additional drilling capacity, we expect to be well-positioned to deliver on our 2021 exploration goals. Based on contractor negotiations, we expect the second drill rig to be in a positioned to commence coring by the mid-week.”
Wicheeda currently boasts an 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% LREO.
To say that Wicheeda’s high-grade REE resource is strategic and that there are a number of supportive undercurrents, crosscurrents—what have you… is probably a gross understatement.
With China already in control of 70% of the global REE refining market, and the West’s desperate need to secure a stable source of REEs for the production of electric vehicle magnets, Defense strikes me as a lock.
China to form two rare earth giants to strengthen pricing power
Once again, the pending PEA, only weeks away, may represent a significant price catalyst for the Company.
Harfang Exploration (HAR.V)
On September 28th, Harfang released bedrock sample results from its wholly-owned Serpent Project in the James Bay region of Quebec.
Harfang continues to deliver high grade gold on the Serpent Project (James Bay, Québec)
Highlights include:
- Grab samples up to 345 g/t Au from Trench TR-21-26;
- Channel samples up to 208 g/t Au over 0.75 m (Powerline showing);
- Quartz-tourmaline boulders (up to 45.5 g/t Au) up-ice of the Moby-Dick gold structure;
- Metallic sieve analyses up to 3,710 g/t Au for the coarse fraction (>106 microns) confirming the abundance of coarse-grained gold grains.
“These results demonstrate the potential for high grade orogenic gold mineralizations along structures more than 7 km long straddling Harfang and LaSalle’s properties (image below). Regional prospecting outlines potential for additional gold structures north and south of the Stu structure. Harfang carries with confidence its drill program in and around the marshland up-ice of the gold-in-till anomaly.”
Exploration this summer included mechanical trenching, detailed geological mapping, and prospecting.
599 channel samples and >560 grabs have been collected thus far.
“Trenching was carried out in specific areas around the marshland where earlier prospecting had revealed large gold-bearing quartz veins and shear zones. Recent prospecting was focused on selected areas around the marshland and in the northern part of the Property. A soil survey (B-horizon) with more than 800 samples was completed. Results from these soil samples and approximately 250 grab samples are pending.”
The Company is currently in the midst of a 3,500-meter drill campaign, testing a number of high-priority targets along this 28,565-hectare property.
Skeena Resources (SKE.T)
On October 4th, Skeena announced a Phase-2 drill campaign at its Albino Waste Facility (AWF) zone, located just to the west of its main resource base at its flagship Eskay Creek Project in the prolific Golden Triangle of British Columbia.
Curiously, the AWF was utilized by former operators as a disposal site for waste rock and tailings.
You know you’re in a prolific geological setting when areas set aside for waste rock turn out to hold significant mineralization in their subsurface layers.
In Q2 of this year, the Company drilled eight vertical holes on a 50 meter grid to test the grade potential of the AWF. All eight holes succeded in tagging remarkable grades and thicknesses:
- 4.17 g/t Au, 160 g/t Ag (6.31 g/t AuEq) over 16.01 meters (SK-21-841);
- 4.18 g/t Au, 190 g/t Ag (6.72 g/t AuEq) over 12.16 meters (SK-21-842);
- 4.16 g/t Au, 204 g/t Ag (6.89 g/t AuEq) over 22.80 meters (SK-21-843);
- 3.13 g/t Au, 127 g/t Ag (4.82 g/t AuEq) over 19.76 meters (SK-21-844);
- 3.97 g/t Au 130 g/t Ag (5.70 g/t AuEq) over 15.20 meters (SK-21-845);
- 8.68 g/t Au 330 g/t Ag (13.09 g/t AuEq) over 13.68 meters (SK-21-846);
- 3.19 g/t Au 115 g/t Ag (4.73 g/t AuEq) over 14.19 meters (SK-21-847);
- 2.62 g/t Au 82 g/t Ag (3.71 g/t AuEq) over 19.76 meters (SK-21-848).
HighGold Mining (HIGH.V)
HighGold dropped a monster hole earlier this AM.
For me, HighGold has always been as much about its regional potential as its current high-grade resource base at Johnson Tract, the Company’s flagship project in southcentral Alaska. There’s a lot of structure to probe along these 8,475 hectares.
The Difficult Creek Prospect (DC), located four kilometers northeast of the JT deposit resource base, was lined up for a proper probe with the drill bit this season. Note the high-grade surface values encountered during their 2020 field campaign (map below)—a discovery appeared (all but) inevitable.
The DC Prospect – characterized by a series of large gossan alteration zones similar in style to the JT Deposit and including a 500×1000 meter silver-rich New Vein Field discovered by HighGold geologists last season that consists of multiple sets of low-sulphidation epithermal crustiform quartz veins, vein swarms, and siliceous breccia.
Today’s headline numbers from the first hole drilled at the DC Prospect blow the doors off the proverbial barn…
The Company reported only one hole in this press release, but what a hole.
Drill Hole DC21-010 highlights:
- 577.9 g/t Au, 2,023 g/t Ag, 2.15% Zn, 0.30% Cu over 6.40 meters, including;
- 982.7 g/t Au, 3,436 g/t Ag, 2.80% Zn, 0.44% Cu over 3.76 meters, including;
- 2,860 g/t Au, 9,990 g/t Ag, 5.04% Zn, 0.88% Cu over 1.26 meters.
(the true width of the 6.4 meter mineralized interval is estimated to be 90% of the width drilled)
Darwin Green, CEO:
“Without a doubt, this is a game changing drill hole that firmly establishes the DC Prospect as a second center of high-grade mineralization and validates our conviction in the multi-deposit potential at Johnson Tract. The bonanza grade intersection in hole DC21-010 represents the highest grade drilled to date on the JT Project, which is a significant achievement given the number of outstanding drill intersections generated previously in the main JT deposit area. We look forward to the pending assay results from additional step-out drill holes and the ongoing exploration of this exciting early-stage prospect.”
Drop the mic Mr. Green.
The DC Prospect is located four kilometers northeast of the JT Deposit and is characterized by a series of large gossan alteration zones similar in style to the JT Deposit that collectively extend over a 1.5 km x 3.0 km area. Gold mineralization and pervasive clay/anhydrite alteration are preferentially developed within dacitic to rhyolitic tuffaceous rocks that underly a shallowly-dipping sequence of lesser altered andesite that is host to a gold- and silver-rich vein field at higher elevations. The widespread extent of mineralization exposed in erosional windows through the andesite supports potential for a large and partially blind mineralized system linking the various DC Prospect zones together.
Hole DC21-010 is the first hole completed by HighGold at the DC Prospect and targeted down-dip of a showing of mineralized silicified breccia at Middle DC where surface sampling retuned 22.1 g/t gold and 178 g/t silver over a 1.5m chip sample. Limited drilling in 1983 by a previous operator yielded 36.6 meters grading 3.57 g/t Au, 1.8% Zn, 0.2% Cu 0.4% Pb and 15.5 g/t Ag in hole DC83-002, including 4.6 meters grading 9.3 g/t Au, 57 g/t Ag and 4.5% Zn. Hole DC21-010 intersected the mineralized zone at a shallow depth, confirming continuity of the mineralized zone and demonstrating the presence of bonanza gold and silver grades, including 2,860 g/t Au and 9,990 g/t Ag over 1.26m within a broader mineralized interval from 46.30m to 52.70m grading 577.9 g/t Au and 2,023 g/t Ag over a 6.4m width. Mineralization consists of an anastomosing network of narrow quartz-sulphide veins within a variably silicified zone of quartz-sericite-pyrite alteration.
A total of seventeen holes, testing multiple targets, have been drilled along the 1.5 x 3.0 kilometer DC Prospect during this first-pass campaign.
Of those seventeen, seven holes were drilled at the Middle DC Zone. These include step-outs down-dip and along strike of this spectacular DC21-010 hit.
A significant number of assays are still pending from this high-grade zone.
CEO Green runs a tight ship: DC21-010’s core would have been absolutely striking—visually—but there was no leak. The market didn’t see DC21-010 coming.
“The importance of the DC Prospect has been elevated significantly by the initial, very high-grade results returned in hole DC21-010. The mineralized zone at Middle DC is open to expansion at depth and along strike and will be a major area of focus for the Company. We look forward to receiving the large volume of pending assay results from Middle DC and elsewhere throughout the greater DC Prospect.”
There are currently three rigs turning at the JT project. Regional mapping, geochemical sampling, air+ground-based geophysics, and a Phase-I metallurgical sampling campaign are also ongoing.
“Drilling is divided between the JT Deposit area and regional targets, including the DC Prospect. To September 30, a total of 13,200 meters have been completed in 34 holes (17 in the JT Deposit area and 17 on regional targets). Assays results will be released on an ongoing basis pending review and meeting Company quality assurance-quality control protocols. An updated mineral resource estimate is planned for the JT Deposit in early 2022, following the completion and receipt of all assays from the 2021 drill program. The new resource estimate will incorporate new drilling completed in 2020 and 2021.”
Hole DC21-010 is a monster. It sets the stage for high drama—additional (highly anticipated) newsflow over the balance of the year.
We stand to watch.
END
—Greg Nolan
Full disclosure: Defense Metals is a Highballer client. The author owns shares of Defense, Skyharbour, and HighGold (color me biased).
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I think in their video, Craig plans on spinning off the Defense Metals uranium property in the Athabasca Basin in order to finance their Wicheeda property. I first took an interest in Defense Metals after making money with MP Materials. I learned that Alex Knox, DM’s current geologist/adviser had worked at MP (back when it was named Molycorp) . He said in an earlier video that Defense Metals had a ‘coarser’ grade material than Mp materials which made it superior. So I was sold and have been loading up on Defense Metals ever since. I’m expecting a minimum doubling on my money all the way up to a 10 fold profit. Keep up the good work.
Good insights Rob. I like the setup here too. It’s the reason Defense is a client. And it’s the reason I own shares.