An eye on undervalued resource plays amidst broader market carnage – Defense Metals (DEFN.V), Patriot Battery Metals (PMET.V), Apollo Silver (APGO.V), and Teuton Resources (TUO.V)
Trading activity in the broader markets has everyone on edge. The S&P 500 index is currently testing its mid-June lows. A decisive break below this level could usher in further carnage, with many analysts in the bear-camp calling for a protracted downward spiral.
Dow Theory Sell Signal Triggered
I’ve stressed the significance of the 200-period SMA where the S&P 500 is concerned (here, and over here) and how it kept bear market rallies in check during the Tech and Housing crashes earlier this century. It appears to be serving as insurmountable resistance again, here and now.
Trade in the broader markets on Friday (Sep. 23) also saw the emergence of THE classic sell signal courtesy of price action in the Dow Jones Industrial Average and the Dow Jones Transportation Average—Dow’s lower low triggers Dow Theory sell signal. This, in the wake of the Fed’s 75 basis point rate hike last Wednesday.
The Greenback
The US dollar continues to demonstrate shocking strength as the Fed recklessly refuses to back away from its hawkish bullying tactics, printing a stunning 1.67% gain on last Friday’s close, surging to fresh two-decade highs.
Gold
With the broader markets on the ropes and the precious metal taking out lows tested no less than six times over the past two years, the short-term momentum appears to be in the bears’ favor.
I wouldn’t count on a complete breakdown in the precious metals arena though. Over the past few years, markets across-the-board have been riddled by a series of bull and bear traps. Up is Down… Black is White… Good is Bad… Day is Night.
But the fundamentals underpinning gold have never been more compelling, despite the lousy sentiment…
Sentiment among CEOs in the junior arena also appears to be waning. Low-ball private placements crossing my screen in recent sessions show a lack of confidence. I understand the thinking… ‘the macro picture is marked by extreme uncertainty – these companies need to cash up while they still can.’ Fair nough.
But I’m in the camp that believes that once the turn occurs—once precious metals grind out a bottom—it will generate a move of historical proportions (accompanied by considerable shock value).
Recent turmoil in the UK—surging yields and a currency that’s bleeding out—has Gold testing all-time highs tonight (Sep 26) in British Pound terms…
$44.01M market cap based on its recent $0.24 close
Last week Defense Metals delivered its first set of assays from a planned 18-hole 5,000-meter drill campaign at its flagship Wicheeda Rare Earth Element (REE) Project in the Prince George region of British Columbia. This ongoing program has seen 15 drill holes completed for 4,800 meters. The two holes presented in this press release—drill holes designed to upgrade the existing resource to the higher confidence M&I categories—were collared from two sites along the northern section of the deposit.
Infill hole WI22-64, drilled southwest to depth within the central area of the deposit, tagged an impressive 1.78% total rare earth oxide (TREO) over 192 meters (including 3.13% TREO over 73 meters (map below). WI22-64 represents one of the deepest holes drilled to date. These results are only partial—the remaining 101 meters (from 284 to 385 meters) are expected shortly.
Drill hole WI21-62, collared 120 meters to the north of WI21-64, tagged 1.39% TREO over 167 meters (including 2.29% TREO over 48 meters).
WI22-64 and WI21-62 confirm the robust nature of the mineralization Defense is delineating in Wicheeda’s subsurface stratum as it pushes Wicheeda towards pre-feasibility (Wicheeda’s resource currently stands at 5,031,000 tonnes averaging 2.95% TREO Indicated and 29,467,000 tonnes averaging 1.83% TREO Inferred).
The following table offers a breakdown of the REE values from both holes.
Kristopher Raffle, P.Geo. and Director and QP of Defense Metals: “We are pleased to have started receiving assays for our ongoing 2022 Wicheeda REE Deposit infill drilling campaign. These initial results compare very favourably to our PEA mineral resource cut-off of 0.5% TREO and continue to demonstrate continuity of mineralization over significant widths. We expect additional results in the coming days, weeks, and months ahead. With the 2022 drill campaign now 96% complete, we look forward to finishing a small number of remaining pit slope geotechnical and hydrogeological holes designed to inform any Preliminary Feasibility Studies.”
$25.3M market cap based on its recent $0.145 close
Apollo delivered two headlines since my last report—both updating progress at the company’s flagship Calico Silver Project where it continues its aggressive push along the resource definition and development curve. The ounce count at Calico, located in the mining-friendly county of San Bernardino, California, currently stands at 166 million ounces of silver contained within 58.1 million tonnes at an average grade of 89 grams per tonne (there’s also gold and barite in these subsurface layers).
Hole W22-RC-029: 151 g/t Ag over 94.5 meters from 1.0 meter depth down hole;
– including 289 g/t Ag over 1.5 meters from 5.5 meters depth down hole;
– including 257 g/t Ag over 6.0 meters from 61.0 meters depth down hole; and
– including 734 g/t Ag over 1.5 meters from 86.5 meters depth down hole;
Hole W22-RC-030: 92 g/t Ag over 40.0 meters from surface (and 53 g/t Ag over 6.0 meters from 50.5 meters depth down hole);
Hole W22-RC-031 – 123 g/t Ag over 26.5 meters from surface.
(Silver assays are reported at a 50 g/t silver COG with up to 4.5 m dilution and are uncapped. Lengths are down hole lengths and may not represent true widths)
Drill hole highlights for Au
Hole W22-RC-030 – 0.225 g/t Au over 27.0 meters from 131.5 meters depth down hole;
– including 0.850 g/t Au over 1.5 meters from 133.0 meters down hole;
Hole W22-RC-036 – 0.315 g/t Au over 6.0 meters from 82.0 meters down hole;
– including 0.524 g/t Au over 1.5 meters from 82.0 meters down hole;
Hole W22-RC-037 – 0.376 g/t Au over 16.5 meters from 71.5 meters depth down hole;
– including 0.672 g/t Au over 7.5 meters from 76.0 meters depth down hole;
– and including 1.200 g/t Au over 1.5 meters from 82.0 meters depth down hole.
(Gold assays are reported at a 0.1 g/t gold cut-off grade with up to 4.5 m dilution and are uncapped. Lengths are down hole lengths and may not represent true widths)
The Grabs
A surficial rock grab sampling program completed recently in the Burcham area, 225 metres (“m”) south of the Waterloo resource area, returned 34 rock samples with 0.1 g/t or more gold (“Au”), showing that this region represents a significant gold mineralized prospect outside the current MRE (map below). The surface program was designed to follow up on historic work completed in this area between approximately 1940 and 1989, showing the area exhibited gold mineralization across a broad area. Notable new surface rock samples reported include 6.280 g/t Au, 2.470 g/t Au, 2.410 g/t Au, and 2.240 g/t Au from subvertical, northwest oriented structures. These results, combined with drilling results to date confirm that gold mineralization is present over an extensive area at Waterloo (900 m X 400 m) over a variably thick horizon (approximately 5 m to 45 m true thickness).
Drill hole and surface rock sample locations map as reported September 14, 2022, for the 2022 Calico Technical Program.
More recently, Apollo announced the commencement of a phase-2 drill campaign at Calico.
RC drilling began on September 19, a campaign designed to further upgrade and expand the current 166 million ounce count.
Phase-2, a proposed 39 hole 4,300 meter RC program, will continue to:
Complete infill drilling to further support upgrading the confidence of the MRE;
Expand the MRE by adding additional high-grade silver ounces and quantifying possible by-products, such as barite and gold; and
Further increase the confidence in the geological model.
To date, 5,021 m (16,473 feet) of drilling in 44 RC holes have been successfully completed at the Waterloo Property as part of Phase 1 of the 2022 drill program. Results to date have confirmed the grade, continuity, and predictability of near-surface silver mineralization within the current MRE; identified silver mineralization in thicker portions of the Barstow sediments approximately 30 m below the base of the current MRE (which is approximately 125 m depth below surface); and have shown that the gold-mineralized horizon is more extensive than historic drilling indicated.
Phase 2 should wrap up by mid-November, and an MRE update is expected to commence shortly after once all the assay results have been digested.
Apollo CEO, Tom Peregoodoff: “Phase 2 of the 2022 drill program has commenced on schedule. The second phase of drilling will focus on the central and northern portions of the Waterloo resource and is designed to maximize the amount of silver which may be upgraded to a more advanced resource category and enable commencement of engineering studies in 2023. As with Phase 1 of the drill program, investors can expect results from this phase of the drilling on a regular basis as assay results are received from the lab.”
The complete and utter lack of price support here is a common defect right across-the-board in the precious metals arena. There are a few notable exceptions, but they are few and far between.
With a 166M oz resource and a $25.3M market cap (based on its recent $0.145 close), the downside risk in Apollo’s common shares might be considered (way) low. Independent Chair of the Board, Andrew Bowering, obviously thinks so…
$562.83M market cap based on its recent $6.29 close
Patriot Battery Metals continues to generate data-dense headlines as it probes its flagship project with the business end of the drill bit. There are currently three rigs turning on the company’s Corvette Project located in the James Bay region of Quebec.
Drill hole CV22-077 targeting large outcrop at CV13 pegmatite cluster
To lock in plans for an aggressive winter drill campaign, the company dropped the following headline announcing a flow-through raise priced at a 109% premium to its $6.35 close on September 14:
Shareholders see minimal dilution for a cash injection of $20M via shares priced at C$13.27 per. A very shareholder-friendly development as Patriot management struts its capital markets savvy.
Then, on September 19, Patriot announced a hit at one of its higher-priority regional targets at Corvette:
The nitty-gritty is in the text of the headline: ‘22.4 meters in first drill hole at CV13.’
Highlights from this Sep. 19th press release:
CV13 Pegmatite Cluster
Spodumene pegmatite intersected in first drill hole (CV22-077) to target the CV13 pegmatite cluster;
Spodumene pegmatite intercept from surface to 25.5 meters (3.1 to 25.5 meters);
Drill hole located approximately 30 meters from outcrop;
Large, centimetre to decimetre scale spodumene crystals;
Core currently being processed at site (no assays received).
There is approx 2,500 meters of drilling planned for these initial pokes with the drill bit along the CV13 pegmatite cluster during this phase.
CV5 Pegmatite Corridor
Spodumene-bearing pegmatite intersections in drill holes CV22-074 and 079 have extended the strike length of mineralized pegmatite at the CV5 corridor further to the west and east, respectively, for a collective mineralized pegmatite strike length of at least 2,100 meters and remains open in all directions;
Largest spodumene crystal to date (1.8 meters) intersected in drill hole CV22-066;
As of September 15th, 2022, a total of approximately 19,199 m over sixty-five (65) holes have now been completed over the 2022 drill campaign – 4,345 m over 20 holes in the winter program, and 14,854 m over forty-five (45) holes in the summer program.
I’m given the unique opportunity to communicate with a number of mining-savvy individuals, via private messages, over at CEO.CA. The following is @Teevee‘s take on the above headlines:
“CV-13 news indicates it is a very shallow dipping pegmatite body. Photos (image below) suggest the grade is at least double that of CV1-6 or greater than 2% LiO2. Just 15-20 million tonnes of +2% high-grade LiO2 with a very low strip ratio is like 30-40 million tonnes at 1%. If drilling bears this out, CV-13 is a contender for a starter pit while the resource at CV1-6 is expanded along strike east and west and to depth, and property-wide at pegmatites not yet drill tested.”
Still on @Teevee: “Regarding flow-through, it is fully subscribed subject to regulatory approval and “back office” paperwork. The winter program can now be planned and budgeted, leading to continued exciting exploration results in the first half of 2023.”
CEO Blair Way: “The summer drill program has been exceptional. I am at site this week with the team, including some of the board members, and look forward to going over in person what we have found to date this summer. It is an exciting time for the Company as we commence detailed planning for the winter drill program.”
Mr Brinsden joined Pilbara Minerals as Chief Executive Officer in January 2016, was appointed Managing Director and CEO in May 2016 and led the rapid development of the Company from junior explorer to become one of the world’s leading lithium raw materials players and entry to the ASX 100.
$60.31M market cap based on its recent $1.06 close
On September 16, Teuton received a progress report from JV partner Optimum Ventures concerning its Harry Project located in northwestern British Columbia’s prolific Golden Triangle.
Optimum has completed a round of geophysics on the property consisting of induced polarization (IP) and magnetic surveys.
According to Optimum management… IP surveying has yielded new and important information that will help guide drilling and surface exploration work. This survey was carried out to outline known structures and uncover unknown structures due to overburden in the area. This has outlined areas of sulphide concentrations as well as areas of quartz – sulphide stock works. The final survey report has demonstrated the program’s success by outlining numerous anomalies.
IP Survey Highlights:
Twenty-seven chargeability anomalies (first to third order) have been identified, which are interpreted and presented in map below;
Drilling targets can now be selected from the first priority on the 2D sections for future exploration follow-up;
The east side of the Grid (L7E, L8E, and L9E), depict the strongest chargeability at both extents of the profiles;
The western profiles (L5E, L6E, and L11E) depict the strongest chargeability in the central parts of the sections;
Discovery of new zone Ursula South;
The first and second priority zones are relatively shallow compared to the third priority zone, which extends to a depth of more than 300m. Aside from anomalous zones, overall chargeability is in the high range, which reflects major amounts of pyrite and high sulphide percentage in the survey area. The chargeability zones are generally controlled by the sub-vertical faults.
Optimum went on to state: The IP resistivity models display a subsurface resistivity variation range from 200Ωm to 20000+Ωm. The survey area generally has low to moderate resistivity, and the range of resistivity shows the area’s sedimentary and volcanic rock units. The resistivity sections resolved the distinct changes in resistivity from south to north along the parallel lines. Sub-horizontal contacts are mapped in this region and several sub-vertical faults are resolved, which extends from surface to a depth of more than 400m.
Drill pads recently constructed on the Harry property are designed to:
Test a strong IP anomaly over the Golden Summit zone mineralization;
Test the mineralization on the Swann;
Test the mineralization on the BR located a short distance above the Swann;
Test the wide zone of mineralization on the Saw Cut zone.
Recent exploration activities exposed the strike and dip of the Swann zone. Swann is teed up for a proper probe with the drill bit. The drill should be turning right about now.
Optimum has shipped approx 1000 surface rock samples, along with core from their portable Shaw drill rig, to the lab for assaying. Select grabs from multiple zones have been dispatched on a rush basis to accommodate immediate exploration efforts. Assays are due any day now.
Optimum’s CEO, Tyler Ross: “Optimum is extremely pleased with the progress achieved by our contractors on this project. I would like to thank geologist Alex Walus who has located and identified numerous new showings, Hardline Exploration, and K-6 Consulting, for conducting a highly successful program. The ongoing work is expanding on the strike extensions of new structures through mapping, saw-cut, and Shaw core sampling of new zones and continued sampling in exposure areas after snow melt. We are excited to start receiving assays, and to start a drill program to not only test IP anomalies but to test new zones as well as enlarge on the success of drilling on the Swann zone.”
Optimum can earn an 80% interest in Harry by spending $9M on exploration, making a $1.5M cash payment, and issuing 4M shares over five years (Teuton will retain a 2.0% NSR once all is said and done).
Final thoughts
There are dozens of high-quality ExploreCos in this arena that strike me as good value right now—some appear insanely good. In a future report, I’ll strive to shortlist a few that interest me most (companies I have yet to feature or mention here in these pages).
That’s it for this one. And thank you for the email queries and comments (it may take a few days, but I try to answer them all).
END
—Greg Nolan
Full disclosure: The author has been compensated for the Defense Metals, Apollo Silver, and Teuton Resources content. Consider the author especially biased where these companies are concerned (do your own due diligence). The author owns shares in all of the companies featured above.
Disclaimer - Legal Notice
Highballerstocks.com (Greg Nolan) is not a licensed financial advisor and does not give investment advice.
The content of this report is for information purposes only.
Nothing contained herein should be construed as a recommendation or solicitation to buy or sell any security.
Always consult a licensed qualified investment advisor in your legal jurisdiction before making any investment decisions.
Though Highballerstocks.com (Greg Nolan) believes its sources to be credible, and the statements contained herein to be true, readers must conduct their own thorough due diligence, and or consult with a qualified investment advisor before important investment decisions are made.
Highballerstocks.com (Greg Nolan) accepts no responsibility or liability for the accuracy of the contents of this report.
