Höwler International Investor Relations and Consulting
– Finanzkommunikation und Unternehmensberatung –
Inh. Dipl.-Kfm. Maurice Höwler
Newsletter issue April 2018
IR Firm Covers Stakeholder
One drill hole could change everything
In my last issue I pointed out that the Organization for Economic Cooperation and Development (OECD) anticipates a strong and synchronized global growth over the coming months, and that for the first time since 2008, no major economy is in contraction mode. It is therefore no surprise that World real GDP is expected to grow by 3.7 percent this year and 3.6 percent in 2019. I do not believe the ongoing boom will come to a quick end any time soon. However, investors in Europe may recognize the strong global economy, but if we take a critical look at today’s financial markets, ten years after a devastating global financial crisis and five years after the Euro crisis, we realize that the allocation of capital to certain asset classes has completely changed – for good reasons. On it’s last meeting on March 8th, the ECB decided that the interest rate on the main refinancing operations, the interest rates on the marginal lending facility and the deposit facility will remain unchanged at 0.00%, 0.25% and -0.40% respectively. Most market participants expect no change of course at least until 2019. So in this challenging market environment, investors are forced to identify attractive yields, but it is also true that the investor sentiment has changed towards a careless risk-ON mode. Some of you may remember this headline:”Best Move: Just Buy Everything?” on CNBC in February 2017 (https://www.cnbc.com/video/2017/02/21/best-move-just-buy-everything.html). More than once, Bundesbank President Jens Weidmann, member of the ECB council, warned market participants against potential bubbles in various asset classes. He has in my view good chances to become the next ECB president in Nov. 2019.
My conclusion is, due to the hyper-expansive monetary policy of Central Banks over the past 10 years, we could at first experience a longer than expected phase of economic expansion. It takes a few years until the trillions of USD, EUR and YEN, which literally have been pumped into the system, arrive in the real economy. All those countries which had experienced slow growth in recent years have now the necessary capital and demand to make purchases on the world market. The remaining question is: What will ultimately happen, when the effect of this massive injection fades away? I wonder if significantly accelerating price inflation will be one unforeseen consequence of the hyper-expansive monetary policy. No one has the answer yet. Only time will tell.
I like to use this opportunity to introduce a very well positioned junior mineral exploration company based in Toronto. Stakeholder Gold Corp. (TSX-V: SRC; FSE: SW0N) is presently primarily focused on the exploration of the so-called Goldstorm property, an exciting gold-silver project in Nevada, USA. In addition, the company is also exploring its 100 percent owned Ballarat Gold Project situated in the White Gold District in Yukon Territory, Canada.
In late 2016, Stakeholder Gold which was previously hit hard by the devastating bear market in mining stocks (2012-2015) was introduced to Mountain View Gold Inc., a private company with an exciting project named the Goldstorm property, situated in a very favorable geology in Elko County, Nevada, USA. Goldstorm is located in an area where three major regional gold- and silver trends intersect. At that time, Christopher Berlet, President and CEO of Stakeholder Gold, recognized a great opportunity and without hesitation, the company entered into negotiations about a reasonable earn-in agreement with Mountain View Gold. A final property option agreement was closed in May 2017. Under the terms of the agreement, Stakeholder Gold has the option to earn up to a 100 percent interest in the Goldstorm property by spending C$ 2.5 MM in exploration expenditures within three years. In 2017 the company also arranged a lease agreement with the owner of additional claims in the region so that today, Stakeholder Gold’s complete land position is comprised of 1,540 hectares. The Goldstorm project is located 30 km northwest of the Midas Mine of Klondex Mines Ltd. (NYSE: KLDX) which is currently being acquired by Hecla Mining Company (NYSE: HL) and 18 km northeast of the Twin Creeks Mine of Newmont Mining Corp. (NYSE: NEM).
The Midas mining district in Nevada has a long history with a recorded production beginning in the early 1900s. In between 1907 and 1942 approx. 300,000 oz. of gold and 3 million oz. of silver were produced, predominately from underground mining of high grade veins that outcropped at surface. The largest historic producer was the Elko-Prince mine in the northern part of the district. Since 1998 when operations at the underground Midas Mine (formerly known as the Ken Snyder Mine) commenced, this mine produced more than 2.2 MM oz. of gold and 27 MM oz. of silver. Today it is one of the world’s highest grade and most profitable gold-silver mines. Now, in recent years the market sentiment for gold miners has improved – the gloomy days are over – and major producers are forced to look at attractive acquisition targets, simply to maintain their reserve levels and to be optimally positioned for the next gold cycle. It is therefore no surprise, that on March 19th 2018, Hecla Mining Company announced the intention to acquire Klondex Mines Ltd. for US$ 462 MM. In the press release, Hecla’s President and CEO Phillips S. Baker, J r. stated: “Opportunities to acquire significant land packages along Nevada’s prolific gold trends are very rare. Rarer still are for these land packages to have the highest grade mines in the U.S. and this transaction is consistent with Hecla’s strategy of owning large prospective land packages with mines w here we can improve costs, grow reserves and expand production.”
In other words, still today in the 21st century, when companies look for gold and silver in the U.S., they do so in Nevada. Prolific faults such as the famous Carlin Trend or the neighboring Cortez Trend have already given birth to dozens of so-called “elephants” – gold deposits of more than 10 million ounces. In these days gold miners of all shapes and sizes are preparing for the next big elephant and it seems to be only a matter of time until at least one of them will make history. Stakeholder Gold is one of these companies. The Goldstorm project could not be better positioned. The map below shows the three major geological trends in this exciting region which merge in to one at Goldstorm: The Carlin Trend (which is believed to host atleast 220 MM oz. of gold), the Northern Nevada Rift Zone (51 MM oz. of gold) and finally the Getchell Trend (60 MM oz. of gold). The Goldstorm project is situated on the southern boundary of this structural intersection.
Figure 1: Goldstorm located at the intersection of 3 Prominent Gold Trends
The Mining Engineer Chris Berlet and his highly experienced geological team – among them Richard Redfern, the company’s exploration manager for Goldstorm, who is involved in the exploration of the project since 2002 – are convinced: Goldstorm has the potential to be the same type of high-grade gold and silver system as the underground Midas Mine and that it could host a large Carlin-style gold deposit at depth. Several significant fault zones host gold mineralization on the project, along favorable WNW and NNW orientations. These zones have been measured to be over 3 km long and are up to 50 m wide. In addition, exploration drilling in recent years has also revealed significant potential for open pit targets: A proven concept hole (WG-1001) drilled by West Kirkland Mining Inc. (TSX-V: WKM) back in 2010, provided the basis for the discovery of the Clayton Veins system, situated approx. 1 km south-southwest of the northern zone. This important hole intersected 6 veins in a 50 m wide structural corridor with high-grade gold and silver mineralization including visible gold in the drill core! The best intercept contained a 2 m wide section of a quartz-naumannite-electrum-bearing mineralization from 65 to 67 m depth. Located only 60 m below ground surface, this section assayed 5.51 g/t gold across the 2 m long core length and included a 1 m interval that assayed 9.29 g/t gold and 72.6 g/t silver. The Clayton Veins system trends north-west and south-east and the geologists believe it is more than 2,000 m long with veining exposed in multiple locations. The Prochnau vein system has, to date, only been tested by air track holes extending to less than 50 m of depth.
Stakeholder Gold started its Phase 1 drill program at Goldstorm in December 2017 and released interesting drill results a few weeks ago. The company’s first drill hole G-2017-1 was drilled approx. 100m west of WG-1001, in order to target gold and silver mineralization in the Clayton fault-bounded Zone. Based on the results, the geological team could successfully identify a new interesting zone at Goldstorm, named the Trail Hill Zone. Additional re-assays of narrower, more selected samples collected from hole G-2017-1, above and below a so-called “S Fault” contact zone of the Trail Hill gold-silver target area, have confirmed their view: The upper 0.43 m wide, limonitic fault breccia, intersected at a core hole depth of 137.68 – 138.11 m, assayed 0.018 g/t gold and a strongly anomalous 3.39 g/t silver. The first interval below the S fault, in between 138.11 – 138.72 m, contained an abundant amount of an undefined black mineral in brecciated, altered, dark gray basalt and sedimentary rock that assayed 0.054 g/t gold and 137 g/t silver (a new silver record for the Goldstorm project). In the company’s latest news release from March 27th 2018, it says: “These data indicate that the rocks on both sides of the S Fault are mineralized, thus the fault may be a feeder to gold-silver mineralization. These data are interpreted as being suggestive of a silver halo around gold mineralization, similar to rocks around the Hollister Mine of Klondex/Hecla and the adjacent Silver Cloud property. We interpret that any main boiling zone for gold-silver mineralization in the Trail Hill Zone at Goldstorm would be at greater depths than those reached in this drill hole.” (See: http://stakeholdergold.com/press-release/)
In order to view the location of the completed and projected drill holes and to get a better understanding of the regional geology including the limiting spatial characteristics of this gold-silver system, interested investors should take a closer look at these two figures:
Now, in the upcoming Phase 2 drill program which is planned to commence in May 2018, Stakeholder Gold will be fully focused on the Trail Hill, Clayton, and Prochnau vein systems at depth, more precisely below the 1,830 m elevation level. This level is so important since geologists assume it is the approximate level of a paleo-water-table, which was existent 15.4 million years ago in the Miocene Epoch. At that time a high-grade gold and silver mineralization could have been settled in the Midas Gold Trend at Goldstorm and at the Midas, Hollister and Silver Cloud mines. It is known that the gold zones for the Midas, Hollister and Silver Cloud mines all begin at approximately the 1,830 m elevation level in what is understood to have been the top of the paleo-water-table. If the same is true at Goldstorm, as the team believes, then a significant gold zone may be discovered below this depth.
It looks like the Goldstorm project could potentially incorporate two primary types of mineralization: Midas style and Carlin style. The Midas deposit consists of a number of steeply dipping, quartz-calcite-adularia precious metal veins hosted by volcanic and also volcanoclastic rocks. This world-class deposit locally contains mineral grades greater than 350 g/t of gold. Gold mineralization occurs as electrum and is intimately associated with selenide and sulfide minerals. Whereas the Carlin Trend is characterized by sedimentary, limestone type of geology. This type of mineralization can be found e.g. at the Twin Creeks mine, approx. 18 km southwest of Goldstorm. Due to this very favorable geology and considering the preliminary findings at Goldstorm which have been identified by Rick Redfern and others, I believe, when the company launches its Phase 2 drill program in the spring, only one drill hole can change everything.
And finally, there is Stakeholder Gold’s 100 percent owned Ballarat Gold Project: This over 7,000 hectares large placer gold project is situated 120 km southeast of Dawson City in the heart of the White Gold District in Yukon Territory, Canada. Chris Berlet looks at Ballarat as a potential Plan B within his overall strategy to build shareholder value in the upcoming new gold cycle – or simply as a second act, depending on how Plan A, Goldstorm works out.
Figure 4: Ballarat property (SRC 100%) in the heart of White Gold District, Yukon
Based on historic records during the past 50 years, over 104,604 oz. of gold have been recovered from placer operations on Ballarat Creek. The small river is one of the most prolific placer gold producers in the world-class White Gold District. The gold source for the extensive placer gold found in Ballarat Creek is almost certainly located on the Ballarat property. The topography of Stakeholder’s Ballarat claims is such that water drainage into the Ballarat Creek comes down from the surrounding Ballarat claims. The gold source is there somewhere, and Ballarat Creek’s prolific gold endowment suggests a deposit source of size and scale may be not far away. During the Yukon summer of 2016 the company completed a Phase 1 exploration program on Ballarat which consisted of soil and rock sampling, several geological surveys and 1,728 m of Rotary Air Blast (RAB) drilling along the Eastern Zone. Results have significantly expanded the Eastern Zone target area. Two float rock samples from this zone yielded values of 0.759 g/t and 0.587 g/t gold. A grab sample taken from a trench at the Northwest Zone ran 1.492 g/t gold. Geophysical work has been completed on the Eastern Zone anomaly. The company has already identified new gold-in-soil targets at Ballarat closer to the Eastern Zone and also at a ridge on the western part of the Eastern Zone.
It is important to know that Goldcorp is currently constructing a new sealed road (named the Coffee Access Road) in that region. This road is being constructed from Dawson City down to Goldcorp’s Coffee Project to provide road access for equipment and mining personnel. This Coffee Access Road will cross the eastern portion of the Ballarat property over more than 10 km across Stakeholder’s ground claims. It was therefore a wise management decision to delay any further exploration until this summer, as work is currently being done to complete the new road. Stakeholder Gold will benefit from the significantly improved accessibility to drill sites, but also from soil sampling and geological results uncovered in road building. The exploration window in the Yukon summer is generally very short, but this new road will definitely result in a more efficient allocation of resources and time.
President and CEO Christopher Berlet is a professional Mining Engineer with over 25 years of business experience both in Corporate Finance and the Mineral Industry. Finally, I like to point out that the TSX-V and Frankfurt listed company has currently only 24 MM shares outstanding, of which around 30 percent are being held by management and institutional investors. Presently, the company has a market capitalization of only C$ 6 MM.
To conclude, Stakeholder Gold is exploring an exciting project, situated in a world-class geological environment. The highly-experienced management team made the right decision at the right time to look for gold and silver in Nevada! This is a unique story many risk-aware, advanced mining investors are looking for in these challenging times. It may be of particular interest to European investors also, against the backdrop of the current market sentiment and the quite obvious bubbles in various asset classes which have resulted – in my opinion – from careless monetary policies of the ECB. Of course, investors should always be aware of the typical, significant risks a junior exploration company is exposed to. However, we should take into account that President and CEO Chris Berlet has a good Plan B in mind with the large Ballarat Gold Project which remains highly-prospective.
Interested investors who would like to learn more about Stakeholder Gold should take a look at the company’s website: http://www.stakeholdergold.com. Stakeholder Gold Corp. (TSX-V: SRC) is also listed on the Frankfurt Stock Exchange under the symbol SW0N or WKN: A2ACEP.
Release date: April 6th 2018
Author: Dipl.-Kfm. Maurice Hoewler, Hoewler International Investor Relations and Consulting, Bremen, Germany.
With Best Regards,
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- Benz Mining Corp.
- Stakeholder Gold Corp.
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