Built Upon Diamonds and Gold

The great expanse of the Canadian Shield is mesmerizing. The aurora borealis lights up the sky while the ground hides riches — Yellowknife was built upon diamonds and gold. All these things are natural, beautiful and conjure a deep spirit within us. Our love of diamonds and gold is obvious, while those who have experienced the haunting beauty of an aurora borealis describe a mystic experience. The area attracts environmentalist, those who love nature and those who mine. Mining, after all, is the foundation of all green and clean technology.

So why, with such incredible mines like Giant and Con in the region, did the Mon mine shut down in 1997 and the last of the gold mines close in 2004?

It was the heyday of the internet bubble and gold dropped to USD$287. It’s hard to imagine gold being so low and at that price it was flat out not economically feasible. The market spoke and funds reallocated towards internet stocks.

This led to the first meltdown of 2001, which reminded us of the importance of fundamentals like revenue, cash flow, assets and price-to-earning ratios. Afterwards, e thought we had learned from the past. But, like those before us we soon had another meltdown, in 2008. It was, on the surface, a housing market bubble, but in truth so much more That failure in the market helped spur interest in gold, again. It helped to remind us of value.

That banking fiasco was never resolved but pushed forward as gold had its time in the sun for a few years. It has been more then 7 years now and we are waiting for a combination of factors to unravel: overvalued real estate markets, ‘disruptive new valuation model internet stocks’ again, $13 trillion in negative-yielding sovereign debt, hundreds of trillions of flaccid corporate debts. All this is to explain the cyclical nature of gold and the recognition of it being a smart haven when bubbles occur and pop.

Knowing all this, there is nothing I want more than a small producing gold mine. Well, maybe a big producing one!

Now, nothing great is ever achieved without extreme hardship and sacrifice. Let me share an example, borrowed from Dr. David Webb, president and CEO of 60 North Gold. Dr. Webb was an athlete — a high-level hockey player and swimmer — so the rugged and gruelling work of geology and prospecting is a good fit for him. He’s drawn to nature, to the land, so it wasn’t surprising to learn that he was prospecting up in the Northwest Territories with a friend while doing his Master’s.

On one cool September day they were faced with the dilemma of crossing a 50m stretch of water. It was an easy swim for two high-level swimmers or a further two-hour pack hike. As they pondered the solution, they turned to their specialized pack of gear that prospectors have always carried. Not unlike a soldier’s pack, it serves as life support, with practical work tools like axes and picks.

They decided to make a flotation device, much like Tom Hanks did in Castaway. I would never call into question either’s engineering capabilities, but as they made their way into the cold, far North water their newly constructed vessel upended. They were then forced to push the packs for the 15-minutes swim. Near hypothermia set in due to the intense cold. Few can truly appreciate this endeavor.

What is the moral of the story? That you must be a bit a crazy to love mining and prospecting!

Mining provides the electrification of the future and gold is still to this day arguably the foundation of all currency and economics. All the metals and elements in your phone, your car, your mobile come from mining. Finding deposits is vital, crucial and necessary for our future.

It may seem obvious as we realize how critical mining is, how it truly is the foundation of the modern world, but it is just as easy getting distracted by another weed stock or another crypto/blockchain stock. These are new, exciting and dynamic but there is a reason why crypto currency developers are called miners. They mine a ton of data. You cannot even have crypto mining without actual mining! It is arduous and necessary to create value, and with that comes a cost in electricity.

As I always say in times of uncertainty, I prefer caution. and the motto of sticking with the ‘things that makes things’ is most prudent. I want the copper, lithium, silver, gold and graphite that make the mobile phone rather than the brand-new version of last years model. Give me a $1,000 worth of gold or copper any day.

That thinking brings me back to Dr. Webb. He’s taken the Mon project to 60 North Gold — a perfect vehicle for it. The financial team understood that this was a radical shift in direction for a junior, but the concept was exciting. It uses a strategy implemented in the past, in a similar geological formation with similar strategy just down the road.

The story of Mon is about practicality and elephant hunting at the same time. This sounds like an incredible contradiction but hear me out. The team intends to mine, produce ore and generate revenue while leaving optionality from the extended gold opportunity at A-Zone, which runs possibly 3km.

The Mon is a quartz shear/vein deposit that operated as an underground mine from 1989 – 1997. It closed due to low gold prices. 60 North Gold has an option to earn an 80% interest in the project, subject to a 20% carried interest held by New Discovery Mines Limited, the current property owner, and a 2.0% net smelter returns royalty.

The mine produced one million troy ounces (31,000 kg) of gold from one million tons of ore. The abandoned townsite, not accessible by road, was demolished in 2005. Several gold-bearing quartz veins occur on the Mon Gold Property. Mechanized trenching in 2017 of the A-Zone crown Pillar showed samples ranging in grade from 1.2 gpt gold over 0.90m to 688 gpt gold over 0.50m.

Often when we cab get focused on the details about drill core, intersect, vein width and grams per tonne we forget about the metallurgy. Mon comes with a tailing pond and metallurgical testing with a simple gravity and flotation mill circuit yielded recoveries averaging 98.8%.

Next phases of work planned:

  1. Airborne geophysics program across the entire property to define drill targets
  2. Logistically getting ice road truckers to
  3. deliver the equipment for the bulk sample extraction and testing program
  4. Future A-Zone program calls for underground drilling as warranted
  5. Install mill and dry stack tailings facility
  6. Process bulk sample and continue mining at an initial rate of 100 tpd

60 North Gold plans to conduct underground bulk sampling on the former-producing A-Zone, and to conduct surface exploration of various gold and VMS targets on the project. The project has operating permits for mining and milling at 100 tpd.

Under the current financing agreement 60 North must spend 6 million on the Mon property by December 31, 2020. A portion of that money has already been funded and interest in the region is heating up.

Next door neighbor Terrax has already filed a Technical report for the 100%-owned Yellowknife City Gold Project.

All good projects test a theory and hitting milestones is a bitter indicator in the junior mining market then share price. There are a lot of reasons for this from the cynical to the practical. Let’s recap: past production in this Belt exceeds 15 million ounces of gold at grades >0.5 oz/tonne, including the Con, Giant and Discovery Mines operated between 1950 and 1969. Does that mean that there is going to be a bonanza discovery? It is too early to tell but what we do know is that there are similarities, good results and a great deal of information to make an informed decision to mine and build out the opportunity. This is not a shot in the dark, this is a small production story with a big upside. It is a different but perhaps that is what this market needs to get people excited about building out the future.

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Securities Disclosure: I, Andrew O’Donnell, I was paid for this article.

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