Emgold TSX Venture Exchange: EMR
OTC: EGMCF FRA: EMLM
One of the key things I look for is the type of risk purchased when taking an investment position. It is necessary to be realistic about the risks associated as that directly equates to gain. We all understand that mining exploration is speculative risk but there are many ways to ‘right-size’ the risk so that we have a better possibility at a 10 bagger. If you look at the article The Model you will see the general guideline that I employ when considering companies. The incredible potential of Emgold lies in its ability to acquire strong projects at great terms in a buyer’s market, quickly add value to them through exploration; scale them and sell them or find joint venture partners to advance them to production. There has never been a better time for this strategy as we head towards gold becoming mainstream in the news. There is a reason why wealthy individuals, central banks and countries have been stockpiling gold and Emgold advanced its strategy in picking up key land packages.
Emgold’s objective is building shareholder value by acquiring high quality projects in safe and stable jurisdictions in North America. They advance projects through reinterpretation of historical exploration data, application of modern geophysics and exploration techniques, drilling, and generation of 3-D resource models. After adding value, they look to divest of assets through sale, joint venture, option, royalty, or other business opportunities. The focus is buying properties beside/adjacent to past or producing mines, buying undervalued in a distressed market, and buying properties that have locational synergy. Of course, this strategy does not guarantee success in finding a resource it is a great indicator to add to all the data. Emgold works in three of the best mining jurisdictions: Nevada, USA and Quebec and BC. In Canada, these regions are not only rich in resources but can offer concessions on hard dollars spent on exploration in the form of tax rebates. Emgold has positioned itself to profit from some prudent purchases over the last years, especially in Nevada. The ability to identify distressed exploration projects, renovate the projects and breathe new life into them is a distinct skill set of this team. Most of us can understand Emgold’s strategy by comparing their acquisition to the residential housing market. If we consider buying renovation properties in potential growing market, we want to buy low, add value exponentially so that we can maximize and unlock all the value in the property, and then sell at profit in a relatively short time duration. Emgold is no different with mining properties. They find excellent properties that they can “renovate”, scale up, unlock value, and look to sell, joint venture, option or do other business transactions with parties looking for quality advanced stage properties.
So ‘Who’ are They?
The management was assembled with smart geologists and a diligent M&A specialist who have experience exploration in Canada and the United States. David Watkinson, President and CEO brings over 30 years of professional engineering experience in underground and open pit mine development, managing operations in Canada, the United States and the Philippines. He has held progressively senior positions with Placer Dome Inc., Kinross Gold Corporation, Thyssen Mining Construction and Vulcan Materials Company. Mr. Watkinson holds a B.Sc. in Applied Science, Mining Engineering, from Queen’s University in Kingston, Ontario (1985) and is a Registered Professional Engineer in the Province of Ontario.
Robert Rosner is the CFO and has 30 years of experience in the mining industry, holding executive positions in Canada and the US, as well as serving as director of many public companies. Robert brings significant experience in the public offerings, reverse takeovers and mergers &acquisitions.
Alain Moreau, B.S., M.S., P.Geo., is the Director of Exploration and a Professional Geologist and member of the Order of Quebec Geologists. He has 30 years of experience in exploration for minerals and metals and has worked exploring a variety of deposit types across North America and the world. He is Emgold’s Qualified Person as defined by National Instrument NI 43-101 for Emgold’s properties in Quebec and oversees Emgold’s exploration on a company-wide basis.
The geological team is completed by Bob Pease and Perry Grunenberg. Robert Pease, B.Sc., M.Sc., CPG. (Consulting Geo for the US) brings 40 years of experience in mineral development, engineering and geology to the company. He has managed exploration projects and his field geology work led to discoveries of lode and placer gold and bedded barite deposits in Nevada and California. He has an extensive background in Mother Lode and Basin-Range geology applied to gold deposits and industrial minerals. He is Emgold’s Qualified Person as defined by National Instrument NI 43-101 for Emgold’s properties in the U.S. He is a member of the American Institute of Professional Geologists.
Perry Grunenberg, B.Sc., P.Geo., (Consulting Geo for B.C.) a Professional Geologist and member of the Professional Engineers and Geoscientists of B.C and brings 30 years of experience in exploration. He is a graduate of the University of British Columbia and is Emgold’s Qualified Person as defined by National Instrument NI 43-101 for Emgold’s properties.
The Projects: Nevada
This region is the tip of the spear for Emgold. The company owns two significant advanced stage exploration properties, is acquiring two additional advances stage properties, and has two early stage exploration properties. All these projects are located in the Walker Lane structural corridor which is located on the western side of Nevada and is host to a number of current and past producing mines.
In all of Emgold’s projects, the potential exists for development of low-grade bulk minable disseminated epithermal gold resources. NY Canyon hosts a copper skarn oxide mineralization at surface and copper/molybdenum mineralization at depth with historic resources. Mindora hosts near surface gold epithermal gold mineralization, molybdenum porphyry mineralization at depth, and has potential for copper porphyry mineralization.
NY Canyon Property
The Property is Nevada, about 30 mi. Hawthorne, Nevada. The Property consists of 21-patented claims and 60-unpatented claims totaling about 1,500 ac. The claims are divided into two groups – the North and South Groups.
The North Group of claims comprising the Property covers historic past producing copper operations and gold occurrences and is adjacent to the past producing Santa Fe Gold Mine owned by Victoria Gold Corporation (TSX:V: VIT). Historic production estimated from Santa Fe Mine is 345,499 oz. of gold and 710,629 oz. of silver between 1989 and 1995
The South Group of claims comprising the Property hosts the Longshot Ridge, Champion, and Copper Queen deposits, which host copper mineralization. The discovery of these deposits dates back to 1875 and historic production, by the Wall Street Copper Company during 1906-1929, came from a number of small surface showings in the Longshot Ridge area. Historic production is reported to be 8.9 million pounds of copper at an average grade of 5.5%
Several companies explored the Property for major copper porphyry deposits including Searchlight Resource Inc and Conoco who reported in an internal report on May 10, 1979 molybdenite mineralization.
Total historic drilling on the Property to date is 234 holes totaling 139,056 ft. (43,384 m). In a 2010 Technical Report by Searchlight Resources defined a historic indicated resource of 16.3 million tons of 0.43% Cu and an historic inferred resource of 2.9 million tons of 0.31% Cu was indicated. The Longshot Ridge prospect is an advanced stage copper target in a carbonate-hosted skarn deposit. Other copper zones identified on the Property require additional exploration to evaluate their potential, including the opportunity to define a large copper porphyry (with molybdenum) target at the Copper Queen prospect.
The Mindora Property hosts a gold/silver/molybdenum/copper deposit and is located 20 miles of Hawthorne, Nevada. There are historically 171 holes drilled on the property totaling 13,056 and this historic data can be used as a starting to potentially fast track exploration and development of resources of several mineralized zones.
This Property was initially drilled in the 1980’s and last drilled in 1995 by Eureka Resources Inc. In 1988 Eureka estimated an open-pit deposit containing 1.04Mt (0.94M tonnes) averaging 1.06 g/t gold and 55.63 g/t silver with a stripping ratio of about 2:1 based on a (0.94 g/t)cut-off Several of the gold-silver zones remained open. Work done at the time included metallurgical test work and scoping studies to look at developing a small open pit mine.
With regard to copper, in 1993, Eureka Resources Inc. established an 11.7 mile grid over what is known as the “main zone” and the area to the east of it. They collected 337 soil samples and 15 rock chip samples and analyzed them for copper. An assessment report describing the mineralization on the Property described it as:
Hence, the Property has significant potential for discovery and a historic database with significant drilling that is useful for quickly identifying exploration target and potentially developing resources. Modern geophysics has not been completed and would be a prerequisite for understanding the potential scope and size of the exploration targets.
Synergy with NY Canyon Property Acquisition
The Mindora Property is located approximately 12 miles from the NY Canyon Property and Emgold management believes the two properties will have potential synergy for exploration and advancement.
The Golden Arrow Property was acquired by Emgold in 2018, subject to underlying royalties, and is located approximately 40miles of Tonopah in Nye County, Nevada. The Property consists of 357 unpatented and 17 patented lode mineral claims covering an area of approximately 7,030 acres. It is an advanced-stage exploration property with a comprehensive exploration database including geochemical sampling, geophysics, and over 61,265m of reverse circulation and diamond core drilling.
To date, two main exploration targets have been drilled: the Gold Coin and Hidden Hill deposits. Emgold’s management believes there is potential to expand both the Hidden Hill and Gold Coin resources and for discovery of other bulk disseminated mineralization. It is located in the Walker Lane structural zone of western Nevada adjacent to the Kawich volcanic center.
A Technical Report entitled “Amended 2018 Updated Technical Report on the Golden Arrow Project, Nye County, Nevada, U.S.A.” (the “Technical Report”) discloses a mineral resource.
Emgold also obtained a deep database of information with the purchase including a completed Plan of Operations and Environmental Assessment that allows it to conduct a major drilling program on the property. Having the Plan and permit saves considerable time and financing estimated around 18-24 months and US$250,000.
This is another 100% owned property that had been leased to Rawhide Mining LLC (RMC are the operators of the Rawhide Mine which has produced over 1.7M oz. of gold and 14.5M oz of silver from 1990-2017. In 2018, RMC completed a Plan of Operations and an Environmental Impact Study to expand their operations. RMC can acquire a 100% interest by bringing the property into commercial production. At that point, Emgold’s interest in the property will convert to a royalty of US$15 per oz. of gold when the gold price is between US$1,200 and US$1,799 per ounce and US$20 per oz. of gold when the gold price exceeds US$1,800 per ounce. Once their expansion is complete, RMC expects to produce between 40,000 to 50,000 oz. of gold per year at Rawhide Mine, to this royalty represents a cash flow opportunity for Emgold. What makes this a standout property is that, once again, this property has a great deal of historic data, over 18,600m of drilling, and is an inlying claim to an operating and permitted mine. If you are looking for a mine, look beside a mine!
This property is 100% owned by Emgold, subject to a 2% NSR royalty. It is adjacent to Rawhide Mine. This property shares many of the same comparable characteristic as the Buckskin Rawhide East property and is adjacent to a large exploration target.
This is the final property in this historic region. It is 100% owned by Emgold, subject to a 2% NSR royalty. It is 5 miles south of the other Emgold properties. The land package consists of 36 unpatented lode mining claims totaling 720 acres. It has a high grade target that has been identified by rock chip sampling – 13 historic rock chip samples had an average grade of 0.52 opt gold and 11 samples taken by Emgold has an average grade of 0.27 opt gold.
Quebec: Casa South
The Property comprises 180 active mining titles covering 100 square kilometers. It extends immediately south of Hecla Mining Corporation’s Casa Berardi Mine operation and extends laterally for 16 miles covering different sub-parallel structures corresponding to a distinct geophysical signatures and hosting elevated gold values in till anomalies.
The Casa Berardi Mine has produced approximately 1.9 million recovered gold ounces since 1988, including 931,244 recovered ounces since production started in 2006. There is a saying: if you want to find a mine, look beside a mine. This is obviously not science or a full proof method but it is always a good strategy and does work as an indicator. Now just because there is reserves and minerals at the Casa Berardi Mine Property do not guarantee discovery or delineation of mineral resources and reserves on the Casa South Property.
Valley Of Gold – Troilus
The second opportunity in Quebec is an investment in Troilus Gold which is in the Frotet-Evans greenstone belt of the Chibougamau mining district. Emgold sold its Troilus Northproperty to Troilus Gold for $250,000 ad 3.75 million shares, thus creating significant value for shareholders in within months of its initial acquisition in 2018. For those new to mining the Chibougamau region was discovered in the 30’s and is known not only for gold but copper, zinc and lead. VMS Volcanic Massive Sulphide deposits host base metals deposits while structurally controlled deposits are associated with gold. The Troilus project is a restoration project to a past producing mine, an open pit and underground mine that produced 2 million ounces of gold and 70,000 tonnes of copper between 1996-2010. It represents a plus 5 million ounce exploration target, based on resourced defined by Troilus Gold to date.
There are two properties in southern BC the Stewart and Rozan properties. The Stewart and Rozan property are both 100% owned by Emgold, each subject to a 3%royalty(NSR), Both the Stewart and Rozan properties are strategic properties because the abut Prize Mining’s Kena-Daylight Property which hosts a porphyry gold deposit with an indicated resource of 481,000 ounces of gold and an inferred resource of 1.3 million ounces of gold. Stewart is a 14,300 acres property that hosts gold, silver, molybdenum, and tungsten exploration targets and has had 13,737 m of drilling on it to date. Rozan is a 4,800 acres property with 10 known exploration anomalies that has had 1,907m (6,300 ft.) of drilling to date. These are additional assets in the portfolio and worth evaluating down the road.
Emgold has positioned itself to be in high favor with Golden Arrow as a core asset with a solid resource, NY Canyon and Mindora properties constituting key assets for its growth strategy, and Buckskin Rawhide East as a royalty opportunity with an inlying property at the operating Rawhide Mine. The Casa South property, adjacent to Casa Berardi Mine could reasonably seem to be an obvious take out possibility by Hecla. If there are excellent results well then Emgold really holds a strong hand. That is just one property of the portfolio. As we enter into a favorable mining cycle the values of all the properties will rise, and as the management unlocks the value you can partake in all those exponential gains that can come with strong renovations stories.
Securities Disclosure: I, Andrew O’Donnell, have not been remunerated for writing this article.
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