By Peter Kennedy
Having survived a prolonged mining industry depression, one of the high profile players in the Yukon gold exploration scene is once again attracting investor interest.
The timing couldn’t be better for Golden Predator Mining Corp. (TSXV: GPY) as company officials met with institutional investors attending the Precious Metal Summit Conference in Colorado.
Golden Predator Chairman Bill Sheriff has often said that exploring for gold in the Yukon is not for the faint hearted. But as shown by the recent discovery of high grade gold on Golden Predator’s 3 Aces property, the rewards can sometimes outweigh the challenges.
Hopes that multiple high grade deposits can be outlined at 3 Aces combined with renewed confidence in the price of gold sent Golden Predator’s stock price soaring to $1.17 on August 16, 2016 from around 14 cents in February. It was a rally that handsomely rewarded investors who have hung in through the exploration slump.
Even at 87 cents, (market cap $64.3 million based on 73.9 million shares outstanding) on September 14, 2016, the stock is still well ahead of the lows seen earlier this year, putting the company in a good position ahead of the Precious Metals Summit in Colorado.
As usual, it featured a select group of exploration and development companies who have been able to survive through the bear market and are now poised to thrive.
The Canadian Yukon remains best known for its placer mining operations, a legacy of the Klondike gold rush in the late 1890s. There are still roughly 1,000 people who make a living by operating placer mines in the Yukon. Hard rock gold exploration, by comparison, has received comparatively little attention.
But that all changed when Canadian prospector Shawn Ryan went looking for the bedrock source of the placer (riverbed) gold deposits. His methodical soil sampling techniques led to the discovery of geophysical anomaly in 2004 that he later optioned to Underworld Resources, a company that was swallowed in March 2010 by Kinross Gold Corp. (TSX:K). The $138 million Kinross deal sparked a staking rush as well as further discoveries, including Kaminak Gold’s Coffee gold project and Comstock Metals Ltd.’s (TSXV: CSL) QV project (230,000 ounces of inferred gold resources).
On May 2016, Goldcorp. (TSX: GG) the world’s third largest bullion producer, acquired the Coffee Project by striking a deal to acquire Kaminak in a share exchange deal worth $520 million.
That put the spotlight back on the Yukon, where Sheriff made headlines during a staking rush in January, 2011 by snapping up all of the available claim staking tags from a local mining recording office. Grabbing 70,000 claim tags was a move to save his company money and gain a big leg up on the competition, he explained. At that time, his company had something like 60 staff including geologists on the payroll and focused on a handful of projects, including Brewery Creek, a former heap leach mine which is located about 55 kilometres east of Dawson City. It produced roughly 280,000 ounces of gold between 1996 and 2002 from low grade oxide deposits.
But the slump in gold exploration that lasted from roughly 2012 to early this year prompted Golden Predator to consolidate its operations and lay off most of its staff.
However, it has been rewarded for hanging onto its best projects after initial trenching and sampling discovered mineralized veins, including free gold on the 3 Aces property which is located in southeast Yukon, along the Nahanni Range Road, which provides access to the Cantung Mine, 40 kilometres further north.
The 3 Aces Project has distinguished itself by yielding some of the highest grade outcrops discovered to date in the Yukon.
“We think it is one of the most exciting stories anywhere, especially in Canada,’’ Sheriff said during a speech to the Precious Metals Summit on September 16, 2016.
Channel sampling in the Sleeping Giant vein returned grades of up to 3.88 ounces of gold per ton (132.91 grams) over 22.63 metres. Grab samples from mineralized shoots that outcrop at surface have assayed at up to 4,820 grams per ton. One of the nice features of orogenic gold systems is they tend to have great continuity at depth.
Golden Predator officially took over the property (covering 23,000 hectares) in 2014, after a previous operator discovered bonanza-grade gold mineralization in the Main Zone. From 2010 to 2012, the previous operator completed 11,410 metres of drilling. Visible gold was identified in new zones, including the Sleeping Giant zone, where surface sampling returned samples with abundant visible gold and “bonanza grades.”
Golden Predator Chief Executive Officer Janet Lee-Sheriff said exploration results, including the discovery of high grade gold and quartz outcrops at 3 Aces, have been the single most intriguing development in the past couple of years. “We are currently sampling and trenching, building roads and a bridge and will start drilling in October,’’ said Lee-Sheriff. “We have discovered 11 new mineralized veins since the beginning of August, 2016, at least five with visible gold.”
The company said it plans to drill a minimum of 3,500 metres of 5.5-inch diameter reverse circulation drill holes during 2016, with additional drilling planned to continue into 2017. The occurrence of gold at 3 Aces is so fine grained it tends to accumulate in clusters which appears and metallurgically becomes course gold nuggets.
Neil Adshead, Investment Strategist at Sprott inc., had a clever question @ the Precious Metal Summit “If you are drilling this nuggety gold deposit with RC then how are you going to split the drill sample…?”. Quite simply, the answer is to process the entire sample, the biggest sample is the best.
An additional 400 metres of large diameter drilling is also planned, a process that will be greatly facilitated by the construction of a 90-foot single span bridge over the Little Hyland River.
Golden Predator has a fully-funded $10 million exploration budget for 3 Aces after recently raising $16.3 million from a non-brokered private placement of flow-through and non-flow through units priced at 73 cents and $1 respectively. Each unit consisted of either a flow through or non- flow through common share and one half of a share purchase warrant. The warrants allow the holder to acquire one additional share of the company at $1 for two years after the closing date. The company is reinvigorated with new shareholders including Albert Friedberg, Patrick DiCapo, Eric Sprott and McEwen Mining.
Canadian gold bug Eric Sprott invested $7.3 million in the non-flow through units. He currently holds a 13.5% stake in the company, rising to 19.4% once the warrants are exercised, and based on 73.8 million common shares outstanding following the private placement.
Bill Sheriff had been increasing his stake in Golden Predator up to 31% last year but post-financing his share is back to 15%. The company expects processing bulk samples extracted from the property will partially defer dilution.
Meanwhile, Golden Predator is working to update a preliminary economic assessment for its Brewery Creek Project. Released in November 2014, it examined the economics of reopening the mine. “The compelling low start-up cost along with the untapped exploration potential of the project should make this an attractive opportunity for prospective joint venture candidate,’’ said Lee-Sheriff at the time.
On July 13, 2016, the company said it has kicked off a 1,600 metre engineering and metallurgical drill program at Brewery Creek. It said the drilling is focused on three pits that are thought to contain oxidized gold mineralization that was not extracted during mining activity that occurred in the 1990s. The program will feature 18 core holes designed to acquire material for metallurgical testing.
An additional 11 holes will be drilled around these former pits to re-establish ground water monitor wells and to obtain additional geotechnical information to acquire the final parameters for new pit designs and permit requirements.
Information gleaned from these programs will be used to complete the mine design for permit submission to the Yukon Environmental and Socio-Economic Assessment Board (YESAB).
Peter Kennedy is an award winning journalist who has spent many years covering the mining industry in Canada. He is currently a contributor to Investing News Network and Resource World Magazine. He previously worked for Stockhouse Publishing, the Globe and Mail, the Financial Post and The Northern Miner.