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On December 20^th, the President of the United States, Mr. Donald Trump, signed Executive Order 13817, which calls for an end to the United States’ reliance on foreign imports of “critical” minerals. Before getting into the details of this Executive Order, I would like to discuss what an Executive Order is.

A U.S. Presidential Executive Order (EO) is legally binding and does not require Congressional approval to take effect, but has the same legal weight as laws passed by Congress.  Interestingly, EOs have occurred much more often than I would have expected, throughout the history of the United States. Examining Wikipedia’s EO page, you can see many Presidents have evoked this power during their terms, most notably Franklin D. Roosevelt who executed 3,522 EOs over the course of his presidency.

The basis of the EO is laid out in Section 1 of the report,

“The United States is heavily reliant on imports of certain mineral commodities that are vital to the Nation’s security and economic prosperity… An increase in private-sector domestic exploration, production, recycling, and reprocessing of critical minerals, and support for efforts to identify more commonly available technological alternatives to these minerals, will reduce our dependence on imports,…support job creation, improve our national security and balance of trade, and enhance the technological superiority and readiness of our Armed Forces, which are among the Nation’s most significant consumers of critical minerals.”

Interestingly, the United States Geological Survey (USGS) and the U.S. Department of the Interior released a report entitled, Mineral Commodity Summaries 2017, just a day before the EO was signed. I believe the report is important; the graph on page 6 is particularly revealing, as it lists all of the minerals and their net import reliance.

In Section 4 of the EO, it states that within 180 days of the date that Secretary of the Interior publishes a list of critical minerals, a report will be submitted to the President, outlining a strategy to reduce the dependence on imported minerals. I have paraphrased what the report will cover, please review the EO for further details:

• An assessment of the country’s ability to produce critical minerals through recycling.
• Plans for improving the topographical, geologic and geophysical mapping of the U.S. and make it available to the private sector for improved minerals exploration.
• Recommendations on how to streamline the permitting and review processes related to critical mineral resources. Therefore, enhancing access to critical mineral resources and increasing discovery, production and domestic refining of critical materials.

The economic and security merits of this EO can debated, however, putting it into the perspective of a resource investor, I think that this will translate into great things for mining companies with projects located in the U.S. that are exploring, developing or producing one of the deemed “critical” minerals.

I believe lithium will be a part of this “critical” minerals list, as the U.S. currently imports more than 50% of its lithium and looks to import far more, as Elon Musk’s Giga Factory, located in Nevada, is expected to have an annual capacity of 35 Gigawatt-hours, which is equivalent to the entire world’s current battery production.

This brings me to the subject of today’s article, an update on Cypress Development Corp.’s fall drill program on its contiguous Dean and Glory Lithium Projects in Clayton Valley, Nevada.

 

Cypress Development Corp. Update

In my last update, Cypress had just received their first round of drill results from its Dean Lithium Project.  Overall, the results were great and supported the case for the continuity of the deposit. In that update, I mentioned the potential for some PUSH in the share price based on the results from holes DCH-13 and DCH-14, which were upcoming. Based on the news released this morning (January 9^th), I was right; the stock is up on over a million shares of volume!

The latest results are highlighted by DCH-13’s intersection of 107 metres of 1134 ppm Li. This average grade is across the entire interval, which started just 5.5 metres below surface and reached a depth of 112.2 metres. The depth is in line with the results from the first round of drilling and DCH-13 remains open at depth.

Finally, DCH-14 intersected 76 metres of 733 ppm Li. While the grade is a little lower than the previous results, it is still very robust and is consistent with the other results in terms of being shallow, with mineralization being intersected just 2.9 metres from surface and stretching down to 78.6 metres.

Overall, these are terrific results and, as you can see in the drill hole map below, both holes extend the Dean Project mineralization to almost the full extent of the northeast portion of the property. With the results from Glory on the horizon, I think it is easy to see that this has all the makings of a very large deposit.

 

Dean & Glory Lithium Projects, Clayton Valley, Nevada Drill Hole Map

 

PUSH: Later this month, look for drill results from the Glory Lithium Project to show similar grade and shallow interval thickness.

 

Dean and Glory Lithium Project Metallurgy

In my introductory article for Cypress Development Corp., I commented that I felt the ability to economically extract the lithium from the claystones would be the largest hurdle for the company in the future.

Well, the company has taken some great strides toward proving out an economic process for extraction, as they have started some bench-scale test work on a sample of Dean Project sourced lithium claystone.

The results, thus far, have revealed moderate extractions of lithium in sulfuric acid solution rising to 74% in both sample types as temperature increases. Additionally, it should be noted that the extractions were achieved with relatively low additions of sulfuric acid for lithium-bearing claystone deposits, with rates of 140 kg to 170 kg per tonne of material. They will continue to optimize the extraction process by refining the leach conditions, checking for any mineralogical variability across the properties and determining methods of recovery of the lithium from the leach solutions.

 

Concluding Remarks

The latest drill results confirm the continuity of the deposit and its extension out to the northeast boundaries of the Dean Project. If Glory’s drill results follow in a similar fashion, Cypress could be in possession of what looks to be a very large deposit of lithium claystone.  As stated in the news release, Cypress will attempt to follow up the drill program with a resource estimate, giving us a clear path toward a Preliminary Economic Assessment (PEA).

Further, the progress made in the extraction of lithium from the Dean Project claystone is positive and, in my mind, a key point to the entire story. Further work to optimize the extraction process along with a resource estimate should provide the necessary inputs for what I think can be a very healthy PEA.

Putting it all together, Cypress Development Corp. is the 100% owner of what looks to be a large lithium claystone deposit in the heart of Nevada. Given the direction of the U.S. government and their push toward developing domestic sources of “critical” minerals, I believe the Dean and Glory Lithium Projects could become very valuable in the years ahead!

 

 

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Until next time,

 

Brian Leni  P.Eng

Founder – Junior Stock Review

 

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company(s) and sector that is best suited for your personal investment criteria. Junior Stock Review does not guarantee the accuracy of any of the analytics used in this report. I do own Cypress Development Corporation shares. Cypress Development Corporation is a Sponsor of Junior Stock Review.

 

 

Investing in high quality companies can bring you gains in any segment of the market cycle. But, when you’re buying a high quality company at the bottom of a commodity cycle, the result can be truly spectacular.

When I bought the best junior gold companies in 2014 and 2015, near the bottom of the last bear cycle, it turned out to be a fantastic contrarian decision, giving me incredible gains in 2016 as sentiment changed.

Today, I feel the same could be said for investing in the nickel market, which, up until 2016, has been decimated by over-supply. This change in the supply dynamic is just one of the reasons why I’m bullish on nickel. In August of this year (2017), I wrote a two-part series on the nickel market and why I’m bullish on its future. For those who would like a closer look at my analysis, check out my series on nickel, Part 1 and Part 2.

So, how do I look to profit from my bullish nickel thesis? For me, the key is FPX Nickel Corp. FPX is the 100% owner of its flagship Decar Nickel District, which is located in central British Columbia, just 80 km west of the Mount Milligan open-pit Cu-Au mine.

Let’s take a look.

 

 

FPX Nickel Corp (FPX:TSXV)

MCAP – $13.4 million (at the time of writing)

 

As of November, 2017

Shares – 133,770,339

Fully Diluted – 141,920,339 (no warrants outstanding)

Management & Directors – 19.3%

Cash – $750K

 

FPX Nickel’s People

If you have invested in the resource sector long enough, you have most likely heard the adage that people are the most important part of a company. It’s absolutely true. The fact is, however, like everything else in life, most people fall within the average moniker. Besides being average, you, of course, have the bottom feeders – the people you really want to avoid – and conversely, you have the cream of the crop at the top. Without a doubt, you want to be invested with the best people, as they give you the best chance of being right in the mining sector.

Peter Bradshaw is the co-founder and Chairman of the Board of FPX Nickel and, to me, is one of those outliers at the top of the industry . Bradshaw was inducted into the Canadian Mining Hall of Fame in 2015 for his achievements in what has been, thus far, a 40+ year career.

Bradshaw is best known for his involvement with Placer Development and their discovery of the high-grade zone VII at Porgera in Papua New Guinea, as well as co-founding the Mineral Deposit Research Unit (MDRU) at the University of British Columbia. Bradshaw has also worked or contributed to a few other companies, such as Barringer Research and Orvana Minerals. Today, he is Chairman of the Board for FPX and a Director with Aquila Resources.

Here’s a list of Bradshaw’s key discoveries and projects: Porgera Gold Mine, Kidston Gold Mine, Misima Gold Mine, Big Bell Gold Mine, Omai Gold Mine and Decar Nickel Project. As you can see, Bradshaw is a minefinder, and I think Decar will be his next mine. Here’s a link to Bradshaw’s must-see Canadian Mining Hall of Fame Tribute Video.

 

FPX is led by President and CEO, Martin Turenne. Turenne, a Chartered Accountant by trade, has worked in the commodities industry for over 15 years. Five of those years have been spent with FPX, where he was first the CFO from 2012 to 2015.

I have spoken to Turenne on a few occasions and am always impressed by his knowledge of the nickel market and, of course, the level of detail with which he answers my questions regarding FPX. Turenne is a major reason why I’m confident in investing in FPX and believe that their future is very bright given the quality of his leadership and vision.

FPX’s team is rounded out by consulting geologist and formerly FPX’s (formerly, First Point Minerals) VP of exploration, Trevor Rabb. Rabb has been busy this summer with FPX’s step-out drill program, which tested the southeast extension of the Baptiste deposit at Decar.

Last, but not least, is FPX’s CFO, J. Christopher Mitchell, who has more than 40 years of experience in the mineral industry. Mitchell has held senior roles with Viceroy Resource Corp. and Orvana Minerals Corp.

 

Board of Directors

Over the last few months, FPX has added two key pieces to its Board of Directors, with the appointment of Robert Pease and Peter Marshall. For those who aren’t familiar, both Pease and Marshall have extensive experience within the mining industry, more specifically, with the development and construction of mining projects in central British Columbia.

Both Pease and Marshall were a part of Terrane Metals; Pease as the founder and Marshall as the Senior VP of Project Development.  Terrane owned the Mt. Milligan copper-gold project, which they developed from the PEA stage through to final feasibility and the commencement of project construction. To note, Terrane was later acquired by Thompson Creek Metals Company Inc. for $650 million in 2010.

Clearly, both Pease and Marshall have great knowledge and experience to draw on as they move toward the development of Decar with the rest of the FPX team.

 

Turenne’s comments with regards to his Board of Directors and how FPX will conduct themselves, moving forward;

Turenne: “We have begun to assemble a team of world-class mine builders and operators. The recent additions of Peter Marshall and Rob Pease are very important, as they have significant experience in developing and building mines in our region in central British Columbia.

Peter and Rob were the team behind Terrane Metals, which developed the similar scale, open-pit, bulk-tonnage Mt. Milligan project from the resource stage to construction in five years before selling the company for $650 million.

 One of our other board members is Bill Myckatyn, who has built and operated several large-scale base metal mines in his career, most notably as the CEO of Quadra-FNX (acquired by KGHM for $3 billion in 2011). We will continue to add new team members with deep experience in mine development, construction and operation. This is a major company-style asset; our ongoing development of Decar will continue to be performed to major-company standards.”

 

 

 

The Decar Nickel District

 

Central British Columbia

The Decar Nickel District consists of 4 main targets, Baptiste (the focus of the 2013 PEA), Van, Sid and Target B. They total 60 mineral claims and encompass a total area over 245 square kilometres. The Decar Nickel District is located in central BC within 5 km of an existing railroad and is accessible by 4WD on logging roads.Decar sits roughly 90 km northwest of the town of Fort St. James, which is well equipped with most services, including accommodation, stores, private airbase, a bank and medical services.

Decar is expected to require 106 MW of power for its production, which can be accessed via a connection to BC Hydro’s Glenannan Substation (GLN). Accessibility and power are two of the major needs for a developing mine.

 

BC and its NDP Provincial Government

I have written about BC’s NDP government in a previous article, so I won’t take up space repeating myself here. The long and short of it is that while I believe there is risk with any political party, I feel the most risk comes from the far left, which, in Canada’s political world, is represented by the NDP.

I had a great discussion about the BC political situation with Turenne. Here’s what he had to say;

“British Columbia has a long history as one of the most mining-friendly jurisdictions in the world. In fact, in a 2017 ranking of safest places to invest resource capital, the Mining Journal rated British Columbia as the second-most attractive jurisdiction in the world, second only to Saskatchewan. An Executive Summary of the report can be accessed on the Mining Journal website.

During this year’s election campaign and since taking office, the NDP government has expressed its support for safe and responsible mining in B.C.  Mining will remain a key driver of economic growth in the province, regardless of changes in the governing party. As with most jurisdictions, there are some profound regional differences in the ability to develop mining projects in B.C.; in the case of our Decar nickel project, it’s located in north-central British Columbia, which has several active mines and projects. For example, Decar sits just 80 km from Mt. Milligan, a similar-scale operation which was permitted and put into production in the last five years, demonstrating that north-central B.C. is an attractive setting for bulk-tonnage, open-pit mining operations like Decar.“

In the end, besides the political risk, BC has one of the richest mineral endowments in the world, let alone Canada.  Whether it be gold exploration in the Golden Triangle or the copper mines throughout the north and central part of the province, BC is a top tier destination for mining and exploration.

While I do see risk in the NDP, when I have the chance to invest in what I believe is a great company, like FPX Nickel Corp., I think it’s worth the associated risk and have been a buyer since the summer of 2017.

 

History of Decar District Ownership

In a 2009 option agreement, what was then First Point Minerals (now FPX) granted Cliffs Natural Resources Exploration Inc. the option to acquire a 75% interest in the Decar property contingent on a number of criteria being met over the coming years.

From 2010 to 2013, Cliffs went on to spend roughly $22 million USD leading up to the completion of a PEA in 2013, giving them a 60% ownership of the project. In August of 2014, however, following a proxy battle, Cliffs’ Board of Directors and management were replaced, and the new management initiated a fire sale of all of the company’s non-core assets, including Decar.

In September of 2015, FPX purchased Cliffs’ 60% ownership of Decar for $4.75 million USD, giving FPX 100% ownership of the project.

 

 

Decar Nickel-Iron Alloy Project PEA 2013

Decar’s nickel is found in a mineral called Awaruite.  Awaruite is a dense and highly magnetic nickel-iron alloy, Ni₃Fe, which is commonly referred to as a ‘ naturally occurring stainless steel.’  Awaruite’s physical properties make it perfect for conventional processing and extraction techniques such as grinding, magnetic separation and gravity concentration.

 

Additionally, in the case of the Baptise Deposit mineralization, there are little to no sulphides present, meaning that both the host rock and tailings are non-acid generating, which is a huge plus when it comes time to permit the project.

 

Mineral Processing and Metallurgical Testing

In 2012, SGS Minerals Services conducted “A Bench-Scale Investigation into the Recovery of Nickel from the Decar Awaruite Deposit.” From their tests, SGS selected a process which uses a grind size of 600 µm for the magnetic concentration stage, and 70 µm for the gravity concentration stage. This process results in an 84.7% recovery of DTR nickel, resulting in a concentrate with a grade between 12% and 15% total nickel.

The concentrate produced by FPX should be highly desirable in the stainless steel market, as steel producers, particularly in China, shift toward using higher grade sources of feedstockl to supply their steel making operations. For your information, lower grade concentrates or pellets have higher amounts of impurities, which, if not properly captured by a Bag House (essentially a massive vacuum), are exhausted into the atmosphere.

For those who aren’t familiar, nickel pig iron (“NPI”) is a major additive in the stainless steel making process, as it contains both nickel and iron, two of the main constituents in stainless steel. The FPX concentrate or pellet, as mentioned earlier, will have a nickel grade of around 13.5% and iron content around 50%, which compares favourably to the specs of high-grade NPI.

I had the chance to ask Turenne about the metallurgy of the Decar Project and the outlook for the concentrate. Here’s what he had to say;

 Turenne: “Decar will produce a premium nickel-iron product in the form of either a concentrate or a pellet with a nickel grade in the range of 12-15% and containing 40-50% iron. The closest market analogues to the Decar pellet are high-grade Chinese nickel pig iron (which typically grades 10-12% nickel with iron making up the balance) and ferronickel (grading 30% nickel, 70% iron). The significant iron content in ferronickel and Chinese NPI makes these products highly desirable for the production of stainless steel, which requires nickel and iron as key inputs; these products, therefore, attract premium pricing in the range of 102 to 110% of the LME nickel per contained nickel unit, as compared to typical nickel sulphide concentrate, which yields 70-75% of the LME nickel price when it is sold to a smelter.

In 2014, FPX conducted market testing of Decar product samples with six of the largest ferronickel and stainless steel producers in the world. The results of this program confirmed the potential for Decar product to bypass smelting and be injected as direct feed for the production of either ferronickel or stainless steel. The commercial feedback provided by the market test participants indicated that Decar product may achieve payability up to 95% or more of the LME nickel price, which is a material improvement over the 75% payability assumed in the 2013 Decar PEA. This improvement will be a key driver underpinning potentially robust economics in an upcoming updated PEA.”

From Turenne’s comments, I think the comment about the potential difference in payability, 20%, is a big deal and should be realized in an updated PEA in the future.

 

Metallurgical Comparison to RNC Nickel

For a better perspective of FPX’s metallurgical advantage, I have a comparison of Process Plant Schematic’s or Flow Sheets of RNC Nickel and FPX.  First, let’s take a look at RNC Nickel’s Dumont Feasibility Study Technical Report, which shows the following flowsheet for the Dumont nickel sulphide deposit:

Source: RNC Nickel’s Dumont Feasibility Study Technical Report – pg.1-10

 

I am not showing RNC’s flow sheet to be critical of their process, but more to point out its complexity versus FPX’s flow sheet. FPX’s process is simple and widely used in the iron ore industry, and, in my opinion, presents fewer risks for economic production in the future.

 

Source: FPX Nickel’s Decar PEA Technical Report – pg.13-12

 

You be the judge. In my mind, metallurgical processing is arguably the most important part of a mine and, therefore, for me, FPX is clearly the better place for my investment dollars.

 

 

 

Summer Step-Out Drill Program

On September 25th , FPX completed their step-out drill program on the Baptiste Deposit.  Eight diamond drill holes were completed, totalling 1,917 metres.  The drill program area was 500 metres along strike from historical drilling, and covered a width of 500 metres.

 

On October 18 and November 20th, the results of the 8 hole program were released. The highlights from the program are as follows:

• Hole 63 had an interval containing 104 m of 0.163% Davis Tube magnetically-recovered (DTR) nickel at a vertical depth of 66 metres below surface.
• Hole 65 had an interval containing 132 m of 0.147% DTR nickel at a vertical depth of 32 m below surface.
• Hole 67 had an interval containing 96 m of 0.167% DTR nickel at a vertical depth of 42 m below surface.
• Hole 68 had an interval containing 124 m of 0.133% DTR nickel at a vertical depth of 20m below surface.

In my opinion, these results are excellent. To understand, let’s put it into perspective; the Baptiste deposit’s indicated DTR nickel resource estimate has a grade of 0.124%, and its inferred DTR nickel resource estimate has a grade of 0.125%.

The highlighted drill results are significantly higher-grade than the existing indicated and inferred resource estimate grades, they are large intervals and they are shallow. These are very positive signs that an updated PEA on the project should have better economics.

The question is how much of an impact can the step-out drill results have on the project’s economics? Well, the historically identified strike length totals 2.5 km in length, the summer drill program stepped out a further 500 m or a roughly 25% extension of the strike length. Given that the mineralization is shallow and higher grade than the existing resource estimates, I think this is going to have a very positive effect on the PEA update.

 

2013 PEA Results

The Baptiste Deposit will be mined via an open pit which is estimated to contain an Indicated Resource of 1.1 billion tonnes of 0.124% DTR Ni, and an Inferred Resource of 0.87 billion tonnes of 0.125% DTR Ni. Based on this, Tetra Tech calculated the following 2013 PEA results:

• Post-Tax NPV @8% – $579 million CAD
• Post –Tax IRR – 12.8%
• Pre-Production CAPEX Cost – $1.3 billion CAD
• Total CAPEX Cost over life-of-mine –k $2.1 billion CAD
• Post-Tax Payback – 6.4 years
• Nickel Price – $9.39 USD/lb.
• Mining Rate – 114,000 t/day or roughly 40 million t/year
• Exchange Rate – $0.97 CAD/ USD

Nickel Price Assumption

As you can see, the Decar project has some robust economics, with a post-tax NPV @8% of $579 million and an IRR of 12.8%. The downside to these numbers is that they were calculated using a nickel price of $9.39 USD/lbs.

For those who have been following the nickel price, you will know that nickel currently trades at roughly $5.50 USD/lbs, with most industry experts using $7.50 USD/lbs as their long-term target price.

At face value, the nickel price assumption is a troubling aspect of the 2013 PEA. A lot, however, has changed in the last 4 years, since the PEA was conducted.

• Firstly, as outlined in the previous section of the report, FPX’s 2017 step-out drill program, completed this past fall, intercepted large intervals of shallow, high-grade DTR nickel, which appears to have extended the existing deposit by another 500 metres or roughly 25%.
• Secondly, as outlined in the metallurgical section of this report, the PEA considered a conservative concentrate payback of 75%. However, FPX’s latest market testing suggests that a payback of 85 to 95% is more realistic due to the product’s high quality.
• Thirdly, the CAD to USD exchange rate was almost 1 for 1 back in 2013. Today, in 2017, according to the Bank of Canada website, for every Canadian dollar we would receive 0.7911 American dollars, making the difference between the two exchange rates almost 20%.

It is my contention that given the 3 outlined changes since the original PEA was conducted, that a new PEA at a lower nickel price will again show robust economics.

 

CAPEX Cost

With a pre-production CAPEX cost of roughly $1.3 billion CAD, you may be thinking, ‘how are they going to pay for this?’ Well, in actuality, for those who aren’t familiar with base metals project development costs, US$1.3 billion is relatively cheap.

FPX’s most current corporate presentation, on slide 23, has a great graph depicting the capital cost (USD) per tonne annual nickel production of the largest nickel mines built   around the world since 2010.

 

As you can see, Decar has the lowest capital cost (USD) per tonne of annual nickel production of all the listed nickel mines.  The key take away from this graph, in my opinion, is two-fold; First, CAPEX costs in the billions of dollars won’t be the reason why this project isn’t developed. As you can see, the average CAPEX cost of the listed comparisons is close to $4 billion, making Decar’s current US$1.3 billion look quite low. Second, if FPX were to complete an updated PEA on Decar, they could potentially lower the throughput rate, which would have an effecton the overall CAPEX value.

Here are Turenne’s comments surrounding the $1.3 billion pre-production CAPEX cost;

Turenne: “The estimated pre-production capital cost in the 2013 PEA was C$1.3 billion for a 114,000 tonne-per-day operation, or approximately US$1.1 million at today’s exchange rate. We are looking at a potential smaller-scale operation, which could potentially reduce capital costs.

We believe that Decar is the most attractive undeveloped nickel asset in the world, truly a tier-1 asset due to the size of the ore body (supporting a top-15 annual nickel producer over a 25+ year mine life) and bottom-quartile operating costs (C$3.23 on-site operating costs in the 2013 PEA).

Due largely to the somewhat depressed state of the nickel market, and due to the modest headline economics in the 2013 PEA (resulting mostly from the low assumed nickel payability and high Canadian dollar assumption), FPX’s current valuation is absurdly low. Our strategy is to continue to demonstrate the technical and economic feasibility of the project, and to commence the permitting process, so that as the nickel price continues to rise, the market will begin to value us more appropriately. As and when this occurs, this will give us a better basis on which to raise funds to advance the project on our own, or to advance the asset with a senior partner. “

 

 

FPX’s Plans for 2018

In my opinion, it’s important to have a long-term outlook when it comes to your investment within the resource sector, as it gives you the best chance for your thesis to be right and helps you manage the ebbs and flows of a volatile sector.

In saying this, I asked Turenne about 2018 and what they had planned. Here’s what he had to say;

Turenne:  “We will continue to advance the Decar project, likely with the release of an updated resource estimate for the Baptiste deposit which will incorporate the results of our very successful 2017 step-out drilling program. The 2017 drilling defined the Southeast Zone, which is the highest-grading portion of Baptiste.

There are a couple of key features of the Southeast Zone: first, it’s a very large zone measuring 1,000 metres long east-west and up to 600 metres north-south; second, long, near-surface drill intercepts in the Southeast Zone have returned grades in a range between 0.14% to 0.16% Davis Tube recoverable nickel. These results compare very favourably with the undiluted head grade in the first five years of the 2013 PEA mine plan, which ranged from 0.105% to 0.116% DTR nickel.  The incorporation of this near-surface, higher-grade tonnage in the early years of a new mine plan has the potential to significantly improve project economics.

Once we have completed an updated Baptiste resource estimate, the next major step is the completion of an updated PEA. Since early 2017, we have been evaluating a number of parameters to optimize project economics, including the development of an optimized mine schedule and process flowsheet, an evaluation of various alternatives for minimizingupfront capital, and incorporation of the results of market testing on payability for our nickel product.

The point on payability is particularly important to understand the upside in a new PEA. We have conducted market testing of Decar nickel product with some of the largest ferronickel and stainless steel producers in the world to confirm the technical and commercial viability of Decar product. The response received from those potential offtakers have demonstrated the potential to achieve nickel payability in the range of 85% to 95% of the LME nickel price, as compared to the 75% LME payability assumed in the 2013 PEA. This implies a significant potential for increased revenue over the life-of-mine, with obvious positive implications for overall project economics.”

 

 

Nickel Company Comparables

For perspective on the value of FPX, I have put together a comparison with another junior nickel company which has a development project in BC.

 

Giga Metals

MCAP – $27.4 million (at the time of writing) based on the current share price of $0.70/share, with 41.4 million shares and 26 million warrants outstanding at exercise prices ranging from $0.07 to $0.70/share

Giga Metals owns the Turnagain Nickel-Cobalt Project in northern BC. Turnagain is a large, low-grade sulphide deposit containing nickel and cobalt-bearing pentlandite and pyrrhotite. The project’s main economic value is found in its nickel, with a much smaller portion being derived from its cobalt credits.

As you will see below, many of Giga’s Turnagain Project economic valuations are very similar to FPX’s Baptiste Deposit. However, I see some areas in which, I believe, FPX is stronger than Giga – let’s take a look:

• Metallurgy – Complex mineralization, which, if successfully processed into a concentrate, will not fetch a premium price in the market, meaning payability of 75% of the LME price, at best. Please read the section of the PEA regarding metallurgy.
• Location – remote location in northern BC with higher hydro power access and concentrate shipment costs
• Limited Upside – The 2012 PEA has a high nickel price assumption ($8.50/lb.) and GIGA has not defined a clear path to making Turnagain an economic project below $8.50 USD/lb nickel.
• Share structure – while the shares outstanding is lower than FPX, this is only after a couple of recent share roll backs, and keep in mind that GIGA’s share count will almost double if all the outstanding warrants and options are exercised.

Here are a few of the highlights from the PEA:

• Measured and Indicated Resource – 865 Mt @0.21% Ni and 0.013% Co and an Inferred Resource – 976 Mt @0.20% and 0.013% Co.

Giga’s Results:

• Post-Tax NPV @8% – $724 million
• Post-Tax IRR – 13.5%
• Initial CAPEX – $1.357 billion
• Year 5 Expansion CAPEX – $492 million
• Total CAPEX Cost over life-of-mine – $1.849 billion
• Post-Tax Payback – 7.3 years
• Nickel Price – $8.50 USD/lb. and Cobalt Price – $14.00 USD/lb.
• Mining Rate – 28.1 Mt/year (average LOM)
• Exchange Rate – $0.95 USD/CAD

 

Currently, Giga Metals trades more than double the MCAP of FPX, which I don’t think is justified. Giga’s Turnagain has a lot of positive aspects, however, when it comes down to valuations, I don’t believe it’s more valuable than FPX’s Decar Nickel District, given the reasons I outlined.

 

 

Concluding Remarks

I’m very bullish on the future of nickel and am investing my money into what, I believe, are the best investments to capitalize on a rising nickel price.

Even if you agree with my bullish nickel outlook, you may have a different risk tolerance when it comes to investing. For me, I prefer the junior portion of the resource sector, as I believe it gives the investor the best risk to reward ratio.

In saying this, I will continue to buy shares in FPX Nickel Corp. because, in my opinion, their Decar Nickel District is among the best undeveloped nickel projects in the world.

As I outlined in the report, there’s some risk associated with FPX, mainly in the nickel price assumption from its 2013 PEA and the NDP political party which currently leads the BC provincial government. I do believe, however, that given the step-out drill results, the expected 85-95% payability on the concentrate and a change in the exchange rate, the Decar Nickel District will be economic at sub $8 USD/lb. nickel.

In my opinion, there’s more upside potential than downside, especially at its current MCAP. Here’s a list of the reasons I’m investing in FPX Nickel:

• Great leadership from CEO, Martin Turenne, and a group of proven mine builders, beginning with Peter Bradshaw and Board members, Robert Pease, Peter Marshall and Bill Myckatyn. This team is being assembled with the successful development of Decar in mind.
• A desirable concentrate or pellet which is made via a simple metallurgical process. Market research carried out by FPX suggests that the concentrate could sell for around 85-95% of the LME price, which is 20% higher than the 75% used in the 2013 PEA.
• The Baptise Deposit mineralization has little to no sulphides present, meaning that both the host rock and tailings are non-acid generating, which is a huge plus when it comes time to permit the project.
• Low Pre-Production CAPEX cost of $1.3 billion – World-class nickel projects come with large price tags, making Decar look very reasonable, if not cheap.
• Low on-site operating costs of C$3.23/lb, which would position Decar in the lowest quartile of the nickel industry cost curve.
• Given the PEA nickel production rate of 82 million lbs. per year, at today’s nickel price of US$5.75/lb, Decar would yield around US$250 million in annual pre-tax operating cash flows.
• Large resource containing over 5.5 billion pounds of nickel in the combined indicated and inferred categories, making Decar one of the five-largest undeveloped nickel deposits in the world
• Successful step-out drill program results from the Southeast Zone, which has increased the strike length by 500 metres or roughly 25%.
• PUSH – An update to the Baptiste Deposit’s resource estimate should come in 2018, setting the stage for an updated PEA.
• FPX is trading for less than half (in terms of MCAP) the value of a comparable junior nickel company which, I believe, doesn’t have as high quality an asset as FPX.

In my opinion, all of these points make a great investment proposition. One that I think will be very hard for a major mining company to ignore in the future. With the completion of an updated PEA, a rising nickel price, and the overall lack of comparably great projects in the world, I believe FPX is HIGHLY undervalued and am looking forward to its re-rating in the market.

 

Don’t want to miss a new investment idea, interview or financial product review? Become a Junior Stock Review VIP now – it’s FREE!

 

Until next time,

 

 

Brian Leni  P.Eng

Founder – Junior Stock Review

 

 

Disclaimer: All statements in this report, other than statements of historical fact should be considered forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often, but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Much of this report is comprised of statements of projection. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.  Risks and uncertainties respecting mineral exploration companies are generally disclosed in the annual financial or other filing documents of those and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this newsletter.

Brian Leni is an online financial newsletter writer. He is focused on researching and marketing resource and other public companies. Nothing in this article should be construed as a solicitation to buy or sell any securities mentioned anywhere in this newsletter. This article is intended for informational and entertainment purposes only!

Be advised, Brian Leni is not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer.

Never, ever, make an investment based solely on what you read in an online newsletter, including Junior Stock Review, especially if the investment involves a small, thinly-traded company that isn’t well known.

Brian Leni’s past performance is not indicative of future results and should not be used as a reason to purchase any stocks mentioned in his newsletters or on this website.

In many cases Brian Leni owns shares in the companies he features. For those reasons, please be aware that Brian Leni can be considered extremely biased in regards to the companies he writes about and features in his newsletters.  You should conduct extensive due diligence as well as seek the advice of your financial advisor and a registered broker-dealer before investing in any securities. Brian Leni may buy or sell at any time without notice to anyone, including readers of this newsletter.

Brian Leni shall not be liable for any damages, losses, or costs of any kind or type arising out of or in any way connected with the use of this newsletter. You should independently investigate and fully understand all risks before investing. When investing in speculative stocks, it is possible to lose your entire investment.

Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction, and should only be made after such person has consulted a registered financial advisor and conducted thorough due diligence. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that they are accurate or complete. Our views and opinions in this newsletter are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.

Junior Stock Review does NOT have any business relationship with FPX Nickel Corp.
Junior Stock Review does not undertake any obligation to publicly update or revise any statements made in this newsletter.

Brian Leni does own shares in FPX Nickel Corp.

The research I did on Newfoundland and Labrador as a destination for mineral exploration and production had me excited to see, in person, if the province would deliver. On October 23rd, I visited Rambler Metals and Mining, and specifically their Ming’s Mine site, which sits roughly 15 minutes from Baie Verte.

View of the water from Baie Verte

Before getting into my visit to Rambler, I want to give you a quick intro to the Baie Verte Peninsula’s mining history and, in particular, a story of how Canada’s smallest town came to be.

 

Tilt Cove

Tilt Cove is currently the smallest town in Canada; with a population of just 6 people, it sits just a few kilometers from Rambler’s Nugget Pond Mill.  The story of how Tilt Cove came to be varies depending on who you speak to, but here’s a brief summary of what I was told.

The story begins with a man named Issac Winser. Winser was a fisherman, who frequently fished the waters surrounding the Baie Verte Peninsula. In a chance encounter on the water between Winser and another man, Smith McKay, McKay noticed Winser was in possession of a large metallic rock, which he was using as an anchor for his boat.

Curiously, McKay took a closer look at the bluish green coloured rock and asked Winser where he had found it. Winser said he’d found it on the shores of the Tilt Cove area, and that there was a great deal more sticking out of the cliffs.

McKay, having a mining background, recognized the rock to be copper ore and later made his way to the Tilt Cove area to set up a mining operation, where he and his team mined the copper ore by hand. The Tilt Cove town was quickly established and grew from a town of 3 families in 1863 to a town of over 700 inhabitants by 1869.

In the Nugget Pond Mill offices, there is a copy of a very old Tilt Cove grocery store flyer advertising sale items. Additionally, the town’s prosperity even brought a movie theatre to the area and many other unexpected perks for such a small community in northwestern Newfoundland and Labrador.

For those interested in reading more about the history of Tilt Cove, here are a couple of links to check out: CBC – Tilt Cove, Canada’s smallest town, a big draw for tourists and Newfoundland Heritage – Once Upon A Mine.

 

 

 

 

Rambler Metals and Mining (RAB:TSXV)

MCAP – 82.4 million (at the time of writing)

Shares – 549 million

Fully Diluted – 627 million

Cash – $2 million

Institutional Shareholders – CE Mining 72%, Lombard Odier 6%, CI Global Investments 5%, Tinma International 4%

 

 

Ming’s Mine and Nugget Pond Mill

Rambler Metals and Mining owns 100% of its 1640 ha property, which is home to the Ming Mine and Nugget Pond Mill. Rambler’s operation is expanding its underground operation by blending ores from the Lower Footwall Zone with the current mining from the massive sulphide zones to produce roughly 16 million pounds of copper annually, at a cost that’s below $2 USD per pound, giving the operation good upside potential against a rising copper price.

The Ming’s Mine has a total Proven and Probable Reserve of 8.7 million tonnes at 1.79% copper and 0.48 g/t gold, for a total of 341.2 million lbs of copper and 133.5 K oz of gold. All zones of the deposit remain open at depth.

Ming Mine – New portal cover installed as part of the ventilation upgrade project

Currently, the mine is targeting 1250 mtpd, which will help drive down costs and allow Rambler to maximize their profits in what appears to be a strong future market for copper prices. Rambler’s  corporate presentation gives us a glimpse of their sensitivity to a rising copper price – below is the graph.

Data Source NI43-101 2015 Technical Report – Financial KPIs @ 1,250 MTPD

 

Although the mine site is closer to Baie Verte, where I was staying, we started the site visit at the Nugget Pond Mill, which sits roughly 40km away from the mine site, near Canada’s smallest town, Tilt Cove.

The Nugget Pond Mill is located 10km off the 414, and is at about the 5km mark where the road breaks in two. On your left, you head to Snook’ Arm, and to your right, our destination, Nugget Pond.

Ming Mine – Truck being loaded with Copper Ore

 

Rambler purchased the Nugget Pond Mill in October of 2009 for $3.5 million CAD, which, at the time, was owned by Crew Gold Corporation. Crew was using the mill to process their gold ore, which was mined at their Nalunaq Gold Deposit in Greenland.

NOTE: The Nugget Pond Mill was originally built back in 1996 by Richmond Mines to mine the Nugget Pond deposit.  When that ore body was depleted, Richmond movedto the Hammerdown mine, near Springdale, and mined, trucked and milled the ore at the Nugget Pond mill.

Nugget Pond Mill – Truck dumping a load of Copper Ore for Processing

The bulk of my site visit was spent at the Nugget Pond Mill, where I was given a detailed overview of the operation by the Mill Superintendent, Dwight Goudie. I then toured the facility, where I met with a couple of operators, Chester and Andrew, who took me through their respective operations and explained to me how the process works and the key parameters that they monitor.

 

Nugget Pond Mill – Operator Andrew, holding a piece of Dry Copper Concentrate

 

I was very impressed at the level of knowledge which both operators displayed. Clearly, they are both fully engaged in the whole process and take great pride in what they’re doing. Speaking from experience, getting and maintaining this sort of engagement isn’t always easy, but pays huge dividends to a company that can sustain it.

 

Future Growth

Rambler is steering towards  a definitive engineering study with regards to an expansion of the mining process, in which their target is to achieve a production rate of 2,000 mtpd, Phase III. An increase to this level of production should lower costs, ergo giving even more potential protection against a falling copper price or upside potential in a rising copper price market.

Along with a longer term production goal of 2,000 mtpd, Rambler’s Chief Exploration Geologist, Larry Pilgrim, mentioned that they are targeting further exploration of the deposit, down plunge, as all zones remain open at depth. In particular, the Ming North Zone remains largely unexplored and will be the exploration focus of the future. A surface drill program is also underway targeting the down plunge extension of the Lower Footwall Zone.

This surface drilling has been successful in expanding the LFZ zone as well as expanding the massive sulphide zone (Ming South zone).  A September news release highlighted some of the results from the first hole.

• Ming Massive Sulphide (MMS) – Upper lens 1.02 m of 1.63% Cu and 1.23 g/t Au and Lower lens 6.30 m of 2.85% Cu and 2.99 g/t Au
• Lower Footwall Zone (LFZ) – 40.0 m of 1.42% Cu, including 6.0 m of 2.51% Cu and 7.57 m of 2.27% Cu

Results from the second hole are expected in the next couple of weeks.

 

NOTE: Pilgrim is a native Newfoundlander with a lot of experience in the mining industry. He mentioned that western Newfoundland, right up the Baie Verte Peninsula, had enough prospective geological targets to last him 3 lifetimes. I mention this because it appears we have only hit the tip of the iceberg in Newfoundland and Labrador’s exploration potential, which is great for the future of mining within the province.

Ming Deposit – Slide from Rambler Corporate Presentation

 

In a news release on June 27 of this year, Rambler reported some great drill results from the Ming North Zone, which aren’t included in the current resource or reserve calculation. Some highlights were: R17-675-04: 4.00m of 3.17% Cu with 6.56 g/t Au, R17-675-05: 21.00m of 3.1% Cu with 1.13 g/t Au and R17-675-07: 17.97m of 2.79% Cu with 1.73 g/t Au. At the very least, the drill results show the potential to help replace the depleted reserves and, on the upside, show the potential to expand the resource and/or reserves in the future.

 

Concluding Remarks

I think it’s undeniable that the world is moving away from the use of fossil fuels as an energy source. In the coming years, alternative non-carbon emitting energy sources, such as solar and wind, appear as though they will have a larger footprint in energy generation. With this movement will come the need to store and transmit electricity on a far larger scale than we are today.

Thus, in my opinion, a major disruption in the primary battery metals and copper markets is destined to come.  In saying this, positioning yourself in high quality companies such as Rambler Metals and Mining, could prove to be a good investment in the years ahead.

 

Don’t want to miss a new investment idea, interview or financial product review? Become a Junior Stock Review VIP now – it’s FREE!

 

Until next time,

 

Brian Leni  P.Eng

Founder – Junior Stock Review

 

 

Disclaimer: All statements in this report, other than statements of historical fact should be considered forward-looking statements. These statements relate to future events or future performance. Forward-looking statements are often, but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions. Much of this report is comprised of statements of projection. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking statements.  Risks and uncertainties respecting mineral exploration companies are generally disclosed in the annual financial or other filing documents of those and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this newsletter.

Brian Leni is an online financial newsletter writer. He is focused on researching and marketing resource and other public companies. Nothing in this article should be construed as a solicitation to buy or sell any securities mentioned anywhere in this newsletter. This article is intended for informational and entertainment purposes only!

Be advised, Brian Leni is not a registered broker-dealer or financial advisor. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer.

Never, ever, make an investment based solely on what you read in an online newsletter, including Brian Leni’s online newsletter, especially if the investment involves a small, thinly-traded company that isn’t well known.

Brian Leni’s past performance is not indicative of future results and should not be used as a reason to purchase any stocks mentioned in his newsletters or on this website.

In many cases Brian Leni owns shares in the companies he features. For those reasons, please be aware that Brian Leni can be considered extremely biased in regards to the companies he writes about and features in his newsletters.  You should conduct extensive due diligence as well as seek the advice of your financial advisor and a registered broker-dealer before investing in any securities. Brian Leni may buy or sell at any time without notice to anyone, including readers of this newsletter.

Brian Leni shall not be liable for any damages, losses, or costs of any kind or type arising out of or in any way connected with the use of this newsletter. You should independently investigate and fully understand all risks before investing. When investing in speculative stocks, it is possible to lose your entire investment.

Any decision to purchase or sell as a result of the opinions expressed in this report will be the full responsibility of the person authorizing such transaction, and should only be made after such person has consulted a registered financial advisor and conducted thorough due diligence. Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that they are accurate or complete. Our views and opinions in this newsletter are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies mentioned in this newsletter will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.
Brian Leni does not undertake any obligation to publicly update or revise any statements made in this newsletter.

Brian Leni does not have a business relationship with Rambler Metals and Mining. Brian Leni does not own shares in Rambler Metals and Mining.

 

 

 

 

 

 

 

 

 

 

 

 

 

Day 3 of my Newfoundland trip started at the crack of dawn, when I was awakened before 4am by the alarm of the logger in the room next to me at the Lakeview Inn in Millertown.  I tossed and turned for the next hour and a half and then made my way downstairs, where I had a terrific breakfast with Antler Gold’s exploration team. After breakfast, we headed to the team’s exploration home base, a rented cabin a few blocks away from the Inn.

Millertown located on the Shores of Red Indian Lake

For the exploration team, each day starts here with a safety review and a delegation of assignments by  Exploration Manager, Dave Evans. By about 7 am, we were on the road headed south of Millertown, down a set of logging roads, to Antler’s Wilding Lake Gold Project.

Yours Truly standing in Antler’s Elm Zone Trench

Before getting any further into my site visit report, I’m going to share some interesting facts about the history of Millertown.

 

Millertown

Just south of Buchans junction, which sits at the north end of Red Indian Lake in central Newfoundland, is Millertown.  Millertown was established in about 1900 by Lewis Miller, a timber baron and merchant from Crieff, Scotland.

Having exhausted his timber lands in Sweden, Miller brought a team of Scots and 100 Swedish lumberman to the Red Indian Lake area, in an effort to establish a logging operation that could supply the British Empire with pine timber.

What is left of the old saw mill in Millertown

The town was created to house this team of lumbermen as they built 80 Swedish style, two-room cottages along the shores of the lake. Additionally, they constructed a school and a church on the hill overlooking the lake, which still stands today.

Millertown Church and homes along the shores of Red Indian Lake

 

During my visit, I asked about the logging industry in the area, and was told that since the closure of the pulp and paper mill in Grand Falls, logging in the area has really declined with only a small number of companies still in operation. Unfortunately, the industry’s decline has had a major effect on the town and many younger families have left.

Shores of Red Indian Lake

With the area’s great geology and the access provided by the logging roads, however, a mining renaissance could be coming to Millertown and the surrounding area. Companies such as Antler Gold, Marathon Gold and Torq Resources are exploring heavily in this general region. A large discovery and the development of a mine could bring much needed cash and jobs to this beautiful area in central Newfoundland.

 

The Wilding Lake Gold Project

After driving for about an hour on the rough logging roads, we arrived at the point of the original Wilding Lake gold mineralization discovery, which occurred just a few years ago. The gold was found in 2015 by prospectors, Brian Jones and Gary Rowsell, in quartz boulders alongside a new logging road. Grab samples from these boulders assayed up to 74.8 g/ton gold.

Approximate location of the first boulders discovered by Jones and Rowsell

 

Jones and Rowsell eventually sold the property to Altius Minerals, which is a large mining royalty company based in St. John’s, Newfoundland and Labrador. Altius then carried out further exploration activities in the fall of 2016, such as soil and basal till sampling, airborne and ground geophysics.

Fast-forwarding to today, Altius has since optioned the property to Antler Gold, who is currently conducting a systematic exploration program of the property with soil sampling, trenching and, most recently, a 2,500m drill program of some highly prospective targets.

To note, Antler’s Wilding Lake Project covers 215 sq. km and more than 50 km of strike length of the projected structural trend that is believed to control the regional gold mineralization. This trend is the same as Marathon Gold’s Valentine Lake Gold Camp, which currently boasts a total over 2 million ounces of 43-101 compliant gold resources in the Measured and Indicated, and Inferred Resource categories.

Wilding Lake Gold Project Geology Map

Text Book Example of Rogerson Lake Conglomerate

Gold Mineralization Zones

In 2016, 5 gold mineralization zones – Alder, Taz, Elm, Cedar and Dogberry – were found by Atlius’ exploration team. The gold showings mainly consist of quartz-tourmaline veins containing clots of coarse-grained chalcopyrite, hematite, malachite and visible gold is hosted by the Rogerson Lake Conglomerate.

Taz Zone Trench located in Close Proximity to Original Boulder Discovery

In the picture below, the purplish coloured rock is the Rogerson Lake Conglomerate. As the conglomerate nears the quartz veining, its colour changes to brownish. The Elm Zone was the most developed trench I saw, and the focus of drilling at the time of my visit.

Elm Zone Trench – Rogerson Lake Conglomerate, bottom left purplish colour

 

Elm Zone Trench – Site of drilling on the day of my visit

 

Taz Trench Rock

 

Systematic Exploration

The drive down the logging roads to Wilding Lake gave Exploration Manager Dave Evans and I a chance to talk about the project, and the systematic approach they are using to find gold mineralization on the property. In the mining industry, a systematic approach is paramount to conserving capital and making every dollar count.

Beginning in the summer, Evans and his team set out to explore as much of the property as possible, taking soil samples and mapping the property, in hopes of identifying further targets for this fall’s 2,500m drill program.

This systematic approach is particularly important for exploration in Central Newfoundland and Labrador because of the amount of overburden which masks most outcroppings. This overburden layer can vary in depth from 0.5m to 15m throughout Newfoundland and Labrador.

The layering of the soil can be seen when standing in the dug trenches, as the top thin layer of organics clearly sticks out on top, followed by an overburden blanket of varying thickness, which is followed by basal till along the top of the rock.

Evans pointed out that the key to proper soil sampling is to get a sample below the organics in the A horizon, down to the brownish soil, where there is the possibility for gold to be present. When high potential soil samples or boulders are found, the geologists identify the path of the glaciers, which would have worn the mineralized outcrops as they moved across, many years ago. The exploration team then moves up ice of the high gold in soil or boulder samples to (hopefully)  find the buried quartz vein outcrops.

 

 

By overlaying soil and till sampling data with the geophysical data, followed by trenching and channel sampling along the quartz veins in each zone, the team has identified high potential targets which, at the time of my visit, were the focus of the drilling.

Evans told me that, to date, they have collected over 6000 samples across the property. In the July 26^th, 2017 news release, Antler released the gold soil geochemistry diagram seen below.

2016 and 2017 Soil Geochemistry Wilding Lake Project – News Release July 26^th, 2017

Further in the August 30^th, 2017 news release, Antler announced the discovery of new mineralized zones, Red Ochre and Raven. The Red Ochre Zone is located roughly 900 meters to the southwest of the Alder Zone, while the Raven Zone is located 400m to the northeast of the Red Ochre Zone.

Antler’s systematic approach to exploration is clearly working and makes me confident that if there is more gold mineralization within their claim boundaries, they will find it!

Pointing out a Fleck of Gold at the Taz Trench Outcrop

Trenching Work

I have included a few pictures from my visit and a few images produced by Antler depicting the Elm Zone, Alder Zone and Dogberry Zone trenches, which have channel sampling data included from the quartz veins. These were a part of a January 24, 2017 news release.

Elm Zone Trench – Quartz Vein Outcrop

Elm Zone Trench – Exploration Manager, Dave Evans

 

News Release Jan.24, 2017 – Alder Zone Trench

 

News Release Jan.24, 2017 – Elm Zone Trench

 

 

News Release Jan.24, 2017 – Dogberry Zone Trench

 

Newfoundland and Labrador – A New Frontier for Gold Exploration

Finally, for those who haven’t read my article on Newfoundland and Labrador as a mining jurisdiction, and/or don’t know much about this great province on Canada’s East Coast, you can find it here.

 

 

Concluding Remarks

Touring the property with Exploration Manager, Dave Evans, was an exciting and very insightful experience. In any mineral exploration endeavour, a systematic approach that ensures dollars are spent wisely is vital to the success of the operation. In the case of Antler, I had the chance to see, first hand, the dividends that are paid when you have a defined process that’s performed by an experienced team.

Secondly, having met Antler CEO, Dan Whittaker, this past summer in Toronto, I’m confident Antler shareholders, including myself, are in good hands moving forward. I am a buyer of Antler Gold and look forward to the first round of drill results in the coming weeks.

 

Don’t want to miss a new investment idea, interview or financial product review? Become a Junior Stock Review VIP now – it’s FREE!

 

Until next time,

 

Brian Leni  P.Eng

Founder – Junior Stock Review

 

 

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company(s) and sector that is best suited for your personal investment criteria. Junior Stock Review does not guarantee the accuracy of any of the analytics used in this report. I do own Antler Gold shares. I have NOT been compensated to write this article and have No business relationship with Antler Gold.

If you’re looking to take your due diligence process to the next level, you have to incorporate a site visit into your repertoire. All the analysis in the world can’t replace the effectiveness of seeing a project and meeting the people in person.

Not only can you confirm what the management team is telling you, but you can meet the people who are on the front lines, mining underground, driving loaders, collecting soil samples or simply answering the phone in the office. All of this can tell you a lot about the health of a company and how it treats its employees, which is paramount to the company’s success, in my opinion.

In October, I had the opportunity to visit Anaconda Mining’s Point Rousse Project, and was not surprised to see that Anaconda’s leadership makes it a priority to empower their workforce. For this, they’re paid back through a motivated workforce.

I returned from my visit to Newfoundland and Labrador very satisfied that Anaconda’s operational team has the right ingredients for success; they look set to put the Stog’er Tight Deposit into production, produce a maiden resource estimate for the Argyle Zone, and explore and develop the Goldboro Project toward production.

2018 looks to be a monumental year of growth for Anaconda, one that I look forward to as a shareholder!

 

 

Anaconda Mining – Site Visit October 2017

On the morning of October 22^nd, I flew out of Toronto’s Pearson International Airport on my way to Deer Lake, located in western Newfoundland and Labrador. While I was here, I had the opportunity to visit Anaconda Mining’s Point Rousee Project, located on the Baie Verte Peninsula in north western Newfoundland and Labrador.

Gros Morne National Park – Western Brook Trail

 

The western portion of the island of Newfoundland, while sparsly populated, possesses, in my opinion, some of  Canada’s most spectacular scenery and destinations. I landed in Deer Lake, an interesting town because it’s home to western Newfoundland and Labrador’s major airport, and compared to many of the other areas in this part of the island, it’s also well developed on a commerical level.

Most importantly, however, it’s the largest centre next to Gros Morne National Park, and acts as a jumping point for people looking to explore this UNESCO world heritage site.

On the last day of my trip, I spent the day hiking a few of the trails in Gros Morne and was amazed by the scenery – this is a place you will want to add to your bucket list, you won’t be disappointed!

Baie Verte, Newfoundland and Labrador

Baie Verte – HWY 410 thru the main part of town

Baie Verte – A view from Bistro on the Bay

Baie Verte is a small town located on the coast of the Baie Verte Peninsula. Baie Verte’s history as a town is rooted in the pulp and paper industry, but owes its major growth to the asbestos mine which was founded in 1955 by George McNaughton and Norman Peters.

Asbestos Open Pit Mine – 1963 to 1995

The open pit asbestos mining operation, which is located a short drive north of Baie Verte, employed 500 people at its peak. The mine was operated by a number of companies throughout its history, including  Advocate Mines Ltd., Baie Verte Mines Inc., and Teranova. The mine was closed permanently in 1995.

While there are other employers in this region of Newfoundland, I definitely got the feeling from speaking to a few of the residents that, outside of being employed by government, mining was the most desirable industry in which to work.

The mining operations that are closest to Baie Verte are Anaconda Mining’s Point Rousse Project and Rambler Metals and Mining’s Ming Mine and Nugget Pond Mill. The two companies, in total, employ roughly 400 people in the surrounding area.

Depending on your speed, it’s roughly a 2 hour drive from the Deer Lake airport to Baie Verte.  I spent two days in Baie Verte, staying at the Dorset Inn, which is right in the heart of town.  From here, Anaconda’s Point Rousse Project is about a 30 minute drive on the 418, which leads to the town of Ming’s Bight.

 

 

The Point Rousse Project

The Point Rousse Project is a collection of Anaconda’s Newfoundland assets, which include the Pine Cove Mine and Mill, the Stog’er Tight Deposit, the Aggregates Project and over 5,800 ha of prospective property.

The Point Rousse Project is located down a very well kept gravel road, about 5 km off the 418. The road makes its way through the forest, up and down hills, until reaching the site’s main offices to your left, and tailings pond to your right. Elevation-wise, the main offices, mill and tailings pond are set roughly 75 to 100 ft above the top of the Pine Cove open pit, and probably another 75 to 100 ft above the sea level at the Port Facility.

During my visit, I was accompanied by the Mine and Mill Superintendent, Tony Chislett. Chislett has been with Anaconda for 10 years, working in a few different roles before becoming Superintendent. In my experience, the best operation managers typically work their way up to the position after having extensive experience in the various jobs that they are going to manage. This not only gives them the much needed knowledge of the process, but also the respect of the workers.

Chislett and his team will be put to the test in the coming months with the conversion of the Pine Cove open pit mine to a long term tailings facility and the start up of the Stog’er Tight Mine, which should occur in early 2018. Not only this, but on the horizon there is the possible processing of the Goldboro ore, which will be an extra wrinkle for the team to deal with, as the Goldboro ore is different from what is mined along the Scrape Trend.

Pine Cove Mine and Mill Superintendent, Tony Chislett

As we drove around the property, Chislett gave me a break down of the operation, and how they have incorporated cutting-edge technology and their personnel’s input to improve the process. For instance, GPS targeting for blasting and on the company’s heavy equipment allows for precision mining and the ability to maximize efficiency with the flow of ore to and from the open pit to the mill. With the movement to Stog’er Tight getting closer, these technologies, I believe, will aid Anaconda in avoiding some of the pitfalls that could accompany the mining operation’s move.

Pine Cove Open Pit Mine– Dump Truck Driving Up the Ramp

 

Pine Cove Open Pit Mine – Mining of Gold Ore from the Bottom of the Pit

 

Stog’er Tight Deposit – Located in Close Proximity to the Pine Cove Mill

 

Scrape Trend

While the Stog’er Tight Deposit looks to become Anaconda’s next producing asset, there are many more prospective targets located in what is called the Scrape Trend.

Source: Anaconda Mining

 

In the image above, you can see the exploration targets listed from 1 to 4. Starting on the left-hand side of the image with #1, is Anaroc, which is located in close proximity to the Pine Cove open pit mine.  Next, #4 is Corkscrew Road, followed by the #2 Connector and, finally, #3 the most explored of the targets, the Argyle Zone.

 

 

Argyle Zone

Fifty-two holes have been drilled at the Argyle Zone, totalling 4,860 meters.  The strike length is over 600m and 225m down dip. To date, here are some of the drill highlights at the Argyle Zone: 6.09 g/t over 8.9m (AE-16-11), 9.31 g/t over 6.0m (AE-16-39) and 3.63 g/t over 12.0m (AE-17-46).

In a recent news release, Anaconda announced a flotation recovery of 97.3% and a leach recovery of 94.5% for a combined recovery of 91.9% of a 25 kg sample of blended core samples from Argyle, with an average grade of 2.69 g/ton gold.

Additionally, Anaconda’s geologists have identified other targets to the south and along strike using geophysical data.

Source: Anaconda Mining

PUSH:  A maiden resource estimation for the Argyle Zone is expected to be announced in December 2017. Additionally, Anaconda’s team is working on an environmental assessment application, conducting metallurgical and ARD testing and government consultations.

Aggregates Project

Deep Sea Port which Facilitates the Aggregate Shipments

While not a focus for Anaconda, the cash and the removal of waste rock that the Aggregates Project provides is a huge plus for the company. The Aggregates Project and the proposed use of some of the larger waste rock as armour stone is a testament to the innovation that Anaconda’s leadership has instilled in their workforce.

With the first Aggregates Project contract having just expired, Chislett mentioned that they intend to negotiate additional contracts in the future. In the last fiscal year ending on May 31 2017, the project generated $0.9 million.

 

 

 

The Goldboro Project

From the first time we met, Anaconda’s CEO, Dustin Angelo, has told me that Anaconda has lofty goals for expansion, as they intend on becoming a 50,000 ounce per year gold producer. To more than triple their current production rate, they will, without a doubt, lean heavily on their latest acquisition, the Goldboro Project, which is located a couple of hours northeast of Halifax, Nova Scotia.

In recent news, Anaconda was able to raise $3 million dollars in a non-brokered private placement. VP of Exploration, Paul McNeill, says roughly half will be put toward further exploration and development at Goldboro.

In a news release on November 1^st, Anaconda  announced a 6,000m diamond drill program, focusing on the Boston Richardson and East Goldbrook gold systems. The goal of the program is to expand the mineral resource along strike and down plunge, while also completing infill drilling in specific portions of the deposit as they look to move some of the Inferred resource up to the Measured and Indicated categories.

Goldboro IP Chargeability Map

In the same release, Anaconda reported that initial drill core observations support the thesis that the Goldboro Deposit continues at depth, as the first diamond drill hole (BR-17-06) intersected the geological structure hosting the Boston Richardson System between 400 to 475 meters, which is 75 meters below the current resource model.

Goldboro Deposit Vertical Longitudinal Section

PUSH: Drill results from the recently commenced 6,000m diamond drill program. Expansion of the resource at depth and along strike has the potential to do great things for the economics of this project.  Pay close attention to drill results coming in the weeks and months ahead.

PUSH: Additionally, a PEA is scheduled to be completed by the end of this year, the economics of which could be enhanced with further expansion of the Goldboro Deposit.

Anaconda possesses a proven team with a track record for success in mining. I believe that Goldboro will be the next feather in their cap, as they look to develop the Project into a producing mine. For a detailed look at Anaconda, check out my last article here.

 

 

Concluding Remarks

Before my visit, I felt the future was very bright for Anaconda. After seeing their Point Rousse Project in person, I’m convinced Anaconda is a company that is dedicated to empowering its people. It has not only survived the depths of the recent bear market, but has emerged in this new gold bull market as a premier gold producer, set to grow in the coming years.

I’m looking to add to my position in Anaconda in the weeks ahead, and see weakness in the share price as an opportunity. Putting it all together, there’s a lot of news flow to watch for in the coming weeks and months, which could provide some PUSH for the stock price:

• Results from the 6,000m diamond drill program at the Goldboro Project. They are looking to expand along strike and at depth.
• Completion of a PEA on the Goldboro Project by the end of 2017
• Stog’er Tight Deposit will begin production in early 2018
• Maiden Resource Estimation announcement on the Argyle Zone in December 2017

 

 

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Until next time,

 

Brian Leni  P.Eng

Founder – Junior Stock Review

 

 

Disclaimer: The following is not an investment recommendation, it is an investment idea. I am not a certified investment professional, nor do I know you and your individual investment needs. Please perform your own due diligence to decide whether this is a company(s) and sector that is best suited for your personal investment criteria. Junior Stock Review does not guarantee the accuracy of any of the analytics used in this report. I do own Anaconda Mining Inc. shares. Anaconda Mining Inc. is a Sponsor of Junior Stock Review.