In a bull market for bullion prices, the race is on to develop new gold deposits to replace ones that are already getting mined out. And among Canada’s richest gold belts, a handful of intrepid explorers are hitting paydirt.
This is particularly significant because these discoveries are being made in well-established mining districts with plenty of infrastructure, sound environmental governance, and political stability. We’re talking about enviable plug and play opportunities that just don’t exist in most parts of the world.
The most successful of these up-and-comers is Great Bear Resources, which has rallied from $0.30 two years ago to recent highs of around $20 thanks to its world-class gold discovery in Ontario’s fabled Red Lake mining camp.
Another contender for a “company maker” discovery is Genesis Metals (TSX.V: GIS) (OTCQB: GGISF), which is making good headway in an emerging gold belt in neighbouring Quebec.
Interestingly, Genesis and Great Bear are stablemates in that they are both part of the Discovery Group and share some of the same mentors, financial backers, and technical advisors. (More on this in a moment.)
Drilling Success Sweetens an Emerging Deposit
Phase 2 of drilling recently got underway. But let’s take a look first at Genesis’s earlier nine-hole Phase I program, which was conducted earlier this year. Its intention was to zero-in on newly recognized high-grade gold shoots within the company’s emerging gold deposit, known as Chevrier Main.
These shoots were first discovered during a 2017 drill program and offer considerable promise because they plunge to unknown depths. In fact, recent drill results demonstrated that these high-grade gold shoots are continuous below 200 metres and occur within wider gold mineralized envelopes.
Among some of the drilling highlights are as follows: 9.73 g/t gold over 4.5 metres, starting at 113.5 metres down hole, within a wider zone assaying 1.65 g/t gold over 84.00 metres. This speaks to the prospect of a much more richly mineralized deposit emerging at Chevrier Main.
By way of a little background, the company calculated a new mineral resource estimate at the end of the 2019 drilling season at Chevrier Main of 395,000 ounces of indicated gold averaging 1.45 grams per tonne (g/t), as well an inferred resources of 297,000 ounces gold averaging 1.33 g/t.
It’s worth reiterating that these new discoveries at depth should significantly bolster the overall grade of the deposit, while also amassing more tonnage at depth to boost its size.
The goal of Phase 2 of Genesis’ summer/fall drill program is to outline the overall size and scope of the Chevrier Main deposit both at-depth and along a lateral plane, too. This involves about two dozen more drill holes spanning 5,500 metres – most of it consisting of in-fill drilling into high-grade veins to sweeten Chevrier Main’s overall grades.
The kicker is that there also exists the prospect of unearthing one or more proximal satellite deposits. Hence, the exploratory component of Phase 2 drilling. This step-out drilling promises to begin to investigate the company’s big-picture potential. Especially considering that drilling will include a cluster of a half a dozen target areas located to the east of the cornerstone deposit. This is where grab samples that assayed as high as 17.8 g/t gold and 10.8 g/t gold have been found.
Zeroing-In on Regional Blue-Sky Opportunities
Additionally, there exists a dozen or so large geophysical targets elsewhere dispersed over a 15-kilometre trend running the length of the company’s property. Each target is sizeable, ranging from one to three kilometres in length. And each of them atteststo the fact that district-scale opportunities for multiple gold discoveries may exist within Genesis’ extensive land holdings.
If any of these satellite targets are large enough to have any meaningful potential, this leads one to wonderswhy they have not been discovered in the past. The answer, according to Genesis’ management, is that these target areas are mostly covered in glacial till, which can make them unresponsive to airborne geophysical surveying. So instead, these target zones were investigated for gold-in-till anomalies by way of painstaking, laborious, boots-on-the-ground soil sampling over large, remote areas. Now all this hard work may be about to pay off, assuming that it helps to [NH1] unlock the value of some of the property’s more elusive gold finds.
Ultimately, Genesis’ efforts to upgrade its Chevrier Main deposit and even discover new satellite deposits could go a long way towards making the company an attractive takeover target. This is mindful of the fact that it sprawling project area is conveniently located in close proximity to several gold mines and mines in-the-making.
In fact, the Chevrier Main cornerstone asset only covers a tiny fraction of a property that encompasses nearly 300 square kilometres, spanning the length and breadth of an under-developed, emerging gold belt that has, to date, already yielded around seven million ounces of gold for other operators in the region.
Bringing the Big Picture Potential into Focus
Let’s look at the big picture for this project going forward.
Located near Chibougamau, Quebec, the company’s district-scale property spans the Fancamp deformation zone. This is a structural weakness in the earth’s crust into which gold has migrated from much greater depths. In other words, this is an ideal geological setting for significant discoveries.
Relatively recent ones include [NH2] the proximal three-million-ounce Nelligan gold discovery that is being jointly developed by Iamgold and its junior gold partner, Vanstar Mining. The trend also includes the high-grade Monster Lake gold discovery.
Hence, the prospect of one or more sizeable gold deposits emerging on Genesis’ property is significantly boosted by the close proximity of these other recently-discovered gold deposits. In fact, they are evidence of how geologically-fertile this under-explored gold trend really is.
The Next Contender from a Stable of Winners
The company is now led by CEO, David Terry, PhD Geo. A seasoned mineral explorationist, Dr. Terry has worked in senior roles for the some of the best-known mining companies in the world, including Hemlo Gold Mines Inc., Cominco Limited and Gold Fields Mining Corporation. He is also a director of high-flying Great Bear Resources.
His duel roles with Great Bear and Genesis speaks to his involvement with the renowned Discovery Group, which is led by John Robins and Jim Paterson. These renowned mining industry financiers/developers have outperformed over the past couple of decades, and are responsible for several of the best-known Canadian gold exploration success stories in recent memory.
Among them is Kaminak Gold Corp, which was sold to Goldcorp for an attention-grabbing CDN $520 million. Notably, Kaminak’s former CEO, Rob Carpenter, is also on Genesis’ advisory board. Other Discovery Group standouts include Northern Empire, which was sold to Coeur Mining for CDN $117 million in late 2018. Most recently, they now include Great Bear and Kodiak Copper Corp.
Additionally, Genesis benefits from some of the former management of Underworld Resources, which was acquired by Kinross Gold for CDN $140 million dollars in 2010. In fact, Adrian Fleming, Genesis Chairman, was in fact, a driving force behind Underworld’s company-maker discovery as CEO and founder.
With tail winds at the company’s back thanks to a buoyant bull market for bullion prices, Genesis is finally back on-track after a protracted slump in the mining industry. This year’s drilling should go a long way towards building additional ounces in the ground and locating the deposit’s sweet spots. At the same time, the company is systematically hunting down new gold discoveries on its wholly-owned district-scale property.
For now, it is the still-emerging Chevrier Main deposit that constitutes the underpinning of the company’s share price. However, the sizzle in the steak going forward comes in the form of all the “blue sky” potential for amassing one to two million ounces (or more) of gold – which now seems like a realistic goal in light of the company’s drilling success thus far this year.
After all, the prospect of proving up a gold deposit of any meaningful size would surely make Genesis an attractive acquisition target as a bold-on addition to any one of the nearly[NH3] mines and mines-in-the-making, such as Nelligan and Monster Lake. This is the trump card that investors may get to play down the road.
Moreover, it’s worth reiterating that the Chevrier project area sits at the heart of an emerging gold belt where new economic discoveries continue to be made and where the presence of plenty of regional mining infrastructure makes for major cost savings for any new mines.
In summary, the recent definition drilling of an emerging network of higher-grade shoots that plunge to unknown depths at the Chevrier Mainis already upgrading the profile of the deposit.
In the process, Genesis is seeing its geological thesis validated, helping the company to better understand the distribution and structural controls of the deposit’s high-grade gold shoots. All of this speaks to the prospect of a much larger, high-grade resource being outlined in the coming months.
This prospective scenario is summed up by Resource Opportunities investment newsletter writer James Kwantes, who says, “The company's $15-million valuation –less than many pre-drill juniors –is backstopped by Chevrier's existing gold resource and now, growing higher-grade zones.”
Then there still also exists the blue-sky potential for other stand-alone deposits within Genesis’ district-scale land holdings. But for now, the onus is on Genesis to build as much intrinsic value into its share price by way of enriching the overall size of Chevrier, while also significantly sweetening its overall grades.
Keep a keen eye on this company, which expects 2020 to be a breakout year.
ABOUT THE AUTHOR: Marc Davis has a deep background in the capital markets spanning 30 years, having mostly worked as an analyst and stock market commentator. He is also a longstanding financial journalist. Over the years, his articles have appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City A.M. (London), Bloomberg, WallStreetOnline.de (Germany) and the Independent (UK).