And, We're Back
Having fun yet?
Six days ago I wrote, “gold is down to USD $2997, silver to USD $28.28”. As I write gold is trading at USD $3236 and silver is at USD $32.24. What happened? Again, I will leave the geo/macro/tariff/Trump chin tugging to the experts, none of whom got any of this right.
My little corner of the market, junior resource companies, were largely unaffected by the main market gyrations. I suspect in large part because the junior resource market has been so beaten up over the last few years that all the downside had been priced in.
The fall and rise of precious metals prices amidst the market turmoil has even given a little bounce to Banyan (BYN.V) and Bayhorse (BHS.V). BYN hit a 9 month high on its road to recovery from the Victoria Gold disaster.
Banyan is worth a look as it heads into its drilling season. Tara Christie and her team have steadily piled up the inferred gold ounces at the company’s AurMac project in Yukon. 7 million pit-constrained ounces “at a cut-off grade of 0.30 g/t gold for all deposits, using a US$/CAN$ exchange rate of 0.75 and constrained within an open pit shell optimized with the Lerchs-Grossman algorithm to constrain the Mineral Resources with the following estimated parameters: gold price of US$1,800/ounce”.
As I often point out, smart exploration companies - or, more accurately, their 3rd party consultants - are very, very conservative when it comes to doing resource calculations. Using $1800 an ounce to determine cut-off grade gives Banyan a lot of headroom with gold over $3000. A lot. A couple of years ago, Tara pointed out to me that Banyan’s exploration cost was running around $5.00 per ounce in the ground and there is no reason to think that cost has gone up much.
This year’s drilling is aimed at extending mineralized domains in Airstrip and Powerline, two sub-domains at AurMac. While a drill program is never certain, there is no reason to believe that the mineralization already found in the two sub-domains will not extend into previously undrilled ground. In fact, “new geophysical surveys from 2024 in combination with soil sampling anomalies” strongly suggest that this year’s drilling will increase Banyan’s inferred gold resource. The question is by how much. 7 million ounces is already impressive and attractive, but 10 million would be a headline number.
My pal Graeme O’Neill at Bayhorse Silver, like many junior exploration CEOs, is faced with the dilemma of too much geology and too little money. The most recent, 1000 foot, exploration hole was hugely significant geologically and allowed very important downhole IP to be conducted in concert with surface IP. But in this market, “information” holes, regardless of geological significance, don’t move the needle.
What might move that needle is a short hole into one of the near surface blobs the IP disclosed. “Work is under way preparing to drill the first IP drill target, that lies 18 m (60 ft) under the Bayhorse Mine access road. Drilling will commence from the lower adit portal, that is 25 m (82 ft) from, and 3 m (10 ft) above the IP target. The IP target, 36m (118 ft) across, is estimated to be similar in size to the historic Sunshine and Junction stopes, where approximately 25,000 tons of direct shipping grade material was mined from each and shipped by rail to the historic Tacoma smelter.” (link) The Bayhorse Mine has historically and in recent mining, found blocks of very high grade - 20 to 200 ounces per ton - silver. 200 feet of drilling and, perhaps, 40 feet of “blob” core assayed and released into a rising silver market? It might well cause the BHS shares to be rerated and the company owns the drill capable of just that sort of hole.
Plus, BHS has an entire copper porphyry project, as well as the potential for more Bayhorse style silver, on the other side of the Snake River, in mining friendly Idaho. Barrick (ABX.T) and NevGold (NAU.V) tucked right up next to the BHS Idaho claims. Ivanhoe, BHI, Rio Tinto are all over the Izee/Olds Ferry terrane sutures and BHS controls one of the most prospective. I suspect the first big company willing to option or JV Pegasus with a few million in the BHS treasury will win. Worth watching.
A week after the tariff trauma and general market swoon, the juniors are still afloat. What may have changed is an increased flow of funds into the sector. Or, at least the possibility that larger companies, institutions and high net worth individuals are taking a look at the long-neglected junior resource sector. If gold and silver resume their ascents, more attention will be paid to companies like Banyan with a lot of gold in the ground and Bayhorse ready to resume mining silver.
(Disclaimer: I hold positions in both Banyan and Bayhorse. Graeme O’Neill is a friend. this is not investment advice. Do your own due diligence. Call the CEO.)