Banyan Gold: Beat the Summertime Doldrums
It has been a while since I posted to this substack. No point loading your inbox with filler.
The junior markets and the companies I follow have been dormant. Which is pretty typical for the April to July period, particularly for companies working in Canada. The end of winter is followed by spring break up during which much of the prime exploration territory in the north and far north unfreezes and turns into a muddy soup. Which means that equipment cannot be moved where it needs to go. Often it is mid to late May before drilling can get underway. Then core has to be transported to the lab for assay. Which often takes a while because the labs are short-staffed as a hangover from COVID. So, realistically, we’re lucky to get results by the beginning of August and, frankly, late August or early September is when we can realistically expect meaningful results.
Frustrating.
With the market in the doldrums the incentive to release news, especially good news, is minimal. Management has a fair bit of discretion as to the timing of press releases in the sense that they have to release material facts in a timely manner but they can wait for the assays from one more set of drill holes.
If there is a secret to winning the junior mining game it is to be cashed up and persistent. I wrote about Banyan Gold back in January and if there is one thing to know about Banyan (BYN.V), it is that its CEO, Tara Christie is as persistent as they come. At the start of 2023 BYN had 19 million dollars in the bank. So, cashed up.
When I wrote in January, Banyan had a declared inferred gold resource of 4 million ounces. July 7 Banyan released a 43-101 Technical Report on the AurMac property with a revised Mineral Resource Estimate of 6.2 million ounces. The Banyan resource has grown by 50%. The share price has shrunk by a little over 40%. Go figure.
Four drills are working to complete the 2023 25,000-meter Phase 1 drill program. BYN now has an on-site preparation laboratory to, ideally, reduce assay turnaround times. Drilling on the AurMac property tends to be relatively shallow, 200 meters at most, so 25,000 meters of drilling will likely yield over 100 actual drill holes. Given that only about 5% of the property has been explored there are plenty of prospective opportunities.
The plan at AurMac is to build out sufficient reserves to make a large-scale, open pit, heap leachable operation feasible notwithstanding the relatively low grade of the resource. It’s a solid plan but it does not create much investor excitement. A year ago BYN’s share price was hovering around $0.45-$0.55, now it is trading around $0.35. Better than a lot of juniors, but not all that thrilling.
Which, while it matters a bit to me as a shareholder, is not the investment thesis here at all. Tara is working to scale and derisk a huge project. Once BYN has cracked the 7 million ounce mark - which I fully expect by late Fall - Banyan will be ripe for takeover by a larger company.
Right now Banyan has a market cap of 100 million dollars with the gold price at its traditional seasonal low of just over $1900. Books have been written on the seasonality of the price of gold and, if any of them are right, gold should be back over $2000 by the time Banyan starts delivering drill results in the Fall.
Add to that the fact AurMac has a road running right through it, a powerline running right over it and is adjacent to Victoria Gold’s Eagle Mine and Hecla’s Keno Hill silver operation, with excellent, preliminary metallurgy, and you are in the sweet spot for takeover.
Putting money into the junior market in mid-summer might look crazy; but buying a well-led, well-funded, 6 million plus gold ounce company trading well below analyst’s price targets and it might be time to pull the trigger.
[Disclaimer: This is not investment advice. I am not an investment professional. I am down about 30% at the moment. I will write about companies that I hold. I will disclose any holdings. Do your own due diligence. Do it hard. Call the CEO.
I currently hold shares in BYN.V and while I have no plans to sell anytime soon I reserve the right to take profits as they arise.]
No way. Just some days ago i thought about your substack and the recent silence. I was actually contenplating writing you an email, asking if you are alright, considering the market has been a dumpsterfire so far.