Dog Days of Summer
High summer is upon us. Junior explorers are drilling and, with luck, results will start flowing around the end of July.
Hercules now Metals rather than Silver (BIG.V) has had drills turning at its Mt. Cuddy project in Idaho since late April. There is much speculation about the holes drilled so far with the company stating in a June 20 Press Release, “Drilling has encountered variable porphyry alteration and mineralization with assays expected by mid summer.” Something to look forward to in the next couple of weeks.
BIG encountered “challenging drilling conditions” early on and, as of June 20, had only drilled 3000 meters of its planned 20,000 meter program. These are long holes and challenging drill conditions are to be expected. In one hole the drill hit “strong artesian water flow” likely due to Spring run off conditions. BIG will go back when the water flow has abated in the Fall.
The challenge for BIG’s share price is to have at least one hole which matches the grade and geology of its “discovery hole” reported back in October of last year. If BIG hits that its shares should pop back up over $1.00. If BIG doesn’t meet or beat that first big hole I expect the shares to trade in the $0.60-0.80 range for a while. Of course, if the company is lucky and exceeds the October result or has several solid holes, the betting line moves up past the Barrick entry price of $1.10. Perhaps by a lot.
Canadian Critical Minerals (CCMI.V) reported its very encouraging June results in a July 10 Press Release:
“the Company trucked 694 wet metric tonnes ("wmt") of mineralized material to New Afton and the Company received a provisional payment of approximately USD$246,000 for the June 2024 shipments versus approximately USD$103,000 for May 2024 shipments. The mineralized material sent to New Afton graded 4.67% Cu, 0.89 g/t Au and 39.5 g/t Ag.”
I am scheduled to chat with CCMI CEO Ian Berzins later this week. The company’s strategy of using an ore sorter rented from Bayhorse Silver (BHS.V) to “high grade” the material from its large stockpile is pretty clearly paying off. In an interview with my pal and CEO of Kermode Resources (KLM.V) Peter Bell, Berzins stated,
“We're learning how to optimize that machine (the ore sorter .ed) because we're about 650 kilometers away from mine to mine. There's a long haul distance for us to be sending material over. We're trying to work the economics so that both New Gold and ourselves also find it profitable.”
That is a long drive. Crucial to CCMI’s strategy is the fact it has a production facility in place at the Bull River mine. The company is in the process of re-permitting that facility and, when it has the permit, it will be able to process its own rock. Which means that it can use the ore sorter on a setting to take only the higher grade rock while rejecting lower grade but mineralized material for subsequent processing on site.
I wrote in June that “Canadian Critical Minerals is a Producer”. But it is still being valued as if it was a junior exploration company with a patch of moose pasture. In mid-summer it is tough for a junior to gain any market attention but, when the market gets off the beach, CCMI is likely to be re-rated based on its existing stockpile, infrastructure, cash flow and carried interest in a very large copper deposit in Ontario.
Meanwhile, in Yukon, we are beginning to get hard numbers and actual contamination data from the Victoria Gold (VGCX.T) heap failure. On Friday, the company put out the sort of press release that only a mining engineer could write,
“Since the start of production, approximately 38.9 million tonnes of ore has been stacked on the HLF. Based on an independent survey of the HLF, the Company estimates that approximately 4 million tonnes of ore, representing about 10% of the total ore tonnes within the HLF, moved during the HLF incident. Of this 4 million tonnes, the Company estimates that approximately half, or 2 million tonnes of ore, representing about 5% of the total ore tonnes within the HLF, moved beyond the HLF embankment. The Company has developed a plan to stabilize the HLF which is under review by an independent third party.”
I am not a mining engineer but this sounds less bad than the initial reports. As well,
“Final results received subsequent to the Company’s News Release dated July 4, 2024, showed one trace detection of cyanide in one of the downstream sample results from Haggart Creek collected on July 2, with the sample measuring 5.7 parts per billion total CN. Prior to July 2, and subsequently on July 3 and July 4, samples collected at this sample location did not detect any cyanide.”
My sense is that while the incident killed the share price there is no reason to believe that it will kill the company. Coming up with a recovery plan and figuring out how to finance it will take every ounce of the Victoria Gold team’s experience and skill. However, the absence of cyanide contamination indicates that the actual containment design worked very well indeed.
Frankly, had the containment not worked, the political and First Nations feasibility of the Eagle Gold Mine would have collapsed. But now there is a good chance that the 500 jobs and significant revenues generated by Victoria will not be lost.
There has been much chin tugging about the future of mining in Yukon as a whole, and the viability of Banyan Gold (BYN.V) a few kilometres down the road, in particular. The lack of contamination at Eagle is likely to take a lot of the air out of those worries.
BYN crashed hard on the Victoria news. $0.33 to $0.20 and it has stayed around 20-22 cents. A lot of that was the worry that Yukon would prohibit mining or heap leaches and that worry is receding. Tara Christie and her team raised $14.3 million in a private placement and are well-positioned to continue drilling the Banyan ground. With a Mineral Resource Estimate of 7 million ounces of gold, Banyan is looking to take its resource close to 10 million ounces in the next couple of years.
Banyan is on sale at anything under $0.25 and will, gradually, shake off the negative effects of the Eagle Mine incident.
(Disclaimer: I hold shares in Banyan Gold, Victoria Gold, Canadian Critical Minerals and Hercules Metals. I may buy or sell at anytime. This is not investment advice. Do your own due diligence, call the CEO but not John McConnell, he’s a bit busy.)