The Art of the News Release
Material facts must be disclosed in a timely manner. Those are the rules.
Great results, dusters, if a company has results it is legally obligated to news release them to the market. But what is “material”? It is a question. So is “what is timely”?
Lawyers delight in such questions, ordinary investors, not so much. Here’s the basic problem, management will almost always immediately release good news but may hang back from releasing neutral or negative news. Human nature and all. Which leads to an equally human investor response, “No news is bad news.”
However, the fact is that with junior resource companies, “no news” may be the result of a whole set of variables. Drills break down, ground is very challenging, drill holes go into bad rock, hit faults, hit water, core takes a long time to process, labs get backed up, assays take longer than expected, the geologists disagree as to what a particular hole or group of holes actually mean. It is an endless list any item of which can cause delay.
Then there is the nature of exploration mineral drilling itself. If you are drilling for oil/gas you either hit it or you don’t. If you are drilling for a mineral deposit a single hole is somewhat meaningless unless it hits bonanza grades in which case it might be misleading. To really define a deposit you need a few holes to see if that bonanza grade is continuous or if it was just a lucky fluke. Release a single great hole and you are potentially misleading the market.
An old exploration geologist once told a CEO friend of mine that the reason they were not drilling where the CEO thought they should was “I don’t do marketing holes.”
All of which might appear a bit “meta”. What is an investor to make of it?
It is certainly a question on the minds of BIG.V investors. The drills have been turning at Mt. Cuddy in Idaho since April and there has not been a news release with actual results since back in February and those were fairly shallow “silver/lead” holes not the big kahuna of the copper porphyry. What has emerged is the CEO calling the ground “challenging” and a number of reported drilling issues. In August the company announced it had permission to drill new targets to the Eastern end of the property.
Is this an example of “no news is bad news”? To read the CEO.CA BIG board you could be forgiven for thinking so. But it is more likely to be some or all of the variables listed above plus the complicating factor of having a company the size of Barrick in the picture. Realistically, Barrick is more interested in a comprehensive picture than a snapshot to goose the share price. Barrick thinks in decades rather than drilling seasons. It liked what it saw enough to invest 23 million dollars and go on a staking rampage which brought it right up to Bayhorse Silver’s ground 75 kilometers up the Snake River.
My own hunch is that the news drought has a lot to do with a need to report and analyse a fair number of holes, even holes which ended prematurely. BIG took off on the strength of single hole and promptly fell back when more holes were not as good. I suspect CEO Chris Paul would prefer not to set investors up for a similar disappointment. Which means gathering the results from a number of holes at a number of pierce points and telling the whole story so far. That takes time.
What should take much less time are a flurry of news releases from Bayhorse Silver (BHS.V). The sequence is pretty predictable: announce the close of all or the first tranche of the private placement, announce drill mobilization, announce the completion of the first hole from the underground drill station, possibly with some core pictures, then assay results from that first hole. That is, of course, if all goes to plan. 1000 foot diamond drill holes into largely undrill-tested rock can be a bit challenging.
The key thing for investors here is that the first and second holes will report relatively quickly and, in a odd sort of way, the actual assays will not matter that much. This is pure reconnaissance drilling. Now, obviously a long run of copper bearing rock would be welcome, but pockets of copper and maybe a bit of the gold the BHS geos speculate may be down there, would go a long way to confirming the Izee/Olds Ferry terrane hypothesis.
This is a binary situation: either there is a mineralized anomaly or there is not. If there is BHS will be rerated very quickly indeed. If nothing is found the BHS shares will trade about where they are now.
CEO Graeme O’Neill understands that. The news flow will be long on results and, I suspect, short on analysis. The VTEM anomaly is either mineralized or it is not. If it is more drilling to determine grades and structure will be called for. But the private placement to finance that drilling will be in the range of $0.25-$0.40.
Rumour has it that O’Neill himself is very likely to go to the Bayhorse mine once drilling has commenced. Graeme is usually there when something big will occur. It would not surprise me if pictures of “interesting” core, if any, were posted the BHS site. In any case, investors will know, one way or another, if the anomaly is mineralized well before the end of 2024.
A positive result from BHS underground drilling would be great news for current investors, but it will also be important to BIG and, ultimately Barrick and other large companies staking the Izee/Olds Ferry sutures. BIG got the ball rolling by hitting a blind copper porphyry. If BHS scores a similar hit with its Oregon side drilling, Dr. Conway’s hypothesis of a “regional magmatic episode” will have another bit of supporting evidence. Which would bode well for BIG and would make the anomalies found on the BHS Pegasus property on the Idaho side all the more enticing.
From an investment perspective, news from either BIG or BHS will move the shares. Positive results for BIG might take it back to Barrick’s buy-in price of $1.20 from its current $0.55, neutral or bad news could drop it back to $0.30.
BHS is trading at $0.04. A solid result, that is to say mineralization, from the first hole could easily take the shares over $0.20. A duster? Well, the shares might drop a little but they are already extremely cheap. The current BHS private placement at $0.04 for a share and a full warrant might be the right move even with the four month hold. Or, for $400, you can get 10,000 BHS shares at market.
(Disclaimer: Graeme O’Neill is a friend and I own shares in Bayhorse Silver and may purchase or sell at anytime. I also hold a small position in Hercules Metals. This is not investment advice. Do your own due diligence. Call the CEO.)