66 Grams Gold Over 25 Metres?

Feb 14

66 Grams Gold Over 25 Metres?

Holy crap!

Imagine what a tiny little Exploreco. would do if they announced a new discovery like 66 g/t Au over 25 m.  The stock would absolutely explode, in most cases.  I’d guess we’d be talking market caps in the range of $30 million to $50 million, easily – maybe even a lot more, like $300 million.

It’s hard to predict.  Every situation is different, but I think it’s safe to assume the little known Exploreco. that just hit 66 g/t Gold over 25 m would have a market cap of more than $3 million, don’t you?

Nobody actually hit 66 g/t over 25 m this past week, but that was a discovery hole at what’s called the “007 Zone” and it was made by San Gold last decade.  A little known Exploreco. called 1911 Gold (AUMB, TSX-V) now owns the property that hosts the 007 Zone plus 80 km of crustal scale fault.

The entire Rice Lake belt has been consolidated for the first time ever by 1 company, 1911 Gold.

I think that’s a pretty exciting thing for shareholders of AUMB (market cap $13 million, with $9.6 million cash in the bank).  Especially considering the price, approximately $3 million ex-cash.

Industry-wide, investors and miners mare starting to talk about how it’s rare to find large land packages in well established mining camps (within the context of M&A).  Owning an entire 80 km greenstone belt within an established mining camp in Canada would be like out of the question.  That’d be a dream, probably not gonna happen in real life (not without spending BIG BUCKS).

However, the opportunity to own an entire greenstone belt, the Rice Lake belt, does exist via AUMB.  And as luck would have it the company is cashed up! Thanks to 5,600 ounces of production from Gold tailings (profitable waste left behind by San Gold) this little Exploreco. 1911 actually increased its cash position during 2019 and ended the year with $9.6 million in bank.

I struggle to understand why 1911’s odds of making a new discovery wouldn’t be as good or better than any other Exploreco.  Except compared to hundreds of others 1911 has a lower market cap, a larger drill program (10,000+ m underway), a stronger balance sheet ($9.6 million cash), and less shares outstanding.

Oh, by the way, that little Exploreco. 1911 also owns a fully-permitted and paid for 1,200 tpd mill.

This is way too much asset for a $3 million ex-cash valuation.  AUMB is a total steal of a deal right now under 40-cents.

I added to my AUMB position again in recent days, and here’s why:

“Go Deep” has been a theme of ours lately and I foresee the go deep theme carrying on throughout the 2020’s and beyond.  New interpretations of geology, new technology, and better drilling equipment is leading to new high-grade discoveries at increasingly deeper depths (and also relatively shallow depths near historic mines) – is that not obvious at this point?

1911’s sitting on an existing mine with an estimated 1 million ounces but they have no intention of mining that underground material in 2020, which is exactly the right strategy.  Their strategy is to use new technology along with Dr. Scott Anderson’s new geological interpretations to make a new discovery away from what’s known.

Without doubt, there’s more Gold to be discovered at greater depths within the existing mine.  And just outside of it.  That 66 g/t over 25 m within the 007 zone was at a depth of like 260 m, not very deep.  Then you’ve got 80 km of a crustal scale fault system that’s only been looked at by prospectors scratching the surface.

The price is right on AUMB and I don’t think their odds of making a new discovery are worse than anyone else’s.