New 2+ Year High For Galway Metals (GWM, TSX-V)

Mar 12

Do you want momentum?

Do you want to buy high and then sell higher?

If the answer is “yes”, Galway Metals (GWM, TSX) is really becoming a stock for you.

GWM has an attractive orderly-looking chart – the stock has dependably traded between 30 and 40 cents.

I’d say the “waiting game” is over, or nearly over.  Therefore the timing for buying or adding to your existing GWM position is nearly perfect.  Following a year’s worth of consolidation, which had the stock trading sideways between 30 and 40 cents, GWM has broken out.

Said differently, GWM is in the process of breaking out, but not in spectacular “shock and awe” fashion.  Not yet anyway, and that’s good news for buyers.

As we can easily see in the chart, trading activity increased substantially in the month of February (rising volume increases the likelihood that this price breakout is for real).  GWM tried to break 40 cents resistance on Feb 25 after announcing 10.6 g/t Au over 47 m, but it was promptly thrown back, all the way back, to support at 30 cents.  Then GWM bounced off 30 like a super ball to a new multi-year high of 43.5 cents!

Nasty little shakeout before the breakout!  

With the 40-cent hurdle (resistance) cleared rather convincingly GWM should continue working its way higher toward 50 then 60 cents – price points that serve as “new” resistance looking forward.

Management/Friends/Family, led by CEO Robert Hinchcliffe with 13.9 million shares, own 30% of Galway’s outstanding equity.

You may recall that Hinchcliffe’s ongoing open market purchases, which never really slowed over an 18+ month period, were what tipped us off on GWM to begin with.  I’ve even expressed concern for Hinchcliffe’s health at times because his actions indicated he might be addicted to buying his own stock.  Lately it’s becoming more clear that this is probably just a “healthy addiction”.

Michael Sutton, who was previously Chief Geologist for Kirkland Lake (KL, TSX, NYSE), is another reason we’ve stuck with GWM.  Sutton and Canada Cobalt’s (CCW, TSX-V) High-Grade Halliday are 2 examples of talent that’s come out of Kirkland.  Junior explorers who can attract top talent from Kirkland seem to have a habit of making discoveries and outperforming in the market.

For those of you who aren’t up to speed on Galway or just want a little reminder, please read some of our “greatest hits” on GWM below (starting with the newest stuff)…

Re: Hole 87 which assayed 10.6 g/t Au over 47 m

Hinchcliffe said, “The wide and high-grade intersection in hole 87 is among the best in the company’s history.  Its location between two other wide and high grade intersects bodes very well for the Clarence Stream resource update scheduled for the 3rd quarter of 2020, both from the perspective of any pit-constrained or underground resource.  Hole 93 is significant because it continues the process of closing the gap between the Richard and Jubilee Zones, just as the previous press release of 2 weeks ago closed the gap between the GMZ and Richard Zones.  Of note is that NONE of the 36,377 m of drilling that Galway has completed in the 2.5-km-long mineralized system that hosts the George Murphy, Richard and Jubilee Zones are in the existing Clarence Stream resource, which was last updated 2.5 years ago on September 262017.  That resource includes the South and North Zones only.  All 5 deposits remain open for expansion in all directions.  Galway’s strong drill results demonstrate that Clarence Stream is an emerging new Gold district in North America.”

To reiterate – NONE of what you’re seeing in the image is included in the existing Clarence Stream resource estimate.

With each round of drill results and each news release it’s becoming glaringly obvious that Clarence Stream is in fact a new Gold district in eastern Canada.  Their next resource estimate should show they’ve got 1+ million ounces of open-pit material grading nearly 2 g/t.  Then if you start extrapolating out over the 65 km of strike, which is littered with high-grade Gold boulders in soil anomalies, a high percentage of which lead to drilling discoveries, I think it’s easy to see Clarence Stream will keep growing (Galway is like a mini-Marathon – MOZ, TSX – at this point).

Galway captures the BIG picture potential of what Clarence Stream could be in that 1 image.  It’s a similar geologic setting to Marathon’s Valentine Lake Project, and Galway’s got twice the strike length (65 km).

Along the Sawyer Brook fault system, soil anomalies are proving to be great pathfinders for new discoveries.  As crazy as it might sound (crazy in a good way!), almost every soil anomaly drilled by Galway has intersected Gold thus far.

In other words, Clarence Stream has been a fun and dare I say “predictable” place to explore.  All you need to do is find an area where Gold has leached into the soil, then drill.  Grab samples also provide a good clue, and have assayed +1 ounce Gold atop some of these soil anomalies.  This process of drilling soil anomalies has helped Galway identify 5 zones across a 5 km strike length (within a 65 km structure called the Sawyer Brook fault system).

Location is a huge plus!  The market’s expressed a strong interest for Gold deposits located in eastern Canada – look no further than price action in MOZ and St. Barbara’s $800 million takeover of Atlantic.

At an estimated 1.96 g/t Gold, grades at Clarence Stream are quite high relative to open-pit mines worldwide.  Galway will be publishing a new resource estimate this year (they’re guiding for Q3), and that ought to take them well over the 1 million ounce mark.

And don’t forget Galway also owns 100% of a Zinc and Gold-rich VMS project in Quebec called Estrades.

Estrades is a wildcard for an unexpected new discovery and/or non-dilutive financing.  Hinchcliffe will look to monetize Estrades when Zinc prices improve.

A Zinc equivalent grade of approximately 21% (measured and indicated resource) ranks Estrades as one of the Top 3 highest grade Zinc projects in North America.