Evergold Corp - Compelling Junior Explorecos Mini-Series
Part 1
Part 1
Starting a mini-series on some
compelling junior exploration plays for the upcoming summer season. I've found
a number of excellent opportunities (in my view) which I'll detail in the
article below. First, I'd like to start off with the fact that I am long these
companies highlighted in these articles, and I'm not paid by anyone to write
about them or compensated in any way for them.
I firmly believe we're in a bull
market in the gold/silver market. The governments around the world have started
the printing presses and they're turning hot hot hot. Gold majors and intermediate
producers have done very well thus far and are hitting multi-year highs.
In previous bull markets, the
juniors and exploration companies don't typically benefit until later stages of
the runs. My thoughts are we're in maybe the second inning of a long bull
market to come.
Overview
Starting off with Evergold Corp
- CEO is Kevin Keough, who previously ran GTGold (Saddle North and South
in NW BC, Golden Triangle) and PCGold (Pickle Crow deposit in Ontario)
Lifted from Evergold's corporate
presentation
(https://www.evergoldcorp.ca/_resources/presentations/corporate-presentation.pdf)
the photos are stunning views of Evergold's Snoball property in the
Golden Triangle, in Northwest British Columbia, in Canada.
The company IPO'ed in 2019 after
raising $3.4 million in October. They released 2 43-101's on their two
flagships (Snoball and Golden Lion) but it seems there were some
delays, so they weren't able to drill last year. The company however was able
to put some drill pads on their Snoball target shown below and they're
ready to drill in June of this year.
Golden Lion has additional work lined up in May/June this year and I
believe the plan is to drill sometime in July to refine their drill targets.
In my opinion, both Snoball and
Golden Lion appear to be exceptional exploration targets and a lot of
upside potential. Snoball has never been drilled from Pyramid Peak or
from the ridges pictured below. Golden Lion has had some historical
holes in some of its prospects, but many of its targets are fresh/never drilled
and new theories are in place (and to be tested) for the structure/trends of
these occurances.
The company currently has $2 million
in cash, and according to their corporate presentation they have a Phase 1
drilling program of approximately 2400m on both Snoball + Golden Lion, each.
There's a solid plan to increase
meters drilled if they have early success (which means a raise of some sort) - "Note:
Contingent upon success, the exploration program may expand. Season can
run as late as mid October" per the corporate presentation. Similarly
to most golden triangle exploration companies, the season is relatively short,
from June to October (~4-5 months), so it's good to see a plan is in place to
maximize the upcoming drill program.
Fully diluted, the company only has 42.8
million shares outstanding, with all of its warrants and options being
in-the money. My calculations have them at an average price of $0.22, and if
they were all to be exercised would bring in another $3.35 million in cash.
As of 4/28/2020 - the enterprise
value of the company (fully diluted shares x share price minus current cash
minus cash if warrants/options exercised, currently in the money) is $15.6
million.
Rationale on why I own Evergold
Corp:
1. Proven management
The CEO, Kevin Keough has had
previous successes with PCGold and GTGold.
Top notch geology team with the Snoball/Golden Lion properties coming from Charlie Grieg (very well known in the Golden Triangle).
Top notch geology team with the Snoball/Golden Lion properties coming from Charlie Grieg (very well known in the Golden Triangle).
2. Clean share structure
Low share count, 27.6 million shares
basic, 42.8 million fully diluted.
No cheap shares, IPO was done at
$0.20
No 'unfair' cheap warrants or
options
From conversations with the CEO, a
good base of shareholders (several hundred)
3. Fully funded drill program
For phase 1 drilling on both
flagship properties (Snoball + Golden Lion)
4. Large insider ownership
26.3% ownership
5. Ready to drill
Drilling to commence in perhaps 7 to
8 weeks (end of June)
Pads built in the fall of 2019
6. Heavy lifting completed
Multi-year field work completed.
Work was done in 2016-2019.
High grade gold samples in soil +
rock samples
2x 43-101 Technical Reports are
available for these properties
We get to reap the potential rewards
of drilling (and their results) shortly without waiting multiple seasons for
rock samples/surveys to be completed!
7. Pre-discovery; low-market cap
In my opinion, one of the highest
risk:reward ratios you can get. There's a chance for two discoveries here
across Snoball and Golden Lion.
8. Geology
All of the other stuff doesn't
really matter if you don't have solid targets. Good thing here is I think the
company has two exceptional properties, with an exceptional plan to execute
this coming summer, with the data/geology to backup what could be some very
interesting finds.
8a. Snoball
Probably one of the most stunning
views from the top of this mountain, shortly to be drilled; "At
Snoball, where key drill pads are already in place, field work will commence
about mid June, also subject to snow conditions, to be followed shortly
thereafter by drilling."
A. Drill pad is built on top of a
large area of good grading material (similar to GT's Saddle discoveries)
KK: "At Snoball, the 'Pyramid Peak' pad has been special-built to allow for drilling 360 degrees - i.e. we don't have to move the drill other than to rotate it, and if the early holes look good and Pyramid Peak is carrying the goods in whole or in part, we could in theory systematically drill off a rather large volume of rock (and potential resource) from the one pad. This would be very unusual but is a benefit of the location - holes at minus 55, minus 70, vertical, then rotate and repeat the process and so on."
KK: "At Snoball, the 'Pyramid Peak' pad has been special-built to allow for drilling 360 degrees - i.e. we don't have to move the drill other than to rotate it, and if the early holes look good and Pyramid Peak is carrying the goods in whole or in part, we could in theory systematically drill off a rather large volume of rock (and potential resource) from the one pad. This would be very unusual but is a benefit of the location - holes at minus 55, minus 70, vertical, then rotate and repeat the process and so on."
B. Compelling gold/silver rock
samples (it's noted rock samples are in their nature selective and not
necessarily representative of the mineralzation). However, I do take note of
them, and it is certainly high grade.
C.High Grade Vein potential - apart
from Pyramid Peak (the ones on the front cover of their pres), there's also
another pad 1KM away, which has some stunning gold samples. They'll drill here
as well to see what they may find.
8b. Golden Lion
Golden Lion is not quite in the
Golden Triangle, but more to the east. Nonetheless, the targets look very
compelling. There is some additional work to be done, per their April 21 news
release "Field work at Golden Lion is scheduled to commence in late May
with baseline environmental work, to be followed about mid June, subject to
snow conditions, by geophysical, geochemical and geological programs to refine
drill targets. Drilling will then start in the latter half of July"
KK: " Golden Lion and the 'Toodoggone Trend' more generally, are in fact in precisely the same 'Stikine Terrane' rocks as the 'Golden Triangle' proper. The Stikine Terrane arches north/northeast up from KSM and Brucejack over to the east, passing through GT Gold and Newcrest's Saddle and Red Chris deposits, then dipping down and running south/southeast as far south as Centerra's Kemess mine and Mt. Milligan and further south even. It's just that to date that area been about as remote as it's possible to be in B.C., given that only a single gravel forestry road services it (it reaches to Benchmark's Lawyers property south of Golden Lion).
The Toodoggone has been known for two things: smaller very high grade gold-silver mines such as the historical Cheni, Baker, and Shasta etc., and giant tonnage lower grade "typical B.C.-style" copper porphyry mines of the Kemess and Mt. Milligan types. Our (Golden Lion) part of it is virtually unexplored - and there's not a lot of that geological real estate left in the province"
KK: " Golden Lion and the 'Toodoggone Trend' more generally, are in fact in precisely the same 'Stikine Terrane' rocks as the 'Golden Triangle' proper. The Stikine Terrane arches north/northeast up from KSM and Brucejack over to the east, passing through GT Gold and Newcrest's Saddle and Red Chris deposits, then dipping down and running south/southeast as far south as Centerra's Kemess mine and Mt. Milligan and further south even. It's just that to date that area been about as remote as it's possible to be in B.C., given that only a single gravel forestry road services it (it reaches to Benchmark's Lawyers property south of Golden Lion).
The Toodoggone has been known for two things: smaller very high grade gold-silver mines such as the historical Cheni, Baker, and Shasta etc., and giant tonnage lower grade "typical B.C.-style" copper porphyry mines of the Kemess and Mt. Milligan types. Our (Golden Lion) part of it is virtually unexplored - and there's not a lot of that geological real estate left in the province"
A. GL1- Eye Popping Sample
Grades - 13,406g/t silver found in 2019. Additional soil samples show a
800x100m gold anomaly which is undrilled, to extend what was previously drilled
(east side)
KK: "Only the GL1 target - the historical zone - not GL1 North Ridge or any of the other - ever had any drilling - so only one of the numerous, presumably related, targets have been 'touched.' We were attracted to the historical GL1 target and expanded our sampling beyond that zone, which is where all the other targets emerged from"
KK: "Only the GL1 target - the historical zone - not GL1 North Ridge or any of the other - ever had any drilling - so only one of the numerous, presumably related, targets have been 'touched.' We were attracted to the historical GL1 target and expanded our sampling beyond that zone, which is where all the other targets emerged from"
B. GL1- New Ridge Target - 'Exceptionally
strong gold-in-soil sampling' results. The slide below tells the story by
itself. The company has planned a 500meter hole in this area to start.
C. GL2 - More high grade, several
styles of mineralization over 1KM^2. - all outcropping from the surface.
Something is definitely there!
D. GL2 East Ridge Target - also
outcrops, can be seen at surface. The presentation basically says, they'll hit
it. Well - it's at surface, and they've sampled it, so why not?
KK: "GL2 Ridge East porphyry target shows promise of being a so-called "rich" gold-silver-copper porphyry of the Red Chris and KSM styles found on the northern and western parts of the Stikine Terrane. The rocks are the same age as KSM, and we have the Hazelton-Stuhini contact right there at GL1, GL2, GL3... (BCGS reckons that many of the deposits in the Golden Triangle proper are localized proximal to it). And, we've also clearly got very high grade gold and silver discovery / resource potential. We just need to get the drills turning."
KK: "GL2 Ridge East porphyry target shows promise of being a so-called "rich" gold-silver-copper porphyry of the Red Chris and KSM styles found on the northern and western parts of the Stikine Terrane. The rocks are the same age as KSM, and we have the Hazelton-Stuhini contact right there at GL1, GL2, GL3... (BCGS reckons that many of the deposits in the Golden Triangle proper are localized proximal to it). And, we've also clearly got very high grade gold and silver discovery / resource potential. We just need to get the drills turning."
E. GL3 Target - Lifted straight from their presentation: "Strong, multi-element anomaly, Au-Ag-Pb-Zn predominant. Another straight-forward drill target"
Corporate Presentation
I encourage you to read the
corporate presentation for yourself, it's laid out very well and tells the
story very well, especially on the targets and property overview.
https://www.evergoldcorp.ca/_resources/presentations/corporate-presentation.pdf
Closing
In short, Evergold is one of the
most compelling stories I've found in this space in quite some time, and has
all its ducks lined up. Most importantly, has 2, in my view, exceptional discovery delivering potential properties Snoball and Golden Lion.
Work has already started on Golden Lion to repair bridges for camp access, and things will likely heat up when drilling commences and speculation builds as it typically does in the Golden Triangle summer drilling season.
Snoball is ready to go as soon as snow clears from Pyramid Peak. And Golden Lion following shortly thereafter.
Work has already started on Golden Lion to repair bridges for camp access, and things will likely heat up when drilling commences and speculation builds as it typically does in the Golden Triangle summer drilling season.
Snoball is ready to go as soon as snow clears from Pyramid Peak. And Golden Lion following shortly thereafter.
The stock has had quite a bump to
around $0.50, and perhaps I would have looked better if I wrote this article
back a few weeks ago when the stock was around $0.30; but even at these prices
I think there's potentially a lot of upside, if the company makes a discovery.
The current valuation seems reasonable for me.
As a reminder; junior exploration is
very risky - I remind you to read the disclaimer once more.
Hope you enjoyed the article -
please let me know if you have any feedback/comments. My contact information is
above.
Disclaimer:
The author is not a registered
investment advisor, currently has a long position in this stock. The author has
not been paid by anyone to write this article. All facts are to be checked by
the reader. For more information go to https://www.evergoldcorp.ca/ and read
the company’s profile and official documents on www.sedar.com,
also for important risk disclosures. This article is provided for
information purposes only, and is not intended to be investment advice of
any kind, and all readers are encouraged to do their own due diligence, and
talk to their own licensed investment advisors prior to making any investment
decisions.
*Edit 4/29/2020: Kevin has made some additional clarifications to some of the ideas presented in this article and are denoted with 'KK'
*Edit 4/29/2020: Kevin has made some additional clarifications to some of the ideas presented in this article and are denoted with 'KK'