Northstar Gold Corp - Compelling Junior Explorecos Mini-Series [CSE:NSG]
This
is the third segment on my mini-series on several compelling junior
exploration plays. Unlike Zephyr Minerals and Evergold which I've previously written about - Northstar can drill year-round and is not a summer drill-play.
First, full disclosure, 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 believe we are currently 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 very long bull
market to come.
Northstar has come across to me as being a compelling story and I have bought this stock on the open market.
Overview
Northstar Gold Corp is a relatively new CSE listed company which is focused on the exploration, development of exploration properties in Ontario. It's flagship property is the Miller Gold Property, located 18km SE of Kirkland Lake, Ontario.
The Kirkland Lake camp is no stranger to gold mineralization with over 24 million ounces of gold produced across 7 mines. Kirkland Lake Gold currently has one of the highest (if not the highest) grade mine operating in Canada - the Macassa Mine. It produced 241,900oz of gold in 2019, includes a reserve grade of 21.9g/t gold and has produced over 5,000,000oz of gold as of 2018.
From the company's corporate presentation - the Miller Gold Property is a Macassa / Sigma / Lamaque Lookalike - and that would have very good consequences if proven. More on this further down in the article.
Northstar began trading on the CSE on January 2, 2020, but the Miller Gold Property has been explored for many years, with various holders and operators over the years. However, it has never properly been explored, and never at depth. We know mineralization in this area goes quite deep.
The Miller Gold property currently has two potential resources - which the company plans to put out an updated 43-101 by Q1 2021.
1. Near the Allied Syenite target area - it has a non-43-101 historical resource of 0.73Mt or 270,000oz at 11g/t gold (1987)
- 2012-2016 drilling done by Northstar as a private company include:
40.5g/t Au over 1m (Allied Syenite)
14.1g/t Au over 3m (Allied Syenite)
1.04g/t Au over 97.5m (Allied Syenite)
2. Planet Syenite area - an exploration target of 3-5Mt of 1-3g/t Au containing 100k-500k oz of gold.
- Previous drilling includes intersections of
6.32g/t Au over 12.2m (Planet Syenite) - Historical
0.57g/t Au over 147m (Planet Syenite) - 2012-2016
Current Situation/Update
The company has assays pending on 13 holes it drilled - before COVID-19 shutdown camp. They are expecting to restart in the near future as conditions allow, including commencement of 3D IP, grav surveys for Phase 2 drilling.
There have been delays - understandably so - due to COVID-19. Folks had to leave camp, and only partial cores were sent to the labs in mid-April. According to a video update from the CEO, Brian Fowler, around early-May the rest of the cores were on the way to the labs to be assayed. He had previously stated that he would be releasing those assays by the end of May.
I have been in touch with the company, and have confirmed that as of yesterday, the company is still waiting for final assays - so I don't expect to see an update this week, but hopefully in the very near future as they get all the results and draft together a news release. I would also expect to hear about an update on the recommencement of drilling and the IP/grav work planned for the month of June and July.
There may be some nervous nellies selling, as they were expecting news this week. We saw today with the price down as much $0.06 to $0.43, but the price closed out strong at $0.50. I'll personally be taking the opportunity to add to my current position if we experience another downdraft in the next few days while we wait for assays to be released.
Don't forget that in their March 31, 2020 NR - the company stated "Northstar has intersected the No.1 Vein in all 12 holes and split core
samples from the first 6 drill holes have been submitted to AGAT
Laboratories for assay and metallic screening. Analytical results will
be batch reported when available." .
Reminder: this isn't in an unknown area or with unknown geology - in fact, it's a known area with striking geological similarities to Kirkland Lake's Macassa and high grade gold has been found and mined here before. Historical gold resources exist, and the current drilling was primarily done to expand on the current resource and step-out from the resource.
Northstar Quick Summary
Rationale on why I own Northstar Gold:
1. Proven Team
- Brian Fowler (President & CEO): 38 years as a mining executive, exploration manager and consulting geologist. Management/technical roles at Placer Dome for 13 years.
- Mike Sutton (Special Advisor): 30 years experience as an exploration geologist. Discovered the Macassa South Mine Complex, received Prospector of the Year for Ontario in 2006.
- George Pollock (VP Exploration) - 20 years in mineral exploration, was Northstar Gold's president for the past 10 years.
- And others with decades of industry experience Greg McKnight (VP Bus Development at Yamana), Charles Main (VP Finance/CFO at Yamana)
The company has gone out and done an excellent job of telling their story - Metal Investor Forum (watch their corp presentation on Youtube), Newsletter Writer coverage (Resource Maven), Twitter account and Youtube account where media is posted.
2. Clean share structure
Currently 38.8million shares outstanding, 8.2million warrants & options, with a fully diluted share count of 47 million shares. The company cleaned the share structure and did a reverse stock split prior to the IPO in January 2020.
3. Insider ownership
According to the corporate presentation - Management & Directors hold a combined 17% of fully diluted shares - a good sign to have skin in the game.
4. Funded drill program for 2020
With cash of $2 million, the company had planned:
- Phase 1: 3000meters drilling/20 holes + 3D IP/Mag/Grav Surveys
- Phase 2 :4000meters drilling/15 holes + Prep
- Phase 3 : TBD (likely more funding needed)
13 holes for approximately 2,300meters have been drilled thus far. I'd imagine the pause due to Covid and prudent Covid measures to protect crew may slightly increase costs, but not in a significant manner.
5. Drilling restarting + drillable throughout the year
Drilling was announced to be stopped April 14th - due to COVID restrictions.
However, the company had put out a mid/late-May target to restart drills - so work should be re-starting very shortly, it should be a constant news-provider throughout the year.
6. Proven gold - it's there - the question is how much
As previously stated - Northstar has proven there is gold in them rocks.
1. Near the Allied Syenite target area - it has a non-43-101 historical resource of 0.73Mt or 270,000oz at 11g/t gold (1987)
2. Planet Syenite area - an exploration target of 3-5Mt of 1-3g/t Au containing 100k-500k oz of gold
The question for me now, is how much more is there? How much gold has been missed - without a proper focus on the property?
The company has a summary of their property - and one interesting one was some of the insanely high grade samples from various parts of the property. Now, grab samples are selective in their nature, but they are very interesting to see nonetheless.
D vein: 1,444 g/t Au , 840 g/t Au, 764 g/t AU
No 1 vein: 274 g/t Au, 139 g/t Au, 119 g/t Au
And that leads into the geology.
7.
Geology, geology, geology - did I say geology?
Now,
a reminder, I'm not a geologist - so I'll let others speak to it for this
article.
The
CEO in this case...Brian Fowler puts it into perspective, that should be
understandable by most.
From Brian Fowler, the CEO of
Northstar (source: Proactive Investors article, link below):
But it’s the geology that excites
Northstar’s CEO the most. “The Miller Gold Property has very compelling
geological similarities to the Macassa SMC (South Mine Complex) and other
Kirkland Lake gold deposits,” explains Fowler. “Miller has the same style
of vertical and flat, high-grade gold-telluride veins that are a unique feature
of the Kirkland Lake District. Furthermore, gold mineralization on the Miller
Property is controlled by a ‘first order’ fault structure (the Catharine Fault)
that joins the regional Kirkland Larder Break and similar first order
structures within the Kirkland Gold District. These fault structures acted as
channels and traps for gold deposition.”
Fowler goes on to explain that it
has been determined that gold mineralization at Miller was emplaced at the same
time as that at the Kirkland Camp gold deposits, or some 2.6 billion years ago.
These similarities and geological features suggest Miller could be tapping the
same gold source as the Kirkland Gold District. The Macassa mine has been
in production since the 1930s and owner Kirkland Gold continues to find and
produce high-grade gold more than 2 kilometres below surface. The Miller
Property is essentially unexplored below 300 metres.
“We're really excited having both
Kirkland-style high grade gold-telluride veins and broad low-grade
intrusion-related gold mineralization in significant quantities on the Miller
Property,” Fowler says. “Our main job now is to do some drilling on these
targets and bring them to 43-101 status. If you stand back and look at it, we
could be knocking on the door of around 700,000 to 800,000 ounces here.”
“We're very confident that we're
going to make new discoveries at Miller, possibly within the Catherine Fault
zone itself, which amazingly has never been drilled,” Fowler says. “It's comparable to Kirkland Lake Gold’s
Amalgamated Break where they’ve found an incredible amount of high-grade gold
mineralization that remains open at depth. These structures can be incredibly
rich and with kilometre-scale strike and depth continuity. We believe we
have all the makings of a Macassa SMC- like gold mineralizing system at Miller
and we're really anxious to get the drill spinning.”
(Source:https://ca.proactiveinvestors.com/companies/news/913997/northstar-gold-is-a-new-face-shining-brightly-in-the-kirkland-lake-gold-camp-913997.html)
Tellurides - why are those important? This was a question answered by
a CEO.ca user;
@Jefe_de_Oro Tellurides are associated with extreme / bonanza grade
gold. They bond VERY well with gold and can bring more gold with them to
the surface than any other minerals. upwards of 4,000 g/t.....macassa has
lots of tellurides.
and the NorthStar property has lots of them ….they have stated many times
they have extremely similar or identical geology to Macassa property with lots
of Tellurides....
Example:
"Intersected 2,458.6 g/t Au over 1.8 m at Macassa Kirkland
Lake Gold Ltd. News Release – May 2,2019"
A samples photo of tellurides and visible gold from 2014 drill core at the Miller Gold property
The
following property map shows the Miller Gold Property with respect to
the Kirkland Lake camp. Again from their presentation some things to
note:
- It demonstrates that the property is situated on a major 1st order fault structure (Catharine Fault) off the Kirkland/Cadillac-Lardar Breaks.
- The property shares numerous important geological similarities with the nearby South Macassa Mine Complex (SMC) and Sigma/Lamaque mines.
- The Miller Gold Property is relatively underexplored at depth: this is the upside which I'm very interested in
Corporate Presentation
I encourage you to read the
corporate presentation for yourself, it goes into more details than this article.
https://www.northstargoldmining.com/site/assets/files/5173/northstar_gold_corp__corporate_presentation_april_27_2020.pdf
If you're feeling really interested - why not have a look at their 43-101 report:
https://www.northstargoldmining.com/site/assets/files/5086/rmg_northstar_miller_43-101_11jan19.pdf
Closing
Northstar Gold Corp is one compelling junior exploration company, which is actually on the lower-risk spectrum versus other companies I've written about; as those other companies do not have proven discoveries ... yet, although very compelling, and fingers crossed!.
Northstar has, in my view, quite a bit of upside potential - very soon - with current pending drill assays, but more importantly, the upcoming IP / grav work to identify targets which hopefully end up making the Miller Gold Property look a whole lot more like Macassa, Lamaque or Sigma gold deposits - with depth extensions and possible lateral extent across other underexplored parts of its property.
My view on gold/silver is bullish - and they have quite a compelling story, with a solid management/geological team, cash in the bank to drill, gold oz already in the ground (pending current 43-101 of course), and their Bryce Gold and Milestone Cu-Ni-Co properties on their books.
The stock has traded well, but seems to be capped at around $0.52, and moving sideways due to the delayed assay results. My personal purchases of this stock have averaged around $0.50, I'll definitely be taking advantage of dips to perhaps pick up a few more and watch the story progress for the rest of 2020.
The current markets allow significant re-rates and funding of companies which hit decent results, and if Northstar delivers, I think we may see the same here.
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.northstargoldmining.com/ 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.
