We are undoubtedly in the midst of a bull market in gold/silver - precious metals market. Governments around the world have started the printing presses and there is no sign of them cooling down anytime soon.
Gold majors and intermediate
producers have done very well thus far and are hitting multi-year highs; and in the recent weeks we've witnessed many junior gold explorers gain traction as investors start to come into the markets.
I recently spoke with the company's Corporate Communications Manager (Peter Oates) and he set me up to chat with Dave Dupre, the company's VP Exploration and Dr. Abdul Razique, the company's Chief Geologist to go over some of the aspects of the Kirkham Property which lies in the heart of the Golden Triangle.
I have bought this stock on the open market this July, and have owned the stock in the past several years, on excitement on the potential prospects of nickel extending from Garibaldi Resource's Nickel Mountain project. However, Metallis has a lot more than just the nickel prospect, which is often forgotten.
This article will detail the upside potential and exploration methodology that the team plans to execute this coming season - with the focus being on the 7.5km Hawilson Monzonite Complex, which could host the potential for a large bulk-tonnage gold/copper porphery deposit.
Overview
Metallis Resources is a TSX Venture listed company which is focused on the gold, copper and also nickel exploration in the heart of the golden triangle. Metallis has a 106 km^2 land package, which is proximal to the Red-Line (large / rich mineral deposits are typically found within 2km of this red-line).
Dr. Kirkham (worked with Mineral Division
of the Geological Survey of Canada 27 years along with KSM and with
Newmont), of all the claims he could of staked, he staked claims around
the 7.5km Hawilson Monzonite intrusion and this
was at a time when the GT was wide open. He was extremely excited by
its potential. Metallis picked up the center claims which held the
Hawilson in 2014 to make it one large package of contiguous
claims.
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| MTS: Property Holdings |
The company discovered the lower Cliff Porphery System in 2017 and intersected in KH17-08 435.5meters of 0.25g/t Au + 0.11% Cu, including a higher grade intercept of 172m of 0.30g/t Au + 0.20% Cu.
The company has a large number of targets with multiple deposit types including:
- Thunder North, K9: Magmatic Ni/Cu
- Cliff, Cole, King East: Cu/Au Porphery
- Etta: Epithermal
- King & Rhyolite Ridge: VMS
Metallis Resources currently has approximate cash of $1.8 million in a mix of approximately half hard-dollar and half flow-through funds at it's disposal, with a fully diluted enterprise value of only $12.2 million.
Rationale on why I purchased Metallis shares:
1. Management & Geological Team
CEO, President (Fiore Aliperti): Has led the company since 2013 and has taken a keen interest in keeping the corporate burn-rate low, while advancing it's projects and raising funds as market conditions become favourable (limiting dilution to existing shareholders).
VP Exploration (David DuPre): Involved in the discovery of the Eskay Creek mine as a project manager. Long history (32 years) of experience in the Golden Triangle/Northwest BC.
Chief Geologist (Dr. Razique): 20 years of experience in the exploration and mining industry. Worked at BHP and Barrick-Antofagasta Minerals JV with a PhD from UBC. Consulted with Garibaldi, Evrim and Riverside and Antofagasta. Key member in team which discovered Reko Diq copper-gold deposit in western Pakistan.
Recent 2020 additions to the advisory team as stated in the company's April 29th news release - Dr. Farhad Bouzari and Andrew McIntosh
"Fiore Aliperti, CEO and President stated "The addition of both Farhad and Andrew to our advisory board provides incredible technical and scientific knowledge to the team, the timing of which we believe to be perfect. Our geological team has worked tirelessly over the past three seasons, establishing that the Cliff Porphyry system holds many similarities to other porphyry systems discovered in recent years in the Golden Triangle, such as GT Gold's Saddle deposit and Seabridge's Deep Kerr". He went on to add "we have asked Farhad and Andrew to join us to provide guidance to our geological team as we move to identify deep drill targets in this upcoming season".
2. Share Structure
Corporate burn rate of only $50,000 per month: no big fat paycheques, fancy offices and big marketing budgets. Almost all funds go directly into the ground, which is what I like to see.
12% management ownership - who have never sold any of their shares.
In short, a tight share structure, and smart with investor funds.
Management has participated in every round of financing.
3. Funded for an initial exploration program with room for expansion
$1.8 million dollars goes a longer way when you are good with cash; which Metallis is. Of that $1.8 million dollars, $1.0 million is in flow-through dollars an $0.8 million in hard dollars.
It's no secret however, depending on the amount of meters it wants to drill this year, will have to go to the market to raise additional funds.
4. The 7.5km Long Hawilson Monzonite Complex - Geology
At the southern edge of the 7.5km complex is the Cliff Porphery System which hosts gold-copper mineralization.
Mineralization has been identified over 3km in relatively wide spaced holes along the trend.
Metallis has drilled several holes into the area and have come up with long intercepts of mineralization, albeit not at a grade high enough to attract a lot of attention yet.
Metallis has drilled several holes into the area and have come up with long intercepts of mineralization, albeit not at a grade high enough to attract a lot of attention yet.
Immediately north of the Cliff target is the Miles porphery center; which has the company also plans to drill in 2020 as well. The company had previously 2 holes totalling 769 meters resulting in KH19-26 (NSR) and KH19-27 (84.5m of 0.35g/t AuEq).
Moving further north is the Nina target, which included previous assay results of: 180 meters of mineralized Monzonite Porphyry, including sections of 0.77g/t AuEq.
And finally at the northern extent of the Hawilson Monzonite complex are the Cole and King East targets.
The company plans to drill approximately 2000meters
There is a geophysical anomaly at the King East target however it has yet to be drilled (1000meters planned for 2020 on King East)
So what does this all mean? In the company's latest news release, David and Dr. Razique give the highlights of what's been done so far on this system.
Metallis Resources' Vice President of Exploration, David Dupre stated, "We are extremely proud of our early exploration achievements derived from only 17 drill holes at the Cliff Porphyry System. Rarely has a Porphyry Copper-Gold project with significant upside potential been advanced so rapidly".
Chief Geologist, Dr. Razique noted "Our updated 3D geological modelling and structural reconstruction has revealed that the Cliff is a substantial porphyry system capped by a series of northeast trending sub-parallel mineralized zones linked to a much larger magmatic-hydrothermal system underneath".
Chief Geologist, Dr. Razique noted "Our updated 3D geological modelling and structural reconstruction has revealed that the Cliff is a substantial porphyry system capped by a series of northeast trending sub-parallel mineralized zones linked to a much larger magmatic-hydrothermal system underneath".
Now also with an expanded technical advisory team with Dr. Farhad Bouzari and Andrew McIntosh, the hope is that they can unlock this system.
5. The 2020 Plan and a Deeper Dive
Additional insights from my conversation with Dave and Dr. Razique which touch upon several areas:
Q: What is the exploration strategy for 2020?
Dr. Razique: "We have a multi-pronged approach. We've got divided the exploration program in to 2 phases. Phase 1, which will start in 1 week or 10 days includes:"
- "Relogging exercise of all drill holes on the property: especially at the Cliff and Nina porphery systems. It will involve relogging all the alteration patterns and vectors." Dr. Razique and Dr. Farhad Bouzari will be conducting this work with various tools
- Field mapping: It is "very critical to map all the structures and distribution of alteration and veining and mapping contacts and structures" that can lead us to the depth potential.
- Surface geochemistry and rock sampling will also be part of the program.
- Prior to IP work: drill core sampling work needs to be done 35-40 samples to analyze the geophysical properties of the rock. The benefit is to improve and optimize the anomalies/targets.
The results of Phase 1 will provide drill targets for Phase 2.
Q: What lead to the Cliff discovery?
Dave Dupre:
"It was kept hidden for years because people would fly over and see the
big gossan to the north, they would land, but they were always dealing
with the northern part of the system. Metallis went down the steep
slopes to the Cliff area."
The following questions are answered in a YouTube clip by Dave and Dr. Razique:
Q:
Why is core re-logging important?
Dr. Razique explains in audio snippet [Audio starts at 0:00]
Dr. Razique explains in audio snippet [Audio starts at 0:00]
Q:
Can you comment about the grade of mineralization in the system at Cliff?
Dave Dupre explains in audio snippet – finding the treasure [Audio starts at
1:26]
Q:
What do you know about the copper/gold ratios in the porphery system?
Dr. Razique explains in audio snippet. [Audio starts at 2:41]
Q:
Can you provide some insight into the undrilled King East target?
Dr. Razique explains in audio snippet
– magma chambers and possible surprises? [Audio starts at 4:40]
The company further explains: "Metallis is sitting on a Complete porphyry system – Top to Bottom. The system runs ~7km in length and pinches/swells from 150-300 meters in width along the whole thing. Last years drilling has confirmed continuous mineralization at the upper levels for 4kms in the south and at Cole at the northern end, drilling in the middle will help show its continuous thoughout. Erosion has removed small portions of the system but this has facilitated better understanding. Recent drilling and surface has exposed (outlined) the upper part of the high grade potassic core to date but still pretty shallow. By analogy to most porphyry systems in the Golden Triangle"
The expectation is that grade
to improve with depth (1km) and increase with width - as is common in the Golden Triangle.
The company put out a News Release this morning detailing it's 2020 Phase I exploration program.
6. Other Prospects - K9
Apart from the gold-copper prophery prospects of the company, the company also did preliminary work on the K9 Nickel prospect at the northwest margins of it's property last season.
Today, it announced that it will be flying IP lines across the K9 target, which is a potentially prospective target for Nickel-Copper, on trend with Garibaldi's Nickel Mountain deposit.
Corporate Presentation & Corporate Communications
I encourage you to read the
corporate presentation for yourself, as it outlines the company's full portfolio of prospects on it's Kirkham property in much more detail.
https://metallisresources.com/presentation/
I'd like to mention that Peter Oates works as Corporate Communications at Metallis and they're always happy to share their story and take questions from potential investors. He can be contacted at peter@metallisresources.com
Closing
In short, Metallis Resources is one recent story that I've re-invested in this season as the company is conducting a 2-phased exploration approach to unlock the potential size and scale of typical gold-copper porpheries seen in the Golden Triangle. Bonus: the gold bull market is just starting, in my opinion.
The 7.5km Hawilson Monzonite system appears to me to be underexplored asonly relatively shallow drill holes have been to date. I'm looking to see the company find deeper targets in it's upcoming exploration season, after it has done additional geological work (re-logging core, IP, and mapping) to drill them this summer and early fall to see if we can find higher grades at depth or find the source of the porphery system.
The geological team should already be preparing to mobilize to the site to start off this years season and I expect them to be in full swing within the next week or two.
The stock has had quite gained to approximately $0.40 as of Friday, and even hit lows of $0.13 back in the early March market crash. The company has $1.8 in funds which should be good for an initial Phase I exploration program, and likely some drilling for Phase 2, before requiring to raising additional funds.
Nonetheless, at $0.40, the enterprise value of the company is approximately $12 million. If they're able to unlock higher grades and open this up with some targets at depth, this can move many multiples of where it is currently sitting.
As a reminder; junior exploration is
very risky - I remind you to read the disclaimer.
Hope you enjoyed the article -
please let me know if you have any feedback/comments.
My e-mail is below:
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 metallisresources.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.