We are in my opinion, in the midst of a bull market in the
gold/silver - precious metals market. We’ve perhaps taken a little breather
since gold’s US$2000+ highs of last summer, however, governments around the
world have continued the printing presses at historical highs and interest
rates continue to scrape the bottom at 0%.
This article will detail the upside potential that I personally see in Enduro Metals and also why I think that Enduro has the potential to be a multi-bagger this upcoming season. The time to consider investing in exploration companies focused in British Columbia’s Golden Triangle has historically been between March-May, in the down season when everyone has forgotten that these companies even exist! Right when the forgotten explorers are again about to set foot on their projects.
Personally, I have purchased shares of Enduro Metals on the open market in the past couple weeks after having spent time reviewing the company’s properties, presentation and speaking directly with a couple folks from the company (I suggest to always reach out to management before making an investment decision).
It is imperative to have concrete relations with stakeholders and communities for any exploration and mining project. In the Golden Triangle, it’s predominately the Tahltan First Nation’s land, who are very pro-mining and pro-business. Take two examples, on March 31st, 2021 Enduro’s neighbour Skeena Resources announced that the Tahltan Nation have invested $5 million dollars into the exploration company. Also, in 2019 the Tahltan Nation announced the largest clean energy investment in BC history to acquire a 5% stake in the Northwest BC Hydro Electric Facilities at the south border of Enduro’s project. Two examples of how not to do business in Tahltan Nation’s land, as recently seen by the Doubleview eviction debacle & the 2019 eviction of the Jade miners in Dease Lake, BC, no relationship means no business. Enduro has made one of it’s key mandates to work closely with the Tahltan Nation to ensure a good working relationship and remain good stewards of the environment. Here’s a picture of the Tahltan Central Government’s President Chad Day, his father Norman Day and Alan McPherson (co-owner and operator of Swiftsure drilling, Enduro’s drilling company every season), as Chad said this picture contains, “four of the largest men of the Tahltan Nation.”
For those that are unfamiliar with the Golden Triangle, it is a remote part of Northwest British Columbia, albeit not very remote anymore with over $4.5 billion dollars of infrastructure that has come into place in the last 5-6 years. Paved highway 37, three clean-energy hydroelectric plants (including the investment of $150m from the Tahltan Nation), all-weather access roads, and the Bob Quinn airstrip. Enduro’s large exploration camp was the original camp of Murray Pezim’s team when they discovered the world famous Eskay Creek deposit (which Skeena Resource’s just announced an updated resource calculation of 5.3 million ounces at 4.3 g/t gold equivalent). Enduro’s team salvaged Murray Pezim’s air-strip onsite and built a 50-person base camp sandwiched between two valleys, one valley leads directly to Galore Creek’s access road to the northeast and the other valley leads directly to one of the hydroelectric facilities to the south. As mentioned, infrastructure in the last 5-6 years have drastically improved the accessibility and Enduro’s project is located perfectly around it.
The company has identified at least 4 distinct systems (target areas of interest). The first season in 2019 was first focused offsite with the projects first ever modern day data amalgamation. By spring of 2019 Enduro had +40 geologists and drillers onsite for the first expansive exploration program this project has ever seen. Keep in mind that prior to Enduro, the Newmont Lake project had less than 30,000 metres of drilling historically, most of which was done over 30 years ago. Enduro’s strong suit are their innovative technology and systematic approaches to quickly vector in to the hot spots. The systematic exploration program consist of massive soil sampling campaigns, prospecting, mapping, sampling, geophysics and regional sampling. All of this data is added to their internal models which gets updated every day while onsite.
The fours systems that Enduro is focused on have large
footprints – comprising of multiple deposit types including:
1. Burgundy/72 which they call now the Ridge Zone: A copper-gold alkalic porphyry
2. McLymont Fault (contains the historic NW Zone deposit): A high-grade gold-copper epithermal + skarn
3. Cuba: High-grade silver-zinc-copper epithermal + skarn
4. Chachi: Multi-element, alkalic porphyry / potentially iron-oxide copper gold (which the smart people deem the nation builders http://dmec.ca/ex07-dvd/E07/pdfs/115.pdf)
*I have annotated the company’s system overview slide and overlayed #1, #2, #3 and #4 to discuss them as “Target 1, Target 2, Target 3 and Target 4” respectively, further in this article.
Company Snapshot:
Share Price 4/15/2021: C$0.185
Partially Diluted Shares: 205.5m
Fully Diluted Shares: 288.2m
Cash: +$4.0m + expected $1.5m British Columbia METC (Mineral Exploration Tax Credit) Return in 2021
Market Cap (Partially Diluted): $38.0m
Enduro Metals currently has approximate cash of $4.0 million
for the upcoming exploration season, per its latest financials. Speaking with
the team, Enduro is also expecting to receive a METC return sometime in 2021 of
approximately $1.5m, putting their total cash position at around $5.5m.
Rationale on why I decided to purchase Enduro shares on the
open market in the past couple weeks:
1. Cleaned up – New management focused on delivering value
In 2019, the former management team over-promised a large exploration budget
that ran the treasury into the ground with a major deficit. By the end of
summer, the company was over $3 million in
arrears with no money left in the treasury. The technical team stepped in,
brought in a new management team and raised the capital needed to save the
company by August 2020 with a $11.3m financing (quarterbacked by mining legend
Rob McEwen, founder of Goldcorp which became the largest gold company in the
world while Rob ran it) and have since repositioned the company, cleaned up the
balance sheet and is now a tightly run, low G&A burn-rate, junior with
the intention of using as much of their funds to explore the company’s
prospective targets.
2. Prospective Targets – Very Prospective
Enduro Metals has, as I mentioned a massive land package and
several prospective targets spread across its claims. Before I have a deeper
dive at each of these targets, I have created a table to highlight some of the
top intercepts from these targets, either historically drilled or drilled by
Enduro. The numbers are nothing to sneeze at – in fact, they include long
intersections of high-grade gold, which could potentially be mined
economically, if sufficient tonnage is found. As several of these intercepts
are multi-element results; I’ve combined them by calculating gold equivalents
and further down $/tonne to highlight how much the rocks are worth.
|
Target
|
Target Name |
Target Type |
Highlight Results Reported by Enduro |
Gold Equivalent Values Calculated by me* |
|
1
|
Burgundy/72 |
A copper-gold alkalic porphyry |
Drill Hole BR-19-16: 51.38m of 0.46% Cu,
0.17 g/t Au, 9.98g/t Ag, 1.22% Zn, 0.16% Pb – starting at 343.66m 37.00m of 1.31% Cu, 1.49 g/t Au, 23.26 g/t Ag, and 2.97% Zn – 100m NE and 250m up-hole from hole above |
Drill Core BR-19-16: 51.38m @ 1.69g/t AuEq
Un-tested Surface Channel Sample: 37.00m @ 5.33g/t AuEq
|
|
2
|
McLymont Fault |
A high-grade gold-copper epithermal + skarn |
Drill Hole NW-87-29: 11.20m of 55.02 g/t Au, 1362.14 g/t Ag, 0.97% Cu
Drill Hole NW-89-11: 10.20m of 17.33 g/t Au, 39.86 g/t Ag, 0.46% Cu
Drill Hole NW-20-09: 28.34m of 10.03g/t Au, 2.31g/t Ag, 0.36% Cu
Drill Core R-07-09 (Re-interpreted): 85.41m of 3.03 g/t Au
|
Drill Core NW-87-29: 11.20m of 76.00g/t AuEq
Drill Core NW-89-11: 10.20m of 18.62g/t AuEq
Drill Core NW-20-09: 28.34m of 10.63g/t AuEq
Drill Core R-07-09 85.41m of 3.03 g/t Au |
|
3
|
Cuba |
Silver-lead-zinc +/- copper carbonate replacement & epithermal-type systems |
Outcrop (Rocks): a)854g/t Ag, 5.34% cu, 4.34% Zn, 1.55% Pb b)2350g/t Ag, 15.22% Zn, 1.28% Cu, 0.59% Pb c)13.39g/t Au, 156g/t Ag, 0.75% Cu, 0.22% Zn |
Outcrop (Rocks): a) 23.24g/t AuEq b) 43.24g/t AuEq c) 24.14g/t AuEq |
|
4
|
Chachi |
Multi-element, alkalic porphyry / potentially IOCG
|
Outcrop (Rocks): a) 5.36% Cu, 35.82 g/t Ag b) 2.74% Cu, 301g/t Ag c) 7.7% Ni, 0.85% Co, 0.17% Cu, 10.9 g/t Ag
|
Outcrop (Rocks): a) 8.91g/t AuEq b) 8.59g/t AuEq c) 26.37g/t AuEq |
*Calculations in table are using the following prices for commodities: Gold=1750/oz, Silver=$25/oz, Copper=$4/lb, Zinc=$1.25/lb, Nickel=$7.30/lb, Lead=$0.90/lb. Readers are encouraged to confirm values.
Target 1 – Burgundy/72 – Ridge Zone
|
Target Type |
Highlight Results (AuEq)** |
Potential Similar Deposit Types |
Valuations of Similar Deposits |
|
A copper-gold alkalic porphyry |
Drill Hole BR-19-16: 51.38m @ 1.69g/t AuEq
Un-tested Surface Channel Sample: 37.00m @ 5.33g/t AuEq
|
Galore Creek (Golden Triangle) |
$275m USD – 50% stake, 2018 deal
|
**From calculation table included in this article
Burgundy Ridge had its first ever diamond drilling conducted in 2019, as Enduro followed up on some interesting mineralization identified by the previous operator. Enduro has shown that it currently has a 2.3km strike length trend, and in 2019, it was drilled down to 420 meters, and importantly, the hole ended in mineralization. Below is a Leapfrog model of the Burgundy Ridge zone – with drill hole collars and highlighted assays. The deepest hole BR-19-16 returned 51.38m @ 1.69g/t AuEq**.
The “Burgundy System” has been identified to be similar to that of the “Galore Creek Suite” – see January 18th news release from the company. A recent geochronology study conducted by the University of British Columbia showed that certain rocks at Burgundy are “coeval with the Galore Creek suite”.
An excerpt from the news release highlights that "The BC Geological Survey has identified 5 specific times during the Golden Triangle's geologic history synonymous with big deposits," commented Enduro CEO Cole Evans. "Learning that Burgundy falls directly within the time window that formed Galore Creek is an important step forward that will help us narrow our targeting efforts in the area."
At first glance, BR-19-16 which returned 51.38m @ 1.69g/t AuEq** is not
ultra-high grade, however, it’s the size potential of this system that makes it
very interesting. Large tonnage at
$95/tonne material is something that sounds like something that could be
profitable looking at other peers in the area. Notice Newmont’s recent interest
buying out GT Gold’s deposit – and what grades and $/tonne Saddle has.
Looking closer at the neighbouring 2011 Galore Creek NI43-101 Technical Report:
-Proven and Probable Mineral Reserves of 528 Mt grading 0.58% Cu, 0.32 g/t Au and 6.02 g/t Ag
-Measured and Indicated
Mineral Resources exclusive of Mineral Reserves of 286.7 Mt grading 0.33% Cu,
0.27 g/t Au and 3.64 g/t Ag
-Inferred Mineral Resources of 346.6 Mt grading 0.42% Cu, 0.24 g/t Au and 4.28
g/t Ag
- A resource of 13.75 Moz Au, 156.4 Moz Ag, and 12.0 billion pounds Cu
This combined total of over 1 billion tonnes of material at Galore Creek is similar (if not actually lower than Burgundy Ridge Zone) grades – shows you what the potential might be if scale can be proven with the drills – in this part of the world.
In 2018, NOVAGOLD Resources announced the sale of its 50% stake in Galore Creek to Newmont for up to $275m USD. Double that for a 100% stake, and you get $550m USD, convert that to CAD and you get $687m CAD. In fully-diluted Enduro Shares, that would be worth $2.39 CAD on this target alone, if it turns out to be the same scale & grade as Galore Creek. Of course, this is only a potential-outcome. Scale is king in any deposit. I found this old slide from 2019, that show’s the scale of the Galore Creek proposed pit outline compared to Enduro’s Chachi that puts into just size comparison of the large areas Enduro has identified and the size of actual major deposits namely Galore Creek and the KSM deposits.
Results included: STDDH19-006 (3rd hole at 72’ Zone target):
- 56.35m of 0.45% Cu, 0.33g/t Au and 3.44 g/t Ag starting @ 225m
From the drill core, geologists noted that STDDH19-006 was synonymous with a large-scale copper-gold porphyry.
The following figure represents the Un-tested Surface Channel Sample that returned: 37.00m @ 5.33g/t AuEq ($300/tonne material). The geological model / theory shows that these two fingers may merge into a large breccia body at depth.
Target 2 - McLymont Fault:
|
Target Type |
Highlight Results (AuEq)** |
Potential Similar Deposit Types |
|
A high-grade gold-copper epithermal + skarn
|
Drill Hole NW-87-29: 11.20m of 76.00g/t AuEq
Drill Hole NW-89-11: 10.20m of 18.62g/t AuEq
Drill Hole NW-20-09: 28.34m of 10.63g/t AuEq $600/tonne
Drill Hole R-07-09 (Re-interpreted): 85.41m of 3.03 g/t Au $170/tonne
|
Sulphurets Camp Porphyries (Bulk Tonnage / High Grade) |
**From calculation table included in this article
The second target I’ll be reviewing is the McLymont Fault. This target was historically pre-dominantly drilled in the 1980s, and returned truly stunning intersections such as NW-87-29: 11.20m of 76.00g/t AuEq ($4275/tonne material). These are the kind of grades, that with a couple million tonnes or even less, have the potential to become profitable high-grade mines.
On February 9th, 2021 Enduro put out a news release outlining drill results from four diamond drill holes completed at the McLymont fault in the 2020 drill program & also outlined exciting new targets.
All four drill holes intersected high-grade gold, including one which I highlighted in my table from drill hole NW-20-09: 28.34m of 10.63g/t AuEq ($600/tonne material)
The company put out a cross-section of historical drill holes plus drilling that Enduro Metals has drilled in the past couple of years, showing both the high grade, and the fact that the gold mineralization is open at depth and along strike.
Not only did the company intersect high-grade gold, but the company has found more evidence that a large-scale gold system exists here as they pulled out 139 meters of 0.82 g/t AuEq in one of the holes.
It’s noted in the news release that drilling has “resulted in the majority of drill holes completed by the Company to have ended in these broad, bulk-tonnage gold mineralization, with indicates that mineralization may continue to significant depths just not tested yet.”
As with Galore Creek – there are several other mammoth sized deposits in the Golden Triangle, specifically in the neighbouring Sulphurets Camp (Seabridge and Tudor) that make the company believe these are early signs of a gold-copper porphyry potential near the high-grade gold.
Excitingly, the company has identified an anomaly that is 300m x 220m which averages >0.1 g/t Au and >0.1% copper in soils. This is broadened to over 700m in length, parallel to the McLymont Fault if >0.05g/t Au in soils is used. Additionally, the company has also reanalyzed ZTEM data collected by Romios Gold and found a strong conductor extending to a minimum depth of 500m directly under this soil anomaly.
Keep in mind that Romios’ last drill program on
this project was over ten years ago. The
picture below you can still see the vegetation line where the glaciers have
receded in the recent years so I’m guessing that Romios couldn’t even explore
in this intrusion area because there was a glacier there ten years ago. Even
more exciting is that the target has never been drilled. The figure below
highlights the new anomaly discussed.
I’m very interested to see what results the drilling on the McLymont target will bring this summer – especially with the high-grade intercepts found and now also the bulk-tonnage potential with new geophysical data.
Target 3 - Cuba:
|
Target Type |
Highlight Results (AuEq)** |
Potential Similar Deposit Types |
|
Silver-lead-zinc +/- copper carbonate replacement & epithermal-type systems |
Outcrop (Rocks): a) 23.24g/t AuEq b) 43.24g/t AuEq $2400/tonne c) 24.14g/t AuEq
|
Intermediate epithermal systems (Au-Ag) – Klaza in the Yukon ($1.3b if Au, $500m of Ag)***
|
***Source: Dylan Hunko, Geologist with Enduro
Going east to west, across the company’s property, we hit
Enduro’s third system and target: Cuba.
It is interpreted to be a silver-lead-zinc +/- copper carbonate replacement
& epithermal-type system. From rock samples collected in the area, it has
been identified to be a >4.2km NNE-SSW mineralized trend with historic
occurrences: Cuba North, Cuba South and Thumper. There’s nothing to sneeze at
here with rocks returning up to 43.24g/t AuEq (or approximately $2400/tonne)
I had e-mailed, Dylan Hunko, a geologist with Enduro on what he thought about the potential deposit type Cuba could represent – geologically and also with some examples nearby. Here’s what he had to say:
“The Cuba system is unique having inputs of both carbonate replacement mineralization and high-grade epithermal silver veins. We are starting to see carbonate replacement hosted mineralization similar to what you could expect at the Pine Point deposit in the NWT. The high-grade Ag-Pb-Zn +/- Cu veins at Cuba provide inputs for the strongest silver grades. Deposits such as the Shuangjianzishan polymetallic vein system, the largest silver deposit in China, are gaining a lot of attention in recent years which display very similar characteristics to what we see in the Cuba system.”
The target consists of a large number of very high-grade silver, zinc and copper rock samples scattered across several kilometers, which are shown in the map below. What’s most important about the map below is that the amount of high-grade silver in soil going over 2 g/t. Most projects I see have their high-grade soils are coming in around 0.5 g/t.
Where there’s smoke, there’s usually fire.
Target 4 – Chachi:
|
Target Type |
Highlight Results (AuEq)** |
Potential Similar Deposit Types |
Target |
|
Multi-element, alkalic porphyry / potentially IOCG
|
Outcrop (Rocks): a) 8.91g/t AuEq b) 8.59g/t AuEq c) 26.37g/t Au |
IOCG Deposits in Australia – 100’s of millions of tonnes @ approx.. 1% Cu + 0.5g/t Au |
850m x 600m 3D Induced Polarization Target |
Lastly, the Chachi target – this target has never been drill-tested, and shows great potential with high grade outcrops with some rocks at surface found to be worth almost $1500/tonne.
On February 18th, Enduro put out a news release outlining a 3D-IP survey that identifies the first drill target at the Chachi target.
The news release outlined a model of high chargeability 850m by 600m in size, which is coincident immediately below copper-silver showings. The company believes this is evidence that suggests that mineralization may continue to depth.
The following shows the high-grade in-situ rock samples immediately on top of the hot-pink chargeability anomaly identified by the Induced Polarization survey.
The company stated that the drill pad has been completed and that this target will be drilled within the next 4-5 months (so now within a couple months).
I had a couple more questions for Dylan, this time, on picking his brain on what Chachi could be.
The current theory is that Chachi is either a porphyry system or an IOCG deposit – what’s the thinking here? “Some really smart geologists would consider IOCG and alkalic porphyry systems to be the same thing making the exact definitions a bit confusing…. The ultimate way of knowing is with a drill hole” Dylan noted.
I had also followed up and queried about what evidence makes
some geologists believe think that Chachi could be an IOCG deposit?
“IOCG's
have a few different characteristics. The metal endowments can sometimes be
very different from typical porphyry systems. The presence of Nickel, Cobalt,
Copper, Silver, Zinc, and Gold all within the same area at Chachi is very
unique. IOCG (iron-oxide-Cu-Au) can obviously be defined by the iron oxide
content within the system. We have strong hematite (fe-oxide) alteration on the
surface for km's at Chachi. ICOG's also form distinct "cigar shaped"
ore bodies. If you look at our IP geophysics, the chargeability anomaly is
mimicking that "cigar" shape. We cannot be 100% confident in the ICOG
interpretation but we certainly cannot ignore the evidence.”
Regardless of what the deposit type may be – there are high-grade copper and silver samples at surface, and if they are found to be the cause of the large chargeability IP anomaly – and the huge anomaly turns out to be associated with mineralization. It would be a potentially giant discovery.
3. The Backing of Rob McEwen, former CEO of Goldcorp
It’s always nice to have a peak at other interested parties in a junior
exploration company. In Enduro’s case, Rob McEwen is an investor himself. For
those who don’t know – he’s the former CEO of Goldcorp!
Rob made his first investment in the project in
2019 with the former management team. Rob liked the project and was interested
prior to Enduro acquiring it. Infrastructure was the issue back then.
Unbeknownst to many, over $4 billion dollars in infrastructure has been
built around the property within the last 5 years. When things weren't going
right and the new team (the operators) were taking over the company, many
meetings were had with Rob and the new team. Rob became Enduro's cornerstone
investor by leading a $11.3m financing with $2m to kick-off the company's 2nd
exploration season in 2020 (albeit a shortened season due to funding and the
pandemic).
4. The 2021 Exploration Program – Fast Approaching
Enduro hasn't announced the plan for its 3rd exploration season yet. However, in a Crux Investor interview in February, Cole Evans, CEO of Enduro Metals has mentioned that the 2021 program will go after the high-grade targets as its primary focus, and will also be drill-testing it’s other targets. We can expect now that Cole and his team are entering into their first full season (2019 = former management, 2020 = shortened season due to covid and raising funds by August), they will want to hit their best targets/prospects.
2019's exploration season was led by Cole and his team and most of the heavy lifting from major soil sampling, prospecting, mapping, and geophysics are completed. This 3rd season we can expect mostly drilling and drilling their best targets.
Corporate Presentation
I encourage you to read the corporate presentation for
yourself, as it outlines the company's goals, management, and property in much
more detail. Also, reach out to Sean
Kingsley who’s in charge of Enduro’s communications and ask him to go through
the presentation with you.
https://endurometals.com/presentation/
Closing
In a nutshell - what do we have at Enduro? Why am I excited about this coming exploration season? Here’s why:
1) Enduro commands a massive 638 km^2 land package in the prolific Golden Triangle
2) New management that has raised the capital it needs and is now tightly run
3) Four very prospective targets (Burgundy/72 – Ridge Zone, McLymont Fault, Cuba and Chachi) – with any one being a potential catalyst to have be a re-rating event of the company - with success in drilling.
4) The backing of the former founder and CEO of Goldcorp - Rob McEwen
5)
A 2021 exploration program which is
nearing very quickly - in less than 2 months
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.
To download this article in PDF Format:
The
author is not a registered advisory service and does not give investment
advice. The author currently has a long position in this stock and may buy more
or sell its position at a later date. Our commentary is an expression of
personal opinion and should not be construed in any manner whatsoever as
recommendations to buy or sell a stock at any time.
The author has not been paid to write this article, however, Mango Research and Management Inc., an affiliate to Enduro Metals, is a sponsor to this blog. All facts are to be checked by the reader. For more information go to endurometals.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.