A gold investment opportunity that really makes the grade
With so many experts warning of rampant inflation ahead, investing in gold equities is becoming a popular hedge play.
Junior miners, which are the most leveraged to rising prices in a gold bull market, promise higher rewards. However, they are also higher risk, and this sector has seen its share of highly promotional ‘pump and dump” scams in years gone by.
So how does a small investor with little expertise in mining go about selecting a suitable gold junior to invest in? For veteran geologist and gold hunter Doug Kirwin, the answer is simple.
“Just look at the people and their track record,’’ says Doug. “Ask questions about who the management and the board are, and most of all look at their previous successes. If there aren't any, then there's a problem.’’
With 50 years of international exploration experience under his belt, Doug’s opinions carry considerable weight in the world of gold. Among his many other achievements, he led the discovery team for the super-giant Hugo Dummett gold deposit at Oyu Tolgoi in Mongolia.
Today he’s an independent consulting geologist working on multiple projects around the world, including Canadian junior Cassiar Gold, where he serves as chief technical advisor.
“Cassiar’s a great example of a junior with a strong team,’’ says Doug. “On the board they have Steve Letwin, the former president and CEO of Iamgold, which has three operating gold mines on three continents; and Chris Stewart, former president of McEwen Mining and of Treasury Metals.
“The list goes on, including a really impressive line-up of geologists led by Kaesy Gladwin and James Maxwell. These are all people with great track records that one can verify.’’
Indeed, for anyone unfamiliar with the junior gold mining sector and considering a first investment, Cassiar Gold (TSX-V GLDC; OTCQB CGLCF; 756:FRA) has much to recommend it beyond its crack team.
Like many juniors, it is currently at an exciting stage of discovery and development that offers the potential for multi-million-dollar upside over the next few years. But like very few other juniors, it’s already sitting on an easily accessible 1 million oz foundational gold resource.
This combination of known ore bodies and untapped opportunity makes it a uniquely attractive investment option, says US geologist Dave Rhys, one of the world’s foremost experts in orogenic gold deposits (those of a type, like Cassiar’s, formed when the earth's crust is folded deep underground to create mountain ranges).
After being invited by Doug Kirwan to study Cassiar’s data, Dave agreed to join their team as a technical advisor, and the two firmly believe the 15-kilometer-long prospective gold belt at the heart of the Cassiar site could prove to be British Columbia’s next multi-million oz gold camp.
A small drilling program in 2020 confirmed and expanded the known large bulk tonnage resource, which lies at the northern end of Cassiar’s 56,000-hectare land package. (In mining jargon, this is a NI 43-101 compliant inferred resource estimate of 1 million oz at 1.43 grams per tonne Au, with a cut-off grade of 0.7 g/t).
For 2021, the goal is to explore an area known to hold several far higher-grade quartz veins, some containing visible gold. These run through a southern part of Cassiar known as Table Mountain, where ore containing 15-25 grams per tonne of gold has been identified.
Ahead of the spring thaw, Dave is helping to plan a 15,000-meter drilling program designed to prove Table Mountain’s massive potential. Any major new finds here will mean a big windfall for investors, says Dave, although he believes Cassiar is investment-worthy already based on its foundational bulk resource.
“Cassiar should be highly attractive to potential investors simply for the fact that it’s a known gold resource that isn't in the middle of some distant, dangerous foreign country - it’s in northeast British Columbia,’’ he says.
“I've looked for gold all around the world and I’ve seen very few sites as great as this one in terms of accessibility and infrastructure. It’s hard to overstate how important that is in mining – it’s all very well finding a great gold deposit, but at the end of the day can you do anything with it?’’
A paved highway runs right through the middle of Cassiar’s prospecting area. This is highly unusual even for BC, a generally rugged, mountainous region where helicopters are often needed to get drill teams onto site.
The permitted mill and mining camp inherited from previous owners are located just a few hours’ drive from airports in the towns of Whitehorse and Dease Lake, they have access to existing power lines and to water, and labour is available too. Cassiar has built good relations with the local First Nations people and the wider community.
All of which adds up to a low-risk operating environment and minimal exploration costs compared to other junior miners operating remote greenfield sites in unstable jurisdictions such as Africa or South America.
But Doug and Dave are geologists, so what gets them really excited is not the cost of doing business above ground, but the chances of striking it rich below.
British Columbia is already home to several companies that have seen their share prices appreciate by 1000% or more simply on the basis of good drilling results, and the pair are confident Cassiar could be the next.
“Cassiar’s prospecting area has been yielding gold since the gold rushes of the 1800s,’’ says Doug. “It’s been owned by several mining companies over the years, and it produced about 300,000 oz of gold in the ‘70s, ‘80s and ‘90s.
“But the Table Mountain section has only been scratched from an exploration perspective. We expect to have a good news flow this year based on our drilling program.’’
The low-grade bulk tonnage resource to the north lies around 100m deep with almost no overburden, so it is easy to reach and suitable for open pit mining. And it is still open in multiple directions, meaning its full extent is yet to be uncovered.
The high-grade veins to the south that will be explored this year sit somewhat deeper, stretching from the surface to several hundred meters underground – but this is still shallow in mining terms, says Dave.
“That’s one of Cassiar’s great advantages,’’ he says. “You don’t have to go deep to find good target areas. Our drilling program this year will give us the opportunity to work on both the high-grade and low-grade resources, and to drill near known deposits as well as stepping out to explore totally new areas.”
“We will be better defining our knowledge of previously discovered mineralization, while at the same time searching for completely new vein systems, which is higher risk but higher reward.’’
Whether they strike more quartz veins or not and regardless of the gold price, Cassiar’s future is assured, says Doug.
“In my 50 years in this game, I’ve learned only to get involved with companies that can survive the cycles,’’ he says. “If you're struggling at a reasonable gold price then there's no way you're going to make it through the down times.
“I believe there are good reasons to expect the gold price to appreciate considerably, but even at current prices the economic returns at Cassiar are superb.’’
Cassiar makes the grade for these geologists as an exciting investment opportunity. And as any miner will tell you, it’s all about the grade.
To learn more about Cassiar Gold please visit cassiargold.com