McEwen Mining To Make Strategic Investment Into Goliath Resources
In past reports, I have mentioned that I think a developing trend that we will see more of as the gold bull market continues unabated is that bigger companies will make strategic investments into smaller companies.
Part of the reason I saw that would happen is out of necessity. The bigger companies need to foster a stronger funding environment for the smaller companies. In a baseball analogy, the larger companies are in the big league teams and the smaller ones are the farm teams. For the long-term health of the big league teams, they need a strong farm team network as those are where the future stars come from and the players to fill their roster.
I was very pleased this morning to see news from two of my favourite picks, McEwen Mining and Goliath Resources. They made an agreement for McEwen Mining to make a C$10 million strategic investment into Goliath Resources.
In 2022, I made McEwen Mining my favourite turnaround pick and since then they are up from around C$4 per share to their current price around $12 per share. I still think they are a turnaround play in motion that has plenty of legs.
While Goliath Resources is my top pick for a gold explorer with an important discovery. It has been getting a lot of attention of late due to reporting a spectacular drill hole with 10m of 132.93 g/t gold equivalent. To put that into context, if you look at the metal factor, which is the grams times metres calculation, it is in the top percentile over the past 20 years of all holes reported worldwide.
Back in 2022, McEwen Mining was trading at multiple year lows due to some unfortunate events at their gold mines.
One of those was a rare occurrence of substantial flooding in an arid part of Nevada. Another one was a foolish decision by a mining contractor that thought it was a good idea to use blow torches on their conveyor belt to warm them up during frigid temperatures and then go off for lunch to come back to a fire that destroyed the conveyor belt.
But, those types of calamitous events are behind them now and the strong price of gold has had a very positive impact on strengthening their financial performance at their gold mines.
The most significant reason for their turnaround since 2022, was when Nuton (a Rio Tinto venture) and Stellantis (one of the world’s largest car makers) made investments during the third quarter of 2022 into McEwen Copper. Since then, Nuton has invested a total of $100 million into McEwen Copper. Stellantis was notable for the amount of money they invested and it was the first time a car maker invested into a copper development company.
McEwen Copper is a private company that owns 100% of the Los Azules copper development project in Argentina. It ranks as the 8th biggest undeveloped copper project worldwide and is also in the lowest cost quartile for copper development projects. McEwen Mining owns 46.4% of McEwen Copper, Stellantis owns 18.3%, Nuton owns 17.2% and Rob McEwen owns 12.7% of McEwen Copper.
The 2024 drill season was a fantastic year for Goliath Resources’ Golddigger project. In the 2023 season, their drilling had visible gold in 32% of the holes and in 2024 they saw 92% visible gold in the holes, with abundant fine-grained visible gold and coarse-grained visible gold.
They recently announced their most spectacular hole to date at Surevet, from a discovery that has widespread high grade gold distribution in a series of stacked gently dipping veins. From a geological perspective, it is emerging to look a lot like the Pogo Mine.
Plus, they have a new potential VMS discovery 35km from the Surebet discovery. I’m eager to see the assay results from their drilling into this discovery because in 2023 they did channel cuts that returned very high grades of gold and copper. The drilling below the channel cuts has hit massive sulphides that look just like the massive sulphides in the channel cuts. In fact, if you put the channel cut pictures beside the drill hole pictures, one can’t tell the difference as they look identical.
With this strategic investment by McEwen Mining into Goliath Resources, both companies will own significant shares in each other. McEwen Mining will hold C$10 million worth of shares in Goliath Resources, while Goliath Resources will hold that value of shares in McEwen Mining.
Both companies have plenty of catalysts. McEwen Copper is working on a feasibility study in the first half of 2025, and contemplating a public listing after the feasibility study. I’m hopeful they go the public listing route because it opens the door for better price discovery for their world-class copper development project that is challenging as a private company.
McEwen Mining has a pending resource update on their Fox Complex project in Ontario that is scheduled to be released in the first quarter of 2025. Plus, they have started a large drilling program of 69,500 metres at the Fox Compex. The bull market in gold during 2024, has had a strong impact on their bottom line from their gold mines. I’m very bullish on the price of gold in 2025 and think it will outperform 2024, which should keep the trend going to strengthen their bottom line from their gold mines.
Goliath Resources has 89 holes pending from their 2024 drilling season. I’m hopeful they will have all those out prior or just after the 2025 Prospectors and Developers Conference in early March. I suspect they will have plenty of interest from retail investors, institutional investors and corporates at the PDAC that will be eager to talk about their Surebet discovery and the Treasure Island VMS discovery.
The pending drill holes, plus what they have already announced, will give them plenty of data to compile in the spring to plan their summer 2025 drilling campaign.
All the best,
Allan Barry Laboucan
Disclosure
Allan Barry Laboucan is a shareholder of Goliath Resources and holds warrants to purchase additional shares. He is planning to increase his position in Goliath Resources and also make an initial investment into McEwen Mining.
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Allan Barry Laboucan, the founder and owner of Rocks And Stocks News, has extensive experience in the mining sector, beginning in 1993. Since 2005, he has been reporting on the sector. He has worked with talented geoscientists in geology, geochemistry, and geophysics throughout his career in mining. Allan applies the expertise gained during his career to evaluate sponsors and sector picks for reporting purposes. Whether a company is a sponsor or a sector pick, it undergoes the same rigorous review process, with coverage focusing on significant news or developments. Allan may hold shares in companies discussed in the reports, whether they are sponsors or picks, and he discloses such holdings when relevant.
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