Strategic Investments From Majors Into Juniors Ramps Up - American Eagle Gold Gets A $29 Million Investment From South32
A trend that I’ve talked about in past reports is coming to fruition. I mentioned how I thought we would see major mining companies get more active in strategic investing into juniors. Today, one of our picks, American Eagle Gold, got a $29.16 million investment from South32 at a 15% premium to their 5-day volume weighted average trading price. This gives South32 a 19.9% share position in American Eagle Gold.
Prior to this, American Eagle Gold had Teck owning a 15.1% shareholding of which they obtained from three previous investments. American Eagle Gold now has two major mining companies that have made strategic investments into the company which are remarkable endorsements of their NAK project in British Columbia.
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Spotlight On A Top Pick
Welcome to the new section of the written reports where we will highlight sponsors and picks.
Goliath Resources is my top pick for a gold explorer with an important high-grade gold discovery. Their Surebet discovery is on a path of it getting better and better the more they drill it. Another great aspect is that it is in the prolific Golden Triangle in British Columbia.
An example of how it gets better and better the more they drill it can be witnessed in what they found during the 2023 and 2024 drilling seasons. The 2023 drilling season was their best ever, a hallmark was they found visible gold in 35% of the holes they drilled with a wonderful new discovery called Golden Gate. One of the trends I have seen many times in a project that becomes better and better the more it is drilled and along the way of advancing it with very pleasant surprises.
Their 2023 drilling season helped them better understand the Surebet discovery and that knowledge enabled them to hit visible gold in over 90% of their drill holes in the 2024 drilling season.
In addition to finding visible gold in a dramatically higher percentage of the drill holes, they also found a wonderful transition from fine-grained visible gold to abundant fine-grained visible gold and coarse visible gold as they go deeper into the gold mineralizing system.
They have 100 holes in the labs going through traditional fire assaying and photon assaying. The labs are jam packed at this time of the year, so it takes time to receive assay results. They should have plenty of assays coming out soon and for several months.
They have received strategic investments from Crescat Capital, a Singapore based fund, Rob McEwen, Eric Sprott and Larry Childress.
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The key reason that I felt we would see more strategic investments into explorers with important discoveries from majors was because the explorers needed their financial support and majors needed to make the exploration side of the mining sector stronger.
Exploration is the lifeblood of the mining sector as miners are constantly depleting their mines and need exploration success to lead to helping them increase production and also replace their old mines with new mines. In baseball terms, the majors are the big league and the explorers and new mine developers are the farm teams.
Without a strong farm team network, the big league teams will have issues with filling up their roster. In mining, what that means is the majors will struggle to increase production and replace their old mines with new mines.
The majors in gold, silver and copper are going through struggles and a big reason for it is due to chronic under investment into grassroots exploration that leads to important discoveries that can advance to the development stages.
The cupboard is slim when it comes to projects in development which combined with the long-term investment into exploration and the challenges for majors to increase production and replace what they mine means the supply chains from top to bottom in gold, silver and copper are broken.
It took decades to break the supply chains and it will take decades to fix the problem. The most under funded part of the supply chains are in exploration from grassroots to advancing discoveries. Which is fundamentally why the majors need to make strategic investments into the explorers.
Why have Teck and South32 made strategic investments into American Eagle Gold? The bottom line is that majors make strategic investments into explorers because they believe that the junior has made an important discovery with the realistic potential of becoming a future mine.
American Eagle Gold’s NAK project is ticking off the boxes as they have several drill holes with thick intersections of high-grade copper. It is following the trend that as important discoveries are drilled, they continue to get better and better, with pleasant surprises along the way of advancing them.
GT Gold was a company that I had picked early in their exploration success that kept getting better and better with more drilling that ultimately led to them being taken over. Charlie Greig was a key person that helped GT Gold and is the Lead Technical Advisor to American Eagle Gold.
In addition to having a great project, I’m also very impressed with their commitment to using podcasts and video interviews to tell their story. They are an outlier compared to many juniors when it comes to using digital marketing tools to keep their story at top of mind for their shareholders and to help potential investors understand what they have found and how they are advancing their impressive discovery. They are an example to other juniors of how to use digital marketing tools to effectively tell their story.
Teck and South32 are wonderful endorsements of the quality of their project. They do extensive due diligence before they invest and do a lot of heavy lifting for investors to do the homework to assess the realistic potential of American Eagle Gold’s NAK project.
When this South32 investment is closed, American Eagle Gold will have $37 million in their bank account that will cash them up to go after NAK in a big way.
All the best,
Allan Barry Laboucan
Disclosure
Allan Barry Laboucan is a shareholder of Goliath Resources and own warrants that are well in the money to increase his position.
