The Floor Of The PDAC Was Paved With A Tinge Of Gold

New Found Gold and Canadian Gold Corp are featured in this report.

It has been a whirlwind of activity over the past couple weeks for me with gold making new record highs and my travels to the PDAC. It actually started prior to the PDAC when I put out a couple reports talking about gold looking like a coiled spring and ready to break over USD $2100.

Things continued to be busy after I left the PDAC as there were several interviews by various groups that cover the mining sector that were recorded during the PDAC. So, I have been at my desk doing a ton of homework.

I have been busy catching up on interviews from the BMO conference prior to the PDAC, as well as the Metals Investor Forum and the Red Cloud conference. Plus, there has been a lot of news out from companies I follow over the past couple of weeks. Additionally, I had my own content to put out during the PDAC and since. But, I’m finally catching up and have lots to talk about and intend to have several reports out soon.

The PDAC was very busy for me as I did two live podcasts from the floor where I talked with representatives from several companies. Every time I’ve gone to the PDAC over the years there are usually a few companies that get the people on the floor talking.

On Sunday of the PDAC, there was cautious optimism due to the late week rally in gold. The attendance on Sunday was good but nothing like on Monday and Tuesday. Gold continued to rally on Monday and Tuesday to get over $2100 and set new record highs. The action in gold brought in a lot more people and there was a definite buzz. A golden buzz if you will.

The aisles were packed on Monday and Tuesday, plenty of booths had many investors asking questions. It has been awhile since I attended the PDAC when the aisles were full and I had to zig zag my way through.

One of the busiest booths was the McEwen Mining booth. They had a gold bar challenge, where attendees could put their hand in a box and try to pull the gold bar out to win it. Plus, they allowed people to take pictures with it. I was watching all this with a good friend and mentioned to him that it was impressive how there was a big crowd of people, and they all had big smiles on their faces looking at the gold bar. Goes to show you that there is something magical about gold that makes people happy.

I’m a science geek when it comes to metals exploration, so when New Found Gold came out with the results from their seismic survey it caught my attention. Seismic is used in oil exploration but not a lot in metals exploration. I had used it in the past when exploring a near surface flat lying diamond bearing kimberlite. It very clearly showed the kimberlite, so when I saw the New Found Gold seismic image I was very impressed.

They are exploring and discovering high-grade orogenic gold zones. They are structurally controlled and have very deep roots. In the images they provided from the seismic survey, I could clearly see it was picking up key structures associated with their gold zones. Seismic can pick up structures going down very deep. I believe this work will help them to drill deeper into the system. The depth potential in an orogenic gold system is what really excites me.

The Red Lake Mine and Fosterville are good examples of how important the depth potential is. Both had been in production for many years, with modest success, mining the top part of their orogenic gold systems. These systems have roots that can go down a few thousand metres or more.

As you get deeper into the system, the closer you get to the heat engine there is often a transition from fine grained gold at the top to coarse grained gold deeper in the system. When Goldcorp went deep they hit the bonanza-grade coarse gold and the rest was history. It was a company maker that made them one of the lowest cost gold producers, due to mining bonanza-grade gold had exceptional margins and generated remarkable free cash flow. They were one of the best performing gold miners during that time.

The Fosterville mine went through a similar story. They struggled mining the top of the orogenic gold system, then drilling went deeper and found the Swan Zone with spectacular grades. When Kirkland Lake was mining it they were one of the lowest cost gold miners, with high margins due to the bonanza-grades they were pulling from the mine. Much like Goldcorp, they significantly outperformed their peers, and ultimately got bought out for a huge win for their shareholders.

The Red Lake Mine and Fosterville Mine are two case studies that I always think about when I’m looking at an exploration company drilling into an orogenic gold system. I watch closely to see if they are focused on the near surface part of the system, or if they want to go deep.

From a strategic perspective, oftentimes, they want to focus on the top of the system because they see high-grade visible gold in the system. Plus, they can tag that with shorter drill holes than going after the depth potential. But, when they focus on the top of an orogenic gold system in the back of mind, I always think of the struggles Goldcorp and Fosterville went through mining the top of the system.

I love it when I can find an explorer that is drilling into an orogenic gold system, and they are focused on understanding the depth potential.

Most of New Found Gold’s drilling has been focused on the top of the multiple orogenic gold zones they have discovered. They have found a lot of high-grade to bonanza-grade gold, but the depth potential hadn’t really been tested with drilling. The geological team clearly understands the geological model of orogenic gold systems. They know how important the depth potential is, which is why they did a multi million dollar seismic survey.

Now they have a road map to project the zones they have hit at the top of the orogenic gold system to depth. This kind of survey is not what gets the market worked up. It does for me because I can see they have a way to target deeper into the system.

Then yesterday they announced a batch of assay results. With the headline: New Found Intercepts 36 g/t Au Over 16.7m, 34 g/t Au Over 14.7m, 43 g/t Au Over 7.35m & 41 g/t Au Over 5.85m at Iceberg. To me these are some of the best results they have reported on the project because of the high-grade and thick intersections. Yes they have hit higher grades, but those are usually over thin intersections. These zones can pinch and swell, so when I see them open up to several metres of high-grade gold it catches my attention.

They also mentioned that the seismic survey will be used to select future holes at Iceberg. I think it will help them identify where to go deeper, where to target dilation zones where the zone opens up and cross cutting structures at depth. All of this will help them target deeper with the potential to accurately predict where to drill to unlock the depth potential.

In the news release they also show a long section that includes the Keats Zone and Iceberg Zones. The Keats Zone has seen the most drilling, but I think the Iceberg and Iceberg East could be just as important.

In the long section the distribution of the high-grade gold along strike at the Keats Zone is not very wide, which I can see a similar story as it goes deeper. There is a nice zone of continuity in it, and who knows it could swell as it gets deeper. Whereas at Iceberg and Iceberg East, the distribution of high-grade looks to be wider along strike.

It will be very interesting when they overlay the Keats Zone, Iceberg Zone and Iceberg East Zone onto the seismic anomalies. I think it will light up big targets of where they need to drill next to unlock the depth potential at these zones as well as the other zones they have found.

Another orogenic gold project that I got to do homework on at the PDAC was Canadian Gold Corp. They have the Tartan mine in Manitoba that saw minimal mining near the surface that ultimately was not successful and was only in production for a couple of years then shut down.

Prior to closing they did get a few holes deep and they tagged very nice intersections of high-grade gold. The project sat idle for many years, then Canadian Gold Corp decided that it should be drilled deeper, they did that and hit high-grade gold deeper in the system over significant intersections.

I’ve looked at the cross sections of where they have drilled, in the top of the system, it has a distinct high-grade core with very good continuity. It projects deeper where they have hit high-grade gold. In fact, to me it looks like the high-grade core is getting wider at depth.

I had a nice chat with the team in the core shack of the PDAC. They are in the midst of a drill program, they have assays pending. What I like the most about the focus of the company is that they are targeting the depth potential of their orogenic gold system.

All the best,

Allan Barry Laboucan

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