As the winter ice begins to melt it’s time to think about traveling north again, far north, to Canada’s Yukon Territory. Every year, Yukon gold juniors begin setting up camps and making preparations for drilling in May/June and then they conduct exploration/drilling programs from June through the end of September (and sometimes into early October).
Seasonality turns favorable for the Yukon gold explorers beginning in April, usually peaking in August before money heads south again for the winter. I have selected three Yukon gold juniors that share some similar characteristics:
- All 3 stand to benefit from positive seasonal tailwinds beginning in April.
- They will all be carrying out significant exploration and drilling programs this year.
- All 3 companies’ valuations are supported by a foundation of some combination of existing mineral resources, equity investment holdings, and cash.
- All 3 companies have strong insider and strategic investor ownership.
- All 3 company share prices are sitting near multi-month lows, down ~50% from August 2020 highs
The C$468,845,000 Resource Gateway Project is beginning to transform the infrastructure of key resource rich areas of the Yukon. Upgrades to the Silver Trail Road which runs through Mayo and Keno City are set to commence in March 2021 after the Government of the Yukon reached a key agreement with First Nation Na-Cho Nyak Dun - the Resource Gateway Project will provide necessary upgrades to existing road infrastructure, bridge replacements/rehabilitations, and new road construction which will provide more reliable access to mineral-rich areas of the Yukon, a big positive for all Yukoners and Yukon resource exploration companies.
The companies are Banyan Gold (TSX-V:BYN, OTC:BYAGF), Strategic Metals (TSX-V:SMD, OTC:SMDZF), and White Gold (TSX-V:WGO, OTC:WHGOF) - we will discuss each one in alphabetical order. I don’t like one more than the other, they are three different stories and each one has its own strengths/weaknesses.
Banyan is focused on its AurMac Project in the Mayo Mining District of the Yukon. The 9,230 hectare Aurex-McQuesten Property (Aurmac) lies in close proximity to both Victoria Gold's Eagle Project and Alexco Resource's Keno Hill Silver District. In July 2020, Banyan published a maiden resource estimate for AurMac that totaled 903,945 ounces. Banyan then proceeded to drill more than 10,000 meters in 57 drill holes.
AurMac benefits from exceptional infrastructure with existing roads and power infrastructure. The Canadian/Yukon governments are committed to spending C$63 million to improve roads in the Mayo Mining District near Banyan, and a new powerline was built from Mayo to AurMac in order to improve power quality and reliability in the area. The infrastructure advantages at AurMac mean that Banyan has a relatively low cost of drilling, and a much longer exploration season than most Yukon explorers (March to December).
2020 drilling expanded the mineralized zone of the Airstrip Deposit by 300 meters to the West and 125 meters to the South, with the deposit remaining open to the East, West and down dip. The mineralized extent of the Powerline Zone was also extended by over 500 meters to the South of the existing Resource – Powerline remains open in all directions and at depth.
With more than C$5 million in its treasury Banyan is going to be aggressive in 2021, with more than 15,000 meters of drilling planned at AurMac. Banyan has been able to add ounces at AurMac for a cost of roughly C$2 per ounce so far, as the AurMac deposit continues to increase to 2,000,000 ounces (and potentially beyond 2,000,000 ounces) I expect the market will eventually value these ounces at somewhere between C$30 and C$50 per ounce. That means that as long as Banyan continues to expand the mineralized footprint at AurMac it will lead to a significant upward rerating for Banyan in the future.
I will add that I believe the 2,000,000 ounce resource mark is important for AurMac, and once that level of scale is achieved it will be much harder for the market to ignore. In addition, when/if the 2,000,000 ounce resource mark is exceeded it will make the first 2,000,000 ounces worth that much more as economies of scale begin to benefit the total value and attractiveness of the project.
Banyan is led by CEO Tara Christie, a CEO that eats her own cooking and has participated in every financing since joining the company in 2015. Insiders own nearly 10% of Banyan, and strategic investors (Alexco, Osisko, and Victoria Gold) hold more than 20%.
Banyan tends to benefit from strong seasonal tailwinds beginning in April that usually last through August:
I view C$.20 or below as bargain basement prices for Banyan, with the valuation well supported by an expanding 1,000,000+ ounce gold resource at AurMac and another 528,000 ounce gold resource at Banyan’s #2 project, Hyland, in the southern Yukon. Drilling has been underway at AurMac since early March and samples have already been sent to the lab for assaying. This means that Banyan has a head start on most other Yukon explorers and news flow is expected to be steady and continuous for the rest of 2021.
Strategic Metals is one of the better run gold project generators out there today. The company’s current C$45 million market cap doesn’t do it much justice considering that Strategic has assembled a portfolio of equity investments that has a fair market value of C$27 million, in addition to C$9 million in cash in its treasury. Strategic also has 100% ownership of more than 100 mineral projects, mostly located in the Yukon.
If we subtract the cash and equity portfolio from the current market cap we can infer that investors are essentially getting 100% direct exposure to more than 100 mineral projects for a price of admission of roughly C$9 million.
Frankly I'm not sure I've ever seen an opportunity this good before. The market is basically indicating that none of these 100+ projects will amount to anything economic.
Strategic’s flagship project is Mt. Hinton located on the eastern edge of the Keno Hill Silver District, a prolific mining district that has produced over 200,000,000 ounces of silver at an average grade of more than 1,300 grams/tonne silver:
Drilling at Mt. Hinton this summer will likely include follow up at the Southwest Zone, where Strategic had a couple of broad hits last summer on a structure that's been traced for about 1.7 km. 4.78 g/t gold over 12.14 m and 3.86 g/t gold and 182 g/t silver over 9.75 m. At the Granite North Strategic hit 6.74 g/t gold and 186 g/t silver over 7.25 m, including 1.77 m grading 22.7 g/t gold and 514 g/t silver underneath a 202 g/t gold surface sample. 100 m down slope, they drilled below the starred 2340 g/t float sample in the above picture and hit 17.00 g/t gold over 1.56 m, and 9.57 g/t gold over 1.47 m, including 0.52 m grading 25.8 g/t gold from two separate holes.. There are a number of other showings in and around the Granite Creek Basin that will be evaluated as well. Work will likely include drilling, trenching and surface sampling.
Strategic will also likely carry out some exploration work on a few of its copper projects, including the GK Project in British Columbia’s Golden Triangle.
If you want to hear Strategic Metals CEO Doug Eaton go through the entire presentation and answer questions from investors then the following video is well worth a 40 minute investment of your time.
Similar to Banyan, Strategic shares begin to benefit from seasonal tailwinds in April that usually last through the summer.
SMD also offers an attractive technical chart setup with a head & shoulders bottom forming and an open gap from November at $.52 offering a minimum upside objective:
Strategic’s net-asset value based upon equities and cash held is roughly $.34 per share, paying $.42 for SMD shares is a juicy asymmetric speculation with roughly 20% downside and the potential for a double, or even better, in the event of exploration success this year.
White Gold not only has amassed a massive 420,000 hectare property package in the White Gold District of the Yukon (40% of the entire district and over 80% of the gold anomalies), but it also has a ~1.75 million ounce gold resource at its flagship Golden Saddle, Arc, and VG Deposits. At Golden Saddle, White Gold has an indicated gold resource totaling 1,140,000 ounces at an average grade of 2.28 grams/tonne Au.
At the most recent $.61 share price White Gold is being valued at roughly US$36 per ounce of resources at Golden Saddle, Arc, and VG. This means that the market is giving essentially zero value to the rest of WGO’s 400,000+ hectare property package.
White Gold also has a strong shareholder base and a tight trading float:
With Kinross, Agnico Eagle, and management/insiders accounting for roughly 60% ownership one would think the retail float is ~40% of the ~132 million shares outstanding. However, Eric Sprott and other institutional investors hold roughly another 10% of White Gold’s shares outstanding. This leaves retail investors with about 35,000,000 shares to trade/accumulate. White Gold is among the tightest share structures of a company with more than 100 million shares outstanding I’ve ever seen.
Similar to Banyan and Strategic, White Gold’s value is well anchored by an existing resource base, leaving a lot of potential upside for a new discovery across White Gold’s project portfolio.
One of the focuses of White Gold’s exploration program this summer will be the Bonanza Property, located 10 kilometers south of Dawson City, Yukon. In a recent news release, White Gold outlined significant gold in soil anomalies and a structural geological interpretation of the property. Bonanza offers many advantages including a lower cost of exploration due to proximity to Dawson and road access to site.
Infill soil geochemistry sampling has outlined multiple property-scale linear WNW- to NW-trending gold in soil anomalies. The recently completed structural geological interpretation based on airborne magnetics and electromagnetics (EM), and high-resolution drone LiDAR data, has significantly improved the understanding of structural controls on gold mineralization. In addition, the combined strike length of the multiple gold in soil anomalies and interpreted controlling structures is more than 6 kilometers and remains untested by trenching and/or drilling.
White Gold Founder and major shareholder Shawn Ryan walked through the Bonanza Property and the recently announced results.
Shawn Ryan explained the unique nature of the Bonanza Property in the above presentation:
“There’s the gold anomaly kicking through right behind the dredge (as he highlights the anomaly on Google Earth). That’s what I'm getting at, this is a unique project because there is no other project where you can find a creek that has produced this much gold, with all these gold anomalies ripping through right next to it. This is very very unique.”
It’s also worth noting the recent M&A that has occurred in the gold sector which includes Newmont Mining’s C$456 million acquisition of GT Gold, and Evolution Mining’s C$343 million acquisition of Battle North Gold. White Gold has a market cap of roughly C$80 million and its relatively low valuation compared to its existing resources and the exploration potential of its property package could make for an attractive target for a larger company. Moreover, the Golden Saddle/Arc/VG deposits compare favorably to other Canadian exploration stage deposits with regard to size and grade, and the majority of the resources are open-pittable. Agnico Eagle and Kinross each own 17% of White Gold, and Kinross in particular has over US$1 billion in cash on its balance sheet as of its last quarterly report.
Similar to Banyan and Strategic, White Gold benefits from strong seasonality beginning in April:
Gold juniors are currently out of favor and many stocks are sitting at/near important levels of long term chart support. Meanwhile, the Yukon gold juniors stand to benefit from strong seasonal tailwinds that tend to begin in early April. Usually the best time to buy gold explorers is when things are quiet and the sector is out of favor, kind of like right now.
Disclosure: Author owns shares of BYN.V, SMD.V, and WGO.V at the time of publishing and may choose to buy or sell at any time without notice. Author has been compensated for marketing services by Banyan Gold Corp. and White Gold Corp.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Banyan Gold Corp. is a high-risk venture stock and not suitable for most investors. Consult Banyan Gold Corp’s SEDAR profiles for important risk disclosures.
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