By James Kwantes
Published first at Patreon
Shark into a swimming pool.
Whiskey bottle into a shot glass.
Pick your metaphor: when large pools of money land in the illiquid junior exploration sector, they tend to make an outsized impact.
It's likely to happen more frequently as high-quality junior mining companies catch a bid in this gold environment, with money flows increasing. Positioning early can be lucrative.
Snowline Gold: "Snowflakes" and hot money
It happened Friday (July 11) for Snowline Gold (SGD-V), which was mentioned by U.S. mining analyst Kip Herriage as his top gold pick on Fox Business TV. I had never heard of Herriage. Evidently he has a following.
Snowline shares shot up from $8 to a high of $10.38 on high volume, before dropping to finish at $8.96, up 11.6% on the day. That's quite a wild ride and a big jump for a company that had already sported a valuation over $1 billion. SGD added to those gains today (July 14), rising 66 cents (7.4%) to close at $9.62.
The short segment featured hyperbole, errors and even a touch of comedy – Charles Payne, the show's host, referred to Snowline as "Snowflake Gold."
Let's break down Kip Herriage's comments; bracketed remarks are mine.
"This could be the largest gold discovery in North America in decades [Silicon-Merlin would like a word], maybe ever [Goldstrike would like a word]. I know that sounds like big talk, but this company has only been around for four years, period. The stock has already gone up almost 4,000% in that time frame and almost nobody knows about it.
"They just came out with their first uh feasibility study, preliminary [Snowline published a preliminary economic assessment on June 23], and they've got, right now, eight million ounces of gold in the ground, but they've got 900,000 acres of land in the Yukon.
"This is a massive discovery, very few people know about it, and it's our favourite small-cap pick right now."
Massive discovery, very few people know about it. Those are the key takeaways.
Snowline has 7.94 million ounces, Measured and Indicated, at grades of 1.21 g/t gold at its Valley gold deposit in Yukon. That resource estimate is based on almost 53,000 metres of drilling and 123 holes. The company is in the middle of a 30,000-metre drill program to advance Valley and test new targets on its vast, prospective property.dfd
The Yukon: Different This Time?
While Friday's stock price action was over the top, there are certainly worse destinations to land for novice investors new to the sector.
Price: $9.62
Shares out: 160.86 million
Market cap: $1.55 billion
Mayfair Gold: Another hedge fund arrives
If Friday's move in Snowline shares represented "dumber" money – indiscriminate buying regardless of price – recent developments at Mayfair Gold (MFG-V) could be considered smart money moving into the sector.
A new insider appeared recently on Mayfair's SEDI filings roster: HCRP Regatta 1 LP. It's a buyout fund managed by Regatta Investment Partners, a hedge fund based out of West Palm Beach, Florida.
The better-known U.S. hedge fund backing Mayfair, of course, is Carson Block's Muddy Waters, which took control of Mayfair last year – as documented in this space.
Muddy Waters – And a Golden Opportunity?
Mayfair is advancing the 4.3-million-oz Fenn-Gib gold deposit in Ontario's Timmins district. A pre-feasibility study for a 4,800-tonne-per-day open-pit operation is slated for completion in the second half of 2025.
Mayfair's chairman is Darren McLean, formerly of K2 & Associates – see A Smart New Voice: Darren McLean of Muddy Waters. Previous wins for McLean and Muddy Waters, which now employs him, included GT Gold, bought by Newmont for $400 million in cash.
Mayfair's CEO is former analyst Nick Campbell, whose appointment I wrote about here. Campbell had corporate development gigs at Artemis Gold (ARTG-V), market cap $6 billion, and before that Silvercrest Metals (SIL-T), which was bought by Coeur Mining for US$1.7 billion.
Regatta filed an opening balance of 814,800 shares, about 0.75%, in the category of "director or senior officer of insider or subsidiary of issuer." The company has been quiet, but my guess is a connection to Mayfair co-founders Henry Heeney and/or Sean Pi. Heeney runs New York-based Heeney Capital, where Pi is a partner.
Interestingly, given the heavyweights backing this Timmins gold developer, Mayfair shares have slid steadily since peaking at about $2.75 in January 2024. The stock is trading below where it went public back in March 2021 ($1.85).
Price: $1.64
Shares out: 109.28 million
Market cap: $179.22 million
Novagold Resources: Paulson's big long
New York-based hedge-fund billionaire John Paulson is best-known for his successful bet against sub-prime mortgages at the peak of the 2007 credit bubble.
Paulson shut down his hedge fund in 2020 and returned capital to investors, transitioning to family office Paulson & Co. He's also a well-known gold bull. That thesis is behind his $800-million investment in Novagold Resources (NG-T), which was announced on April 22 and gives Paulson a 40% interest in Donlin Gold. Novagold put in $200 million to up its share of Donlin Gold to 60%. The seller was Barrick Gold.
Donlin, an Alaska gold deposit, is one of the world's largest undeveloped gold deposits, hosting 39 million ounces of gold (Measured & Indicated) at grades of 2.24 g/t. The new partnership began working immediately to update the feasibility study.
Novagold's shares are up about 56% in the three months since the deal was announced.
Price: $6.72
Shares out: 406.9 million
Market cap: $2.73 billion
Disclosure: I own shares of Snowline Gold and Mayfair Gold. No business relationship with any company mentioned in this article. This is not financial advice and all investors need to do their own due diligence.
