Sunday 23rd October 2016

Resource Clips

Safety in Numbers

Redstar bets on an ever-expanding Nevada gold property portfolio

By Kevin Michael Grace

“We are a pure precious metals exploration company,” declares Scott Weekes, President of Redstar Gold Corp. And a small one at that: a share price of $0.165 and a market cap of only $9.5 million (as of October 27). But Redstar has a crucial advantage—one that puts it “on almost a level footing with the big guys”—a comprehensive database of American properties acquired from AngloGold Ashanti.

“We didn’t want to be just a one-trick pony, and if you’re a gold explorer, Nevada’s a place you’ve got to be interested in. It came to our attention six years ago that AngloGold was moving out of North America, and their database was for sale.” The database has over 1,600 extensive property files on Nevada, including mineral occurrence and digital geochemical and geophysical datasets.

Since 2005, “Redstar has been generating projects using that database. We’ve got 12 in Nevada now. We just added one on the Cortez trend, and it’s a perfect example of the value of the database: to point to a project that has gold values within one of the major trends in Nevada. It’s very unusual for a junior to be able to do this.”

Redstar now has three projects on the Cortez Trend as well as projects on the fabled Carlin Trend, but Weekes stresses that Redstar doesn’t follow trends. Instead, “We want to generate projects wherever the data leads us.”

One project the data led Redstar to is Oasis in southwest Nevada, operated by Centerra Gold, which can earn a 75% interest. “It’s a little bit different,” Weekes says. “The mineralization is related to a gold-porphyry system. And so we wanted to market it to a company that would understand it. Centerra’s been doing a fabulous job of exploring there, very aggressive. They’ve just completed a drill program of almost 16,000 feet. It has really big size potential.”

According to Weekes, if any of their Nevada projects strike it big, the company may spin them out “as a dividend to shareholders.” Shareholder value is of great concern to Redstar. “We went into this thinking we would be able to generate two to three projects a year. You’d get some projects that would move forward, others that would be worked on, and we would drop. Eventually, we would end up with a stable portfolio of 18 projects.”

For such an active company, Redstar is remarkably frugal. According to Weekes, it has only $300,000 to $400,000 in cash, but as most expenses are incurred by joint-venture partners, that is not a problem. “We’re a company that hasn’t gone to the well very often; we can operate with a very low burn rate.”

Another factor keeping down costs is Nevada itself. “We’ve worked in places outside North America, and you’re often working in political environments you’re not too comfortable with. Nevada’s a good safe environment.”

Another safe environment is Ontario, home of Redstar’s non-Nevada project, Newman Todd, on which Central Resources Corp holds a 60% option. Nine miles away, within the Red Lake Mining Camp, is the Golden Eagle find, which Goldcorp bought four years ago for over $1 billion. Also there is Rubicon Minerals Corporation, which has an $800-million market cap. Weekes enthuses, “There are not many places where companies without resource estimates have this kind of market cap.”

Gold is a pretty good place to be in —Scott Weekes

Assays at Newman Todd have revealed values as high as 24.89 gold per tonne over 3 metres, including 69.02 g/t over 1 metre. “We’ve defined three gold zones along that trend so far,” Weekes reports. Central is committed to spending a further $500,000 in exploration before the end of the year, but may choose to focus on their Yukon properties. In that case, Redstar would retain 100% of the project, and if this occurs, Weekes anticipates a $2-million drilling program, with a different partner.

Weekes concedes that as a pure explorer, Redstar is at the mercy of the market, and when the market is down, “joint ventures are the first to go.” These days, however, with gold over $1,300, Weekes feels pretty good. “We’ve probably had more people contact us in the last six weeks than in the past six months.”

He concludes, “I think we’re a significantly undervalued company because we haven’t had much news flow. But I think over the next 12 to 18 months we’re going to have a lot of news flow. There’s a recognition now that gold is a pretty good place to be in, and there’s lots of companies looking for good gold projects.”

One Response to “Safety in Numbers”

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