Thursday 29th September 2016

Resource Clips


The Proof’s In The Porphyry

Northern Freegold Drills Yukon Gold, Silver, Copper, Moly

By Greg Klein

Northern Freegold’s TSXV:NFR January 18 inferred resource estimate was, as President/CEO/Director John Burges says, another milestone in its rapidly advancing Freegold Mountain Project in central Yukon. The Revenue Deposit’s initial 43-101 came in addition to the adjacent Nucleus Deposit’s existing resource of 1.39 million gold-equivalent ounces indicated and 898,000 gold-equivalent ounces inferred.

The boost of 3.66 million gold-equivalent ounces prompted analysts Michael Fowler and Leonie Soltay of Loewen Ondaatje McCutcheon to rate Northern Freegold a speculative buy with a target of $1.44—a steep hike from its January 18 high of $0.30.

Northern Freegold Drills Yukon Gold, Silver, Copper, Moly

That helps explain why Burges, a Northern Freegold newcomer as of November 1, “would want to move from a pretty comfortable Wall Street role covering the resource and commodities sector to a junior exploration company in the middle of a financial maelstrom.”

After being approached by Director Greg Johnson, the first thing Burges noticed was the company’s valuation. “It was trading at about a third to a quarter of its peers,” he says. “So the company’s cheap. But companies are sometimes cheap for fundamental reasons. I then went through the basics. The Yukon’s a great place to be mining, and the region has good infrastructure. But did the company have the ability to scale up its resource? This latest announcement shows we can do just that, and do so rapidly.”

With a gold-equivalent cutoff of 0.5 grams per tonne, Revenue’s January 18 inferred resource estimates 101 million tonnes grading

  • 0.34 g/t gold for 1.12 million gold ounces
  • 3.14 g/t silver for 10.19 million silver ounces
  • 0.13% copper for 286.87 million copper pounds
  • 0.04% molybdenum for 89.61 million molybdenum pounds
  • 1.08 g/t gold-equivalent for 3.66 million gold-equivalent ounces

The adjacent Nucleus Deposit has a February 2011 indicated resource estimating 48.5 million tonnes with a gold-equivalent cutoff of 0.4 g/t grading

  • 0.7 g/t gold for 1.1 million gold ounces
  • 0.9 g/t silver for 1.4 million silver ounces
  • 0.06% copper for 67.75 million copper pounds
  • 0.89 g/t gold-equivalent for 1.39 million gold-equivalent ounces

The Nucleus inferred resource estimates 41.45 million tonnes with a gold-equivalent cutoff of 0.4 g/t grading

  • 0.47 g/t gold for 627,000 gold ounces
  • 0.98 g/t silver for 1.31 million silver ounces
  • 0.07% copper for 62.03 million copper pounds
  • 0.67 g/t gold-equivalent for 898,000 gold-equivalent ounces

“Last season we drilled 27 holes, 12,375 metres, all of it in Revenue. We spent $4 million on exploration and converted that to over 3.6 million gold-equivalent ounces, an incredibly low finding cost,” Burges points out. “Part of that comes from having a porphyry asset. When you have a pretty good sense of the overall structure, you can scale up the size with relatively low-risk, low-cost drilling.

“We have an eight-kilometre geophysical anomaly running from Nucleus to the Stoddart Zone,” he adds. “Revenue is in between and that’s probably where the porphyry is centred. When you compare that geophysical anomaly to the soil geochemistry, where we have extremely strong copper and gold showing across a four-kilometre strike zone that crosses about the middle of that geophysical anomaly, it’s easy to become convinced that it’s a single porphyry system. It’s one of the largest geophysical anomalies you’ll see and probably comparable to some of the largest porphyry projects in the world. That’s the potential—obviously we haven’t proved that yet. We have to work at that every drill season.

“Revenue is open laterally in all directions and at depth. This coming season we think we’ll have very similar results as we drill the western side of the deposit.”

We spent $4 million on exploration and converted that to over 3.6 million gold-equivalent ounces, an incredibly low finding cost —John Burges

This year the company also plans to drill Nucleus below its current depth of about 300 metres and to explore some of the project’s prospective targets. The drill season usually runs from April to October.

As for infrastructure, “We have a government-maintained road leading to the main highway, a key advantage over companies that have to helicopter everything in. A high-voltage transmission line is about 30 kilometres away. We are on Crown land, but we maintain strong relationships with the local communities.”

Those relationships are enhanced by Founder/Director Bill Harris, a second-generation Yukon prospector who knows the territory’s people as well as its geology. “He not only found the deposit but was able to amalgamate a very fragmented land package,” Burges notes.

Director Greg Johnson is President/CEO of South American Silver TSX:SAC and a co-founder of NovaGold TSX:NG who helped push three projects through to feasibility as the company’s market cap rose from $50 million to over $2 billion.

Tim Termuende is President/CEO/Co-founder of Eagle Plains Resources TSXV:EPL, which Burges describes as “a serial incubator of assets which they spin out, the most recent example being Copper Canyon Resources, which NovaGold acquired last year.”

VP of Exploration Al Armitage is a 25-year geologist with extensive experience in North American porphyry assets, says Burges. “With his colleagues Al Sexton and Joe Campbell, they’ve really driven the exploration side of the company.”

The company had $3.6 million cash as of December, Burges says. “The cheapest capital would come from exercise warrants. We now have 29.8 million warrants at a 45-cent exercise price.”

He concludes, “We have the kind of asset that intermediate producers like—low-cost, open-pittable bulk-tonnage projects. And having a project like this in a low-risk jurisdiction with good infrastructure makes it even more valuable. I believe Freegold is going to be huge, and we’re rapidly working towards that.”

At press time Northern Freegold had 111.5 million shares trading at $0.29 for a market cap of $32.4 million.


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