Identifying the opportunity in an undervalued project is where that “sweet spot” of resource investing comes in – purchasing an undervalued stock that, in our opinion at AOTH, is strongly favored to move higher.
It is with this in mind that we present the case for Getchell Gold (CSE:GTCH, OTCQB:GGLDF) and it’s Fondaway Canyon and Star Point projects in Nevada.
Ever since Newmont’s discovery of the large Carlin deposit in the 1960s, gold mining has become a focal point of Nevada’s economy. The state is consistently ranked among the top five mining jurisdictions in the world.
Each year, more than 5 million ounces of yellow metal are produced, which based on today’s gold prices, amounts to about US$9.5 billion in value. Nevada is home to nearly 30 gold mines, with more to come.
The state offers an attractive tax regime with a low net profits tax and zero income tax. Regulations and permitting processes are transparent and easy for explorers to navigate.
According to the US Geological Survey, if Nevada were a country, it would be among the world’s top four gold producers. The Nevada Bureau of Mines and Geology tallies gold reserves at about 70 million ounces, enough to sustain gold production near current levels for up to 15 years.
The creation of Nevada Gold Mines in 2019 — a joint venture of Barrick and Newmont — has piqued the interest of other companies looking to discover and develop new ounces in the golden state. Major miners with new projects include AngloGold Ashanti, Coeur Mining and Kinross Gold.
As proven by many others, one of the most important keys to building up a project is identifying and exploring areas where mining activities have been documented in the past, which is exactly what Getchell Gold has done so far.
In January 2020, Getchell acquired Fondaway Canyon along with the Dixie Comstock properties as part of an option agreement with Canarc Resource Corp. for a potential outlay of US$2 million cash and another $2 million in stocks.
Fondaway is an advanced-stage gold property comprising 171 unpatented lode claims totaling 1,186 hectares (2,932 acres) in Churchill County, Nevada.
Upon signing the deal, Getchell’s Chair and CEO William Wagener said these properties would “dramatically transform and elevate” the company in prominence given that they boast significant gold in the ground and are located in a top gold-mining jurisdiction.
Given Fondaway Canyon’s project profile, that could only be a matter of time.
Previous exploration/ mining in the late 1980s and early ‘90s denoted 409,000 oz of Indicated resources grading 6.18 grams per tonne, and 660,000 oz Inferred grading 6.4 g/t, for a combined 1.1 million ounces.
Significant intervals included 2.83 g/t Au over 65.4m and 1.77 g/t Au over 62.9m at the Colorado zone; and 1.01 g/t Au over 66.1m at the Halfmoon zone.
The property overlies 12 known veins, including five used to assemble the 2017 resource – and seven untested targets. Seventy to 80% of the ounces are within Colorado, Paperweight and Halfmoon, with the remainder found in parallel veins or splays off the main veins. Mineralization is contained in a series of steeply dipping en-echelon quartz-sulfide shears outcropping at surface and extending laterally over 1,200m, with drill-proven depth extensions to >400m.
The 3.5-km-long gold mineralized trend remains open along strike and at depth.
Key to the exploration strategy at Fondaway is the Central Area, detailed on the first map below. Substantial gold mineralization is evident near surface, within a 650-meter-long structurally controlled gold zone, as seen at the Colorado and Pack Rat zones on the second map. 2017 drill holes indicated the mineralization extends to depth. A similar set-up appears in the Paperweight to South Pit zones.
In 1989, Tenneco Minerals completed 165 meters of underground development (adit and drift) to bulk sample the high-grade Half Moon shear vein, a prominent quartz-rich shear zone within the Central Area. Highlights from channel sampling of the drift face included 24.1 grams per tonne Au over 1.8m and 21.8 g/t Au over 1.5m.
Getchell is also looking at the Western Area of the project, where 155,000 tonnes of oxidized material was mined in 1989-90 at the South Mouth open pit. Two holes drilled into the pediment west of the South Mouth pit hit broad gold intercepts (over 30m). These holes have never been followed up.
The company views the Pediment Zone as a stand-alone target with potential similarities to the world-famous Carlin-style gold system in Nevada, which is noted for its “disseminated” (fine-grained) nature. As such, additional work on the Fondaway veins is warranted.
The nature of the mineralization at Fondaway, ie., at surface and at depth, has the company evaluating the potential for both open-pit bulk tonnage and high-grade underground mining.
Earlier this year, Getchell confirmed the presence of two mineralized domains in the Central Area of the property: a higher-grade domain based on drill intercepts grading >1 g/t Au; and a lower-grade envelope, based on drill intercepts grading >0.25 g/t Au.
Four of six holes, part of a 2,000m drill program, have been completed, with samples from the first two holes sent for cutting and assaying. Results from these drill cores are anticipated within a month. Five holes are planned for the Central Area and one hole is expected to be drilled into the Pediment zone.
The fact that Fondaway Canyon has stibnite boulders on the property is very encouraging, the explorer previously noted, because a combination of arsenic and antimony (stibnite) is “a strong indicator of a big system.”
Sixty km north of Fondaway Canyon, the Star Point near-surface, high-grade copper oxide (tenorite) mine operated from the late 1940s through the mid-1950s. Ore was shipped to a smelter in Utah for processing, though there is no record of tonnages or grades.
Previous development focused on a 300 x 300-meter area at the southern edge of a north-south trending promontory. The surface area is covered with various pits, portals, shafts, open cuts and associated dumps. Underground development consists of several short shafts, winzes and tunnels of varying lengths, leading to a series of stopes and drifts.
Surface sampling began in 2011, with the samples primarily sourced from the dumps and to a lesser extent from outcrops. Of the 79 grab samples collected, 13 returned a grade >0.5% Cu, with the highest grades reported at 4.25, 3.00 and 2.35% Cu (see figure below).
Fast forward to 2018, when a magnetic geophysical survey and a limited (one line) IP survey was conducted over the Star Point area. This revealed that the surface mineralized expression at Star Point is underlain by coincident magnetic high-, chargeability high- and resistivity-low anomalies that are interpreted as potential copper sulfide mineralization, possibly intrusion-related. They present a compelling drill target for the company.
Less than a month into its fall exploration on the Star Point copper-gold project in Pershing County, the company showed its technical prowess by completing the Induced Polarization (IP) geophysical survey ahead of schedule.
A total of 22.5 km along five lines were done over two high-grade occurrences: the historical Star Point copper mine and the copper-gold-silver Star South artisanal mine site. Results are expected back within a few weeks, which will reveal more about this early-stage Nevada project.
The second area of focus within the Star Point property is the Star South Cu-Au-Ag prospect, situated just 2 km south of the historic mine.
This target area consists of a series of pits, artisanal adits and associated dumps within a 300 x 150m east-west trending area. These adits appear to follow high-grade Cu-Au-Ag mineralization hosted within quartz veins that are associated with shears trending in several different orientations.
As part of a 2011 sampling campaign, a total of 89 samples were collected, with the vast majority sourced from the dumps. As with the Star Point mine, there was an abundance of malachite and azurite mineralization (see image below), which is indicative of high copper content, as well as gold and silver.
What’s more impressive is that of the samples collected, many of them reported high grades of copper, gold and silver in combination, with 40 samples grading >1% Cu, 21 samples grading >1 g/t Au and 20 samples grading >30 g/t Ag. One sample returned an impressive 2.45% Cu, 9.26 g/t Au and 310 g/t Ag.
This sampling work was later validated by the 2018 surveys, which reported the presence of a strong conductor coincident with a NE-SW trending magnetic low. The geophysical signature is interpreted as a potentially mineralized structure along the thrust fault boundary, with the high-grade historic artisanal workings representing the mineralized expression at surface.
In our opinion Fondaway Canyon is a strong contender for building ounces – most likely at the Central Area, where five mineralized zones have already been found, and were used to delineate the 2017 resource estimate. Another prize could exist to the west, at the Pediment zone. It is here where Getchell Gold has the chance to test the geological theory that a large pool of gold might be sitting under the range-front, that fed a highly mineralized corridor with a number of targets, into the hills as far as Silica Ridge/ Hamburger Hill.
Getchell is working on a 2,000m, six-hole drill program focused on the Central Area and the Pediment zone. Assay results are expected soon. We are excited to see where the company stands fit to expand the already substantial 1.1Moz resource, and whether the mineralization is mineable, as we suspect it might be, as an open pit mine, or pit-underground combination.
And with exploration work activated on a second Nevada project, Getchell is well-positioned to expand its footprint further in the golden state of Nevada, and unlock its copper potential as well.
A recent injection of funds through a $1.1 million private placement also puts the company in a stronger stead to pursue its goals.
Shares Outstanding 69.9m
Market cap Cdn$25.17m
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