Under the Spotlight – Ready shoot aim – Bob Moriarty, Quinton Hennigh, Rick Mills

Rick Mills Founder Ahead of the Herd:

Quinton how did you come to be involved with Crescat Capital?

Quinton Hennigh, Geologist, Geologic & Technical Advisor, Crescat Capital:

I’ve been working with Kevin and Tommy for about five or six years, Kevin came to me in 2019 said he wanted to invest in mining companies particularly junior mining companies, for exploration exposure, and I can remember in the fall of 2019 pointing him to opportunities like Vizsla, which was just coming out of the gate at that time, Great Bear which was kind of in its earlier days of discovery, and he did quite well, those both paid off big time.

But in the early part of 2020 when covid came along Kevin was short the market and actually made quite a bit of money in it, the period March-April-May I think something like that.

And then he decided to establish a precious metals fund at Crescat and asked me if I could help deploy money and we did, we deployed a considerable amount of money, I think it was around $80 million at the time into a lot of junior exploration companies primarily, and that’s sort of been our main investment strategy.

It’s pretty rare to see a fund do this in this day and age, there’s not too many of us left, but we are either the last of the dinosaurs or the first of the mammals, I’m not sure which.

RM: Bob and I were talking three months ago, when we first started this little conversation we’re having every week, and we were looking for stocks that were cheap and there was no other rationale or anything, we thought we were at the start of a gold bull market and one of the first stocks we talked about was Harvest Gold Corp. (TSX.V:HVG).

Why were you interested in Crescat investing in Harvest?

QH: There’s actually a little bit of the history before their acquisition in the projects they have now over by Windfall. Originally Harvest was targeting a porphyry gold complex in BC, they drilled a couple of holes, didn’t hit the big one unfortunately, they did a hard pivot and picked up the projects in Quebec, this is over near the Windfall deposits, basically the same greenstone belt.

Part of that was I did have interaction with them around screening some opportunities they were looking at, and this one looked pretty good, mainly because it looks like the mirror image, if you look at the greenstone belt and look at the position of the Windfall deposit, which was sold here recently to Gold Fields (Z:GFI), you can see that the mirror half of that belt is expressed in there I believe it’s the Mosseau property to the west, so it basically looks like an early-stage prospective version of the Windfall target.

Not a lot of data on the property, but the guys had done a pretty systematic job, we did help fund them last summer to get some technical work done, really build up their geophysical data, their surface geo-chem data and other things and that data has now put them in a position where they have quite a few drill targets they’re going to start testing.

Is this a slam dunk? No, is it a really interesting prospective piece of greenstone belt? Yes, very much so, and this is the kind of thing I like. I like to see companies go after big targets.

Bob Moriarty Founder 321gold.com:

Since Quinton is on the line I can say this. When I pick stocks, I cheat ok? I look at what Crescat has invested in and quite bluntly they are selecting stocks for very valid technical reasons and then when I find something that’s especially cheap, I’m willing to buy it, I’m willing to talk about it.

And since Harvest Gold had passed Crescat’s test and it was absurdly cheap I thought it was a good buy and quite bluntly it was.

RM: Quinton, another one of the stocks that Bob and I thought was so cheap and we both own was Orestone Mining (TSX.V:ORS).

Now David Hottman and crew are experienced with oxide. They have a nice copper property, but I like the Francisca gold oxide, what do you like about Orestone Mining?

QH: Well, first of all let me give a little background about the property. This Francisca project is in Salta province in Argentina, and while this region, in fact Argentina was kind of a no-go zone for us in terms of investment up until recently, it’s really turned around now.

I see Argentina having a great deal of promise, I think they’re heading in the right direction, and I think in particular the Salta province which has really been off limits for exploration generally for quite awhile now, I think it’s going to open up in a big way. I mean these areas that have been kind of locked up for awhile are actually the best places to go looking for the next great discoveries.

I remember talking about Francisca with somebody ages ago, it was like 10-15 years ago, and I remember thinking, “Gee, here you have an oxide gold anomaly that’s quite sizable.”

This thing has a lot of strike length to it, and importantly it’s along the ridge crest, ok, so it’s basically positive relief, in other words it’s sticking out of the ground; that makes it really attractive. There are trenches across the property that demonstrate pretty decent grades, 1+ gram, even 3+ gram in the one trench, and I think although there was some historic drilling it was misoriented and largely off the trend, I think this thing is an untested gold anomaly.

And now here we are in a position where the environment to explore in Argentina has improved greatly, and this target which has been shelved for a long time is coming off the shelf.

So, we jumped in, Orestone has been a penny stock for quite a lot here, but you’ve started to get some traction, the market’s starting to appreciate that this could be a very exciting drill target.

What is it? It’s what we call hornfels sedimentary rocks, basically cooked up sedimentary rocks probably indicating there’s some sort of intrusion nearby, I don’t know exactly how that part of the system fits into all of this, but this one just smells like a big gold system so I’m in. And its oxide, which means it’s metallurgically friendly, which also is very favorable.

RM: Bob, we picked two because they were cheap, and it turns out they both give good technical.

BM: Well it’s nice but what it needed, and nobody’s mentioned it yet, the junior resource market has been crippled for the last couple of years because of lack of money, and Orestone’s issue was financial, so now they’ve done a money raise, and they’ve got the money to actually advance Argentina, so they’ve got the technical advantage, it being technically interesting, they’ve got the Moriarty advantage of being absurdly cheap, and now they’ve got money in the bank so they can actually do something so that’s kind of a trifecta.

RM: Winner winner winner chicken dinner.

Rackla Metals (TSX.V:RAK) Quinton. The Tombstone Gold Belt, there’s quite a few companies working up there and it seems to be developing into an area play that a lot of people are interested in. Tell us about it.

QH: The name Rackla actually comes from the Rackla Belt, which is part of the Tombstone Belt, so the company’s been around for quite some time but back when Snowline hit it big at Valley, Simon Ridgway is very sharp, very quick to recognize that there might be more of these intrusions in this area; it really opened up the Eastern Yukon because most people had a perception that this style of deposit was not present in this part of the belt.

They thought about tungsten and stuff like that. But the gold discovery at Valley really opened up everybody’s eyes. Simon started grabbing some ground and he tested several targets, so let’s see I think it was 2022 when he started getting aggressive. He tested a couple of targets, but they didn’t play out, they were kind of I’ll call it secondary targets in the sense that they weren’t direct on outcropping mineralization. The targeting was based on a combination of geophysics and maybe a little bit of soil sampling and things like this, but they weren’t just sticking out like Valley was.

This new project, Grad, that they’re going to drill this year is absolutely hands down an outcropping discovery in my view, and if you look back to the discovery news release they talk about finding this thing— this is last year, last season — it’s in a valley that really has never seen any prospecting which is remarkable to think in North America we still have places thank God where you can walk up a valley that nobody’s ever prospected before.

And they found a great deal of outcropping mineralization, basically they found a mountain something like 400 meters from bottom to the top, and over a strike length of I think a little over 500 meters they chip-channeled this granite, this intrusive rock with sheeted quartz veins. They got over a gram gold per tonne, I mean wow I can’t think of anything in North America that’s left like this, it’s really extraordinary to see a grassroots discovery made like this.

Inside of that 500 meters I think there was something like 160 or 180 meters, but it was much higher grade, it was like 3 g/t. So, this thing in my book demonstrates it can generate grade, that’s the key ingredient at Valley, and it’s also got size. In fact, and I don’t like to disparage one deposit for another because I think Valley’s a wonderful deposit and it’s going to make a great mine, but if you look at the scale of this thing at Grad it’s absolutely enormous.

I mean you could actually fit maybe two or three Valleys inside of the overall gold trend that they’ve discovered in this mountain range. So exciting, yes, sheeted quartz veins sticking out of the ground, good gold assays over broad widths.

I’m so excited that I’m actually heading up to the Yukon in mid-July, I think I’m going to be at site on the 16^th, they start drilling early July is what I’ve heard recently so I’m hoping that we’ll see a new discovery, a new reduced intrusive discovery this year.

RM: So, the Tombstone Gold Belt, you’ve got a lot of these RIGS, the reduced intrusion-related gold systems, you’ve got Fort Knox, Eagle’s Nest, Olive, these are all mines. Fort Knox is 10 million oz, Eagle’s Nest and Olive in the Yukon are over 4 million, you’ve got the past-producing Brewery Creek mine, also in the Houston area, the Yukon portion of the belt, Snowline Gold’s Valley, that’s a Tier 1 discovery, Sitka Gold’s RC deposit, Banyan Gold’s AurMac deposit, and Victoria Gold’s Raven deposit, they’re all large reduced intrusions, the RIGS.

These things occur in clusters, so you’ve got the Yukon, the western cluster, and you’ve got the eastern cluster, is there a difference between the two geologically speaking or are they all the same thing? How do they get split into two different groups western and eastern, what’s the dividing line?

QH: Well, if you look at a lot of the work that guys like Craig Hart had done, who’s a famous geologist, it really helped define this reduced intrusive-type gold model that we use today. If you think about the way these things form, basically there’s a very large volume of granitic melt that forms deep in the crust. You know the scale of these things could be tens of miles, like these things are enormous bodies of molten rock in the ground, and these little apophyses, little fingers of melt kind of rise up, they escape the mother ship so to speak, and they rise up and they intrude the crust above.

And some of these little fingers, these apophyses that stick up, they can carry a lot of gold and that’s how these things form ok? So, you tend to get clusters because over the top of one of these big magma bodies you end up with innumerable — I’ve used the term upside-down udder on a cow right, you end up with innumerable teats and I can get away with saying that word on this podcast because it’s legitimate. You’ve got these teats sticking up out of the ground and each one of the buggers has gold associated with it quite often, so you see clusters and Craig Hart makes a very compelling case in some of the work he’s done.

So, what you’re seeing or what you’re pointing out is that we see these discrete areas, like over where Banyan Gold (TSX.V:BAN) and Sitka are located it’s probably more or less one giant magmatic complex, so you’ve got a bunch of these things poking up there, and then as you move eastward you see repeated clumps of these things, and quite frankly even at Valley I think there’s going to be more of these discoveries, they just seldom occur as one-off deposits. That’s why I keep harping on the fact that I think the Yukon, the Stikine Belt, is going to prove to be one of the more prolific gold discoveries, continual discovery one after another for the next decade or two and really evolve into one of the big gold belts in North America over time.

BM: Let me jump in for a minute. There’s something that we all know, but we haven’t bothered talking about, and I think it’s correct to say there is a western side and an eastern side, and one of the most important differences, there’s far more access to the western side than there is to the eastern side, so all of the projects on the eastern side cost a lot more money to actually drill.

Now I’ve got to give Scott Bergdahl all the credit in the world at Snowline Gold (TSX.V:SGD) I mean he got in, got active, raised some money, drilled the crap out of Valley and came up with a tremendous deposit. Certainly Rackla is taking advantage of Snowline, they’re riding on Snowline’s coattails, but it’s a lot easier for Rackla to raise money now because of the success of Snowline and Scott Bergdahl, but I think the real big surprises are going to be in the eastern half of the belt that everybody’s been ignoring because the cost is so high, but the cost at $1,800 gold is not the same thing as the cost at $3,500 gold.

RM: We’ve got two more up in that area and the second one I’d like to talk about is Sitka Gold Corp. (TSX.V:SIG), Quinton. Why Sitka, I mean I know it’s Tombstone Gold Belt, it’s a RIGS deposit but what about Sitka do you like?

QH: Look, Sitka’s actually made some really big steps in the past couple years. They started drilling the RC project I think about three or four years ago, they had some ok results but kind of lowish grade. At Blackjack and Eiger they put together an initial resource, I think it was a little over a million oz, but it was low grade 0.6, 0.8 grams, in that range.

But sometime in the latter part of 2023 I noticed they started hitting higher grade, particularly at the Blackjack target. That caught my attention because grade is really what you look for in these reduced intrusive systems. If you start to see grade you want to follow it diligently because that’s where the bulk of the gold is going to be, where the higher-grade part of the system is.

Look at Valley for example, very clear, and when they started hitting high grades I thought “Gee, this thing could have more to it than just kind of a large cloud of low grade,” so that discovery of high grade was the first pivotal moment in my book about why I got interested.

The second one was soon after I think it was 2024 maybe June they picked up the balance of the ground in this area from Victoria, in fact they picked it up right before Victoria tipped over, it was amazing the timing of that, but they actually secured the rest of this district or this cluster, and now they have a consolidated property position which includes finding maybe another half dozen of these things.

It is an extraordinary story, I still think it’s early days, I’m really glad to see them do 30,000 meters of drilling this year, I think it’s going to give us the first taste of how many of these intrusions are extra-mineralized, you know what we might see in terms of an overall endowment of gold.

I think they’re over an indicated/ inferred resource of 2 million oz’s at Blackjack and Eiger, and the grades have come up, they’re over a gram per tonne now combined resource. So, they’re on the right path, they’re growing their resource, they’re testing the targets this year, this should really be the year that we start to see this this thing crystallize in heading the direction of being a multimillion-ounce reduced intrusive gold system. How big could it be? I think the property has reasonable potential to host 10 million oz, similar to Snowline, albeit in a number of deposits.

BM: Quinton you should mention you had a lot to do with this, when they were drilling in 2023 and 2024 they were doing shallow holes ok, and I mean relatively shallow holes, you and I’ve spent a lot of time talking about that and I know you were a big fan of them drilling deep and when they drilled deep they started hitting home runs and I think they’ve changed their modus operandi to drilling deep rather than just drilling shallow and you certainly see it.

They just came out with a press release yesterday; they had 211 meters of 1.13 grams including 73 meters of 2 grams. 2 grams of gold right now is about $220 US ok, so that’s wildly economic in the Yukon. And to the extent that Sitka and Banyan and Victoria all have better access than Snowline and Rackla.

RM: Let’s move to Trifecta Gold (TSX.V:TG). I like the Tombstone, and you’ve made some good points on the individual stocks, but you said and I’m going to quote what you said about Trifecta, Quinton: “The Mt. Hinton property appears to host the central core of a large, well-zoned reduced intrusive mineralizing system. The world-class Keno Hill silver veins form a peripheral halo to this complex.

Rye, although earlier stage, shows equally compelling promise for the discovery of an intrusive-hosted gold system. Broad gold-in-soil anomalism as well as recent discovery of sheeted quartz veining with associated multi-gram per tonne gold values make this target a high priority.”

Is there that much potential in this one stock?

QH: Mt. Hinton is an interesting property, if you follow Craig Hart’s model it does look like it hosts the core of the Keno Hill District. You see basically an intrusion or good geophysical evidence of an intrusion underlying the Mt. Hinton project. You start to see the quartz veins extending out from that, it does morph into the high-grade silver-lead veins over at Keno Hill. And that’s the kind of picture you would expect.

The big question in my view about Mt. Hinton is not all reduced intrusions follow the pattern, ok? Now is the gold in this system, has it been preferentially concentrated in the veins for example? I mean that’s a distinct possibility. The veins are nice big fat wide veins, and they seem to have pretty good continuity, but is it going to be like a Snowline-type target, I don’t know.

There’s geophysical evidence, there is an intrusion to test there and they’re going to test it this year is what I understand, but it’s not outcropping, so I don’t want to jump up and down say this is a slam dunk they’re going to hit something huge. It could be that the veins themselves are actually the big prize, that might be where most of the gold endowment is in that system, but it is a big system and you look at how much metal that Keno Hill’s generated, you say, “Gee if we found something like that in terms of gold there could be a big gold deposit here too.” Yeah, I think so, so that one’s justified.

Now the Rye project, which is off to the east, is actually quite interesting in my book because it’s closer to Valley. And if you use that cluster theory that I was talking about earlier, this could be one of — I’m not sure if it’s the same magmatic chamber or not — but it could be the same flavor as Valley for example, and there is sheeted quartz veining in outcrop, it is an outcropping discovery in my book, it does have a little bit unique chemistry in that it’s got a bit of tin and some other things, but it does have the gold-bismuth-tellurium signature as well and I’m really pushing the company to at least get a few holes in there by end of season.

I think they’re trying to permit that now. I’ve really pushed Richard to go ahead and get that thing permitted. What we saw with Valley was if you remember late 2021 they drilled three or four holes into Valley right at the end of the season, they put out some news about, “Oh we saw some sheeted quartz veining,” and nobody really picked up on it but then when the assays came out they had 100-plus-meter intercepts of 1+ grams, it really caught people’s attention and the rest is history.

Once they got in there in 2022, they started systematically drilling it and hitting bigly. Well, if they could do that at Rye, get in there drill three or four holes, show that there’s a system there and then get people excited, I think they can come back at it again next year and make the big discovery.

RM: With these intrusive deposits the gold is sitting on top of the intrusive and the silver would be further away.

QH: That’s correct, yes, the silver would be distal to the intrusion. Now like I said not all these things follow the script, ok some of these intrusions don’t really have a big lead-silver halo, look at Valley for example, to date there’s not been any discovery of that type around there, so you can’t just say they’re all going to the same thing, it’s a generalized model.

RM: Ok, I was just trying to clear that up in my own head. A lot of RIGS have the silver halo and some don’t, I was just wondering the difference between the Valley discovery and Mt Hinton.

QH: That’s true, to date nobody’s found a big silver halo around Valley, not to say it’s not there but it’s just glaringly absent in my book, like I don’t see it.

RM: Let’s move to Red Mountain, Silver47’s main project and the Summa merger. I think Red Mountain’s one of the most interesting projects I’ve ever seen in almost 25 years of being in this business, Quinton.

QH: It is an exciting belt, and they really do have a district-scale property position. It belonged to White Rock Minerals a few years ago, we were invested heavily in White Rock partly because of Red Mountain but partly because of their gold project. Now the guys at Silver47 (TSX.V:AGA) did not pick up the gold asset, they focused on Red Mountain because Silver47 really is trying to make itself into a leading silver exploration company and they felt focusing on these VMS deposits was a good flagship opportunity for them.

Now the VMS systems are really interesting in my view because there’s a little bit of volcanic rock associated with these, which we would expect with a volcanic massive sulfide deposit, but there is also a lot of sedimentary rock.

They almost feel more like a SEDEX deposit in some respects, I know this sounds a bit esoteric but what that speaks to is that they could have big scale ok? Think of a basin full of hot fluids that were coming up and dumping out metal way back in the Devonian time, so there’s a lot of little tell-tale signs that this could be a big district.

They have a lot of targets — Dry Creek and West Tundra Flats are the main focus to date — but they have probably a dozen more drill targets and I think they’re going to test a lot of them this year. So kudos to them, they’ve got a great resource to start with in Dry Creek and West Tundra Flats, I think they’ve got 10 or 12 million tonnes of high-grade zinc-silver resource but they’re going to find a lot more and if they find something like a few 10s of millions of tonnes which I think is easily possible here, it could be analogous to say Greens Creek or something like that, you know a big long-lived mine or resource base that can support a mine. Very exciting.

Now I do know the assets at Summa, they’ve got Tonopah, interesting I’m not a super big fan of Tonopah, the veins are a little bit skinny, little bit squirrely, but they have this project called Mogollon, in New Mexico.

I actually worked at Mogollon when I was doing some prospecting for a major mining company nearly 20 years ago, and I really like the district.

Now when I was doing the work 20 years ago there was an issue. There was a little town there and kind of difficult people, I don’t want to speak ill of people but there was a flood through the town sometime I think about five or 10 years ago, and largely that town has been degraded considerably, so you don’t have quite so much social issue, not to say there isn’t always a bit of social issue, but I think they’re in a better position now where they can explore.

The company’s done a good job of getting in and actually drilling responsibly, drilling their targets. This is one of the biggest epithermal vein systems I know of in the western United States, it’s certainly unexplored. You think, “Gee, New Mexico, that’s kind of a weird place,” it is off the beaten path ok but if you put it in the broader context of deposits to the south going down into Mexico this is one of the great grand-daddy epithermal vein systems, like we see just a short ways to the south in Durango and Sonora and stuff like this.

So, it’s kind of a natural continuation of the epithermal belts that we find in Mexico up into the United States and this is a whopper of a district ok, I really like it. I like the fact that they’re going to be able to drill there year-round, which kind of helps balance the fact that Red Mountain’s a seasonal story and quite frankly Mogollon demonstrates very good results to date, so I think there’s a compelling story with both of those in one company.

RM: Yeah, it’s unbelievable, I’ve got a map of that project, and the vein system is outlined in red, the whole project is basically red.

QH: It’s an interesting one, like Vizsla Copper (TSX.V:VCU) kind of stood out in my book. When I first looked at Vizsla in 2019 I was like, “Gee that’s a lot of veins,” this is kind of like that, where it’s just, “Wow there’s a lot going on here.” I remember sampling veins across that district for about two or three months, and I was just impressed, the types of grades you can get both gold and silver across the property, it’s a big powerful epithermal vein system.

RM: I think they should put a drill on it just continuously. Bob what do you think about that one?

BM: Well, here’s what’s interesting. You don’t know but Quinton and I have a long history with White Rock, and we really know the Alaska property well. And quite bluntly it has an economic resource right now, ok. It’s going to be a mine and clearly there’s a lot of potential there to adding to the resource, but if you go back to when covid hit, the management of White Rock, which was an Australian company, had not set up a drill crew, so literally drill crews were in short supply so they made the decision that meant they couldn’t drill in 2020 so they missed the year totally and they had two gold projects in Australia.

Australia changed the rules on deposits and literally bankrupted White Rock but Quinton and I both had a lot to do with suggesting to Silver47 that they pick up the Alaska project and I’m thrilled that they did it, but he’s pointed out very accurately it is a seasonal project. They can drill for about three months and then it takes three months to get the assay results and you’ve got these wild swings in the price, so I’m going to give credit to both the Silver47 management and Summa management, they’ve managed to put something together that is mutually beneficial and it’s a perfect example of a symbiotic relationship where 1 + 1 equals 5.

Summa has some great projects, Silver47 has actually two great projects, they’ve got one in Canada that’s on hold because of government stupidity, but there will be news 12 months a year and they offer investors an opportunity to invest in a silver-strong property which I think is going to be increasingly valuable, but I think the merger it’s absolutely wonderful, I admire the management of both sides and I think they have a bright future and quite bluntly I’ve owned shares since Silver47 picked up the Alaska properties.

RM: It was a brilliant deal, we did a pretty deep talk about it a few weeks ago and we agreed that it was a merger of equals and shareholders should treat it that way. The second thing was the ability to drill year-round, news being the lifeblood of any junior, if you can get projects of the quality that they got with Summa coming in and now you can work year-round and drill year-round, your northern properties and your southern properties.

We’re going to move on to one more stock. Talon Metals (TSX.V:TLO), we have a nickel play here. What was it about this nickel play that got your attention Quinton?

QH: Ok, first of all Talon has a pretty long-running history, the company has this project in Michigan, they have an earn-in agreement with Rio Tinto (Z:RIO), they have the right to get to 60%, which I think they will do through the completion of their PFS study, which they’re doing on the Talon deposit right now, so they have an existing deposit which looks pretty good.

It’s not a bad deposit but they have been pushing this thing forward in a market that’s been just awful, and the company has diluted the bejesus out of the stock. I mean this thing has an unbelievable number, it’s like an ASX stock, something like a billion shares, that’s a bit annoying but to advance it they’ve had to do dilutive raises over and over again.

So, there’s a history there. Here they are, while they’re advancing this deposit which is good it’s running a couple percent nickel, it’s got copper, a little bit of PGEs and stuff, they started doing some more, call it creative testing, there’s a video actually that was put out here in the past week or so by the CEO and the lead geologist — good technical guy by the way, very competent person — about how they identified this target with EM.

So basically, they recognize that there was an untested conductor that they should target and it was a bit below. Like this deposit is dipping at about 30° I think 30 or 40° and as it projects downward, they recognized there was another conductive body below it ok? So, they actually put in a hole, and they committed to drilling this thing to a greater depth and they hit what is an absolutely phenomenal intercept.

I think it was 35 meters of extremely high-grade copper and nickel as well as high-grade platinum and gold (combined 34.9 meters grading 28.88% NiEq and 57.76% CuEq at the Tamarack Nickel Copper Project – Rick). I think the combined platinum and gold is in the 20s of grams. The copper-nickel alone add up to over 20% ok, in massive magmatic sulfide nickel mineralization.

Where do we see this around the planet? Not very often. Grades like that are very scarce, there are a few deposits, the Eagle deposit which is not far from these guys at Talon, that’s an example, Eagle I think initially started as RTZ then Lundin bought it and I can’t remember who owns it now I think Lundin Gold (Z:LMC) sold it to somebody, but it is a high-grade mine, it’s kind of perceived as having a limited tonnage, which is a bit of an issue for that one.

I think they’re getting closer to end of mine life there, but this one that they found here Talon looks like they’re just on the cusp of making a brand-new discovery in a deposit that’s already been largely drilled.

But this discovery is way higher grade ok and to describe it, it looks like a bit of a waterfall, so when these magmatic sulfide deposits form this is not through hot water which is the way many ore deposits form. This is actually molten rock that’s coming up through the ground, it’s rock that’s derived mainly from melting in the mantle down deep in the earth, and it carries a lot of nickel, copper and other goodies like platinum and gold, and as this melt comes up to the surface if it comes into contact with a source of sulfur in particular, that sulfur can scavenge those metals out of the melt and basically create a new melt, a subset of that melt, that is extremely rich in metal sulfides like nickel sulfides, copper sulfides, and even the precious metal sulfides.

Think of it like mercury, it’s super-hot mercury, it’s very dense, it’s liquid, it has a very low viscosity, it flows, as the magma is kind of pushing up through the ground this sulfide melt will kind of settle out of it and flow in different directions, it’ll find places where it can pool up and what it looks like in the case of Talon is that the existing deposit as it projects down it looks like this thing then steps over and basically forms a new pool of sulfide below.

Now the interesting thing is the grades are super high, they’re much higher than the traditional orebody there, Talon. It makes you wonder if they’re actually not finding the type of sulfide like a new sulfide source that was coming from depths. In my book this is probably telling us there’s a much larger sulfide body down there.

Now they’ve got some more geophysical data to help them guide their next round of drilling, I think they’re going to start drilling again in July, they just raised a large pot of money I think $24 million or something, but man, you want to talk about an exciting nickel story, I haven’t seen anything like this since Voisey’s Bay, and quite frankly a lot of geologists who are opining on this are comparing it to Norilsk, which is the biggest magmatic nickel sulfide deposit in the world. So, is it exciting? That would be an understatement. Yeah, very.

RM: The buy-out that shocked the world. That is a hell of a story Quinton.

QH: No, it’s better than that, sorry I’ve got to be very clear: it’s something like three times the grade of Voisey’s Bay — way better.

RM: What about size to it?

QH: Well, we don’t know yet but that’s the important thing. If these guys find out that they’ve got a brand-new pool of sulfide that’s kind of waterfalled down into a low spot, who knows? Maybe there’s something much bigger, we just don’t know yet but it’s going to be exciting to watch them drill it.

RM: We’ve got a little bit of time left here so let’s just do something and neither of you have to answer if you don’t want to but, Quinton if you had to pick one stock to watch which would you pick? You only get one, which one?

QH: That’s crazy. I’ve got a gun to my head, ok this is lovely, I’m going to put some qualifiers on that, I’m going to say what is the most likely company that’s going to deliver something of significance in the shortest amount of time.

I talked about a number of them here. I like them all, don’t get me wrong, I don’t want to say I’d like this one more than that, I’m talking about what’s an opportunity that I can see that’s got a relatively short timeline.

Look I would say given that Rackla is going to start drilling I think any day now, probably by early July and if they pull a successful hole out, kind of like Snowline, I mean think back to 2022 I think it was May or June 2022, Snowline went into the field, started drilling and immediately came out with this announcement they’d hit several hundred meters I think it was like 300 or 400 meters of sheeted quartz vein with specks of visible gold.

If I had to say that’s possible at Rackla, no guarantees in life, but I really hope these guys at Rackla poke a hole right in the guts of this thing and just knock it out of the park. So that would be my number one, but again I don’t want to disparage in any way, shape or form — they’re basically queued up here. Like the one I just talked about, Talon, they’re probably going to start drilling sometime later July, and Trifecta if they get over to Rye, especially later this year, etc., there’s good news coming out all of these. I don’t want to say there’s something wrong with any of them.

RM: If Rackla, or any of the other Tombstone players lined up to drill, comes out and nails it it’s what that would do for the industry, for that area to become an area play. I think that it would be everything that the junior resource sector could ask for, is any area to be just blown wide open, an area play like that with 2 huge RIGS discoveries, or more, and I think that’s what it would do, energize and excite the whole sector so I applaud your choice.

Bob what you got?

BM: Ok, I’m going to be a wuss, and while I agree 100% with Quinton what I see with Rackla that I think is important is the data they have already put together says they’ve got a big system, and I look forward with great pleasure to them drilling it, but what I would like to do is point out we are so early in this new gold bull market that there are literally dozens of good juniors that are really cheap, cheaper than they’ve been for years and people are waking up to the fact that that this is the last safe haven.

Now the stock market is hitting new highs, the crypto currencies are high, when the stock market goes boom, and it’s going to very soon, people are going to look for place to put their money and I’ll be blunt I think the percentage of junior resource stocks is something under half a percent of the total amount of money available for investments, ok? There is simply no place juniors can go except up, and there are dozens of stocks.

We’ve been doing this for three months now and picking stocks when they were 2.5, 3 cents, and they doubled and tripled and you’re going to see that across the board. So, while I agree 100% with Quinton for technical reasons, there are dozens of stocks are going to do exactly the same thing.

RM: Reuters had an exclusive and they were talking about central banks have been adding to their gold holdings at a record pace with a net 40% of central banks planning to further increase their gold holdings over the next decade.

Over the past three years, central banks have purchased over 3,000 tonnes of gold and analysts predict they could add another 1,000 tonnes to their reserves this year.

Demand is largely being driven by emerging market central banks, which are diversifying their holdings away from the US dollar, more so than developed market central banks.

And there’s a stat that says if you’ve been sanctioned by the US, you’re dropping your dollar holdings and you’re increasing your gold holdings because the US is using sanctions as a dollar weapon to get you to go along with their policies; Russia’s a great example of that.

BM: Ok here’s what I believe. We’ve got a lot of central banks buying gold because there is a flight to safety and people are rejecting the Treasuries and that’s a big deal. But we’ve also got the Japanese bond market crashing.

When the Japanese bond market crashes the US bond market is going to crash, so I think there’s a flight to safety. We should be and should is in quotation marks we “should” be in a correction for gold, but this correction it’s not much of a correction. I look for a pause during the summer, we’ve got an all-time high for the stock market and by October there will be a major crash.

QH: Well, I can’t predict a crash, not my department, but I can emphasize a lot of what Bob said.

I think there’s been some events here in the past three or four years, especially with the Ukraine war and Russia getting their assets frozen, it’s taught a pretty valuable lesson to a lot of countries that they don’t want that to happen to them and that’s spilled over into their views on holding Treasuries, holding US dollars things like this.

But I also think that there’s a deliberate effort to weaken the dollar in our own country, in the United States. I think there’s a deliberate effort because the dollar has been a bit of a wrecking ball for the past few years, the demand for dollars is obviously driven by the need for a lot of countries and other entities to have to pay back US-denominated debt in dollars and that’s driven the dollar higher, but I think it has backfired in many ways in the US economy such that they’re going have to let the dollar weaken to make US goods more competitive, things like this, so I actually think there’s a bit of deliberate activity behind all of this.

RM: Last week we had a report from the European Central Bank that said gold overtook the euro to become the second largest reserve asset held by central banks, of course the US dollar being number one.

CNBC also reported member countries in ASEAN, the Association of Southeast Asian Nations, are implementing a regional plan to reduce their dependence on the dollar, they’re going to settle more trade in local currencies. 

Chinas got something going and it’s got its own payments network, the Cross-border Interbank Payment System (CIPS) and they’ve got a yuan-dominated alternative to SWIFT, the Society for Worldwide Interbank Financial Telecommunications. That facilitates international transactions between banks and institutions.

So basically, what China is doing is replacing SWIFT with their own settlement method, they’ve got six new foreign banks and they’re targeting Africa, the Middle East and Central Asia with this. The Western sanctions are highlighting the risks of holding too many dollar-based assets. US dollar supremacy is gradually slipping, and I think you’ve got to start thinking about your portfolio and just how exposed you are.

Central banks are hedging their bets with gold, their dollar exposure is getting replaced with gold, maybe the rest of us should be looking at the same thing.

BM: I can only agree and certainly I’ll point something else out to you, we should mention platinum, it hit almost $1,500 this week, it’s up $500 in the last 60 days, and my concept of buying things when they’re cheap and selling them where they’re expensive, I think it’s very valid. I think that platinum’s going to catch up to gold, but what the United States has done by putting the sanctions on Russia and China and literally stealing $300 billion from Russia is they’ve told the rest of the world that being in dollar instruments is very dangerous, so this is kind of a form of suicide by the United States on the American dollar.

It’s not a question of China coming up with an alternative SWIFT system, they had to because of what the United States had done. The United States has done some very foolish things in the last few years and they’re turning around and biting them on the butt now.

QH: If I had to add anything to this it’s not necessarily just about the SWIFT replacement here, I think that again there’s a deliberate endeavor to weaken the dollar by the US government, partly because they want to make US competitive in terms of exports, but also because a cheaper dollar makes it easier and cheaper to pay back debt, I mean think about it that’s a big part of the whole story.

Is the downward trend on the dollar here lately driven by foreign governments selling? I don’t think so, I think a lot of it’s driven right at home, and quite frankly I wouldn’t be surprised if they let the dollar depreciate and they actually follow through with a lot of what Scott Bessent’s talked about, basically looking at a reset of the dollar standard, a new dollar standard. How that might manifest, don’t know yet, but it might even include backing with things like gold.

Scott Bessent is actually pretty pro-gold, so wouldn’t it be kind of revolutionary to see the US embrace backing the dollar with gold at some level in the not-too-distant future, I think that’s actually within the realm of possibility.

BM: Strangely enough, I think it’s fairly obvious that the BRICS countries are looking at gold as a key partner in some new reserve currency.

RM: It certainly appears the way they’re buying gold, and a lot of this is coming from the southern banks, they’re quite worried about their dollar exposure. The chaos that has been created by the tariffs is only accelerating their concerns I believe.

Now as central banks were backing up the truck for gold, and they have been, they still are, and they’re forecast to continue, they’re shrinking their US asset exposure not only dollars wise but basically to everything else as well.

The New York Fed’s custody data comes out every now and then and this is via the Globe and Mail, there’s been a steady decline in the value of Treasuries and other US securities in non-US central banks, and just last week or the week before the value of US Treasuries at the New York Fed on behalf of foreign central banks fell to $2.88 trillion and that’s the lowest of the year.

When you add in mortgage-backed bonds, agency debt and all these other securities the total value of foreign central banks’ US custody holdings at the New York Fed — this is where they’re held — dropped to $3.22T, which is the lowest since 2017.

So, there’s definitely been a global movement out of US Treasuries and dollars, but all other assets as well are taking a beating. It’s all kind of building up to something ominous isn’t it, Bob?

BM: Yeah of course. You could call it end of empire and it’s my theory that at end of empire you get all the fools running the country. I’ll be candid, if you look around the world, you look at the United States, you look at Mexico, we’ve got a lot of so-called leaders doing especially stupid things.

Now I maintained for years there is an ongoing conflict between the debt-based system of the West, and the resource-based system of the East and the South, and I think it’s becoming more and more obvious the debt-based system of the West is on its very last legs. 

Trump with his “ready, shoot, aim” approach is causing so much disruption that some of the things that he’s doing could be good but none of what he does is predictable, and I think he’s created a lot of chaos in the world because that’s how he operates. I don’t think that’s a good thing, I think that stability would be a lot more important than chaos and we’re getting chaos and not stability.

RM: Quinton, I really appreciate you coming on here, thank you for doing this. Do you have any anything you want to add just to close it up?

QH: Look, there’s quite a few more companies out there that are high quality, if people want to learn more about what Crescat is invested in, watch our video, we do a video every other Friday. You can hear about these stocks but also some other stories too.

RM: Great. And thank you Bob.

Rick Mills
Aheadoftheherd.com

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Richard does own shares of Harvest Gold (TSX.V:HVG), Orestone (TSX.V:ORS). HVG, ORS and Silver47 (AGA) are advertisers on his site aheadoftheherd.com

Bob owns Harvest Gold, Orestone, Silver47, Rackla, Sitka, Trifecta and Talon