All the makings of a major gold rush are rapidly emerging in the Canadian province of Nova Scotia. And investors who learn about this opportunity could soon be rewarded.
Few investors know it, but Canada’s weaker currency, plus new gold extraction technology, have reawakened a major brownfield gold resource that’s long been forgotten about… until now.
In fact, over $1.2 billion in gold has been taken... but there is much more gold yet to be produced.
Right now is the opportunity to get in at the ground level. One company has just moved into the neighbourhood, with the expertise and track record to successfully follow up with a new mine.
That newcomer is Osprey Gold (TSX-V: OS; OTC: OSSPF), a small company moving into Nova Scotia’s largest historic gold production area. Osprey has quietly amassed significant claims in under-explored target areas that are ripe for expansion drilling.
Goldenville, Nova Scotia’s NEW Golden Age
As global instability continues to ramp up in many of the world’s top gold-producing nations, the safe and predictable shores of Nova Scotia are now prime for the coming of the region’s second official gold rush.
While everyone was moving out West to San Francisco in the late 1800s and early 1900s for arguably the world’s most famous “gold rush”, a second gold rush to the East was quietly minting millionaires until the 1940s. Legendary for its gold, Nova Scotia’s most prolific gold producing region was aptly named, “Goldenville.”
The largest gold production site in Nova Scotia’s history, Goldenville produced 212,300 ounces of gold prior to 1942. That’s worth $263 million in today’s dollars.
But the commencement of the Second World War diverted resources, labour, and attention away from the site and the region for many decades.
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It’s a wonder why billions of dollars’ worth of gold was left behind, unexplored and under-produced.
Until now. In a way, these historic mines are being “rediscovered”, with today’s technology and know-how capable of far surpassing the production levels of Nova Scotia’s peak nearly a century ago.
Goldenville is unlike any other place on earth because the rocks from nearly every epoch are all exposed. In this one place, you can find an incredible amassing of gold.
So unique are these characteristics, that it’s not uncommon for geologists to get misty-eyed, and to lovingly describe these rocks as “magical”. With gold so near the surface, open-pit mining could allow a mining company to produce vast quantities of gold inexpensively.
Atlantic Gold, a Canadian gold mining company, saw this opportunity, and they are mere months away from seeing it through to production.
Less than 3 years ago, Atlantic was toiling at a share price of $0.18. But when the company secured financing for its MRC mine, its stock started to take off.
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To date, Atlantic is on budget and on schedule, already surpassing the 70 percent mark of construction, and set for commissioning this September—a feat very rare in the mining industry, marking the completion of many major milestones already.
Gold Rush 2.0
Osprey Gold saw this area as an opportunity too good to pass up. They acquired an option to earn a 100 percent interest in four parcels within striking distance of Atlantic’s MRC site.
One of Osprey’s parcels already had a historic resource of less than 200,000 ounces. However, that was calculated under the presumption that gold would be produced with an underground mine.
By rethinking the deposit as eligible for open-pit mining and building in other data, Osprey’s team upped the capped resource to 288,000 ounces Inferred (a 60 percent increase) and to 447,000 ounces of gold Inferred, uncapped (a 72 percent increase).
In short, Osprey, a company with a market cap less than $10 million, is sitting on at least $560 million in gold. But even that could be a conservative estimate.
There are four main reasons why Osprey has enormous upside potential:
1. Abundant gold reserves allow open-pit mining: Gold miners in Nova Scotia had always chased and tracked high-grade veins in underground mines.
But more recently, geologists thought outside of the box and chased a hunch. They started to assess the host rock which spawned the veins for disseminated mineralization. Their hunch was correct – the shale host rocks have been proven to be mineralized.
The result is the opportunity that Atlantic, and now Osprey, is chasing: open pit mining, instead of underground.
The benefits of this strategy are three-fold: it’s scalable, risk is drastically reduced, and it’s far cheaper. To top it off, the Canadian dollar has depreciated sharply in the last few years, lowering costs for producers and opening up a huge window of opportunity.
Crucially, the province of Nova Scotia is friendly to open pit mining. Ranked 17th out of 109 Mining Jurisdictions for Policy Perception, according to the Fraser Institute, Nova Scotia has an extensive history of high-grade production. With lots of potential and great infrastructure links, Nova Scotia is prime for its next gold revolution.
2. Being open to the pit: Unlike the 1940s, when Osprey’s Goldenville was last “golden”, there was not the access to geochemical sampling and mapping that we have today. Along with its Goldenville property, Osprey is also concurrently conducting exploration on its nearby Mitchell Lake property, which also had historic production that was stunted by the war effort.
Goldenville is undoubtedly Osprey’s top asset, located only 5km from the town of Sherbrooke, complete with all applicable infrastructure and access. The historic mine on site produced 212,300 ounces of gold between 1862 and 1942, which is more gold than any other mine has produced in the province.
In 2005, a previous owner dewatered and sampled the old workings, and tacked on some drilling to define a resource. That yielded 106,976 indicated tonnes, grading at 10.76 g/t gold, and 533,739 inferred tonnes, grading at 14.26 g/t gold.
It’s high grade, and in theory could be rebooted as another conventional underground Nova Scotia high-grade underground mine. But that’s not Osprey’s primary strategy.
Instead, the goal is to mimic the methods applied by Atlantic at Moose River. Osprey plans to define a lower-grade, open-pit deposit at Goldenville, around the old workings, of which there are dozens.
3. Ambitious drilling program: Osprey hopes to prove that stacked gold-bearing veins stretch to much greater depths than the 325 metres that the mineralized veins have been tested at so far.
If the system remains open at depth, there’s a chance that Goldenville’s mineralization continues across to Osprey’s Mitchell Lake property. Only stepout drilling will tell if that’s the case.
On Mitchell Lake, a drill program was carried out by a previous owner in 1997 that included a drill hole that returned 1.33 g/t gold over 20.2 metres, meaning there’s enough grade to make an open-pit mine not only economic, but that it could likely operate for quite a few years.
But there was limited follow-up exploration since those holes were completed. Osprey takes these results quite seriously, and plans to expand upon where this work left off.
Osprey has acquired the drill data from the previous owners, which was then sent for assay. The result will likely be not only more information, but more ounces to the Goldenville resource. All for a low cost.
This summer is scheduled to have Osprey turning the drills at a steady pace, as they map out and extend their knowledge base on their properties.
Osprey is cashed-up enough to make good on its ambitious drilling, logging and sampling campaign this summer.
As mentioned, Osprey acquired 24 near surface drill cores from Goldenville’s previous owners. The holes were drilled in a fairly tight grid around a couple of higher grade near-surface intercepts.
Combine this data with the new holes from Osprey’s summer drill programs, and the company will begin to see an impact on their economics both near surface and underground. The result will more than likely be a significant resource increase, for a relatively low price.
4. Topflight management
While Atlantic is bolstered by the support of heavyweights like Rick Rule and Sprott, Osprey has assembled a formidable team with significant expertise.
The team is led by Osprey President, Cooper Quinn, a geologist with international experience, whose resume includes significant contributions on Underworld Resources’ White Gold project in the Yukon, which was acquired by Kinross for $139 million. He’s also known for his contribution towards Lion One Metals’ (TSX-V: LIO) Tuvatu project in Fiji.
Quinn is accompanied by regional expert Perry MacKinnon who was brought on as VP of Exploration last month to impart his Atlantic Canadian geological expertise, and leverage his history to advance the company.
From a financial standpoint, the company is backed by the fundraising strengths of CEO Jeffrey Wilson, who has helped to raise over $50 million over his career for companies that were taken over by mid-tier miners.
And on the board, are veteran project generators Adrian Fleming and Greg Beischer. Fleming and Quinn have a history together, both having worked together at Underworld before the major Kinross acquisition took place. Beischer is the current President and CEO of Millrock Resources (TSX-V: MRO), which is a company completely built upon project generation and seizing opportunities.
Backed by the negotiating know-how of Fleming and Beischer, Osprey will have no problems along the way as it continues to seek out opportunities to expand operations, and acquire assets. It’s a $10.3 million company, sitting on $560 million in gold.
For those that missed the boat on Atlantic Gold, Osprey is still at a stage where investors can find great entry points.
But the window is tight.
The summer program is right around the corner, and at any moment, the company could release a “triggering” announcement that could send it off and running to catch up to Atlantic.
So, don’t be like those who skipped out on Nova Scotia during the first gold rush. Learn from history.
While it is sitting on $560 million worth of gold, Osprey Gold (TSX-V: OS)(OTC: OSSPF) is still only valued at $10.3 million. Needless to say, it looks reasonable at these levels.
Sandstorm Gold (TSE: SSL)
Sandstorm Gold Ltd. provides financing for precious metal mining companies in the form of a 'gold streaming' transaction whereby an upfront cash payment is exchanged for a percentage of gold production from the mine.
Harte Gold (TSE:HRT)
Harte has seen some very strong results YTD. The stock received an extra boost when it posted a 25% increase in Proven and Probable reserves at its True North property. We expect Harte’s stock to remain steady at these levels until gold prices hold around $1250.
Detour Gold (TSE:DGC)
Detour, A Canadian miner has Its primary asset is its Detour Lake mine. Detour has an indicated resource of approximately two million ounces, and has completed over 160,000 meters of drilling. Detour’s stock has fallen back from its Sept. 2016 high, but the companies’ outlook remains bright.
Gold Fields Limited (NYSE:GFI)
South African Gold Fields produced 2.15 million oz. of gold equivalent in 2016, slightly lower than its 2015. It owns and operates mines in South Africa, Ghana, Australia and Peru. Its growth efforts are focused mainly in the regions where it already has a footprint and are mainly driven through brownfields exploration. Unlike its smaller counterparts, Goldfield yields a modest dividend.
Eldorado Gold Corp (NYSE:EG)
Eldorado Gold is offers exposure to international gold markets, with assets in Turkey, Greece, Brazil and Romania. While share prices recently plummeted due to uncertainty over its Greek subsidy Hellas Gold, there is a great buying opportunity here for a company with financials and performance both on the up.
By Joel Chury
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