A Gold Explorer With All Of The Key Ingredients In Place For A Big Upside Move
After the stunning success of Great Bear Resources (TSX-V:GBR) there is an exploration resurgence in the Red Lake region of western Ontario. WIthout delving into great detail into the Great Bear story, in 2017 GBR picked up a project that had multiple previous owners and had seen a considerable amount of historic drilling. GBR’s Dixie Project is now the hottest gold exploration project in the world after Great Bear geologist Bob Singh “cracked the code” with a new and unique interpretation of the geologic model at Dixie.
GBR.V (July 2018 – September 2019)
Great Bear is busy trying to understand just how large of a gold system it might have on its hands at Dixie, but there is significant potential for the Dixie Project to contain between 5 million and 10 million ounces when it’s all said and done. When factoring in the high-grade nature of what GBR has uncovered to date at Dixie, the project quickly becomes one of the best new gold discoveries of the last decade. While GBR shares still have considerable upside potential, at a C$400 million market cap it’s safe to say the largest percentage gains for GBR shareholders are in the rearview mirror.
This begs the question: which company could be the next Great Bear?
As I was digging around trying to answer this question, I came across a micro-cap gold explorer named Argo Gold (CSE:ARQ, OTC:ARBTF). Argo Gold has a project called the Uchi Project that sits on the same “Confederation Volcanics” as Great Bear’s Dixie Project, which is roughly 100 kilometers away.
I recall meeting with Argo CEO, Judy Baker, at a conference in late-2017. However, at the time I didn’t feel any sense of urgency in terms of buying ARQ shares.
What a difference two years makes! The situation in Argo today is much different than it was in 2017.
Not only has Great Bear taken the junior mining sector by storm with discovery after discovery, but Argo now has a much better understanding of the structural and lithological controls at Uchi than it did two years ago. Argo is a discovery focused company, and the Argo team boasts more than 150 years of combined discovery and development experience. Argo President Peter Mah (who recently came onboard in July 2019) is a mining engineer with 30 years of global mining industry experience including gold, diamonds and base metals. As a Group Executive at the world’s largest gold producer, Newmont Mining, Mah led the early stage exploration study teams defining over 15 million ounces of gold resources for development in Canada, Nevada, Ghana and Peru.
Uchi consists of a corridor of widespread gold mineralization – within Uchi are multiple distinct vein-gold hosted systems including Woco, Northgate, Raingold, and the HST Zone:
Using an innovative exploration technique called biogeochemistry, Argo has been able to identify anomalous gold in black spruce bark (from trees). Argo technical advisor, Dave Heberlien, is one of the world leaders in this method of exploration and even the initial orientation survey led Argo to a new gold anomaly that is 150 meters south-southeast of the Woco Gold Vein. Results for the 1100 sample biogeochemistry survey along 5 kilometres of strike length are expected in October.
Argo Gold is continually compiling historical data and adding new data to the Uchi Gold Project, which has helped Argo to refine its understanding of Uchi. In addition, a third party gold producer has done an independent review and sees 1 to 2 million ounce potential. Argo Gold’s drill programs will continue to expand with the next program expected to be 10,000 meters – double the size of the last drill program.
Argo has a very clear plan of objectives for the remainder of 2019 and the first half of 2020:
- Re-log drill core with additional assaying
- Structural mapping of available outcrop
- Integrate all data into 3D model – geology, drilling, geophysics, biogeochem
- LIDAR survey
- Data analysis and integration – geology, drilling, geophysics, biogeochem, structure, LIDAR
- Development of a structural model and mineralization model
- Mechanical stripping at all known gold mineralization and biogeochem anomalies
- Washing, sampling, mapping and structural mapping at all known areas of mineralization and biogeochem anomalies opened up by winter mechanical stripping program
- Drill program
Argo also has strong insider ownership (~20%) and an extremely tight share structure (38 million shares outstanding, ~43 million shares fully diluted). Well known Canadian mining investor, Rob Cudney (Northfield Capital), is also an ~8% shareholder of Argo. All of this adds up to an ideal situation for Argo to generate maximum upside leverage for shareholders, in the event that the company makes a new discovery during the next 6-9 months.
Structural mapping, modeling, and sampling programs will help argo further refine its drill targets for the next phase of drilling that will begin in early 2020. The objective of the next phase of drilling will be to target areas of known gold mineralization where there is potential for down plunge, on strike, and en echelon extensions of gold mineralization.
Argo checks all of my boxes for a gold explorer with all of the key ingredients in place for a big upside move over the next 6-9 months (tight share structure, strong management team, attractive project with home run potential in an excellent location/jurisdiction, etc.). Argo is an attractive speculation at a ~C$5 million market cap and I can envision the stock trending higher over the coming months as the gold sector continues to garner attention and Argo moves closer to its next phase of drilling in the first half of 2020.
ARQ.CA (Daily – 1 Year)
I have bought Argo Gold shares on the open market and may choose to buy or sell at any time without notice.
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