The downtrodden and long dormant junior gold mining sector has begun to awaken. It only took a $1,000/oz+ rally in the gold price over the last two years to finally generate some animal spirits and speculative optimism in companies with millions of ounces of gold in the ground, but lacking the financial capacity to put the gold deposits into production by themselves.
Gold (Monthly)
With gold at $2,700 and sentiment rising on gold’s future trajectory, suddenly gold ounces in the ground are beginning to be valued higher. This is especially true for high-grade gold deposits, where much of the mineralization is within 200 meters of surface. Even better if the gold is located in a tier-one jurisdiction near infrastructure and power lines.
Such is the case with Scottie Resources and its formerly producing Scottie Gold Mine (95,000 ounces of historical production at average grades of ~16 grams/tonne gold) near the town of Stewart, British Columbia. Most Golden Triangle gold explorers have to conduct helicopter-supported drill programs that generate very high costs per meter of drilling. Scottie has the advantage of being located near Stewart, B.C. – one of the great mining towns of Western Canada with excellent infrastructure and a highly skilled labor force with mining running through the veins of the local population. Being able to drive up to the drill pads means that Scottie has an all-in cost per meter of roughly $300/oz for diamond drilling. That compares very favorably with other GT explorers with costs of $600-$700/meter due to difficult access in more remote locations.
Scottie has another unique advantage with the location of its district-scale 58,000 hectare land package; the heart of the Scottie property (Blueberry Contact Zone, Scottie Gold Mine) is sandwiched in between one of the highest grade gold/silver mines operated by the world’s largest gold producer, Newmont (NYSE:NEM), and fledgling B.C. gold/silver producer Ascot Resources (TSX:AOT).
It’s difficult to overstate the importance of being positioned next to an operating mill, a mill that is currently starved for additional ore to feed it.
Scottie has such an attractive property position with an abundance of high-grade near-surface gold drill results that the world’s largest gold royalty company, Franco Nevada (NYSE:FNV), decided that it was worth investing C$9.6 million in order to secure a 2% gross production royalty on Scottie’s claims in the Golden Triangle. As part of Franco’s investment in Scottie, FNV also purchased ~5.5 million shares at C$.18 per share.
This is especially notable due to the fact that FNV does not often invest in exploration stage companies, particularly those who have not yet published a resource estimate or economic study. FNV’s investment in Scottie is a strong sign that the largest gold royalty company has confidence in the future economic prospects of the gold deposits on Scottie’s claims – perhaps more importantly I believe FNV’s investment adds validation to Scottie’s theory that the multiple gold-mineralized zones (Blueberry, D-Zone, etc.) are all part of a single trend, in which multiple gold deposits are linked to the same mineralizing event.
Scottie has the benefit of having wide zones of near-surface high-grade gold along the Blueberry Contact Zone (BCZ) – the high-grade gold mineralization spans multiple zones including Road, Blueberry, Fifi, Lemoffe, and D-Zone.
The geometry of the different gold deposits along the BCZ makes it likely that any future mining operations will be a combination of open-pit and underground mining operations.
Last week, Scottie announced the first drill results of the 2024 exploration season. The company reported nine holes (out of 43 drilled in total in 2024) that included multiple high-grade gold intervals in four different holes. Most notably, hole SR24-321 intersected 8.78 grams per tonne gold over 9.00 meters and 12.2 g/t gold over 3.47 meters in two separate intervals.
Expansionary drilling on the Blueberry Contact zone in 2024 targeted projected high-grade structurally hosted mineralization at depths of less than 300 meters, in areas that would have a high confidence of being included in the upcoming resource estimate.
Drilling of the D-Zone sought to both confirm the orientations of previously identified gold bearing vein structures and increase the lateral and downdip drilled extent. The results from these first drill holes improved the understanding of mineralization at both locations and demonstrate the exploration upside of continued work around these two target areas.
Investors can expect several more drill results news releases from Scottie over the coming months. The 2024 drill results will be integrated with 60,000+ meters of historical drilling in order to generate a maiden resource estimate for both Blueberry and Scottie Gold Mine in Q1 2025.
Management
Scottie CEO Brad Rourke is a corporate finance executive with 30 years experience in mining, energy, and real estate, Mr. Rourke holds a proven track record with successful start-up companies. His leadership experience and entrepreneurial approach have given new direction and scale to Scottie’s efforts in the Golden Triangle. Rourke is one of the more personable CEOs in the junior mining sector who is very relatable and always more than willing to speak with shareholders.
VP of Exploration Thomas Mumford, Phd, is a registered professional geologist with Engineers and Geoscientists – British Columbia (EGBC) with a comprehensive field, technical and academic background in the Golden Triangle mining district. Mumford has served as a lecturer at Carleton University and British Columbia Institute of Technology. He also holds a Ph.D. from Carleton University focused on magmatic controls for the Thor Lake REE deposit in the Northwest Territories. Dr. Mumford is one of the sharpest geologists I have ever spoken with, and he is an integral part of the Scottie team.
Thesis
I believe Scottie represents an attractive junior gold miner speculation at today’s current share price of $.165 per share – I see downside risk as relatively modest due to the strongly delineated gold zones along the Blueberry Contact Zone, and excellent location of Scottie’s gold deposits.
The bullish thesis is based on multiple factors, including:
- Gold bull market (rising gold price stands to lift share prices across the sector).
- Strong near term catalysts including drill results from 34 holes pending assays, and maiden resource estimate (MRE) in Q1 2025.
- The likelihood of gold M&A to accelerate, particularly in the best gold jurisdictions such as the Golden Triangle.
- Strong probability that with additional drilling over the next year, Scottie will be able to demonstrate that all of its different gold zones are tied together along one gold trend with the same source event.
- Strong financial backing with a shareholder base that includes Franco Nevada and Eric Sprott (insiders own 6%).
Key Catalysts
- Drill results from 2024 drilling (assays pending for 34 holes from multiple zones including D-Zone, Golden Buckle, and Blueberry)
- Maiden Resource Estimate (Q1 2025)
- 2025 drill planning and target delineation
- Summer 2025 drill program
- Maiden PEA
Disclosure: Author owns shares of SCOT.V at the time of publishing and may choose to buy or sell at any time without notice.
Disclaimer
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Scotte Resources Corp. is a high-risk venture stock and not suitable for most investors. Consult Scottie Resources Corp’s SEDAR profiles for important risk disclosures.
EnergyandGold has been compensated to cover Scottie Resources Corp. and so some information may be biased. EnergyandGold.com, EnergyandGold Publishing LTD, its writers and principals are not registered investment advisors and advice you to do your own due diligence with a licensed investment advisor prior to making any investment decisions.
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