Margaux Resources soon to be Cassiar Gold Corp $MRL is:
B.C Canada focused advanced Jr explorer that has recently consolidated 2 historic High-Grade Gold Orogenic Districts Scale Land Packages
( Orogenic systems structurally control the gold mineralization, known to be the birth place of huge, world-class gold deposits, further details in the 2 geological reports attached) , both land packages (Cassiar and Sheep Creek) haven’t seen modern exploration in decades and one has already established a 43-101 resource of over 1 million mineable gold ozs. Historically on their land packages, only the highest-grade veins were mined, leaving the bulk tonnage (halo) as well as many untested mineralized veins plus multiple unmined high-grade veins behind due to the drop in gold prices in the early part of 1900s. The company recently has undergone a transformative board and executive changes. They are finishing up a 5000-meter drill program and have assays pending. In the spring they will be drilling the high-grade Table Mountain area. A share consolidation will happen in the next few weeks to tighten up the share structure 1 for 5 and in this market, newly tight share structures are being rewarded due to demand from financings when those who don’t get a full allocation have to buy on the open market. (market cap is really the only thing that matters). With assays pending, the lack of stock available if the news is positive has its own consequence.
Insiders and Advisors own 42%.
They have close to 300,000 meters of drill data beginning in the early 1900s as well as a wealth of historic soil samples, geophysics, trenches, occurrences, etc that they are using Windfall Geotek Inc. $win AI technology to uncover drill targets.
Throughout you will find “NOTE:” which are my opinions of the data.
Commodity Discovery Fund
BIA Master Gold Fund
Gold Mountains Asset Management
Bowfort Capital – Mannix Family
MRL / MARFF
Share Outstanding: 200,534,271
Share Price: $ 0.155
Market Cap: $31 Million Canadian Dollars
So who cares Doc? Good Question. I’ve been asked about my DD process so here’s a bit of it and how I arrived at my investment decision MRL. Note: I mean investing not trading
The Short of the long: New Rock-Star management, It’s a new direction with a hyper-focus on building a tier 1 asset, 5+ million ozs story, trades at a discount to it’s a profitable-to-be-mined resource which underpins the share price downside risk, has both bulk tonnage and high-grade potential. The new CEO has brought on a team (with an invested interest of getting the share price up, it goes beyond the 42% insider and advisor ownership, more on that later on) and has addressed the prior bloated G&A of prior management, lack of focus and loose capital structure.
RESOURCES/ASSETS of Interest
NOTE: Original 43-101 was filing in Nov 2019 using a 0.7 cut-off grade for 1 million ozs, the average 12-month trailing gold price leading up to 43-101 filing was approx. $1300 USD and $1625 Can Dollars, Current price is $650 high USD and $950 Can Dollars higher justifying the lowering of the cur off to 0.50 g/t
Current 43-101 Resource at Taurus, Au g/t Cut-off 0.50 29,970,000 Tonnes 1.20 Au g/t 1,161,000 Ozs
Historic Resource at Table Mountain 70010 Au ozs @ 23.1 g/t
Tailings Resource at Table Mountain 600,000 Tons @ 1g/t = 19292 Au ozs
Total = 1,250,302 Gold Ozs
Market Cap: $31 Million Canadian / 23.5 million USD
Basic Price per Gold Ozs in-ground: $24.79 Canadian / $18.81 USD Price per compliant 43-101 Gold Ozs = $26.70 / $20.26 USD
THE REAL PRICE PER OZS in the Ground
Item 1). The tailing of 19292 Ozs at a decent grade of 1 g/t has a metal value of $50 Million Canadian dollars x a VERY conservative 60% recovery rate x VERY conservative 50% cash flow margin (It’s already mined they just throw it into a mobile processing unit, this assumes they pay 50% the value to the contracted operator) = $14.9 Million Canadian in positive cash flow for MRL, this could be done in the next 12-24 months
Item 2) $2.6 million in cash on the balance sheet.
Item 3) eliminate the historic resource from Table Mountain to be conservative, give those 70100 ozs at 23.1 g/t zero value
(Market cap $31 million) - ($2.6 cash on balance sheet) - ($14.9 net profit form tailings) = Adjusted Market Cap = $13.5 Million
Adjusted Market Cap / 43-101 @ .5 cutoff grade = $11.63 per Ozs / 43-101 @ .7 cutoff grade = $13.36 per Ozs
I know, I was surprised too.... That’s cheap for Canada, especially a high margin open pit with enough current scale to be a mine... more on that later.
JUST BECAUSE IS CHEAP DOESN’T MEAN ITS CHEAP
Not all ozs in the ground are created equal... There are a lot of companies with a resource but realistically it will never be a mined because of 1 or more of the following:
1) the ore composition is too complex to extract the gold profitably (A Refractory Ore, there are many, some can be worked with and others are uneconomical to process)
2) the Gold is too deep or stranded to mine economically
3) The cost of build infrastructure is too high (Roads, No Grid Power, No water)
4) The jurisdiction is too risky and no one will finance
5)The Capital Cost far outweighs the NPV
6) Management has no skill in building a mine, lack the knowledge and ability to execute, basically used the treasury to fund the boards lifestyle
7) Land package lacks scale, geology to support a multi-million ozs deposit
There are many more reasons why an explorer will ultimately fail and we investors lose money but I think those 7 are enough to challenge my thesis, now let us take each one at a time.
1) Taurus Resource Ore composition:
MRL’s resource ore is greater then 95% free milling, less then 5% Refractory. What is Free milling? Glad you asked. Free Milling is Ores of gold from which the precious metals can be recovered by concentrating methods without resorting to pressure leaching or other chemical treatment. (Meaning cheap and easy to produce gold)
2) The current resource is found in broad sheeted mineralization no greater then 150 meters depth in a flat valley perfect for an open-pit mine, the deposit is open in multiple directions and current drilling aims to expand strike, depth, and grade. This also means a low strip ratio = low cost
3) Infrastructure, it’s in the middle of nowhere right? Wrong. Highway 37 bisects the property as well as many access roads, grid power, a 30 man all-season camp with everything is already there with even cell phone and internet, water, and a permitted historic mill. (The mill is very small and needs work to be usable but the important part is it’s already PERMITTED)
4) Jurisdiction? Great North BC, Canada, Mining friendly, tax credits, and social license intact.
5) Capital cost of building a mine vs NPV. There isn’t a PEA yet, I think they will do one in 2 years once they have proved up +3 million Ozs, but based on my experience a 100k oz/year operation with a 10 year more life would be in the 115-130 million range, modeled on a 6500t on/day mill, pretty low overall because the ore is very easy to process and the project has grid power, water, flat topography, and highway access. (No barging and flying in equipment) The Aisc would be about $700us, add in a modest $100 an oz for G&A etc that leaves you $1150 = 1.15 billion UDS / 1.51 Billion Canadian of Cashflow or is valued at just 2% of current npv on 43-101 resource.. As well they will operate in a cheap currency jurisdiction, Meaning 90% of their daily operational cost will be in Can $ but sell their gold for US $, the forward curve of the future can/USD exchange rate is very attractive for Canadian gold companies
6) What about management? For those who follow the company know big changes in the Board Room and C-Suite has happened recently
The golden Rick Rule rule: “invest in management first”
i) NEW CEO:
.Mr. Roque started his career in private banking with
Millennium BCP, He is a co-founder of Reyna Silver, a silver exploration company with a portfolio of Mexican silver assets, built around two assets that formed part of MAG Silver’s original IPO. Marco is a CFA charter holder, earned an MBA from Hong Kong University of Science and Technology and London Business School, a Masters in Finance from Nova School of Business and Economics in Lisbon as well as an undergraduate Management degree from the same school.
Note: I was an early investor in Reyna Silver, it has been an amazing story, Marco knows capital discipline and has already publicly stated he’s been cutting G&A from the inherited corp structure and focusing those dollars into creating shareholder value in the ground. He sees the big picture which is building a multimillion ozs mineable resource
ii) NEW CHIEF TECHNICAL ADVISOR
Chief Technical Advisor, Geologist with 49 years of international exploration experience including detailed knowledge of Tienshan
geology and mineral deposits. from 1995-2012.
Executive VP for Ivanhoe Mines Limited Led the discovery team for the super-giant Hugo Dummet deposit at Oyu Tolgoi in Mongolia. Previous director of Jinshan Gold and a founding non-executive Director of Ivanhoe Australia. Currently the acting CEO of Realgold Corp and an independent consulting geologist working on projects in the Philippines, Peru, South Korea and the Kyrgyz Republic. PDAC’s Thayer Lindsley Award For Best International Mineral Discovery Co-recipient of the 2004
Note: Doug is a legend, it’s that simple. He finds big gold deposits, the question is why has he agreed to work with a tiny Jr like MRL? He has gone on the record stating The Cassiar Project's geology, prospectiveness, structural nature, high-grade endowment ..he believes the end result could equal or exceed that of Fosterville. That's a big deal because Doug is known for his critical eye and no BS assessments. If you want to hear the CEO talk about Doug’s comment listen to this interview done for primarily US investors 1 month ago: https:// register.gotowebinar.com/register/2791786875525189646?source=ceo
Director. Mr. Letwin brings over 30 years of experience from the resource sector, where he specializes in corporate finance, operational management, and merger and acquisitions, including 6 years as President and CEO of IAMGOLD.
Prior to joining IAMGOLD, Mr. Letwin was based in Houston, Texas, where he was the Executive Vice President, Gas Transportation & International, with Enbridge Inc. Before joining Enbridge, he served as President & Chief Operating Officer of TransCanada Energy. Mr. Letwin holds an MBA from the University of Windsor, is a Certified General Accountant, a graduate of McMaster University (B.Sc., Honours), and a graduate of the Harvard Advanced Management Program.
Note: Another Legend. Did I mention Steve's brother is the companies largest shareholder? He is. Food for thought.
Director Mr. Stewart is a senior executive with over 26 years of diversified experience in the mining industry, 14 years working with mining contractors, and 12 years working with mining companies. He is a Professional Engineer and holds a Bachelor of Science in Mining Engineering from Queen’s University Mr. Stewart is currently President & COO of McEwen Mining. Prior to joining McEwen Mining, he held the position of President & CEO for Treasury Metals, a junior gold developer focused on its properties in Northwestern Ontario. Prior to that he was the Vice President of Operations for Kirkland Lake Gold, where he was responsible for all mining and milling activities, and played an instrumental roll in the significant turnaround of the company between 2014 and 2016. Before joining Kirkland Lake Gold, he served as President and CEO for Liberty Mines Inc., and has also held various senior positions at BHP Billiton, Lake Shore Gold Corporation and DMC Mining Services.
Note: Anyone good enough to run Rob McEwen company and Kirkland Lake Gold’s operations with Eric Sprott is good enough for me.
Note: Thoughts on changes to Board and C-suite:
Its' a Rock-Star Board room. The Combined wealth of these men is staggering, not to mention they have all built, been part of hugely successful gold mining companies, they are top- tier serially successful mining executives, financier, mine builders, and discoverers, the fact that they are involved with this turned- around and refocused Micro-cap advanced Explorer speak volume to me about the Multi-million ozs potential of their 2 district scale orogenic gold land packages.
7). Is a multi-millions ozs resource possible?
A warning here, this is a long long answer, be prepared because this is a long, long answer.....Here’s are 2 reports that link the system under Cassiar to Barkerville and Cariboo gold districts. If you don’t have a degree in geology that's okay, read through them anyway, chances are you earn something that will stick and make you a better investor in the sector.
http://cmscontent.nrs.gov.bc.ca/geoscience/PublicationCatalogue/Bulletin/ BCGS_B031.pdf http://cdn.ceo.ca.s3-us-west-2.amazonaws.com/1flpdu4- BCOG_Allan_MineralsSouth_20171108-2.pdf
If you read the 43-101 you’ll see the resource has been top cut because of those high-grade quartz veins to 30g/t which means the resource has the nuggety upside which this system has been mined for in the past for.
OVERVIEW OF FIRST LAND PACKAGE
Large land package: 60,000 Ha
• Large low grade (bulk tonnage) opportunities • High-grade upside • Permitted 270-tonne p/d mill (gravity/flotation) & tailings facility for processing high-grade ore. Needs to be reinstated • Good infrastructure (Highway 37, grid power, water, accommodation)
Taurus: Bulk Low-Grade • Favourable topography, good access. • Many known zones remain open. Room for additional discoveries
Past Production Table Mountain (kind of speaks for itself)
1979-1988 150k ozs 17.12 g/t
1986-1997. 90k. 20.55g/t
1980-1997 50k 10.27g/t
1993-1995 24k 13.7g/t
2006-2007 6.5k 3.42g/t
1981-1988. 35k 4.11g/t
Other areas outside of the Taurus area within trucking distant that could feed a mill with a satellite pit (buried in 43-101 filling)
A strong multi-element (Au-Ag-As-Sb) soil geochemical anomaly has been defined over an approximate 1 square km area (the Lucky prospect), approximately 4 km northwest of the Taurus zone. The Lucky prospect is located above treeline, at an elevation of approximately 1700 m. Rock exposure is good, although some areas are covered by large talus deposits. Numerous quartz veins are exposed within an area that exposes strong iron-carbonate altered mafic volcanics and listwanite. Veins include both large, barren “bull” quartz veins, as well as low-sulfide quartz veins with associated alteration envelopes.
Wildsky Resources completed a soil geochemical survey over the Lucky prospect in 2018 to confirm elevated gold values from historical soil
sampling. A total of 1195 soil samples were collected, with a 20 m sample spacing on 50 m spaced lines. Gold values in soil samples range to the upper detection limit of 25 ppm Au, with 49 samples returning over 1 ppm Au and with an average gold grade for all 1195 samples of 0.23 ppm Au (WSK news release, 2018-11-06). Wildsky also collected 86 rock samples from the Lucky area, with numerous samples containing elevated gold, to a maximum of 2.89 ppm Au.
The area is centered on the Boomerang-Lyla fault zone, and on a thrust fault which may be a remnant of the Table Mountain thrust. It is a high priority for further exploration, including detailed geological mapping and additional rock sampling.
7.3.4 Wings Canyon
The Wings Canyon occurrence is located along the Erickson Creek fault zone and 1 km southeast of the Taurus (Sable) zone. An impressive zone of intense iron-carbonate altered mafic volcanics with up to 15% quartz veining is exposed in both walls of Quartzrock Creek. Alteration and veining are exposed for a distance of approximately 650 m in a north-south direction and 185 m in an east-west direction (before the zone is lost under cover). Rock sampling by Hawthorne Gold in 2009 and others has returned a number of samples with gold values exceeding 1 ppm Au.
A total of 12 holes have been drilled at the Wings Canyon occurrence, 6 in 2009, and 3 each in 1996 and 1997. Several of these holes have returned long intervals of elevated gold, including:
128.5 m @ 0.56 ppm Au 90.6 m @ 0.55 ppm Au 116.1 m @ 0.37 ppm Au 131.7 m @ 0.36 ppm Au.
Some previous authors have suggested that although the Wings Canyon occurrence represents a major fluid pathway, optimal conditions for gold deposition were not present (no trapping by overlying sediments?), therefor overall gold grade is low. In this author’s opinion, Wings Canyon remains an attractive target due to the size and strength of the alteration, the proximity to the Taurus zone, and the lack of exploration between Wings Canyon and Sable including an untested chargeability anomaly.
A swarm of veins is located in a 1 x 2 km area within the McDame Creek valley, about 3 km southeast of the Taurus area. Individual veins/vein systems include the Oro, No. 1, No. 2, Backyard, Sommerville, Lulu, Katie and Backyard on the north side of the McDame Lake, and the Davis, Porcupine and Smile veins to the south of McDame Lake. Numerous other unnamed veins are also present. The Taurus II and Reo zones to the west may represent a continuation of the Newcoast vein swarm.
The Newcoast area is bisected by the Erickson Creek fault zone and includes a klippe of Table Mountain sediments that are in thrust contact with underlying basalt. Previous drilling in this area targeted individual high- grade veins and included only select sampling. As listed below, drill results indicate potential low-grade, bulk-tonnage mineralization, although this is not well tested by most of the drilling.:
9.4 m @ 3.79 ppm Au
20.4 m @ 1.72 ppm Au
28.4 m @ 1.04 ppm Au
137.2 m @ 0.91 ppm Au
108.5 m @ 0.32 ppm Au, including 28 m @ 0.77 ppm Au
“potential exists in the Taurus II project area to outline gold-bearing vein- alteration systems that could be amenable to open pit mining. Emphasis should be place on looking for litho-structural features that could have controlled hydrothermal fluid flow resulting in the coalescing of swarms of anastomosing gold-bearing vein-alteration zones to form areas worthy of additional exploration. The Dribble Creek area is a corridor of exploration interest, particularly where the Backyard, Somerville, North Notch, Newcoast and Newcoast West areas trend into the Erickson Creek Fault Zone and adjacent parallel structures”.
The Newcoast area warrants further study, including geological mapping, rock sampling and reviewing historic drill logs and drill core to assess the potential for Taurus-style bulk-tonnage mineralization.
7.3.6 Other Zones of Mineralization
There are numerous other zones of known mineralization on the Property that warrant further exploration for low-grade, bulk-tonnage type gold mineralization. The Rich area, 2.5 km west of the Sable zone, at the base of Snow Mountain is a historically rich placer gold area with known veining and alteration and with elevated gold in soils and rocks. Very minor drilling was completed here in the mid 1980’s, which was directed at the potential for high-grade veins and not for low-grade bulk- tonnage mineralization.
Another zone of interest is the Pooley Pass region in the southern part of the property. The high gold response in silt geochemistry from this area, along with known veining (the Pete vein), the favourable geological setting, and the thick listwanite zone along the Table Mountain thrust fault all make this area worth assessing for low-grade, bulk-tonnage mineralization.
The Lucky Shot target (Minfile 104P 041), just north of Highway 37 in the eastern part of the property also warrants further work to explore the potential for low-grade, bulk-tonnage style mineralization. Limited work in the 1980’s defined a swarm of quartz veins with local elevated gold values. The area is in a similar geological setting to the Taurus zone, but on the eastern side of the allochthon. This is particularly significant since there has been only minimal exploration in the eastern part of the property, despite the large areas of with favourable geological and structural setting.
In total, 2475 drill holes, totaling almost 275,000 m, were drilled on the Cassiar Gold Property between 1937 and 2012. With the exception of sonic drilling to test the Table Mountain tailings deposit (described in 6.6 below and not included in the above totals), no drilling has been done on the property since 2012.
The majority of historic drilling targeted high-grade veins in the Table Mountain portion of the property, with most of these holes drilled during periods of active mining at the Main, Vollaug, Cusac and Bain mines. The vast majority of drilling on the property was diamond drilling (2430 holes compared to 46 RC holes). RC drilling was primarily at the Taurus target in 1995-96. Core size has varied over the years. Most of the surface drilling is NQ size.
Note: 25 years since any serious exploration, plus the gold price has lift tremendously making extremely profitable what once was walked over.
RESOURCE DEPOSIT DETAILS:
Au g/t Cut-off . Au g/t Au oz
0.5 1.2. 1,161,000
0.6 1.32 1,084,000
0.7 1.43 1,005,000
0.8. 1.54 931,000
0.9 1.66 850,000
1.0 1.79 780,000
Note: I dug this out of 43-101 its kind of important, if you are a geologist you'll get this right away.
Density: A density of 2.65 t/m3 was chosen for the tonnage estimate. Dry bulk density studies have not been performed on the results to date. The value of 2.65 was chosen by reviewing similar deposits in the area and choosing a conservative value.
NOTE: the Density used by a company dictates the resource size, a higher density increases the amount of gold per cubic meter, this is a conservative density so actually resource could increase 10-20%, more tons per meter= more gold per meter especially in bulk disseminated gold mineralization plays = more total resource
Table Mountain Non-Complicate Historic Resource
TOTAL TABLE MOUNTAIN: 70,010 gold ozs @ 23.1g/t Note: Look at the grade
Category Tonnes Grade G/T Ounces Contained
Indicated 21,470 18.02 13,650
Inferred 67,750. 24.30 56,360
IN CASE YOU FORGOT HERE'S SOME INFO ON THE SECOND OROGENIC DISTRICT SCALE LAND PACKAGE THEY OWN IN SOUTHERN BC CLOSE TO US BORDER THAT HASN'T BEEN WORKED IN DECADES. (Southern BC can be worked year-round, has roads, water, grid power as well, not the current focus but in time it will be.
The Sheep Creek Gold District is an orogenic gold district with historical gold production of almost 800,000 ounces at an average gold grade of 14.4 g/t. Margaux Resources has consolidated the claims in this district for the first time ever, to allow systematic, modern exploration of the 10 km long prospective belt.
A recent Geoscience BC Report has shown that veining at Sheep Creek is analogous to that in the Barkerville area. In contrast to Barkerville, the Sheep Creek Gold District has had minimal modern exploration since
mining ceased in the early 1950’s. (that's 70 years ago!!! What was the gold price than compared to now? Getting an idea of what they could discover there.)
The area is underlain by a sequence of Cambrian metasediments, including argillite, quartzite and limestone, which are intruded by two separate intrusive events, one in the mid-Jurassic and the other in the Cretaceous. As a result of Jurassic accretion, the sediments have been folded into major anticline/syncline pairs with north-trending axial planes. Veins formed in the final stages of the accretion event, and are preferentially hosted within more brittle units within the metasedimentary sequence, or within pre-vein Jurassic intrusives.
Margaux entered into an option agreement to earn 100% interest in the
Sheep Creek Gold Deposit district in early 2017.
Historic Production (1900 – 1951)
• 785,000oz Au
• Average grade 14.4g/t Au
Some resources you might enjoy: Crux Investor did a series of 3 interviews with the company last year. All have valuable info and I personally think are required listening.
I think it could have 5-10x upside in the next
18 months. The numbers are the numbers.
Please do your own DD.
About me: I’m enjoying early retirement after a long, successful and fulfilling career as an investment professional with a focus on the resource sector (including oil and gas). I employ common sense, Fundamental, bottoms-up analysis that incorporates but not limited to: currency exchange rates, cost of labour, raw materials cost, geology, Metallurgy, cost of capital, infrastructure, macro influencing factors, capital discipline by management, etc.