With the exceptional results reported from their 2020 drill campaign on the Taurus deposit and 2021 around the corner, let us review what's changed since my prior update "Part 2: The CASSIAR GOLD PROJECT, the next FOSTERVILLE?", what do we know now to be true?
Cassiar Gold is such an unknown and undiscovered gem, if you are new to the story please refer for in-depth analysis:
https://ceo.ca/@Drjimjones/part-2-the-cassiar-gold-project-the-next-fosterville
(Throughout when you see "NOTE", what follows is my analysis, take it or leave it.)
1) The resource at Taurus will grow by at least 500k ozs or 50% as stated by the CEO Marco on numerous media platforms to at least 1.5 million ozs, the official resource update will be released in Q1 2021. (Note: That will be a positive share price catalyst as the market digests the number and revalues the company, I think we'll see 1.6 million ozs, Ceo's don't set themselves up to under-deliver, especially a seasoned Capital Markets professional like Marco.)
2) Over 95% of the resource is still free-milling ore, no changes, and at the surface and close to the surface in wide sheeted intervals, flat topography so extremely low strip ratio. It lays next to infrastructure: power, water, camp, a highway runs through it, they have a permitted mill and tailings, this all means high margin, easy liberation of gold and very low capital cost to develop into a producing mine.
3) Based on the successful 2020 drill program at Taurus and the successful drill results that proved up the Wings Canyon area as a satellite deposit, the gap zone, and the depth and stepping out extensions at the known deposit prior to this maiden drill program, Marco has stated on numerous media platforms the needle has moved considerably for the company's internal estimate on the ultimate resource size of the bulk tonnage, they are now targeting in excess of 2 million economically mineable ozs at the bulk tonnage Taurus area.
4) The debate regarding whether or not the Taurus Bulk Tonnage area would see drilling in 2021 is over, in Marco's words "...the results exceeded all my expectations... in grade and width..." Both the high-grade Cassier South (formerly Table Mountian, a High-Grade Orogenic Gold System where the average grade mined historically was above 16g/t, GLDC has a historical resource of 70K ozs at +20g/t to start with as they drill 15'000 meter program in Q2 2021) and Taurus Bulk Tonnage will be drilled, I quote Marco again, "...the bulk tonnage area is an easy win for us to build ozs..."
5) Marco stated they have $6.8 million in cash and are fully funded for 2021 and won't be raising capital anytime soon.
6)Drilling cost came in at $175 a meter, the grades from this 5000 meters were considerably higher than 43-101 resource.
7) In the last 2 weeks many insiders have been buying on the open market
8) institutional ownership has increased 150% from 10% to 25% of shares outstanding
Here's the fun part, the above anyone can find out by reading the news released and listening to the many interviews Marco has had in the last few weeks....
Doc's Thoughts....
They will be lowering the cut-off grade to most likely .4- .5g/t that adds 100k ozs to the resource without drilling a single hole, therefore, they started the 5000-meter program with 1.1 million ozs, the 5000 meters of drilling found and added 400-500k ozs, let's meet in the middle and call it 450k will be added.
The math: 5000 meters x $175 a meter = $875'000
What is their true finding cost per ozs? $875'000/450'000ozs = $1.94 / ozs
$1.94 to find an oz of gold.... $1.94 to find a minable oz of gold. THAT IS INCREDIBLE. $1.94 = 1 Gold oz at $1860
“You have $2, wanna buy a coffee or go find an ozs of gold?” They spend $1.94 find an oz of gold and the market add $50-75 to the market cap in re-evaluation, that's a 25-38x return to market cap from each dollar spent drilling. Talk about some serious wealth creation, the only other company I know that even comes close in Banyan Gold with about a $2-$2.50 finding cost.
Every 2 million dollars put into the ground returns and delivers $50-75 million in market cap addition based on a peer evaluation, which we don't have yet because no one is following the story yet. Realize the current adjusted MC is in 25.8 million Canadian $.
Yet.
(I never understood why investors wait until the actual public resource update to buy a stock when you can figure it out prior or when the CEO says it'll be 50% increase.)
Based on the above approx $1-1.5 million in drill spend in 2021 (remember they have $6.8 million in cash) will get them to +2 million ozs at the bulk tonnage, high margin Taurus gold deposit. (Read research report "Part 2: The CASSIAR GOLD PROJECT, the next FOSTERVILLE?" where I break down the economics of this ore composition and location, it's amazing. If you are a Geo, lots of fun stuff there.)
What investors should understand is in general as the MINEABLE resource grows (Not the Spanish Mountains of the world, the mineable ozs profitable at $1500 Gold) the value each gold oz in the ground is given by the market increases because, to an acquirer, it translates into the ability to have a higher annual production profile, a longer mine life, a lower AISC as the fixed cost get spread across more ozs, ultimately a higher IRR and much more profits over a long stable period.
Another consideration, as the ozs increase beyond 2 million ozs there are fewer and fewer deposits to be had by mid/major miners of that pedigree, those deposits historically get higher prem in a buyout, especially a deposit like Taurus, low strip ratio, excellent metallurgy at +94% recoveries, very shallow in depth, basically dig it out, truck it to the mill, pure gold. Super high margins. Their resource grade in the 43-101 is more then double what Victory Gold is mining very profitably. Think About that. A 2 million ozs deposit like this with all the infrastructure already there = AISC of sub $750/oz at 130-150k ozs per year.
If you haven't look at the drill results, it's geo-porn at its best. long intervals, high grades, continuity....Thankfully for investors new to the story Covid, tax-loss season, and general weakness in the gold sector has left this new company overlooked.
Current evaluation:
Market Cap $32.6 Million
Cash: $6.8 Million
Debt: $0
Net Market Cap (MC-Cash+Debt) = $25.8
Resource/ Assets
Taurus: 1.55 million ozs at 1.3-1.4 g/t
Table Mt: 70’000 ozs at +20g/t
Tailings at Table Mt: 20’000 ozs at 1g/t
PERMITTED Built Mill (inactive needs expansion and love and care, what is it worth to knock off 1-2 years to a development timeline?)
Total Ozs = 1.64 Million
Simple Value per ozs in the gound without assigning value or premium to other assets (Mill permit, infrastructure, tailing, etc) = $15.73
Maroc and the team have done a great job executing on adding low-cost ozs and are just now getting the story out, add in South Cassiar 15000 meter program and if they prove the Fosterville thesis Doug Kirwin has about it.... I believe it'll one of the best investments in 2021, maybe for years to come.... but do your own DD....
Best Doc
Here's a treat. This is a play I wrote. Enjoy.
The Cassiar Conversation by Doc Jones
Investor: "...I'm sorry can you repeat that?"
Doc: "$15.73 per oz in the ground but that doesn't include..."
Investor: "....Wait. This must be in the middle of nowhere or in an unstable country, locals hate mining or complex sulphide ore with lousy recoveries or no expansion possibilities, over-paid board, high drilling cost, no water, no permits for a mill, high tax state, lots of overburden, crazy high strip ratio, it's 500 meters deep and inconsistent grades and widths, a small deposit, they have no money and will be diluting like mad, it's run by a bunch of nobody's and crooks, right?"
Doc: "No, none of that. The market is pricing it at $15.73 per oz
Investor: I'm sorry, can you repeat that?
Doc: $15.73 an oz... Canadian dollars... or.... $12.35 an oz in US dollars.
Investor: Oh, but aren't 1.55 million oz high margin mineable deposits getting $50-75 oz in the market?
Doc: Yes.
Investor: But that's like a 300-500% gain just to get to a peer evaluation.
Doc: Yes... Oh, I didn't mention Cassiar South? Doug Kirwin thinks it'll be the next...
Investor: ....What's the ticker?....
Doc: ...Fosterville...
Investor: ...What's the ticker!?
(Long dramatic pause)
Doc: GLDC.
(Investor whips out a smartphone and opens the brokerage app.)
Doc: Hold your horses Gun-Slinger, don't take my word for it, do some research, crunch the numbers, confirm the data, so you know what I know, BEFORE you buy.
Investor: Good point. Thanks. ( he lowers his smartphone)
Doc: Sure... I didn't mention the Sheep Creek orogenic gold property they also own?
Investor: I see I have a lot of work to do.
Doc: Yes, you do. But it's your money.
FADE TO BLACK.
https://cassiargold.com/presentations/CassiarGold-CorporatePresentation.pdf
Doc Jones:
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, bottom-up analysis that incorporates but not limited to currency exchange rates, cost of labor, raw materials cost, geology, Metallurgy, cost of capital, infrastructure, macro influencing factors, capital discipline by management, etc.
Research, research, research. High focused portfolio
I am driven by the hunt for value and truth. This is my passion in life. I’m a big research nerd. Always double-check and only trust the numbers that you have vetted.
Commit to memory: “all ozs in the ground are NOT created equal” understanding this basic principle will increase your wealth and your ability to sleep at night...
Best,
Doc Jones
(FYI my middle name is Jim, so spare me the Koolaid jokes.)
