One of the most significant gold discoveries of 2020 took place in Finland when Rupert Resources (TSX-V: RUP) drilled two holes into a new target, each one intersecting broad intersections of near surface gold. The Ikkari Discovery has made Rupert one of the biggest success stories of the last couple years in the gold exploration sector, and vaulted the company to a billion dollar market valuation.
Rupert has rapidly advanced Ikkari to a four million ounce maiden resource in record time (18 months from discovery hole to maiden resource estimate). Ikkari is located in Finland’s Central Lapland Greenstone Belt (CLGB), a region that is already host to more than 10,000,000 ounces of gold resources. That total is growing rapidly as Rupert and several other companies continue drilling out additional gold resources across the region, in proving out what is shaping up to be the next major gold and base metals camp.
There is a potential Kalgoorlie and Kambalda (one of the biggest mining camps globally) analogy here. The recent world class Sakatti Cu-Ni discovery (Anglo American) and the Kevitsa Ni-Cu-PGE mine (Boliden) located in the area provide evidence of major crustal scale structures and mineralizing events to support a world class base metals and gold camp.
The CLGB is home to Europe’s largest primary gold producing deposit, Agnico Eagle’s Suurikuusikko Gold Mine. Visible gold was first detected in 1986 in an outcrop 4 kilometers to the southwest of Suurikuusikko during regional gold exploration. Later, low-altitude airborne magnetic and electromagnetic surveys directed detailed work to the shear zone, at the flank of a major fold, which also includes the Suurikuusikko area. It took twenty years of drilling to outline a 7.9 million ounce gold deposit with production commencing in 2007.
Considering that the discovery of the CLGB as a prolific greenstone belt with multiple orogenic gold deposits only occurred in the last 30 years, this gold belt is still relatively young with significant untapped potential:
One of the companies working to make new gold discoveries in the Central Lapland is actually Rupert’s neighbor at Ikkari, Aurion Resources (TSX-V:AU, OTC:AIRRF). Aurion has several projects in the CLGB, and the Kutuvuoma-Ikkari Joint Venture Property (B2Gold has recently given Aurion notice that it is exercising its option to increase its stake in the JV to 70%) borders Ikkari to the south and west. In fact, Rupert’s closest drill hole collar at Ikkari is less than 50 meters from the property boundary with Aurion/B2Gold’s property:
Aurion has interests in a total of 1,000 square kilometers of land in the CLGB across three primary projects:
- Risti (100% ownership) - 160 square kilometers
- Launi (100% ownership) - 140 square kilometers
- B2Gold JV: Kutuvuoma-Ikkari, Sinermä (50% ownership) - 331 square kilometers (UPDATE: B2Gold announced this week that it has completed C$15 million in exploration expenditures bringing its interest in Kutuvuoma-Ikkari to 70% and that it intends to sole fund the project to the feasibility study stage, which will give it a maximum 75% ownership in the project).
- 16% ownership in Strategic Resources (TSX-V: SR)
The Risti Property put Aurion on the map in February 2017 when the company announced the discovery of a new bonanza gold-bearing boulder field that covered a 1,100 meter x 750 meter wide area. The Aamurusko discovery, located near the center of the Risti Property, began with the discovery of more than 100 high-grade and bonanza-grade boulders at surface. Subsequent field work has identified more than 1,200 surface samples averaging 25 grams/tonne gold in the Aamurusko and Aamurusko NW zones at Risti.
As often happens in the junior exploration sector, speculators became very excited about the potential at Risti during the first half of 2017 and proceeded to bid Aurion shares up to a more than $200 million market valuation. The extremely high expectations of 2017 created a high bar for Aurion to jump over in the last four years. And despite tremendous drilling success (more than ½ of the drill intercepts at Aamurusko have intercepted gold grades above 3 grams/tonne), AU shares have fallen more than 80% from the September 2017 peak at $3.49 per share:
This is an all too familiar script in a sector in which speculators tend to ‘buy the sizzle and sell the steak’. Aurion’s most recent share price decline from the $1.20 area to below $0.70 can largely be attributed to sector-wide weakness that can be best described as capitulation level bearish investor sentiment on gold stocks.
The pendulum swings in the junior mining sector can be absolutely enormous. Share prices can rise 10x, or even more, during periods of increasing speculative optimism and euphoria. However, share prices can also fall 80% or more during periods of despair, pessimism, and eventually capitulation. In the last five years, Aurion shares have experienced the full spectrum of emotions ranging from euphoria (September 2017) to capitulation (March 2020).
One could say that the Aurion investment proposition today is the exact opposite of what it was in September 2017 at $3.49 when expectations were sky-high and the valuation was pricing in 3+ million ounces of high-grade development stage gold resources.
Risti & Launi
In total, Risti & Launi comprise more than 300 square kilometers, including an extensive surface footprint comprising 8,500 samples averaging 6.0 grams/tonne gold.
Diamond drill intercepts at Aamurusko NW include:
- 9.42 g/t Au over 28.22 meters
- 23.41 g/t Au over 11.10 meters
- 6.84 g/t Au over 19.00 meters
Drill intercepts at Aamurusko Main include:
- 789.06 g/t Au over 2.90 meters
- 42.28 g/t Au over 4.00 meters
- 24.50 g/t Au over 4.75 meters
- 22.63 g/t Au over 3.53 meters
Located approximately 15 kilometers away, as the crow flies, is Rupert’s Pahtavaara mine, which has a 500 tonne per day (tpd) processing facility that is optimally-suited for the high-grade gold at Aamurusko, setting the stage for potential synergies between Rupert and Aurion.
Aurion is in the midst of a 10,000-meter drill program at Risti & Launi. The drill program is designed to test the continuity of the mineralized zones at the Aamurusko NW and Gap Zone targets at Risti, as well as following up on the recently identified zones of gold mineralization in gabbro and other lithologies at the Aamurusko discovery. Drilling is also planned to test several regional targets within the Risti and Launi Properties.
The current Gap Zone drilling is of particular interest because it offers the potential to connect Aamurusko Main and NW into a larger, more cohesive zone of mineralization:
There are two parallel faults running from the northwest to the southeast through Aamurusko, spaced roughly 250 meters apart. These faults were a pathway for gold bearing hydrothermal fluids that rose from the depths. Within these parallel faults are multiple NE-SW trending breaks along a 1.7-kilometer distance. The veins discovered to date appear to be associated with those NE-SW trending breaks.
According to Aurion’s July 29th, 2021 news release, it’s becoming clear that the gold mineralization at Aamurusko is not just limited to the high-grade quartz veins. The company intersected gold in conglomerates, which is a new geological setting for gold, not previously tested. A broad zone of gold mineralization was also intersected in gabbro. In previous drilling, most holes only drilled a short distance into the gabbro, with the belief that any gold encountered was associated with the quartz veining at the contact. The wide zone of gold intersected in the gabbro provides evidence that the gold is far more pervasive in this setting than originally thought, and that this style of gold mineralization may extend for at least 1,000 meters along strike. Aurion has also identified multiple parallel structures and lithologies, indicating that there could be repetition of the gold-bearing settings to the north.
This is an important revelation because it means that gold mineralization will not be solely associated with quartz veining in clastic sediments, and that many lithologies at Aamurusko are prospective for gold. However, it will be critical for Aurion to build upon the drilling success to date. Expanding the mineralized footprint into new geologic settings and areas while demonstrating that the gold is not only found in the high-grade quartz veins will be an important step in gaining renewed interest in Risti & Launi’s economic potential. The good news is that there is no shortage of drill targets in and around the Aamurusko Area, and Aurion is committed to testing these targets.
In total, assays are pending for more than a dozen holes from drilling at Risti & Launi this year and drilling is ongoing. Aurion is averaging roughly 1,200 meters of drilling per month and there are two programs underway:
- Aamurusko – Aurion is aiming to extend the known mineralized zones and expand the mineralized footprint into new geologic settings and areas.
- Regional – testing early-stage targets with a few drill holes and then moving to the next target. Prospecting, mapping, till sampling and geophysical surveys have generated a large number of targets, which Aurion is testing in a systematic way. Aurion is also generating new targets via an ongoing base of till sampling program.
As it stands today, Aurion has a C$65 million market cap (using a $0.66 share price on the TSX-V) and the company has roughly C$10 million in working capital. Meanwhile, Aurion has likely already outlined more than 1,000,000 ounces of high-grade gold at Aamurusko. In addition, a 5,000 meter diamond drilling program is underway at the Kutuvuoma-Ikkari Project (70/30 JV with B2Gold). The drill program is designed to test geochemical and geophysical anomalies within the geologic setting that has been interpreted to extend 8 kilometers between the Kutuvuoma-Ikkari (KI) Project (Aurion/B2Gold JV) and Rupert’s multi-million ounce high-grade Ikkari Project.
From B2Gold’s Presentation (page 29)
The focus of the current drilling at KI is on the corridor that extends for 8 kilometers from Rupert’s Ikkari property boundary (large red arrow in map above). Exploration permits located adjacent to Rupert Resources' Ikkari discovery were granted in June, enabling commencement of exploration activities in these areas. Based on an average of 1,200 meters of drilling per month B2Gold is roughly halfway through the 5,000-meter drill program as I press publish on this post.
There are clearly defined geophysical/geochemical anomalies that have already resulted in diamond drill intercepts grading 16.47 grams/tonne gold over 11.0 meters and 14.77 grams/tonne gold over 1.6 meters. Rupert has multiple 500+ gram-meters intercepts close to the property boundary with KI including a stunning 4.4 grams/tonne gold over 188 meters (827.2 gram-meters).
On Monday morning, B2Gold gave notice to Aurion Resources that B2 will sole fund all programs and budgets until completion of a Feasibility Study at the 331 square kilometer JV Project adjacent to Rupert's Ikkari Project in Finland's Central Laplands. B2 has already spent C$15 million in exploration expenditures, paid Aurion C$50,000 in cash and issued 550,000 B2Gold shares to Aurion. The completion of the FS will bring B2Gold up to a 75% ownership stake in the JV project while Aurion will still hold 25% of the feasibility stage project.
It's unlikely that B2Gold would have spent this much money and committed to sole funding of the project through to the feasibility study stage unless they were finding something valuable in the ground. If the B2Gold/Aurion JV project is only 1/2 as good as Rupert's Ikkari that still means that Aurion's 25% interest is worth more than its entire market cap today, giving zero credit for its other assets and projects (Risti & Launi).
Drilling success at KI over the next few months could fully support Aurion’s current market valuation, giving shareholders Risti, Launi, and the 16% interest in Strategic Resources for free.
Management & Key Shareholders
If we were to judge junior mining companies solely by the quality of their management teams and key shareholders, then Aurion would be near the top of the list. Aurion’s shareholder register is a who’s who of the mining sector including:
- Kinross Gold (9.98%)
- Newmont (3.24%)
- Eric Sprott (4.23%)
- David Lotan (10.35%)
- Ross Beaty (3.52%)
Management and the Board of Directors owns more than 15% of Aurion’s outstanding shares, and Chairman David Lotan has been a consistent buyer in both the open market and in financings:
Mr. Lotan has purchased more than 200,000 shares in the open market in just the last two weeks. He prides himself on aligning himself with smaller shareholders while demonstrating his commitment to Aurion’s success.
The agency conflict exists in all companies that are not owner managed, and Aurion’s management team has done a good job of ensuring that the agency conflict is as minimal as possible at Aurion.
CEO Matti Talikka is a native Finn who took the helm at Aurion in late 2020. In a relatively short period of time, he has had a significant impact; he’s figured out how to save money and time by building a temporary road using blasting mats to enable access for a track mounted rig to areas such as the Gap Zone and some other targets in the western half of the Aamurusko area, he also managed to secure the top drill contractor in Finland to help iron out some of the challenges that Aurion has had with drill productivity in previous years. Talikka’s softer spoken nature belies a strong intellect and a keen commitment to unlocking the full potential of Aurion’s properties in his homeland.
As the junior mining sector moves into the teeth of tax loss selling season, the main risk for Aurion shareholders is the potential for disenchanted shareholders with underwater positions to dump their shares in order to gain the tax loss benefits. Disappointing drill results and gold price volatility are also an ever-present risk in the junior mining sector.
However, these obvious risks also offer opportunity to those who are able to look beyond short-term share price volatility and appreciate the many ways that Aurion can unlock value for shareholders. A relative lull in news flow combined with an out of favor sector has delivered a rare deep value opportunity to pick up shares in a fallen angel at a 50%+ lower price than some of the most successful investors (Eric Sprott, Ross Beaty, David Lotan), and largest corporations (Kinross and Newmont), in the mining sector.
I have acquired Aurion shares on the TSX-V in recent weeks at prices ranging from $0.67 to $0.79, I may choose to acquire additional shares, or to dispose of my existing shares at some time in the future without notice.
For more information, please visit Aurion’s recently launched YouTube channel and watch this brief corporate video to get a sense of Aurion’s opportunity in one of the most exciting emerging gold belts on the planet.
Disclosure: Author owns shares of Aurion Resources at the time of publishing and may choose to buy or sell at any time without notice. Author has been compensated for marketing services by Aurion Resources Ltd.
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