Since peaking at $2,085/oz on the evening of May 3rd, gold has experienced a ~5% correction that has brought it back below the key psychological $2,000 level:
Gold (Daily)
The $1985 level has provided solid support over the past month; however, gold has broken this support level in the past 24 hours. The 50-day moving average serves as an important guidepost during strong trending moves, and this time should be no different if gold is to maintain its clear uptrend since the Q4 2022 bottom. In 2022, when gold was experiencing a sharp downward trend, the 50-day simple moving average (SMA) tended to contain rallies. In simpler terms, if gold is in a strong uptrend and its price falls below the 50-day SMA, it should not remain below this moving average for an extended period.
I've been waiting for gold to undergo a correction that would offer attractive entry points into my favorite Yukon gold plays in time for the beginning of the summer exploration season. As it happened, gold’s $100+/oz decline in the last couple weeks couldn’t have come at a better time. Summer exploration is about to begin across Canada, and many junior mining stocks are on sale despite gold still trading near $2,000.
We know that seasonality turns favorable for the Yukon gold explorers beginning in April, usually peaking towards the end of August before money heads south again for the winter. This year, we haven't seen a lot of movement in anticipation of summer exploration. In fact, sentiment is so dour that many gold juniors have experienced share price declines since the beginning of April.
One Yukon gold explorer in particular has been flying under the radar while not receiving much value for an already significant in-situ resource. Last month, White Gold (TSX-V:WGO, OTC:WHGOF) published an updated resource estimate for its Golden Saddle/Arc/VG/Ryan’s Surprise deposits. The updated resource totals 16 million tonnes averaging 2.23 g/t gold for 1,152,900 ounces of gold in the Indicated Resource category and 19 million tonnes averaging 1.54 g/t gold for 942,400 ounces of gold in the Inferred Resource category.
“The White Gold project now ranks amongst the largest primarily open pit deposits at such high grades in Canada owned by an exploration company.” Stated David D’Onofrio, CEO.
Today’s C$58 million market cap values WGO’s 2.1 million ounce resource at less than C$30 per ounce on an enterprise value/ounce basis.
WGO.V (Daily)
Agnico Eagle Mines (NYSE: AEM) holds a 19.5% stake in White Gold, and recently maintained its ownership interest by participating in the December 2022 financing at C$.38 per share. It’s important to understand that Agnico has been building its position in WGO since 2017, investing a total of C$35 million at an average cost basis of C$1.12 per share - it’s likely that Agnico is invested in White Gold for the long term and looking to make a profit on its investment.
Other notable investors in WGO are another large gold mining company, Kinross Gold (NYSE:KGC) at 14.8%, and billionaire mining investor Eric Sprott (~7%).
White Gold management and insiders hold another ~20% of the outstanding shares, leaving a relatively small public trading float of ~35% of the outstanding shares of the company.
White Gold’s valuation is bolstered by its 2.1 million ounce gold resource and strong financial backing from major mining companies and investors. However, it is the exploration upside across White Gold’s entire 865,000 acre property package where the upside really exists.
Increased attention on the Yukon, and parallels to the development of B.C.’s Golden Triangle are making the Yukon an increasingly attractive destination for mining investment.
The Yukon has received a great deal of mining investment in recent months:
September 2022 - Hecla completes C$69 million acquisition of Alexco
December 2022 - Fireweed Closes $35 million offering including significant investment by Lundin Family
March 2023 - B2 Gold invests C$19.1 million in Snowline Gold
March 2023 - Mitsubishi Materials invests C$21.3 million in Western Copper
April 2023 - ATAC announces signing of definitive agreement with Hecla for C$31 million
In the next few weeks we can expect White Gold to finalize its summer exploration plans, with drilling to begin in June. I am expecting the focus of 2023 drilling to be the Betty and Nolan Projects.
The Betty Ford Target sits along strike from Newmont’s Coffee Gold Project and was one of the primary focuses of 2021 & 2022 drilling for White Gold:
The Coffee Creek Fault is one of the key hosts for gold mineralization at Newmont’s Coffee Deposit and WGO demonstrated it also hosts high-grade gold at Betty Ford.
White Gold drilled several impressive gold intersections in 2021 and 2022, including 50.0 meters of 3.46 g/t gold from 33.0 meters downhole in 2021, and 8.94 g/t gold over 18.29 meters from 35 meters downhole in 2022:
This drilling connected significant high-grade gold intersections along 165 meters of strike extent. 2023 drilling will aim to continue to expand the gold mineralized zones at Betty Ford along strike and at depth.
Perhaps the main attraction of 2023 exploration drilling will be the Cali Target at the Nolan Property. The Nolan property is located approximately 50 km west of Dawson City in west-central Yukon, approximately 15 km east of the Alaska border. The claims are situated in the active Sixtymile placer gold camp, which has produced over 500,000 ounces of placer gold to date.
Cali is a target that White Gold has talked about drilling for a couple of years, and 20% shareholder Agnico Eagle made a specific request to drill Cali this summer. What make Cali so intriguing is that the target forms a large 250 meters x 2,500 meters long northeast-trending multi-element (Au-As-Sb-Bi-Cu-Pb-Zn) soil anomaly, including maximum values of 515 ppb Au, 1436 ppm As, 2184 ppm Cu, 1225 ppm Pb and 2670 ppm Zn.
The soil anomalies distinctly occur along the Sixtymile-Pika Fault and mineralization does not appear to extend into the hanging wall metasediments on the north side of the fault. The 150-km long Sixtymile-Pika Fault extends westward and structurally controls other major gold deposits in Alaska as well.
The strongest base metal values appear to occur in sub-zones within the larger anomaly, which remains open along strike particularly to the southwest. In 2017, WGO drilled 22 short (less than 100 meter holes) RAB holes on the Cali target, with several holes intersecting anomalous gold, silver and copper which warrants follow up exploration including diamond drilling.
I also expect WGO to conduct airborne surveys at the Pedlar and Hayes copper porphyry targets this summer. This will help to finalize drill targets at these highly prospective copper-gold targets that are located adjacent to Newmont’s multi-million ounce Coffee Gold Deposit and Western Copper’s massive Casino Copper-Gold Deposit. As announced in April, both projects are located in the Dawson Range which hosts several significant porphyry deposits and preliminary regional exploration has identified prospective geochemical surface signatures with similarities to porphyry-style mineralization:
Summary
Seasonal tailwinds offer a nice tailwind ahead of a busy 2nd half of the year for the company.
Disclosure: Author owns WGO.V shares 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 White Gold Corp.
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