As many of you know, last week I was on the Yukon Mining Tour sponsored by the YMA (Yukon Mining Alliance) and the Government of the Yukon. The Yukon is a special place. Not only because of its geographic location on earth, but also due to the diversity of people who live in this natural wonderland, and the enormous mineral endowment that this territory holds.
The mineral wealth that exists in this far northern Canadian territory is literally breathtaking. There are large deposits of copper, zinc, gold, silver, etc. all over the place and the greatest challenge for geologists is to find a high enough concentration of these minerals in one location, in order to support an economic deposit and eventually an operating mine.
Infrastructure, infrastructure, infrastructure. This is by FAR the biggest challenge in the Yukon and it's been a project killer for scores of projects that won't advance to feasibility, permitting, and production until the Yukon builds new roads, upgrades bridges, and extends power lines across the territory.
With that being said there are some areas of the Yukon that have enough infrastructure to support major mining projects. These areas include Whitehorse, anything near Dawson City, and the Mayo Mining District (which includes Alexco's Keno Hill Project, Victoria Gold’s Eagle Gold Project, as well as Banyan Gold's AurMac Project). Everything outside of these three areas pretty much always comes with a sizable capex bill which can include road construction/upgrade, laying power lines, building mills etc.
Fireweed Zinc's (TSX-V:FWZ) MacPass Project is impressive (one of the largest undeveloped lead-zinc deposits in the world with more than 4 million tonnes of contained lead and zinc) and I have no doubt it will move into production one day, however, until they get certainty on the road upgrade (will the government foot the C$100 million bill? Fireweed seems to think so and the Canol Road is a public road dating to WW2 so it makes sense the government would pay for it) and/or the zinc price goes back to $1.50 this project still probably has a 5+ year timeline to construction.
Alexco (TSX:AXR, NYSE: AXU) is a solid silver play that probably has strong support at around the C$150 million market cap level (limited downside due to 100+ million ounce silver resource and replacement cost of infrastructure which includes an operating mill). Alexco is set to be Canada's next primary silver producer once an amendment to its Bermingham water permit is received (company is guiding to Q4 for the water permit). Alexco also has an environmental business which will generate C$30 million in revenue this year.
ATAC Resources (TSX-V:ATC) caught my attention last week with its renewed focus on its Tiger/Rau Projects on the west side of its claims. A "short" 65 kilometer drive to Keno which once a road is built (estimated C$15 million cost) would give the project road access to site and to the port at Skagway, Alaska. ATAC began diamond drilling at Tiger today (roughly 4,000 meters in total of diamond and RAB drilling) I bought some stock as a starter position last week. I usually do this to 'force' me to follow a story more closely. There's nothing like having some skin in the game.
A 30 minute conversation with Strategic Metals (TSX-V:SMD) CEO Doug Eaton impressed me. The number of claims/projects/targets this project generator has is mind blowing. They are currently drilling three 400 meter holes at the Meloy Porphyry Target in Southern Yukon. Pull up their presentation and find the slide which shows the copper soil geochemistry footprint of Meloy relative to the Casino Deposit. Meloy looks to be about 3x the size of Casino (a massive copper/gold deposit in the Yukon which boasts 1 billion tonnes of ore with 4.5 billion pounds of copper and 9 million ounces of gold). Eaton said they had just completed the first hole and had just begun drilling the second hole. I got the feeling he likes what he's seeing. He says Strategic will release assays by the end of August.
White Gold (TSX-V:WGO) was an impressive site visit which included a few helicopter rides around WGO's massive claims package in the heart of the Yukon. I had the pleasure of spending the day with Shawn Ryan (large White Gold shareholder and technical advisor to the company) and his passion and enthusiasm for exploration was clearly evident. This is a guy who gets excited by finding new stuff and thinking outside the box in terms of finding new and innovative exploration techniques which allows White Gold to stretch shareholder money that much farther. White Gold's Vertigo Target at the northern end of its claims is a new discovery that was made last year and the company is busy drilling multiple targets at Vertigo as we speak. In total White Gold is carrying out 17,000 meters of diamond drilling and 7,500 meters of RC drilling across its claims package in the White Gold District of the Yukon this year.
Shawn Ryan explaining White Gold's land package in the Yukon during last week's Yukon Mining Tour.
Western Copper & Gold (TSX: WRN, NYSE: WRN) holds the massive Casino Project in the Yukon which holds nearly 18 million ounces of gold and 10 billion pounds of copper (in all categories). WRN is currently drilling 6,000 meters with the objective of upgrading inferred resources into the measure and indicated categories. Casino is one of the key projects in the Yukon with the potential of providing 800 new jobs during project construction and 500-600 steady jobs during the operating phase of the mine. This could account for between 15% and 20% of the Yukon's total GDP.
Western Copper & Gold Director Tara Christie posing for a pic atop WRN's Casino Project in the Yukon.
I could write a book on all of these companies and the Yukon as a whole, however, for the sake of brevity I will conclude with some notes from a conversation I had with legendary junior mining investor John Robins during the Yukon Mining Tour:
1. The average timeline from a new discovery to production is 20 years!! Crazy to think about that and helps to understand why shares of developers are often treated so poorly by the market.
2. He is very bullish on Bluestone Resources (BSR.V), of which he owns 5 million shares. Amazing gold project that they picked up from Goldcorp for US$18 million. BSR shares are being painted with the same brush as Tahoe's Escobal Project which had its mining license suspended. Guatemala is not all the same and Cerro Blanco (Bluestoe's project) will be generating US$100 million in free cash flow very soon.
3. This led to an interesting conversation about the difference between mining companies based in various jurisdictions. There is clearly a cultural difference between US based firms (such as Tahoe) who aren't used to dealing with indigenous issues and Canadian companies who are extremely mindful of indigenous issues (CSR = Corporate Social Responsibility). Tahoe was a massive CSR failure as they never consulted with locals and indigenous groups in the area.
4. He likes K2's (TSX-V: KTO) new Mohave Project just across the border from Nevada, in California. The project is entirely on BLM land (Bureau of Land Management) and Robins thinks a Trump reelection will be great for this project as the BLM has become much easier to deal with under Trump.
5. Major mining companies regularly make "dumb" uneconomic decisions, they are not necessarily the smart money in the mining sector. There is a good chance that Newmont Goldcorp will be putting Coffee up for sale. Around C$700 million has been plunged into Coffee by Goldcorp including the purchase price. They might be able to sell it for 1/2 of that amount.
6. Newmont will either divest Coffee OR they will make a much bigger move into the Yukon by consolidating the district. Think Western Copper (WRN.TO) and White Gold (WGO.V).
Disclosure: Author is long shares of ATC.V, BYN.V, FWZ.V, and WGO.V at the time of writing and may buy or sell at any time without notice.
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