In a previous article/analysis on Galway Metals (GWM.V), I wrote why I thought this was an undervalued company. One of the reasons for this were insider movements. Management seemed confident their shares were trading cheap as 5 of them bought extra shares in the company these past six months. Amounts ranging from $25,000 to $150,000. So no small amounts, which clearly indicate that company management and directors believe in their projects.
On top of that, they managed to raise $3.37M in a private placement they closed in 4 weeks time. Very exceptional for a company in this stage of discovery and with their market cap. Clearly signaling an interest in the company from parties with funds at their disposal.
Two weeks after that first article, Galway came out with a news release of a new discovery, smack in the middle of two known zones that are 2km apart. The result of this first drill hole was 7.3g/t over 36.7m. A great result which prompted a 40% daily gain in the share price. Since then it has lost some of its profit after a more than decent rise, but currently still sitting on a comfortable 63% gain since that original article.
2 projects
Galway Metals has two different projects in Eastern Canada. Both of them are located in mining friendly jurisdictions where active mines and necessary infrastructure are closeby.
They have a gold-zinc-copper-silver project in Québec (Estrades) and a gold project in New Brunswick (Clarence Stream). Both of these are currently being drilled and investors have only seen news from their Clarence Stream project this year. 4 news releases in two months time is a positive for shareholders. This way the share price doesn’t have much time to give its profits away because shareholders don’t need to wait a long time for updates. The exploration sector is filled with impatient investors, so it’s good to know management is working diligently.
As mentioned above, both projects are currently being drilled. Both projects also have multiple targets. At Clarence Stream these targets were determined by soil and magnetic analysis. These types of surveys help the company to find the gold and to get an indication of what might be located beneath.
Those numbers added on the map, represent the values of gold found in parts per billion (ppb) from soil analysis. Through these gold-in-soil anomalies Galway has been able to map a trend at surface which might be indicative of an underground gold vein. This trend is a clear future target to drill. The map above is just a piece of their Clarence Stream project and the trend -indicated as a red line- is 4km in length.
5 zones
The zone at Clarence Stream that has delivered us a lot of high grade results so far, is the George Murphy zone (GMZ). Thursday (02/28) Galway Metals came out with another news release from this zone: 13.8g/t over 8.7m. Once again, a thick intercept of high grade gold.
A little tidbit from this same news release that hasn’t gotten the attention it deserves is the following paragraph:
“The proximity to each other (23m west, 34m above) of two multi-hundred-gram intersections (807g/t over 1.25m and 201g/t over 0.5m) strongly suggests that a subvertical “shoot” exists. These mineralized shoots are important to the economics of deposits, and they tend to be continuous for long distances along their plunge.”
An ore shoot (google this) can be a real game changer for the economics of this project and is yet another potential catalyst for the company.
What’s extra interesting, is that Galway’s current focus for drilling will be the Jubilee zone. The Jubilee zone will be included into the resource upgrade this year, has seen previous drilling and has a lot of room to be expanded as this zone is open in every direction. That red trend line shown before is closest to the Jubilee zone.
To date, Clarence Stream has seen the discovery of five zones which are at their furthest 6km apart. Strike length of this project is 65km so plenty left to explore. Only the North and South zone are currently in resource and Galway is planning on upgrading this resource this year with the GMZ and Jubilee zone.
Zoomed out below, you get a view of what’s possible with this project. At the moment we’re seeing some separate zones that have been discovered through drilling of interesting targets. It might be possible that these zones will be joined through exploration between them.
At current pace and with the current stream of results I’m guessing it won’t take long before this company will be noticed by newsletter writers, analysts, institutional and retail investors.
Potential
In their corporate presentation and at a recent live presentation, Galway Metals makes the comparison between their Clarence Stream project and Marathon Gold’s Valentine Lake project. Both of these have both continental and geological similarities. Galway’s chief geologist Michael Sutton -who’s previously been awarded for a discovery at Kirkland Lake’s Macassa mine- thinks they have a similar deposit here. Should this prove to be correct, than Galway Metals has good potential because their current market cap is only one fifth of Marathon’s and the strike length is double as long. Of course we’re not yet where Marathon is in terms of resource and stage, but it shows what’s possible.
As I mentioned in the previous article there’s also an undervaluation when comparing the proven gold ounces with Galway’s enterprise value (MC-cash). This is currently sitting at $17.5/oz, while the average for a company in this stage (pre feasibility) is $52.
It has to be noted that this $17.5/oz number is based on the current resource, so only North and South zone and the Estrades resource. If I would add a conservative number of 400,000oz for the resource upgrade, then this number drops to $14.5/oz.
I use the term conservative because management indicates that the GMZ alone could host between 200-260,000oz in a 400x400m grid. This new resource (2019) will include both GMZ and Jubilee.
The PDAC started this weekend. A convention where mining and exploration companies around the world gather to connect with each other and investors. RedCloudKS, a company that provides support, marketing, analysis and financing for these companies, held a competition among 20 exploration companies at the opening event of this convention. Each of these companies had 10-15 minutes to present their projects to a panel of mining analysts, geologists and project managers. The winner would win 6 months of support and marketing by RedCloudKS. Galway Metals won this competition so these next couple of months should see a lot of exposure for them.
The case of owning Galway Metals has been discussed here based solely on the recent developments at Clarence Stream. Their Estrades project is being drilled as well so I’m expecting an update from this corner as well soon. This will be discussed and analysed by me as well once the data is delivered.
When looking at the current and future results of Clarence Stream, managements capabilities and recent purchases and imminent international exposure, this should turn out to be a strong growth story.
