For investors looking for exposure, you essentially have to learn a new language before you can confidently understand what you’re getting involved with, let alone know whether the company is making legitimate progress.
Since we’ve been in the resource space long enough to constantly get asked how to evaluate these kinds of companies, we’ve decided to come out with a new initiative we’re calling Verbal Alchemy, which translates press releases written in ‘mining-speak’ into, well, English.
For our first edition of Verbal Alchemy, we’re going to look at the latest press release from Gold Plus Mining Inc. (CSE: GPMI), a Canadian gold exploration company with properties in some of the most prolific gold-mining regions in the country. If you want a full overview of them before we begin, check out our feature video here.
1. Understanding Drill Results – Density & Concentration
“[Gold Plus Mining Inc.] has engaged Longford Exploration Services Ltd. to assist the Company in designing a work program for its 100% owned Lawyers East and West claim blocks that are contiguous to Benchmark Metal Inc.’s (BNCH – TSX.V) ‘Lawyers’ Gold and Silver project in BC’s famous ‘Golden Horseshoe’ region, that recently reported drilling intercepts of 2,360 g/t silver and 11.30 g/t gold over a 1 meter interval as well as 1.44 g/t gold equivalent over 102 meters (see press release dated February 11th and Jan 31st, 2020 respectively).”
Let’s break this down into pieces. First of all, GPMI announced that they are bringing on a partner company to help them survey and explore the region.
According to their website, Longford Exploration Services Ltd. describes themselves as: “a Canadian services company providing turnkey solutions for the mineral community. We work with our clients to design and execute programs that fit your company’s needs. Whether you have a fast-approaching work commitment, are looking for the perfect project, or need a full-service solution, Longford will be there for you.”
Outsourcing the highly technical component of exploration work to a reputable third party company. Straight forward enough.
Next, let’s look at which properties are being focused on, and why. GPMI fully owns two land claims that are “contiguous” (meaning, sharing a border or geographically touching) to Benchmark Metal’s ongoing project in the region, which is exploring and processing gold and silver. Recently, Benchmark has reported positive drill results from that specific region, which means that there are precious metals in the ground, warranting further investigation.
A benefit of being a junior resource company, is that in many cases you can piggyback on exploration work that has been undergone by the big guys. Let them spend the initial capital, and then let their data guide your work.
Last, the most confusing part of this section is the numbers. For example, what does “11.30 g/t gold” mean? G/t is one of the most common measurements used in gold mining, which looks at grams of precious metal found per tonne of milled ore – this ore density measurement determines whether or not the deposit can be considered “high-grade” or “low-grade” through standards set by the World Gold Council. Simply put, the grade of a deposit tells you how much effort it takes to remove the metal from the ground. Less effort means higher margins, which means more
Since we’re looking at gold, the World Gold Council defines a high-grade mine as having a gold density between 8 and 10 g/t, whereas low-grade mines have a gold density between 1-4 g/t.
2. So You Think There’s Gold – Now What?
While it may seem intimidating at first, this section is breaking down exactly how their work will take place and the steps involved within it. This is basically the company laying out their plan to move forward and proactively answering the question “so you think there’s gold – now what?”
First, they will rely on computing power to make sense of the initial flurry of information. They’ll put together a data compilation of historic work in the area to see what other prospectors have found, and use that to guide their next steps. In each region, the ground will contain specific properties related to how the earth is formed, which will essentially provide clues as to where precious metals are most likely located.
Once they have organized and interpreted the data they require, GPMI is going to create what’s called a “field program”. A field program is a fancy way of saying “we’re going to go out and begin the hunt” and in this case, they’ve stated that their methodology will be based on the conclusions from all data from the region, both recently and historically. Their methods are going to consist of “sampling and geologic mapping of highly prospective and mineralized areas”, which means that GPMI is going to take earth samples to find out ore density, and map out regions where they have good reason to believe that there’s gold. Here’s an example of such a map from a region in Nevada (and don’t worry, this is a professional tool, you aren’t expected to be able to interpret this):
The last part of the plan is that “samples will be taken from mineralized areas and analyzed for precious metals”. This is pretty much exactly how it sounds: once they have ore, they’ll test it to determine its ore density and use their map to determine ore concentration in a region. Once this is found out, you’ll be seeing results in terms of grams per tonne and grade.
3. Why Here & How Does this Make Investors
President and CEO Spencer Smyl states, “With Gold prices recently exceeding $2,000 per Oz and multiple recent gold discoveries on neighboring claims, we are excited about the potential of our highly prospective Lawyers East and West claims. Gold Plus now has three projects in some of the most prolific mining camps in Canada: the Golden Triangle in British Columbia, the Red Lake mining camp in north west Ontario and the Abitibi region of Quebec. We plan to conduct work programs on all three properties in order to obtain samples and define priority targets for upcoming drill programs.”
The first part of the statement from GPMI’s CEO, Spencer Smyl, is one that resource investors ought to be very familiar with: the price of gold. While it may not be as high as when this quote was released, gold is still near record levels. Though early exploration companies do not have proven gold reserves, the higher the price of gold, the more torque the stock has to the upside if any is discovered during the work program. For a gold exploration company, the aforementioned steps are the final legs of the process, with gold-in-hand as the desired end result.
So, with three projects in different regions, why is GPMI choosing to work on the Lawyers region first? Well, “neighboring Benchmark Metals announced on August 27th 2020, the discovery of the new “Marmot Zone” that returned samples of up to 61.3 g/t gold and 3,890 g/t silver. The discovery of the Marmot zone is trending South East from Benchmarks initial Cliff Creek zone discovery and towards Gold Plus’s Lawyers East claim”.
Just as the odds of winning go up when you have Lebron James on your team, the odds of discovering gold go up when the ground around you is proven to be laden with it. While they have stated that they will be testing and developing all of their claims, focusing on the most likely regions increases the odds of gold being found sooner and
If you have anything you’d like broken down further or any further terms/processes that you want to know more about, leave a comment below and we’ll help with translations! Plus, let us know, what did you think of the first edition of Verbal Alchemy? Leave a like if you’ve enjoyed it, or comment suggestions to improve it for next time.
Disclaimer: Gold Plus Mining is an Edge Investments marketing client. We also own shares in the company.