(MENAFN- Investor Ideas) At AOTH, we see Getchell Gold Corp. (CSE:GTCH, OTCQB:GGLDF) as an excellent value play in a rising gold price environment.
Among the factors keeping precious metal prices rocking, are recessions fears; the banking crisis; the Fed's expected adjournment of the current rate tightening cycle; robust gold demand especially from central banks; and stagnant gold supply.
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Moreover, disruption to the global supply chain in recent years has meant that costs are rising fast in the gold mining sector. In 2022, the average all-in sustaining cost (AISC) reached a record-high $1,276/oz, up 18% from 2021.
Gold majors wanting to grow their reserves without incurring large capital expenditures are therefore hunting for cheap gold in the ground. Getchell Gold has 2 million ounces at its Fondaway Canyon gold project in Nevada and the outer limits of the deposit have yet to be encountered by drilling.
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Getchell has achieved consistent mineralization over three years of drilling. Out of 18 holes drilled, Getchell has yet to miss! The company has been focusing on the Central Area of a 3.5 km east-west gold trend.
This is Fondaway Canyon's nexus of gold mineralization, with the structures providing not only pathways but traps for gold. Getchell has delineated quite a bit of gold in the ground, but, imo they are only just getting started.
getchell gold, a case study of "gold in the ground"
After acquiring Fondaway Canyon in 2020, Getchell identified two priority areas, shown as ellipses on the map below. As they started to drill, Getchell kept hitting gold, and continued to hit mineralization in step-out holes. In its first year of exploration, Getchell outlined three new gold zones: Colorado SW, North Fork and Juniper.
The early wide-spaced drilling demonstrated the presence of high-grade shear veins enveloped in thick bands of mineralization and extended the mineralization model a remarkable 800 meters down dip from surface.
Five drill holes hit substantive zones of mineralization, between 50 and 100 meters thick. The company kept drilling in 2021 and 2022, upping the scale and capitalizing on its discoveries.
At the end of 2021, Getchell made a new discovery: a very high-grade zone that was running 10 grams per tonne over 25 meters near surface.
Substantive mineralization in four holes was highlighted by hole FCG21-08, the most northwestern hole, intersecting the Colorado SW zone extending for over 200 meters down hole, and hole FCG21-10, intersecting the North Fork zone extending 82 meters down hole.
The latter interval, hosting the highest-grade gold intercept in the 40+ year drilling history at Fondaway Canyon, and reporting 47 g/t Au over 1.5m , is a prime example of the structures that promote the high-grade concentration of gold at the project.
Partway through the 2022 drill program, an open-pit model mineral resource estimate was commissioned and published (see below).
Eighteen drill holes doubled the previous resource from 2017, with 550,800 ounces of gold in the indicated category and an additional 1.5 million ounces inferred , all at comparatively excellent gold grades for active Nevada operations (1.56 g/t Au indicated, 1.23 g/t inferred).
Note, however, that this resource estimate is already out of date. There are nine holes that were excluded in the resource estimate because they missed the cut-off date, and Getchell plans to do a lot more drilling on its wide-open deposit in 2023.
Also worth noting is that Getchell hit mineralization in all 18 holes, which is almost unheard of in mineral exploration.
To date, the gold mineralization at Fondaway has been traced for a half a kilometer on surface and half a kilometer down dip. It remains open as the drilling has yet to encounter any limits, with the potential size and ultimate scale of the mineralization unknown.
"We've doubled the reported mineralization in a short 2.5 years and I don't know how big this is going to get to," Getchell's President Mike Sieb told Proactive Investors, explaining that the large footprint on surface is shallowly dipping, making for a perfect open-pit model.
He went on to say: "This is a marked difference from what it looked like it in 2020. We've increased not only the length of the mineralization from surface but also the thickness as well, right now we've modeled an extent about 550 to 600 meters down dip, the mineralization is still continuing on strong."
Simply put, the upside potential of Fondaway Canyon is evident from the fact that Getchell just continues to find more gold.
Getchell Gold is working to expand its resource estimate through drilling. Preparations for a much larger drill program than previously are underway; a steady stream of results are expected throughout the second half and into next year.
Getchell plans to keep on expanding the mineralization, drawing it along strike and down dip, thus enlarging the conceptual open pit.
"We've been increasing the drill meterage into the ground from 2020 through 2022 and this year we're targeting two drills turning all year long to continue to expand and increase the resources at Fondaway Canyon and also perform just enough infill drilling to take all that inferred and put it into the indicated category," Sieb says.
The CEO added the market can expect an updated resource estimate and the completion of Getchell's next major milestone, a preliminary economic assessment (PEA), in the first half of 2024.
"We're moving up the tiers of de-risking and adding confidence to the project as we go," he said.
As part of the 2023 drill program, Getchell this week announced it is applying for an additional 12 drill pads.
"After three years of drilling and delineating a sizeable Mineral Resource 600 metres down dip from surface and 600 metres along strike, the gold mineralization remains fully open for further expansion. Exploration of these ample and very evident priority targets requires the Company to permit more drill pads than previously anticipated based on the past three years' drilling success," Sieb stated in the May 24 news release , adding: "The 2023 drill program and drill hole sequencing will be finalized after permit approval is received."
The company reiterated the fact that 18 of 27 holes drilled into the Central Area were responsible for doubling the 2017 resource, and that the remaining nine holes, completed in the latter part of 2022, didn't make it into the resource estimate (RE). These nine holes, says Getchell, "all intersected substantive mineralization, fully supporting the mineralizing model and attest to the upside potential and strength of the Fondaway Canyon gold project."
The latter bodes well for an updated RE, expected in H1 of next year.
It is also important to emphasize that the current RE conceptualizes an open-pit mine model - much cheaper than mining underground - although the minor amount of contiguous mineralization currently extending beyond the open pit limits has been categorized for potential underground mining. Getchell's plan is to expand the mineralization to grow the mineral resource and, in the process, support a larger open-pit model which can then convert the current underground mineral resources to open pit mineral resources.
The company expects the majority of inferred resources, currently sitting at 1.5 million ounces, could be upgraded to indicated with continued exploration.
As a reminder of how good an environment Getchell Gold is operating in, the Fraser Institute recently named nevada the world's number one jurisdiction for mining attractiveness - knocking Western Australia off its perch and reclaiming the top spot. The annual survey is closely watched by mining investors.
Nevada is host to the largest gold mining complex on Earth: the Nevada Gold Mines joint venture between Newmont and Barrick. Formed in 2019, NGM consists of as many as 10 underground and 12 open-pit mines, plus autoclave, roasting and heap leach facilities.
Total production last year from NGM reached more than 3 million ounces, about 3% of the world's total.
Among the reasons for retaining its competitive edge are Nevada's lack of income tax, the fact that mining is governed under the federal Mining Act of 1872, which would take an act of Congress to change, and that mining taxes are set out in the state's Constitution.
Not only does Nevada produce a lot of gold from existing mines, it is also an excellent place to put a new mine into production. That's because conducting exploration, constructing and building a mine in Nevada is relatively easy.
Getchell Gold is among the junior exploration companies hoping to take advantage of Nevada's mining-friendly environment.
Over the past three years, Getchell has increased the mineralization substantially, decreased risk, and demonstrated that there is a lot of upside left to grow the resource at its Fondaway Canyon project.
Getchell Gold Corp.
Shares Outstanding 106m
Market cap Cdn$22.8m
Richard (Rick) Mills
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