FireFox Gold Corp

First Steps from Phase I Show Promise

Impact: Mildly Positive

Phase I of drilling at FireFox’s Mustajärvi project successfully intersected high grade gold both at depth and along strike of the known mineralized structure warranting further follow-up as the company moves in to Phase II of drilling. We have a fair value estimate of C$0.63/share for FireFox’s Finnish project and we expect Phase II at Mustajärvi to offer evidence of this potential.

  • Project-wide technical success. The consolidation of results from Phase I proved to be a project-wide technical success. Notably, IP and magnetic anomalies were tested stepping out 100m to the west of the known mineralization returning 0.97 g/t Au over 3.65m (18MJ008). To the east, drilling intersected additional vein structures with highlights including 1.15m at 3.6 g/t Au (18MJ004) continuing to delineate an eastern extremity of the gold structure. Finally, as previously reported, drilling has confirmed the potential of a deeper mineralization at drill hole with 18MJ010 which assayed 45.1 g/t Au over 2m at 125.5m depth. This news aligns well with the company’s geologic interpretation of the area and is beginning to bring proof of the potential we see at Mustajärvi. 
  • Mineralized footprint still unconstrained. With successful drilling from Phase I complete, the company has an increased understanding of the geologic controls at Mustajärvi and will move ahead on to Phase II. To date, the company has only tested ~14% of the mineralized trend which extends to both the east and westmost extremities of the property.
  • Further drilling in the forecast. We expect numerous catalysts coming from the company as Phase II drilling begins and exploration efforts continue at both the Jeesiö and Seuru projects where surface work is underway. Phase I results support our view that Firefox should able to define a high grade deposit at Mustajärvi while advancing its later stage targets.

Valuation does not match recent exploration progress or significant land package. We value FireFox at potentially C$0.63/share (Figure 1). At C$0.25/share, the company has an EV of C$6.2M and a significant land package in the CLGB and continues to warrant a positive outlook for exploration success. Upcoming Catalysts include 1) Phase II results from Mustajärvi 2) Further exploration and commencement of drilling at Jeesiö and Seuru.



Pacton Gold Inc

Adding Ground in the Pilbara

Impact: Mildly positive

Pacton has announced its entry in to a binding letter of intent (LOI) to acquire the Tardarinna Gold Project in the Pilbara Region of Western Australia. This news is accretive to the company’s acquisition strategy as it now holds projects in the Pilbara and Canada’s Red Lake Gold district in Ontario.  With work underway at two different exploration targets, both in highly favourable mining jurisdictions, Pacton is gaining ground and nearing a discovery. 


    • LOI increases exposure to shear hosted gold. Under the binding terms of the agreement, Pacton will acquire 100% interest in the Tardarinna property located to the southwest of its Egina tenements where it is ramping up conglomerate gold exploration. While the property remains to be drill tested, it hosts large target areas of 10-50m wide pegmatoidal quarts veins delineated over a +1km shear zone. A potential discovery at this project could add an additional sweetener beyond the company’s current conglomerate gold targets in the area. 
    • Work to date shows strong discovery potential. Historic gold sampling at the Tardarinna Gold Project has returned surface sample highlights of up to 328 g/t Au. The property shows evidence of eluvial gold workings near surface in the southeastern quadrant of the project, but the wider property remains largely underexplored. The company will follow-up with in depth surface sampling as it advances the project toward target identification. 
    • Continued success in Red Lake could lead yield a discovery soon. Pacton is quickly assembling a greater understanding of the potential at its Red Lake project where it is consolidating data from historic surface sampling (highlight grab samples of 133 g/t Au 2002), alongside trenching and diamond drilling. The company will complete a high-resolution magnetic survey as it continues to target D2 structures for potential drilling.
    Growing strategic land holdings alongside exploration work not reflected in current pricing. We believe that Pacton offers investors exposure to a number of potential discoveries throughout its projects in Red Lake and the Pilbara. We expect steady news flow to generate positive momentum for the stock as work continues. Upcoming catalysts: 1) Initial exploration results from Boondalyerrie (Q2/19), 2) Results from Egina alluvial exploration (Q2/19) and 3) Heliborne survey results at Red Lake (Q2/19).


Red Pine Exploration Inc

Results Point to Resource Expansion

Impact: Mildly Positive

Drilling results announced by Red Pine at Surluga continue to validate the company’s geological model and bode well for the Surluga resource update expected in Q2 2019. We continue to believe the Wawa Gold Corridor hosts a large gold system and that Red Pine is positioned to deliver multiple gold discoveries.

  • Results additive to existing mineralized footprint. Delineation drilling has intersected high grade zones highlighted by 42.2g/t Au over 2 m (true width) within a wider interval running 3.7g/t Au over 34.6m (true width). These drill holes targeted previously unexplored gaps within the deposit and confirm the company’s understanding of structural controls. As these latest results occur outside the current high grade (3 g/t cut-off) resource envelope at Surluga, they should be additive to the resource update expected in Q2 2019E.
  • Gap zones proximal to existing infrastructure. The reported high-grade intervals are proximal to the existing underground infrastructure of the historic Surluga and Jubilee mines. This should help mitigate future capital costs for an underground operation at Surluga. Moreover, with ore zones typically the range of thicknesses from 3m to 30m, we envision cost effective bulk underground mining methods being applied.
  • Upside Above and Below. This last batch of drilling results included 1.2m @ 8.3 g g/t Au returned from the hanging wall of the Surluga deposit. This intercept is believed to represent the extension of the Minto B Shear and hints at the potential for discovering additional structures both in the hanging wall and footwall of the Surluga Deposit. We note that Red Pine has barely begun to test for such additional structures at Surluga but we favor their chances of discovering and growing new ore zones given their improved understanding of this gold system.
Despite ongoing exploration success Red Pine trades at US$12/oz AuEq versus peers at US$40/oz AuEq . We note that the company is well funded with roughly C$5M – continued exploration success should close the valuation gap to peers. Additionally, we view the eventual consolidation of the projects ownership structure to likely be a major catalyst for Red Pine. Upcoming catalysts include 1) Pending assay results for 23 holes completed at Surluga 2) Updated Surluga Resource estimate in Q2 2019 



De Grey Mining Ltd.

Mallina Drilling Expands Resource Potential

Impact: Mildly Positive

De Grey has released step out RC and diamond drill results from its Central Mallina Target which point to potential growth beyond the current ~160koz resource. We believe that De Grey’s Pilbara Gold project is of sufficient scale and exploration potential, to position company as a whole as an attractive target for mid-tier producers.

  • Diamond drilling intersects wide alteration zone at depth. Diamond drilling beneath the current Mallina Central zone orebody highlight a potential 50-70m wide alteration zone of sulphide and limited quartz vein mineralization (MLRC259D). While assays are pending for this hole, it lies directly beneath previously drilled MLRC214D which returned 56m at 3.04 g/t Au and appears to be similar in geologic nature. Mallina’s current deposit has only seen shallow drilling (<100m) which was the basis for the initial resource estimate of 160,700 oz at 1.3 g/t Au.
  • Step out drilling extends resource potential along strike. Results confirm the extension of Mallina Central to the west where RC drill hole MLRC255 intersected 5m at 2.03 g/t Au at 50m to the west of the current deposit (Figure 2). Additionally, the company is completing a 5km x 1km Sub-Audio Magnetic (SAM) geophysical survey which is expected be used in identifying further potential targets along strike from the deposit and provide information on the mineralization controls in the wider Mallina area.
  • Continuous news flow across entire project. The company is pending results on several diamond drill holes which we expect will provide further insight on the potential of the deeper Mallina Central zone. Additionally, the company is pursuing resource expansion throughout the entirety of its Pilbara Gold project, we expect updates are coming on capital costs, operating costs and mine plans for the proposed project as well as drill results across a number of the company’s deposits.
We expect De Grey to progressively re-rate as exploration and project development continues. Our preliminary estimate for De Grey’s hard rock assets are worth at least A$0.30/sh. These estimates do not account for the optionality the company has with its conglomerate targets. We believe that as the company demonstrates the exploration upside and scale potential of PGP, it is likely to become a takeout target for larger peers. Upcoming catalysts: 1) Ongoing exploration results and 2) Project development updates.


De Grey Mining Ltd

Updates Demonstrate Project Wide Upside

Impact:Mildly Positive

De Grey has provided positive updates from both its conglomerate target Loudens Patch target and Farno JV highlighting project wide explorational potential. As De Grey continues to outline an increasingly economic operation for its Pilbara project supported by significant exploration upside, we expect mid-tier producers to begin to show an interest.

    • Conglomerate potential looking increasingly promising. Bulk sample results to date from De Grey’s Loudens Patch West have returned an overall average grade of 3.04g/t Au. These results continue to demonstrate the possibility that Loudens Patch could provide supplemental higher-grade ore to the company's proposed hard rock development plans without necessarily defining a resource. These results continue to that further testing of the conglomerate gold target is warranted.
    • Farno JV shows potential from initial drill results. Reconnaissance drilling completed 20km to the South of the company’s Withnell deposit have delivered new anomalous gold prospects at Quartz Hill, Clarke and Gillies. A total of 2,310m of drilling was completed at the three targets returning grades ranging from 0.23-1.19g/t Au over various quartz vein and anomalous gold zones. De Grey expects to earn its initial 30% interest (can earn up to 75%) in the Joint Venture with Novo Resources through the completion of planned 2019 work programs.
    • Considerable news-flow coming from multiple prospects. We don’t expect the company will ease-up on its current momentum in 2019. As it pursues resource expansion throughout the entirety of its Pilbara Gold project, we expect updates are coming on capital costs, operating costs and mine plans for the proposed project bolstered by further drill results.
    Market does not value Pilbara Project’s current resources or expansion potential. Our preliminary estimate for De Grey’s hard rock assets are worth at least A$0.30/sh. These estimates do not account for the optionality the company has with its conglomerate targets. We believe that as the company demonstrates the exploration upside and scale potential of PGP, it is likely to become a takeout target for larger peers. Upcoming catalysts: 1) Ongoing exploration results and 2) Project development updates.

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