RCKS Talk

04-Mar-2019

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. 

Highlights:

    • 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.
    Valuation:
    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).

03-Feb-2019

Pacton Gold Inc

Advancing an Interesting Target in Red Lake

Impact: Mildly Positive

Pacton has announced the beginning of a magnetic surveying program over its property in Red Lake Ontario with the aim of identifying potential drill targets on a property that is between two of the better projects in the camp. This news is interesting as the company is now advancing exploration targets on two different continents that suggests to us that with some success in Red Lake a spin-out is likely, which we expect to be value creating for shareholders. 

Highlights: 
    • Red Lake project has an excellent address. Pacton’s Red Lake project is located to the northwest of Great Bear Resources’ (TSXV:GBR) new Dixie project and to the southwest of Pure Gold’s Madsen Gold project (Figure 1). The company recently expanded its land position in this area. Both these projects have created significant shareholder value, and while early days Pacton hopes to do the same with its project.
    • Work to date suggests there is potential. Preliminary work suggests that Pacton’s ground has similar structure and rocks to its neighboring projects (Figure 2), but more work is needed. We expect the heliborne survey that the company has just initiated, is likely to be a good first step to demonstrating its potential.
    • We expect success to result in a spinout. With two disparate sets of projects (Pilbara and Red Lake) we believe that early success in Red Lake is likely to create value for shareholders. Not only because of exploration success, but we would expect the company to separate the assets into two sperate companies (spin-out or asset sale).
    • Still advancing projects in the Pilbara. The company is still working to advance its various projects in the Pilbara, most notably Boondalyerrie (hardrock) where early fieldwork has been encouraging.
Valuation:

Valuation reflective of early stage exploration in the Pilbara, Red Lake unaccounted for. We believe that exploration success at its Australian and Canadian projects could generate positive catalysts for the stock. Additionally, early exploration success in Red Lake should create value for shareholders. 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).

22-Oct-2018

Pacton Gold Inc.

More Nuggets from the Egina

Impact: Mildly Positive

Pacton Gold continues to discover gold nuggets on its properties in the Egina region; specifically at the Golden Palms property (Figures 1 & 2). The news is another step in the right direction for the company as it ramps up its exploration efforts in Western Australia and transitions from land-acquirer to explorer. In our view, Pacton has multiple projects that could yield a significant conglomerate gold discovery, as demonstrated by its early stage success.

Highlights:
    • Nuggets from Golden Palms imply significant scale potential at the company’s Egina tenements. The discoveries were made within a 300m by 300m area located approximately 2.5km northwest of the company’s previously announced discovery of gold nuggets at Friendly Creek (Figure 1) and associated with the same 10km stretch of ultramafic and komatitic basalt rocks. While very early days, the scale potential is similar to that of Novo Resources (TSXV:NVO) Comet Well/Purdy’s Reward project.
    • Significant underexplored strike length. The Golden Palm, Friendly Creek and Hong Kong tenements are all located in South Egina, along a large underexplored 8km thick volcano-sedimentary system, which extends for ~10km along strike (Figure 1). The combined land package is adjacent to Novo’s recently acquired Egina tenements, which Novo highlighted as prospective.
    • More exploration catalysts expected shortly. The company has started to ramp up exploration, specifically at the Egina properties. We believe that exploration success from its own projects, along with positive news from Novo, should provide additional momentum for the share price.
Valuation:

Pacton is the third largest conglomerate landholder and its recent exploration success could be repeated at its other projects. With an excess of 2,500 km2 in the Pilbara and work underway on multiple projects, we believe that exploration success at one or more of its projects could drive Pacton’s share price higher. This should be particularly true if Novo’s bulk sample results provide some positive momentum for the space. Upcoming catalysts: 1) Initial exploration results from Arrow and 2) Novo bulk sample results (Oct).

15-Oct-2018

Pacton Gold Inc.

Nuggets Delivered from the Egina

Impact: Mildly Positive

Pacton Gold announced the discovery of gold nuggets within favorable stratigraphy. This news is the beginning of an important step for Pacton as it moves from land-acquirer to explorer. Pacton’s gold nugget discovery at Friendly Creek bodes well for future exploration along the 10km of favourable conglomerate. The Pacton tenements are in the Egina region of the Pilbara that has been identified as prospective for conglomerate gold by Novo Resources (TSXV:NVO).

Highlights: 

  • Gold nuggets collected from six locations along conglomerate horizon. The discoveries were made along a 10km stretch of ultramafic and komatiitic basalt rocks (Figure 1). Previous historical reports of gold working in the same geological unit as Friendly Creek have indicated that the nuggets originated from underlying bedrock and were alluvially transported to surface.  
  • "Egina-ing out the competition!” Friendly Creek success follows the planned acquisitions of the adjacent Golden Palms and Hong Kong tenements (Figure 1). The combined land package is adjacent to Novo’s recently acquired Egina tenements, which Novo highlighted as prospective in a recent presentation. We believe ongoing work by Novo, Kairos Minerals (ASX:KAI) and Pacton is likely to demonstrate the potential of this region and benefit all players. 
  • Transition from acquirer to explorer; catalysts on the way. The company appears to have slowed the pace of acquisitions and has started to actively explore multiple projects, including its Arrow project and Friendly Creek. We believe that exploration success from its own projects, along with positive news from Novo, should provide additional momentum for the share price. 
Valuation:
Pacton is the third largest conglomerate landholder in the Pilbara. With an excess of 2,500 km2 and work underway on multiple projects, we believe that exploration success at one or more of its projects could drive the share price higher. This should be particularly true if Novo’s bulk sample results provide some positive momentum for the space. Upcoming catalysts: 1) Initial exploration results from Arrow and 2) Novo bulk sample results (Oct).

11-Oct-2018

Pacton Gold Inc.

Living on the Egina!

Impact: Mildly Positive

Pacton Gold announced that it has entered into an LOI to acquire additional conglomerate ground in the Egina region. We believe this to be a positive development, as it is an area of the Pilbara that has now been identified as prospective for conglomerate gold by Novo Resources. This pending acquisition is in line with the company’s strategy to use the valuation difference between Canadian and Australian conglomerate gold players, to acquire prospective ground for exposure to conglomerate gold exploration. It is important to highlight that the company has started work on its 100% owned Arrow project; thus, transitioning Pacton from an acquisition strategy to one with some exploration.

Highlights: 
  • By securing land in the region the company tries to get a lock on perspective ground ahead of news flow. The prospective deal provides exposure to a project adjacent to Novo’s recently acquired tenements. We continue to believe that upcoming news from Novo Resources should help dictate the direction of all the stocks with Pilbara conglomerate exposure.  
  • The Project has historic showings over 5km of prospective strike. The project has seen historical small-scale mining both in traditional hard rock targets and conglomerates. The exploration licence covers 40.15km2 and is home to over 5km of strike of favourable stratigraphy for conglomerate gold.  
  • Terms of the acquisition appear reasonable; with limited cash commitments. Terms of the agreement will have the company paying Clancy the sum of C$175,000 and 3,797,470 common shares, implying a total acquisition cost of ~C$1.47M. In our view, the company’s ability to conserve cash with these acquisitions puts them in a better financial position to explore them in the near future.
Valuation:
Pacton is the third largest conglomerate landholder (Figure 3); with work underway on its Arrow project.
We believe that initial exploration success at its Arrow project could drive the share price higher, particularly if Novo’s pending bulk sample results provide some positive momentum for the space. Upcoming catalysts: 1) Initial exploration results from Arrow and 2) Novo bulk sample results.

27-Sep-2018

Pacton Gold Inc.

Adding Ground at the Egina

Impact: Positive

Pacton Gold has announced a binding LOI for the acquisition of another project in the Engina region of the Pilbara, which we view positively. The Golden Palms property adjoins Pacton’s Friendly Creek project adding 35 km^2 to its growing land package in the Pilbara.

  • While a smaller land package, the property has already had nuggets discovered on it, and has favourable lithologies for conglomerate gold, moving it ahead of multiple projects in Pacton’s portfolio
  • The Egina area, with in the Pilbara, has been the subject of recent exploration and acquisition activity with Novo Resources (TSXV:NVO) recently acquiring prospective projects in the region and Kairos’s (ASX:KAI) recent exploration success.
  • This low-cost acquisition (C$100,000 & 400,000 shares) follows the company’s strategy of using the valuation disconnect between Australian and Canadian listed Pilbara conglomerate gold explorers to consolidate a significant land position (Figure 1)
Pacton is in the process of shifting from acquisition mode to exploration, with work beginning on its Arrow project, as the 3rd largest conglomerate gold land holder and 3rd largest Pilbara conglomerate gold company by market cap, we believe that exploration success could close the valuation gap to peers.

27-Aug-2018

Pacton Gold Inc.

Pacton Adds More Conglomerate Ground

Impact: Positive

Pacton Gold has announced that it has entered into a binding letter of intent (LOI) to acquire the conglomerate gold rights from Calidus Resources Limited (ASX:CAI) over a portfolio of eight exploration licenses, which includes six granted exploration licenses and two exploration licenses under application for a total of 357.5 sq. km within the Pilbara region of Western Australia.

  • Included in this land package is 40km of favourable stratigraphy for conglomerate, but the property has seen little work to date
  • We highlight that Haoma announced the discovery of gold hosted in conglomerates at its nearby Marble Bar tenements and Calidus has previously discovered watermelon seed nuggets in this area as well (Figure 1)
  • Under the terms of the LOI, Pacton would make a non-refundable payment of C$10,000 and issue to Calidus or its nominees 7M common shares in addition to the right to deferred compensation whereby Calidus may receive up to 3M additional common shares of Pacton on the first anniversary of completion of the transaction based on Pacton’s 30-day VWAP
This acquisition continues with Pacton's strategy to use the valuation gap between Australian and Canadian listed Pilbara conglomerate gold explorers to consolidate a significant land position (Figure 2).

22-Aug-2018

Pacton Gold Inc.

Pacton Accelerates Acquisition of Arrow Pilbara

Impact: Mildly Positive

Pacton Gold has agreed to terms to acquire the remaining 49% of Arrow Pilbara Pty Ltd, (currently owns 51%) from Arrow Minerals Limited (ASX:AMD), accelerating the previous Share Purchase and Option Agreement to acquire 80% of the company. The remaining 49% is being acquired for C$1M in cash and the issue of 2M shares of Pacton.
  • Arrow Pilbara holds a strategic land package totaling 609 sq. km comprised of two granted tenement licences and two applications for licences; it is an advanced portfolio consisting of conglomerate gold targets within the Mallina Basin
  • This continues to be an earlier stage conglomerate gold target; however, conglomerate hosted and nuggets have recently been discovered on the property and seven conglomerate gold targets have been identified to date, follow-up work is needed
  • The property is adjacent to and in close proximity to key exploration properties controlled by Novo Resources, De Grey Mining, and Kairos Minerals (Figure 1)
We view this acquisition as another step forward for the company in continuing to execute its strategy of land consolidation in the Pilbara. Pacton is quickly advancing its interest in the Pilbara, taking advantage of the valuation gap between Canadian and Australian listed conglomerate gold companies.

10-Aug-2018

Pacton Gold Inc.

Pacton Terminates Deal to Acquire Bellary Dome

Impact: Negative

Pacton Gold has announced that with regards to the letter of intent (LOI) entered into on June 20, 2018 to acquire the Bellary Dome Project, it has elected to terminate its agreement with Marindi Metals, following the completion of its legal and technical due diligence investigation into the exploration licence.

  • Under the terms of the LOI, Pacton would have paid C$2M and issued 10,098,000 common shares to Marindi upon the closing of the transaction, in addition to paying C$1M or issued shares equal to that amount both on 12 months and 18 months after completion of the transaction
  • The Bellary Dome property hosts ~25km of strike extent between the Mt. Roe Basalt and the conformably underlying Bellary Formation with fine visible gold panned across the project
  • We view the Bellary Dome property as highly prospective for conglomerate gold mineralization and would have been one of the better assets in Pacton’s portfolio, therefore, we see this as a negative development for Pacton
The company recently acquired a 146.8 sq. km land package from Gardner Mining Pty Ltd and we expect the company is likely to continue executing its strategy of land consolidation in the Pilbara. In addition to the recent strategic investment from Eric Sprott, Pacton is quickly advancing its interest in the Pilbara and is well-positioned to commence exploration activities on its properties.

07-Aug-2018

Pacton Gold Inc.

Pacton Continues to Add to Pilbara Land Package

Impact: Mildly Positive

Pacton Gold has entered into a binding letter of intent (LOI) to acquire 100% of both the Yandicoogina and Boodalyerrie exploration licenses and mining leases from Gardner Mining Pty Ltd for a total land package of 146.8 sq. km.
  • The Yandicoogina Project hosts ~4.7km of prospective strike defined by structurally controlled gold systems and the Boodalyerrie project hosts 2.3km of strike of the contact between the Hardey Formation and the Mount Roe Basalt
  • The strategic portfolio includes 2 granted mining leases and 3 granted exploration licenses, where the mining leases add the potential for immediate bulk sampling and add to the 5 mining leases acquired from the May 28, Friendly Creek transaction
  • Under the terms of the LOI, Pacton will pay C$25,000 and issue 3,000,000 common shares to Gardner Mining in order to purchase 100% interest in the properties
We view this acquisition as another step forward for the company in continuing to executing its strategy of land consolidation in the Pilbara. In addition to the recent strategic investment from Eric Sprott, Pacton is quickly advancing its interest in the Pilbara and is well-positioned to commence exploration activities on its properties.

28-May-2018

Pacton Gold Inc.

Pacton Picks Up More Land in Pilbara

Impact: Positive

Pacton announced the acquisition of the Friendly Creek exploration license (1) and mining leases (5) totalling 31.36km2, adjacent to land held by Novo Resources’ and Kairos Minerals (Figure 1).

  • Initial exploration is planned to be undertaken on the historical property which extends over a 10km strike
  • Large scale bulk sampling can begin quickly with mining licenses already in hand
  • Under the agreement Pacton will pay C$25,000 to the vendors and issue 2.5 million shares
Following the strategic investment from Eric Sprott and recent land consolidation, Pacton is quickly advancing its interest in the Pilbara and becoming a large landholder in the region.

 
22-May-2018

Pacton Gold Inc.

Pacton Becomes 3rd Largest Land Holder in Pilbara

Impact: Positive

Pacton has become the 3rd largest land holder in Australia’s Pilbara region after acquiring 100% of the shares in Drummond East Pty Ltd, a wholly owned subsidiary of Impact Minerals Ltd. (ASX:IPT), for the company’s seven granted tenement licenses covering 1,126 sq. km (Figure 1).

  • Exploration has indicated that up to 90km of prospective conglomerates occur at or near-surface on granted tenements
  • Historic rock-chip results of 11.2g/t gold have been found in a gold-pyrite conglomerate that extends for 25km
  • Acquisition provides access to the extensive regional knowledge and expertise provided by team led by Dr. Mike Jones
With a total of 2,227 sq. km in consolidated property in the Pilbara district, Pacton is continuing to demonstrate its commitment to its strategy in the Pilbara. Following the strategic investment from Eric Sprott and previous land consolidation, is quickly advancing its interest in the Pilbara.

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