top of page

Drill Spec in the Blackwater Neighbourhood - Independence Gold (TSXV:IGO)

Writer's picture: SmallCapInvestorSmallCapInvestor

I was first introduced to IGO a few months ago before the company had began its 2020 drill program at the 3T’s project. At that time, the stock was trading for around $0.15 and I was unsure about whether or not the drill program would be successful. Fast-forward to today… the company has released FOUR out of a total TEN holes from the 3T’s drill program which all intersected mineralization of significant grades over wide intervals…. yet the stock is still trading for $0.15. Although, I am not too surprised to see the market’s relatively mute reaction to the news, considering the lack of promotion the company has done. The focus has been on getting results from the drills, which I do like to see. I think the lack of response to these great results is presenting a great opportunity for new investors to get in on the action before the other six drill holes are released.


I won't lie.... it takes a lot for me to bite on a junior mining stock without the AugustaGroup 'stamp of approval', but I am willing to make an exception in the case of IGO, mostly because of Randy Turner's integrity and track record in addition to the quality of the 3T's asset.


Before taking a swing at this, I suggest everyone read up on the full story in order to understand what is at stake but MORE IMPORTANTLY to understand the risks. While there is a value cushion of ~600k ounces at 3T's, this is not really enough for a standalone mine, so it is essentially a leveraged bet on the drills.


HIGHLIGHTS

  • Multiple Properties

  • Proximity to Blackwater (Owned by ARTG)

  • Heavily Undervalued (~$18/Oz Au)

  • Promising Drill Results from 3T’s Project (4/10 holes completed; SIX REMAINING).

 

Independence Gold’s operates in two different provinces within Canadian borders: BC and the Yukon Territories. There are three projects in BC: 3T’s (our favourite), Merit, and Nicoamen; and there are two projects in the Yukon: Boulevard and Moosehorn. Given that the drilling season in the Yukon is so short (due to cold weather), it is nice to see that the company has projects in BC for which the drill season lasts a little longer. The company’s portfolio of projects is diversified, consisting of early stage grassroots exploration to advanced-stage resource expansion projects. To put things bluntly, in my opinion, the blue sky potential for IGO lies within the 3T’s project, considering its proximity to the Blackwater gold project; forget about the other projects.

THE 3T’S PROJECT

The 3T’s project is located just 20km away from the Blackwater Project, owned by Artemis Gold (‘ARTG’). ARTG purchased Blackwater from New Gold in mid-2020 for over $200 million. The project has over 9 million ounces and some juicy economics to go with it. ARTG now trades at an $800 million market cap while the market cap of IGO sits at a mere ~$11 million. While the blue sky potential for the 3T’s project lies in the drills, it is nice to know that there is already an NI 43-101 compliant resource containing 441,000 ounces of gold and 12,540,000 ounces of silver; this is 619,200 ounces of gold equivalent at an average grade of ~2.5 g/t. This would imply an EV/ounce multiple of around $18/oz. It may not be enough to justify a large-scale mine build, but it is nice to have a value cushion and an existing resource to build upon.

RECENT DRILL RESULTS

On October 15th, IGO released results from the first two drill holes from the 10-hole drill program at the 3T’s project. The mineralization was pretty good, but the length of the intersections was not as long as I was expecting to see. The length is important because the mineralization could just be a tiny little vein that does not extend anywhere else on the property. These were decent results; the important thing is that they were not dusters. After the release, the stock rose from $0.14 to $0.15.

On November 10th, IGO released another two drill holes from the 3T’s drill program. This time, the grades were just as good, but more importantly, the length of the intersections was much larger. 67.6 meters of 3.63 g/t is a fantastic drill intersection. The markets reaction was not so dull this time as the stock opened at $0.20, up from the previous close of $0.13. However, the market seems to have come back to reality as the stock now trades for $0.15. To be honest, if you showed me that drill result a month ago and asked me to guess the price of IGO, I would have guessed al ot higher than $0.15. The fact that it is still trading here despite the positive results is not something I can explain… it doesn’t make sense. Especially considering that the company has only completed FOUR out of TEN of the total drill holes; there is more to come.

Another point to note here is the silver credits, which are not to be overlooked, and will ultimately be beneficial to the economics of the deposit. The table above shows the recent drill intersections converted into gold equivalent values. We see the 67.6 meters drill intersection was actually closer to 5.36 g/t Au Equivalent using today’s gold and silver prices. The silver credits clearly make a difference to the gold equivalent g/t values, especially for values above 100 g/t silver.



MANAGEMENT TEAM

IGO has a strong management team with mining-industry legend, Randy Turner, in the driver’s seat. Randy Turner has quiet the resume. In 2000, he sold his Winspear Diamonds to DeBeers for $305M. In 2011, he sold SilverQuest to New Gold, to consolidate ownership of the Blackwater Gold Project. Blackwater is now owned by Artemis Gold ($ARTG) which has a market cap of $700M. So... one home-run in 2000, another home-run in 2011, and now he is back on the horse with Independence Gold. Not only that, but Randy knows the area like the back of his hand. Randy was the one actually responisble for the discovery of the Blackwater project via SilverQuest Mining. Not many know this.


While he has had a long history of success in mining, he does not seem to be overly promotional. In terms of strategic shareholders, there is Newmont Corporation (initial investment made by Goldcorp) as well as New Gold ($1.7B market cap; previous owner of Blackwater). Newmont Mining and New Gold are both major mining companies. They are not interested in IGO for the established 620k ounce resource. Clearly they feel that there is more discovery potential in the area and are using IGO as a prospect generator in hopes of adding another big project to their pipeline.

CAPITAL STRUCTURE

Looking at the last financing, we were relieved to see that the amount raised was quite minimal. Just enough to finance the current drill program. It seems IGO wanted to raise as little money as possible, which is good to see, considering the financing occurred at a low price and would have been highly dilutive, if larger. It was a commendable move on the part of managements to finance the current drill program without diluting the capital structure too heavily. Considering the small, tightly held float (under 70 million), the stock should rise quickly if these next few reported holes are successful, at which point the company should be able to raise money again at higher prices.


DILUTION + LIQUIDITY RISK

The most obvious drawback with IGO is the inevitable dilution risk. The last raise they did was only $1M, just enough to cover the 2500 metre drill program. While I do like to see this "take only what is needed" financing approach as it avoids necessary dilution, they will undoubtedly need to do another financing after this drill program in order to continue exploring 3T’s in years beyond 2020. I would imagine they would like to get the stock up to higher prices before doing so, as to avoid diluting too heavily, which the next set of results may help with.


It is also important to be aware of the illiquid nature of the stock. Although the volume has been picking up in recent days, the average daily volume on the stock for the last few months is just 175k shares (~$25,000/day).



Other Links:


-SmallCapInvestor


 

DISCLOSURE & DISCLAIMER

DISCLOSURE: Author owns shares of Independence Gold (TSXV:IGO) and may choose to buy or sell at any time without notice. Author did not receive any compensation for publishing this article.

DISCLAIMER: The work included in this article is based on current events, technical charts, company news releases, and the author’s opinions. It may contain errors, and you shouldn’t make any investment decision based solely on what you read here. This publication contains forward-looking statements, including but not limited to comments regarding predictions and projections. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements. This publication is provided for informational and entertainment purposes only and is not a recommendation to buy or sell any security. Always thoroughly do your own due diligence and talk to a licensed investment adviser prior to making any investment decisions. Small cap companies can easily lose 100% of their value so read company profiles on www.SEDAR.com for important risk disclosures. It’s your money and your responsibility.


JSC LOGO BLACK BARS PNG.png

CONTACT US

E-mail:

Social:

  • Twitter
  • Discord
  • Whatsapp
  • YouTube
  • Instagram

SUBSCRIBE NOW

You are now subscribed to SmallCapInvestor.ca

DISCLAIMER

This is the official website of SmallCapInvestor (“SmallCapInvestor” or the “Creator”).

Please read the following terms and conditions of website use (the “terms and conditions”) carefully before accessing or using the Creator’s website as they represent a binding agreement between you (either an individual or a single entity) and the Creator and govern your use of www.smallcapinvestor.ca together with all of the information and materials available on such website (collectively, “This Site” or “www.smallcapinvestor.ca”). By accessing, browsing or using This Site, you agree to be bound by the terms and conditions as outlined herein. If you have not read, do not understand, or do not agree to be bound by these terms and conditions, please do not use This Site. The Creator reserves the right to change these terms and conditions from time to time at its sole discretion and without notice.

It is your responsibility to check for any updates, and you should revisit this page from time to time as your use of This Site is subject to the most current version of the terms and conditions posted at the time of such use.

The Creator has taken all reasonable care in producing and publishing information contained on This Site and will endeavour to do so regularly. However, material on This Site may still contain technical or other inaccuracies, omissions, or typographical errors, for which the Creator assumes no responsibility. Under no circumstances shall the Creator be liable for any direct, indirect, special, incidental, consequential or other damages, including but not limited to, loss of programs, loss of data, loss of use of computer or other systems, or loss of profits, whether or not advised of the possibility of damage arising from your use, or inability to use, the material on This Site. Further, you may not modify or reproduce in any form, electronic or otherwise, any information on This Site.

Your rights to use This Site

Provided that you accept and comply with these terms and conditions, you have the limited right to access and use This Site to view the various materials, including information, documents and other content on This Site and to copy, download or print a single copy of any of the information and materials available on it, solely for your personal non-commercial use or your internal informational use in business and not for resale or distribution to anyone else, provided that you reproduce all of the Creator’s proprietary markings on each copy of reproduced material. Except as expressly permitted by the Creator in writing, you may not copy, reproduce, download, upload, post, transmit, translate, modify, distribute, sell, rent, license, transfer, mirror, frame or create derivative works from This Site, in whole or in part, in any form or by any means. 

Do Not Use Any Information in Our Publications to Make an Investment Decision

We are paid advertisers and we are publishers of publicly disseminated information on behalf of our clients, publicly traded companies, or non-affiliate third party shareholders of various issuers (“Client Companies”). Do not base an investment decision on any of the contents of our publications on This Site.

We are not registered as and we do not act, directly or indirectly, in the capacity of any of the following and you should not construe our activities as involving advice from any of the following: (a) an investment advisor; (b) a broker dealer; (c) a broker; (d) a dealer; (e) a stock recommender; (f) a stock picker; (g) a finder; (h) a securities trading expert; (i) a financial planner; (j) a securities analyst; or (k) a financial analyst.

The information found on This Site was prepared without regard to any particular investor’s investment objectives, financial situation, or financial or investment needs. Accordingly, investors should not act on any information contained on This Site without obtaining specific advice from their financial advisors and should not rely on information herein as the basis for their investment decisions. Investments based on the information provided on www.smallcapinvestor.cainvolve a substantial risk of loss and are not appropriate for everyone. No representation is being made that utilizing the information on www.smallcapinvestor.ca will result in profitable trading or be free of risk of loss. Before deciding to trade or invest you should carefully consider your investment objectives, level of experience, and ability to tolerate risk. The possibility exists that you could sustain a loss of some or all of your investment. 

Forward-Looking Information

Certain information contained on www.smallcapinvestor.ca, including any information as to the future financial or operating performance of the Client Companies highlighted, may be deemed “forward looking”. All statements on www.smallcapinvestor.ca, other than statements of historical fact, which address events or developments is expected to occur, are “forward-looking statements” or “forward-looking information”. Generally, these forward-looking statements can be identified by the use of forward-looking terminology, including but not limited to, the words “expects”, “does not expect”, “plans”, “anticipates”, “does not anticipate”, “believes”, “intends”, “estimates”, “projects”, “potential”, “scheduled”, “forecast”, “budget” and similar expressions or their negative connotations, or that events or conditions “will”, “would”, “may”, “could”, “should” or “might” occur. 

All such forward-looking statements are subject to important risk factors and uncertainties, many of which are beyond the ability to control or predict. Forward-looking statements are necessarily based on estimates and assumptions that are inherently subject to known and unknown risks, uncertainties and other factors that may cause Client Companies’ actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking statements.

Forward-looking statements are not guarantees of future performance, and actual results and future events could materially differ from those anticipated in such statements. All of the forward-looking statements contained on www.smallcapinvestor.ca are qualified by these cautionary statements. The Creator expressly disclaims any intent or obligation to update or revise any forward-looking statements, whether as a result of new information, events or otherwise, except in accordance with applicable securities laws.

Indemnity

To the maximum extent permitted by applicable law, you will defend, indemnify and hold harmless the Creator, and its respective directors, officers, employees, consultants and agents from and against all claims, liability, and expenses, including all legal fees and costs, arising out of your breach of any provision of these terms and conditions or, any applicable law or proprietary or privacy right in connection therewith. The Creator reserves the right, in its sole discretion and at its own expense, to assume the exclusive defence and control of any matter otherwise subject to indemnification by you. You will co-operate as fully as reasonably required in the defence of any claim.

Stock Quotes

All stock price quotes and historical stock price data on This Site are provided by third parties, are for informational purposes only, and are not intended for trading purposes. If you are contemplating trading in securities of companies mentioned on www.smallcapinvestor.ca, the Creator strongly advises that you obtain independent professional advice (including independent legal and financial advice from qualified advisors) before making any investment decision. The Creator makes no representation or warranty regarding the timeliness, accuracy or completeness of any stock price quotes or historical stock price data.

Laws

This Site (excluding linked sites) is controlled by the Creator from its offices within the Province of British Columbia, Canada. By accessing This Site, you and the Creator agree that all matters relating to your access to, or use of, This Site shall be governed by the statutes and laws of the Province of British Columbia or the federal laws of Canada, as applicable, without regard to the conflicts of laws principles thereof. You and the Creator also agree and hereby submit to the exclusive personal jurisdiction and venue of the courts of the Province of British Columbia with respect to any and all matters arising in connection with these terms and conditions. 

Third Party Links 

The Creator has provided links from This Site to several other websites (“Third Party Websites”) that are arm’s-length to the Creator, and may embed content from Third Party Websites on This Site. The viewer should be aware that in linking to Third Party Websites they are leaving This Site and the Creator is not responsible for the content of any Third Party Website. Information on Third Party Websites, and any information from Third party Websites embedded on This Site, may be updated, revised, or otherwise modified without the knowledge or involvement of the Creator.  The Creator expressly disclaims any and all responsible for the accuracy of the content on any Third Party Websites, whether on This Site or not. 

bottom of page