Portfolio Update - December 2020

You may have noticed… I have been quiet lately. It’s tax loss season right now — so not exactly the best time to be going out and pulling the trigger on any new plays. That, and also, the “flavour of the month” sectors like cryptocurrency, e-sports, cannabis, and psychedelics seem to be outperforming every other sector in the market by a mile… and these sectors are just not for me. I am a value-hunter and we seem to be in a speculators market. You will not find me chasing hype plays to the moon. If I can’t buy with conviction, I prefer to spectate from the sidelines. I do believe that the market will come back to earth very soon and the fundamentals-driven companies will finally start getting the love that they deserve.

At the moment, there are only two stocks in the SmallCapInvestor portfolio….


Titan Mining Corporation

For the last week, I have been focusing my attention on Titan Mining Corporation. Titan Mining is a big-board listed zinc/gold play run by the AugustaGroup of Companies. For those who don’t know, the AugustaGroup are legends in the business. The AugustaGroup of Companies has created over $4B in shareholder value over the last decade alone all while staying very low-key. The last two gold deals they did were Ventana Gold (sold for $1.6B in 2011) and Newcastle Gold (turned into Equinox Gold via three-way merger). The last zinc deal they did was Arizona Mining which sold for a whopping $2.1B in 2018.


Now, the AugustaGroup is back on the gold train again with Titan Mining and their recently optioned Mineral Ridge gold property in Nevada (Possible for a 100% earn in). Titan Mining actually started out as zinc producer formed after the success of Arizona Mining, when zinc prices were reaching new highs. Unfortunately, commodity prices fell off a cliff shortly after. As a zinc producer, Titan Mining was hit hard.


The focus for Titan seems to have shifted to gold with the Mineral Ridge transaction. Although, the company does also retain ownership of the producing ESM zinc mine in New York. And recently, zinc prices have been on a tear which could potentially help to finance future exploration activities at Mineral Ridge. Anyways, judging by the market’s relatively mute response to recently positive drill results from the zinc mine, it seems the market is classifying Titan mainly as a gold exploration-development play now.

Let’s talk more about Mineral Ridge. Mineral Ridge was owned by Scorpio Gold, which a $10M cap gold company, for years. It was a past-producing mine that shut down when gold prices dropped off. So being one of the most successful natural resource investment groups in recent history, why did the AugustaGroup choose this particular asset? A look at the historical drilling results from Mineral Ridge as well as the future exploration targets, pretty much says it all.


The last time Scorpio Gold drilled at Mineral Ridge, here is what happened….

  • 40.1 g/t gold over 7.6m, 18.9 g/t gold over 9.1m, 10.6 g/t gold over 12.2m, 11.7 g/t gold over 9.1m, 9.6 g/t gold over 12.2m

These intercepts are from the Oromonte target. Pretty darn good. Which makes you wonder, why on earth these results were never followed up on? The answer comes down to one thing…. money.


Historically, Mineral Ridge has been a typical open-pit, low-grade, near-surface mine. The asset actually still hosts an NI 43-101 compliant resource which shows 350k ounces at an average grade of 1.16 g/t gold, amenable to open-pit mining. But these recent high-grade step outs were found deeper below the pit. To continue drilling at depth is very expensive and Mineral Ridge is a huge project…. there are a plethora of different regional exploration targets outlined. A comprehensive drill program of such scale costs tens of millions of dollars. Scorpio could not afford it. AugustaGroup could.


Scorpio Gold’s President, Chris Zerga, even said it himself…. “It’s an exciting point for the property with where we are with the gold price. I think we have a good story to tell. We would love to start mining. We just need the dollars to do it.”


Clearly, those high-grade intercepts from below Oromonte are clues that there is a much larger, deeper resource in the ground at Mineral Ridge. Looking at the most recent Titan Mining Investor Presentation can help us to decipher some of those clues.


Looking at the Brodie Deposit slide, there appears to be a mineralized structure that was not captured in the 2017 resource model for the Brodie Deposit, which was done at $1350/ounce.

Another thing that stands out here is the “bluelite” mineralization - a large undefined zone of mineralization that remains open along strike and has potential to connect with Brodie and Oromonte.


This can also be seen by looking at the Oromonte Deposit slides.


It seems that there is a possibility that all of these separate zones are connected.

One thing I will say about AugustaGroup deals is that they run a tight ship when it comes to the flow of information. Looking at the most recent MD&A from early December, there seems to be two drill rigs on the property. Looking at the investor presentation which outlines the exploration targets at Mineral Ridge…. they are going to need a lot more than two drills.



I will also add this… during this most recent year, AugustaGroup also took a stake in Bullfrog Gold (BFG) alongside Barrick Gold (ABX). I bring this up because the Bullfrog Gold Project is less than 150 miles away from Mineral Ridge. Could the the close proximity and timing of Augusta’s entrance into these deals be pure coincidence? … Doubtful.


Anyways, the stock prices seems to be getting a nice uptick lately which is likely a results of speculators moving into the stock in anticipation of drilling results at Mineral Ridge.

Carebook Technologies Inc.

Carebook Technologies stock has been struggling lately. To put things bluntly, the market is pissed off. The market is pissed because Carebook announced two acquisitions without having the adequate cash to do so. This, combined with a weak analyst report from Canaccord, has put a lot of pressure on the stock… and I mean ALOT. In reality, the top-line opportunity set for Carebook is not any different than it was two months ago when I first started writing about the company. But a series of blunders has led to the share price being where it is at today. It is unfortunate, yes. But in the long-run, these are short-term blunders — they are not the end of the company as we know it. I do believe that Carebook will find a resolve to the funding gap in due course and the stock will likely rebound as a result.


An Exciting New Silver Play

I have been hearing word on the street about an exciting new silver IPO that will hit the market in early 2021. There is not much known about the deal other than it is a silver deal in Mexico backed by the same team as K92 Mining, Fosterville South, and Turmalina Metals - Bryan Slusarchuk and crew.

There is a teaser website which is posted below:

www.silvercowboy.com



- SmallCapInvestor


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