Tag Archives: Gold Canyon

Small Mining Companies Hibernate to Survive Industry Slump

Dow Jones Business News,  March 13, 2015

Gold Canyon Resources Inc. has 5.1 million ounces of gold and 26 million ounces of silver underground on property in Northern Ontario. It owns little else.

The Toronto-listed company is part of a generation of junior mining companies that has gone into hibernation. Rocked by a three-year-old mining downturn, these companies have reduced themselves to skeleton staff, locking up their properties and stripping out almost all costs.

Junior miners, which are companies that specialize in exploration or small-scale mining, are in a position to sit out a slump because they often have little debt, few big costs and the ability to hire out their machinery, such as drills. That is unlike the industry giants, from Freeport-McMoRan Inc. to Rio Tinto PLC, which have big debt piles and large, high-cost operations to maintain.

Those qualities have allowed the junior mining sector to defy predictions of widespread bankruptcies. Nonetheless, the downturn has stalled their exploration, historically a major contributor to new supply of metals, from gold to copper.

An industrywide pullback in exploring for nonferrous metals reflects in part the juniors’ dormancy. Globally, the sector’s exploration budget shrank to $11.4 billion in 2014, roughly halve of the $21.5 billion earmarked in 2012, according to a report by SNL Metals & Mining.

Gold Canyon, which was founded in 1985, had just completed its exploratory drilling when the downturn hit full stride in 2012, sending share prices tumbling and steering investors and banks away from many new mining projects. The next step for Gold Canyon was to be a study to determine how economical it would be dig out the gold and silver–but that was put on hold. Such feasibility studies can cost up to $15 million.

“We have cut to the core,” said Ron Schmitz, a director at Gold Canyon with more than 20 years of industry experience.

Gold Canyon, which had built a 60-plus person camp in northwest Ontario, now has just a “couple of guys” there to keep any intruders out, said Mr. Schmitz. The company recently raised money and has no debt, allowing it to ride out the downturn. But it still has costs.

“It’s about $150,000 a year just to exist,” Mr. Schmitz said.

Earlier this month in Toronto, Mr. Schmitz joined over 23,000 others in the mining industry, largely from the junior sector, for the annual Prospectors & Developers Association of Canada conference. Most were looking to raise money to restart their projects. Most would return home disappointed.

“There is no money walking the floor,” said Richard Cushing, who works in investor relations at Monument Mining Ltd, a Canadian gold miner.

Because mines typically take years to develop, skimping on exploration could translate into meager supply growth down the road. But if in the meantime demand picks up in a notoriously cyclical industry, miners may find themselves scrambling to boost production.

Among PDAC attendees, Everton Resources Inc. also is trying to hold out by shrinking operations and putting exploration on hold in the Dominican Republic. In 2012, the gold miner had up to 20 staff and hired teams of contractors to drill, explore and test samples. Now it has around eight employees and is doing little in the way of digging out its gold or exploring for new assets.

“We sit and wait till the markets allow us to raise money,” said Sabino Di Paola, the company’s finance chief.

Since its peak in April 2011, the Global X Junior Miners ETF index has fallen about 78%. From their price peak, gold is down 38%, copper off about 42% and iron ore down 70%, according to the Steel Index.

At the end of January, Toronto-based exchange TMX Group was home to 1,485 miners, of which 80% were listed on the TSX Venture junior exchange. All of these miners combined had a market capitalization of $266 billion, less than half of their peak value reached in February 2011.

Of miners’ total market capitalization on the TMX in 2015, only 3.7% represented companies listed on the junior exchange, underscoring how badly these miners have been hit.

For some, even a junior exchange listing–which for Gold Canyon runs about $35,000 a year–has become a luxury. Last year, 44 miners asked the TMX Group to delist them from Canada’s various exchanges. That was double 2013’s number and well over the 10 miners asking out in 2010 when the mining boom was in full stride.

Delisting can be a risk for investors, who already are holding portfolios of hibernating and illiquid miners, as it wipes out the remaining equity value of the holding.

For some ill-fated miners, their listing is all they have left.

Peter Cunningham is the founder of Lions Edge Capital, a Toronto-based corporate advisory firm that specializes in enlisting miners in so-called reverse takeovers. Last summer, Lions Edge brokered a deal in which tech company Smart Fleet bought Golden Virtue Resources Inc, a lithium exploration company, and reversed into its TSX Venture Exchange Listing.

Reverse takeovers have seen miners supplanted by tech companies, retailers and potential suppliers of medical marijuana, as companies in these sectors look for a cheaper way to get a listing.

“You have a public company that cost $200,000 a year to keep listed, with no money, drowning in debt, so it is easy to have a conversation” said Mr. Cunningham, who attended the PDAC conference this month.

Source

NEWS: Gold Canyon Corporate Update and New Investor Relations Agreement

Mar 11, 2015

Gold Canyon Resources Inc. (TSX VENTURE:GCU)(OTC PINK:GDCRF) (“Gold Canyon” or the “Company“) is pleased to provide an update of the Company’s activities. On February 5, 2015, Gold Canyon completed a private placement raising gross proceeds of $1,306,850. Given the Company’s conservative use of cash, the current working capital allows Gold Canyon to continue to collect environmental baseline data vital for future permitting of its 100% controlled Springpole Gold Project as well as support corporate and project overhead into next year.

On November 5, 2014, the Company announced completion of three years of aquatic habitat surveys at the Springpole Gold Project. These surveys have uncovered no prohibitive issues. In 2015, the Company plans to continue to collect additional data on aquatic habitat and water quality and chemistry to augment its already robust dataset while at the same time identifying opportunities in the region around Springpole to create and/or improve aquatic habitat to offset habitat displaced by any potential future mine plan. Once all opportunities have been identified, they will be reviewed and assessed during further discussions with the Department of Fisheries and Oceans Canada (DFO). Some potential offset initiatives may be suitable for working with local First Nations communities, an opportunity Gold Canyon seeks to pursue. Gold Canyon is now at the stage where it can begin work on aspects of the project needed to develop a mine environmental assessment (EA).

“We continued to reduce overhead costs over the latter part of 2014,” commented Akiko Levinson, President, CEO and director of Gold Canyon. “Although the downturn in the mining sector has been sharp, we have the means to keep weathering this storm and be able to look at various options we may have to move forward.”

Springpole Gold Project

In a news release dated March 25, 2013, Gold Canyon announced a Preliminary Economic Assessment (PEA) prepared by SRK Consulting (Canada) Inc. of Vancouver, British Columbia for the project. This PEA provides preliminary support for a potential conventional open-pit mining and milling operation. At a 5% discount rate and a US$1,300/oz gold price, the project, has an estimated pre-tax net present value (NPV) of US$579 million, a pre-tax internal rate of return (IRR) of 25.4%, and a non-discounted payback of just 1.7 years. Other highlights of the project include:

  • At full operation, an estimated 217,000 ozs and 1,200,000 ozs average annual gold and silver production, respectively
  • Estimated cash cost of US$636/equivalent ounce gold (eq.oz Au) and all-in cost of US$860/eq.oz Au (eq.oz Au = total revenue/Au price)
  • Strip ratio of 1.7
  • Average mined gold grade of 1.25 gpt and silver, 6.31 gpt (undiluted)
  • Initial capital cost of US$438 million and total capital cost including sustaining of US$544 million
  • Payback period of 1.7 years (non-discounted)
  • Pre-tax NPV of US$579 million
  • IRR (pre-tax) of 25.4%
  • Life of mine of 11 years

The PEA is intended to provide an initial review of the Company’s Springpole Gold Project’s potential and is preliminary in nature. The PEA includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainty that the PEA based on these mineral resources will be realized. Mineral resources that are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing, or other relevant issues. The quantity and grade of reported inferred resources in any estimation are uncertain in nature and there has been insufficient exploration to define these inferred resources as an indicated or measured mineral resource and it is uncertain if further exploration will result in upgrading them to an indicated or measured mineral resource category.

The PEA is effective as at March 25, 2013 and dated May 3, 2013, and is available through the Internet under the Company’s profile on the Canadian System for Electronic Document Analysis and Retrieval (SEDAR) at www.sedar.com and on the Company’s website at www.goldcanyon.ca. The PEA is based on the project’s most recent National Instrument 43-101 (“NI 43-101”) compliant mineral resource estimate that includes an Indicated Mineral Resource of 128.2 million tonnes grading 1.07 g/t gold and 5.7 g/t silver and an Inferred Mineral Resource of 25.7 million tonnes grading 0.83 g/t gold and 3.2 g/t silver at a cutoff grade of 0.4 g/t gold. This estimate is set out in an independent technical report, entitled “Mineral Resource Update for the Springpole Project, NW Ontario, Canada” (the “Technical Report”), dated November 30, 2012 with an effective date of September 19, 2012, which was prepared for Gold Canyon by Dr. Gilles Arseneau (P.Geo.), associate consultant with SRK Consulting (Canada) Inc., an independent Qualified Person as defined by NI 43-101. The Technical Report is also on SEDAR at www.sedar.com and on the Company’s website.

Investor Relations Agreement

Gold Canyon is also pleased to announce that it has retained the services of Renmark Financial Communications Inc. to handle its investor relations activities. In consideration of the services to be provided, the Company has agreed to pay a monthly retainer of $5,500 starting March 6th, 2015.

Renmark Financial Communications Inc. does not have any interest, directly or indirectly, in Gold Canyon or its securities, or any right or intent to acquire such an interest.

Qualified Person

The PEA was completed by SRK Consulting (Canada) Inc. of Vancouver, British Columbia, pursuant to NI 43-101. The PEA was completed by, or under the supervision of Bruce Murphy, Maritz Rykaart, Mark Liskowich, Dino Pilotto and Adrian Dance, each independent Qualified Persons (as defined in NI 43-101). Adrian Dance, a Qualified Person pursuant to NI 43-101, reviewed and approved the technical and scientific information relating to the PEA contained in this press release. Dr. Quinton Hennigh, Ph.D., P.Geo., a Qualified Person pursuant to NI 43-101 who is acting as a technical adviser to, and a director of, Gold Canyon, is also responsible for approving the technical information in this news release that is not related to the PEA.

Full release

Gold Canyon is Heating up – Institutional Buying is Evident

Gecko Research, Mar 6, 2015

As we dig deeper in our due diligence on Gold Canyon (gcu.v) and tell the story from our perspective, it’s evident to us that one or several institutional buyers have been (and still are) buying shares in the open market. In this article we will try to shed some light to that thesis and what they might find so attractive that the retail investors have missed.

Institutional Buying

We have been following the day-to-day trading of GCU very intensely for a while now and when we were buying shares around 16.5-17 cents, we noticed that someone was iceberging (see below) their order at 16.5 cents. This is a typical strategy for deep pocket institutional buyers and we think they weren’t very successful at that level. They probably picked up 400,000-500,000 shares before GCU started to move higher.

We are simplifying a bit here, but close to 70% of the company’s outstanding shares has traded in the last three months and although some of those shares are traded several times, a large huge chunk of that was Sprott and Pinetree dumping (as we explained here) their holdings. We are making a guess here that someone has been accumulating between 20-40 million shares at the very least in Gold Canyon lately and what we can say with a 100% certainty, those shares have not been bought by retail investors. Someone is still out there buying and the only conclusion we can make from that is that institutional buying is strong in GCU at the moment.

Life Cycle of a Junior Explorer

Placing Gold Canyon in the graph below, it’s our opinion that Gold Canyon is past the “discovery cycle” and has already bottomed out in time for its next cycle. We have seen the speculators leave (Sprott, Pinetree and very likely many retail investors) and now it seems like institutional money is moving in. Our whole thesis for our investment is that GCU is ripe for a take-over, so we see someone else moving the Springpole Gold Project forward with the next step being to take the Springpole Gold Mine to a full feasibility study.

JrLifeCycle
Let’s assume that we are right and that one or several institutions (take your pick: funds, large-cap producers, Chinese interests) are trying to acquire a strategic position in GCU, what attracts them besides what’s already known? Sure, the 5.1 Million ounce open pittable deposit in a great jurisdiction is the obvious reason. But as we have touched on before, we suspect that the potential at Springpole is greatly understated and perhaps even misunderstood.

We have had a friend of ours, a geologist who we consult when we ourselves lack in knowledge and understanding of the technical aspects, go through all the technical reports and other available information. If you look at the map of Springpole below, all the drilling that has been done is in a small corner of the property, to the north-west. It’s clear that most of the project has never been drilled and if what our geologist told us is correct, Springpole could very likely become a >10 Million ounce gold mine. The deposit is open at depth, to the south and to the southeast.

springpole

The Springpole Gold Mine put in perspective

Springpole’s resources are 5.1 Million ounces eq. (4.4 Moz Indicated, 0.7 Moz Inferred). When one prepares a bankable feasibility study one has to do infill drilling to prove up the resources into reserves, so in that sense this comparison is not 100% accurate, but it will still get you an idea of just how undervalued Gold Canyon is. Two other large Canadian projects:

1) Goldcorp has one of their flagship properties in the Red Lake district, the Red Lake Mine, which produced 414,000 ounces in 2014. That mine has 2,550,000 ounces in Proven and Probable reserves.

2) Goldcorp recently acquired Probe Mines (valuing Probe at the time at C$526 Million) mainly for its Borden Gold Project. Borden has both higher grade underground resources as well as (perhaps?) open pittable resources, together totaling 4.35 Moz mostly in the Indicated category (similar to Gold Canyon’s resources).

Even if Springpole doesn’t contain a single ounce more of what’s been discovered so far, the current resource alone makes this a world class mine in the making. The metallurgy is non-complicated, the strip ratio is very low and the project is in a country that is considered one of the best in the world.

To be fair, Gold Canyon need to bring the Springpole Gold Mine further ahead in order for a comparison to Probe to feel accurate, but how much should 5.1 Million ounces be valued at in a take-over? C$100 Million? C$200 Million? And assuming we are right, how much should the potential to double the resource be worth on top of that?

Gold Canyon’s market cap is a mere ~34 Mcad at today’s 18.5 cents/share (184m shares x 18.5c) and we don’t want to speculate where a fair bid would come in at, but it sure isn’t going to be near where the stock is trading today. A shareholder’s dream scenario would be if more than one party eventually gets seriously interested, only then would we get a maximized and fair bid for Gold Canyon.

(Iceberging: When large participants, such as financial institutions, need to buy and sell large amounts. Instead of placing a single large order, it can be divided into smaller lots. Usually through automated order mechanisms, iceberg orders are used for the purpose of hiding the actual order size. By doing so, other participants only see a small portion of the total order at a time, the same way the “tip of the iceberg” is the only visible portion of an immense mass of ice)

 

Team Gecko Research
www.geckoresearch.com

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Gold Buyouts Heat up

BNN, Mar 3, 2015

Springpole-CampSpringpole Camp

You may not be actively shopping for shoes, but if you stumble on a stylish pair discounted 90% – you’re probably going to buy them.

This bargain-hunting reflex has hit the gold sector causing a flurry of acquisitions including Goldcorp’s (NYSE: GG) $526 million acquisition of Probe Mines, Agnico Eagles’ (NYSE: AEM) $205 million acquisition of Cayden Resources, and Timmins Gold (TSX: TMM) $140 million purchase of Newstrike Capital.

Newmont Mines’ (NYSE: NEM) CEO Gary Goldberg also recently stated that “We’re always looking to improve our portfolio,” and “It doesn’t hurt to just look around.”

Gold Canyon’s (TSX.V: GCU) Ontario, Canada Springpole project may be the next shiny set of shoes about to be scooped up.

“Gold Canyon offers one of the best opportunities to leverage the price of gold,” wrote Bob Moriarty in a December, 2014 publication note, “at $0.10 a share, you are paying about $2.60 an ounce for gold in a safe jurisdiction. That’s pretty hard to beat.” [ed. note: GCU share price has risen 70% since then].

Springpole is one of the highest quality bulk tonnage gold deposits in Canada. In 2013, Gold Canyon announced a Preliminary Economic Assessment (PEA) for the project, supporting a conventional open-pit mine and milling operation.

“Springpole Gold is an alkaline gold deposit,” stated GCU Director Dr. Quinton Hennigh in an exclusive interview. “These alkaline systems are typically large and disseminated with low deleterious elements. The first time I looked at Springpole I felt that it could be a 3 million + ounce gold system, and it has far exceeded my expectations.”

Eric Sprott invested in the first tranche financing in 2010 to get the company drilling. That program was a success, revealing several intervals of over 100 meters of two to three gram gold. Since then 85,000 meters have been drilled, proving up a 5.1 million ounce resource.

“We published the Preliminary Economic Assessment (PEA) in March 2013,” recalls Hennigh. “The deposit had glowing economics. The initial operation was projected to generate 217,000 ounces of gold and 1.2 million ounces of silver per year. The silver credit is significant. Six grams of silver for every gram of gold, definitely improves the economics of the mine.”

At $1,300 gold and a 5% discount Springpole has a pre-tax net present value (NPV) estimated at US $579 million, a pre-tax internal rate of return (IRR) of 25.4%, and a non-discounted payback of just 1.7 years. While the gold price has recently fallen to US $1,200 per ounce, in Canadian dollars it is higher than what it was when the PEA was released. Not only will the revenue be positively affected, operating costs are likely to be lower, owing to much lower oil and steel prices. Hence, if the PEA were to be revised, the numbers should actually look better today than they did when gold was US$1,300 per ounce.

“We’ll be mining a pit resource of about 1.25 grams per ton of gold and about 6.31 grams per ton of silver,” stated Hennigh. “It is a robust metal asset with consistency and continuity. We are also looking at a strip ratio that is very low. From the point of view of a mine investor wanting to de-risk its money – the Springpole Gold project is a safe bet.”

The Red Lake Camp is in a favorable mining jurisdiction. There are no mines immediately around Springpole, but Goldcorp’s Musselwhite project is to the north-east, and several historic mines are in close proximity.

“We’ve done a lot of engineering work to make sure that we can mine this deposit without any net environmental damage,” stated Hennigh. “I anticipate that we will dyke and dewater a small portion of the lake on our property. We’ve completed extensive studies of the fish habitat, establishing that there are no endangered species or sensitive spawning grounds. We are continuing to receive advice and support from the Department of Fisheries and Oceans Canada (DFO).”

Hennigh does not anticipate any environmental, geological or financial impediment to moving the Springpole project forward.

“We’ve signed a protocol agreement with the local First Nations,” stated Hennigh. “They have a protocol agreement amongst themselves, to negotiate in good faith with Gold Canyon. We expect it to be a fruitful partnership – with employment, knowledge and economic benefits flowing in both directions.”

Hennigh stresses that Gold Canyon is not an early stage exploration company.

“For our next steps, we will be advancing our geo-technical work,” stated Hennigh. “That includes drilling holes to test the structural integrity of the pit. The PEA has formed a solid foundation for launching into a feasibility study. There was small amount of ‘inferred resource’ that needed to be converted to ‘indicated’. Although our resource has not officially been updated, the last drill program was designed to accomplish that. Currently, the PEA pit resource is effectively all indicated, meaning we can take it forward to feasibility level study without the need for further resource drilling.”

Because mineralization in the Springpole deposit is consistent, Hennigh and the Gold Canyon geological team think it is possible to go right to a feasibility study. The PEA estimated cash cost is US $636/equivalent ounce gold, with a life of mine of 11 years.

“This is one of the best bulk tonnage projects left in Canada,” stated Hennigh. “Over the past few years, projects like ours have been bought one-by-one.”

Source

Gold buyouts heat up

Financial Post, Mar 3, 2015

Will Gold Canyon be next?

You may not be actively shopping for shoes, but if you stumble on a stylish pair discounted 90% – you’re probably going to buy them.

This bargain-hunting reflex has hit the gold sector causing a flurry of acquisitions including Goldcorp’s (NYSE: GG) $526 million acquisition of Probe Mines, Agnico Eagles’ (NYSE: AEM) $205 million acquisition of Cayden Resources, and Timmins Gold (TSX: TMM) $140 million purchase of Newstrike Capital.

Newmont Mines’ (NYSE: NEM) CEO Gary Goldberg also recently stated that “We’re always looking to improve our portfolio,” and “It doesn’t hurt to just look around.”

Gold Canyon’s (TSX.V: GCU) Ontario, Canada Springpole project may be the next shiny set of shoes about to be scooped up.

“Gold Canyon offers one of the best opportunities to leverage the price of gold,” wrote Bob Moriarty in a December, 2014 publication note, “at $0.10 a share, you are paying about $2.60 an ounce for gold in a safe jurisdiction. That’s pretty hard to beat.” [ed. note: GCU share price has risen 70% since then].

Springpole is one of the highest quality bulk tonnage gold deposits in Canada. In 2013, Gold Canyon announced a Preliminary Economic Assessment (PEA) for the project, supporting a conventional open-pit mine and milling operation.

“Springpole Gold is an alkaline gold deposit,” stated GCU Director Dr. Quinton Hennigh in an exclusive interview. “These alkaline systems are typically large and disseminated with low deleterious elements. The first time I looked at Springpole I felt that it could be a 3 million + ounce gold system, and it has far exceeded my expectations.”

Eric Sprott invested in the first tranche financing in 2010 to get the company drilling. That program was a success, revealing several intervals of over 100 meters of two to three gram gold. Since then 85,000 meters have been drilled, proving up a 5.1 million ounce resource.

“We published the Preliminary Economic Assessment (PEA) in March 2013,” recalls Hennigh. “The deposit had glowing economics. The initial operation was projected to generate 217,000 ounces of gold and 1.2 million ounces of silver per year. The silver credit is significant. Six grams of silver for every gram of gold, definitely improves the economics of the mine.”

At $1,300 gold and a 5% discount Springpole has a pre-tax net present value (NPV) estimated at US $579 million, a pre-tax internal rate of return (IRR) of 25.4%, and a non-discounted payback of just 1.7 years. While the gold price has recently fallen to US $1,200 per ounce, in Canadian dollars it is higher than what it was when the PEA was released. Not only will the revenue be positively affected, operating costs are likely to be lower, owing to much lower oil and steel prices. Hence, if the PEA were to be revised, the numbers should actually look better today than they did when gold was US$1,300 per ounce.

“We’ll be mining a pit resource of about 1.25 grams per ton of gold and about 6.31 grams per ton of silver,” stated Hennigh. “It is a robust metal asset with consistency and continuity. We are also looking at a strip ratio that is very low. From the point of view of a mine investor wanting to de-risk its money – the Springpole Gold project is a safe bet.”

The Red Lake Camp is in a favorable mining jurisdiction. There are no mines immediately around Springpole, but Goldcorp’s Musselwhite project is to the north-east, and several historic mines are in close proximity.

“We’ve done a lot of engineering work to make sure that we can mine this deposit without any net environmental damage,” stated Hennigh. “I anticipate that we will dyke and dewater a small portion of the lake on our property. We’ve completed extensive studies of the fish habitat, establishing that there are no endangered species or sensitive spawning grounds. We are continuing to receive advice and support from the Department of Fisheries and Oceans Canada (DFO).”

Hennigh does not anticipate any environmental, geological or financial impediment to moving the Springpole project forward.

“We’ve signed a protocol agreement with the local First Nations,” stated Hennigh. “They have a protocol agreement amongst themselves, to negotiate in good faith with Gold Canyon. We expect it to be a fruitful partnership – with employment, knowledge and economic benefits flowing in both directions.”

Hennigh stresses that Gold Canyon is not an early stage exploration company.

“For our next steps, we will be advancing our geo-technical work,” stated Hennigh. “That includes drilling holes to test the structural integrity of the pit. The PEA has formed a solid foundation for launching into a feasibility study. There was small amount of ‘inferred resource’ that needed to be converted to ‘indicated’. Although our resource has not officially been updated, the last drill program was designed to accomplish that. Currently, the PEA pit resource is effectively all indicated, meaning we can take it forward to feasibility level study without the need for further resource drilling.”

Because mineralization in the Springpole deposit is consistent, Hennigh and the Gold Canyon geological team think it is possible to go right to a feasibility study. The PEA estimated cash cost is US $636/equivalent ounce gold, with a life of mine of 11 years.

“This is one of the best bulk tonnage projects left in Canada,” stated Hennigh. “Over the past few years, projects like ours have been bought one-by-one.”

Source