I have an 84-year-old friend in Toronto who calls me almost daily about junior gold stocks. He has made a lot of money over the last 50 years (far exceeding his losses) investing in early stage, micro-cap gold stocks at the right time in historic cycles; and what does he keep harping on? “Good people, good projects in a minable location (he likes Canada!)…and always, always a tight share structure, closely held by management.” I can’t wait to tell him about the Cloud gold project in Flin Flon, Manitoba, held by Lake Winn Resources (TSX.V:LWR), which this week, post consolidation, launched on the TSX Venture.
It’s here, it’s happening, there’s a gold bull run going on right now, likely the most dramatic in history. Biden’s administration is expected to present a costly stimulus package which would put downward pressure on the US dollar, and upward incentives for gold. Even the ultraconservative, long-view investor, Warren Buffet jumped into gold last August snapping up 12% of Barrick gold. This is the environment where your average main-street investors can capitalize on gaining multiples in a promising junior resource stock. The formula is simple, but the execution is everything. This is a high risk industry where some junior mining ‘zombies’ appear in a gold bull run then fall back into the ground when the rally is over. Lake Winn is no zombie.
“It’s one of those prospects that should have been drilled but never has been drilled,” says Lake Winn President and CEO, Patrick Power. “Bill Ferreira, a well-known prospector out of Manitoba and a good friend of mine has had this project for 22 years. Bill, picked up the Cloud property on the cheap while gold was trading well below $1,000. He optioned the property to previous operators and did some impressive high grade surface sampling and geochemical surveys such as IP and resistivity, but the operator never had the right environment to do a drill program. Some of the samples run as high as 122 grams 4.3 oz of gold per tonne. It’s amazing no one has drilled this yet, and we’re lucky to get it in this current gold bull-market.” The Cloud project lies within the Flin Flon orogenic greenstone belt of Manitoba. The belt contains a number of oregenic gold deposits, one only 10 kilometers away, and the largest being Hudson Bay’s Snow Lake which contains 2.5M ounces.
Lake Winn is aiming for a drill program late October, after just completing a 10-for-1 roll back and closing a $2.75 million financing, which post financing will leave the company with a tight share structure of under 37.6 million shares with 7% held by management. “The project is right off the highway, says Power. “We can drill all year round including breakup. It has a logging road running right through the property to the outcrop. It really doesn’t get any simpler than this.” All-in drilling costs (drilling, logging, and assays) will be $100 – $200 per meter; Lake Winn can achieve a fully funded 3,000 meter drill program.
Successful junior gold investments always start with a good geologist. All the promotion in the world won’t sustain a valuation if the rocks don’t agree. If you start in a known gold belt, with a good geologist that knows the area, you’ve upped your chances ten-fold, because nothing gets rewarded in the market more and a new discovery.
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Few geologists have seen two projects from discovery through to the decision to mine. Lake Winn’s VP of Exploration, Buddy Doyle has over 25 years of experience in mineral exploration. He worked for Rio Tinto PLC for over 23 years. He was the Exploration Manager and Vice President of Kennecott Canada Exploration Inc. owned by Rio Tinto and a key member of the Kennecott Exploration Australia team that discovered the multi-million ounce Minifie gold deposits at Lihir in Papa New Guinea 1987-1988. He also led the team who discovered the Diavik diamond mine in Canada, in 1994-1995.
Ferreira, the prospector who held the ground for two decades and vended it to LWR is another exploration geologist with over 30 years’ experience in gold, base metals, and diamond exploration in Canada. Educated in Manitoba, he holds a Master of Science degree from the University of Manitoba after achieving a BSc. from the University of Minnesota, Duluth. Ferreira’s extensive exploration include two mine discoveries for San Gold Corporation in Manitoba. These mines are in a similar geological setting—orogenic greenstone—to LMR’s Cloud deposit.
The Flin Flon belt, which hosts the Cloud contains numerous oregenic gold deposits the largest being Hudson Bay’s Snow Lake which contained 2.5 million ounces of gold.
Doyle says a lot of the previous work Hudson Bay did was looking for a VMS (volcanic massive sulfide) deposit, drilling EM (electromagnetic) anomalies. For those that want a more technical explanation: “They were hitting Iron formations to the north of us but while that was all going on a prospector in the 80s found this outcrop and its silicified volcanic, basalt and rhyolites with some felsic intrusive. Within the silicification, we see some quartz veins that run multi-gram, multi-ounces and it’s a zone that goes about 1.3 kilometres. Another operator did IP (induced polarization) and resistivity. They seemed to sit on a boundary between a fairly strong IP response. They sit on the northern side of the IP response and the southern side of a high resistivity. My initial interpretation is that the resistivity is the silicification of the quartz veins and the IP is probably disseminated sulphides associated with the same alteration and continues for one-and-a-half kilometres.”
Power, who is also president of diamond explorer Arctic Star, where Doyle is VP Exploration, says he likes the team’s chances in Flin Flon. “Bill found two high grade gold mines in Manitoba so he’s got a good pedigree going into this. On this ground, he took a lot of samples from the outcrop that runs parallel with the fault where this resistivity lies, and it all makes sense. He’s got some rock samples returning over four ounces per ton and he has numerous high-grade grab samples. Over the years another group did rock samples and similarly, they returned over four ounces per ton.
“The fire, the smoke is there, the right geophysics, it’s in the right setting, there’s another gold mine on trend being Snow Lake, and Bill has a great history of discovery, the most relevant being his two discoveries at San Gold also in Manitoba.”
I better now call my ol’ buddy in Toronto about Lake Winn. He’ll be mad I didn’t call him first.
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