This will be an introduction article on Labrador Gold Corp which is a junior exploring for high grade gold in Newfoundland, Canada. I own shares and the company came on as a banner sponsor of The Hedgeless Horseman a while ago but I wanted to wait until things started to get exciting before doing my customary introduction article. Fast forward to today and things are indeed starting to get exciting…
Flash News – Oct 14: “Labrador Gold Announces Mobilization of Drill to Kingsway Property”
Labrador Gold in Short:
- Ticker: LAB.v
- Website: LINK
- Presentations: LINK
- Market Cap (pre Palisades financing) @ C$0.44/share: ~C$40 (~US$35 M)
- Cash (pre financing): ~C$6 M
- Enterprise Value (pre financing): C$~36 M (~US$27 M)
- Notable shareholders:
- Rob McEwen
- Shawn Ryan
- Now also Palisades Goldcorp (New Found Gold insider)
- … And yours truly!
- Major Catalyst:
- Upcoming drill results
My Case For Labrador Gold:
Labrador is a small cap junior which is directly on strike from the bonanza grade intercept in the “Keats zone” (92.9 g/t over 19m!) which was drilled by New Found Gold. New Found Gold then did a 2km step out hole in the direction of Labrador Gold’s Kingsway project and hit more high grade gold in an area called the “Lotto Zone”. And then on October 6 Labrador Gold announced an investment in the company by Palisades Goldcorp. Palisades Goldcorp is by far the largest shareholder of New Found Gold so you could say that the “writing is on the wall”. In other words, the insiders with the best information available are saying that they think that the Epizonal Gold Systems (like Fosterville) could possibly/probably extend onto Labrador Gold’s Kingsway project. Given that the Fosterville Mine was/is worth several billions of dollars I think the prize is pretty obvious.
My Even Shorter Case For Labrador Gold:
It’s a small cap explorer, which might have a Fosterville type system on its flagship project, and is backed by Rob McEwen, Shawn Ryan and now also by the largest insider of New Found Gold.
Settings The Scene – Roger Moss and Shawn Ryan discuss Labrador Gold’s Kingsway project in Newfoundland:
So why has this part of Newfoundland turned into one of the hottest area plays currently?
… Well, simply because of this:
(Note how the gold seems to be concentrated in close proximity to the “Appleton Fault Zone” and which direction said fault is heading to the north-east)
New Found Gold’s first hole at the Keats Zone resulted in one of the best intercepts in the world with 92.86 g/p over 19 m. One sure starts to think about Fosterville and probably with good reason given that the core looked very similar to what is found at Fosterville:
Many probably know that Novo Resources bought a stake in New Found Gold shorty after the discovery. What some may not know is that Quinton Hennigh of Novo Resources was the guy that realized what Fosterville was to become, before it become THE Fosterville. I think you understand where I am going with this… One of the best authorities if not THE best authorities on these types of gold systems fully believes this is another Fosterville type system. If you want to hear Quinton’s thoughts on why he believes that then click HERE.
Back to Labrador Gold
We know that a) New Found Gold looks to have a Fosterville type system by its tail,b) We now know that New Found Gold has successfully done some 2km step out holes and hit even more high grade mineralization and c) The gold looks to be concentrated in the proximity of the Appleton Fault Zone in this area…
Which brings us to why one probably should not be surprised to see the largest insider of New Found Gold invest in Labrador Gold, because:
(Drawings added by me)
… Follow the yellow (golden) brick road!
The Appleton Fault Zone, where the high grade gold seems concentrated, is expected to continue on to Labrador Gold’s ground for many kilometers. As you can see in the slide above there is 3km long gold anomaly mapped on Labrador Gold’s Kingsway project already. What’s more is that it is also proximal to the inferred strike of the Appleton Fault Zone. Balance of probabilities suggests that this is the same Epizonal (orogenic) gold system that has shown to have incredible numbers a few kilometers to the south-west.
There’s more smoke on Labrador Gold’s Kingsway project than that to boot:
… Multiple areas with anomalous gold values in proximity to the Appleton Fault Zone and along strike from New Found Gold’s Keats and Lotto Zone. Yes, it sure looks like there might be the same type of gold systems at Labrador Gold’s Kingsway project.
You Don’t Need Much Tonnage if The Grades Are There
The thing with these high grade to bonanza grade Epizonal (orogenic) gold systems is that you don’t need a lot of tonnage. The Fosterville Mine is a great example…
The Fosterville Mine used to be a relatively low grade deposit that barely made any money. This all changed for real when the Swan Zone was discovered at depth. The thing about the Swan Zone is that it is not very big. Despite this, the Swan Zone was so high grade that it contained multiple millions of ounces and those ounces are worth billions. The following slide is a long section of the Fosterville Mine, from five years ago, when the company had just started to hit mineralization in what would later become the legendary “Swan Zone”:
Again, before the Swan Zone was delineated, Newmarket Gold (which owned the mine back then) was really just another junior producer. Well, fast forward to September 19, 2018 and the Fosterville Long Section looked like this:
… You see the Swan Zone just makes up a very small part of the overall system but it was THE thing that catapulted Newmarket/Kirkland Lake to become a $10+ B company. What is also important to point out is that the Swan Zone is located at a depth of 1+ km. The thing about New Found Gold’s discovery is that the insane drill intercept in the Keats Zone is located at a depth of just 75 m from surface… “Open pit depth” as described in the latest New Found Gold presentation.
Think about this for a minute. It took decades/years for the Fosterville Mine to become THE Fosterville Mine known to date. Why? Because the Swan Zone was, again, located at a depth of 1+ km and it took that long to “stumble” on it.
Why This is Important
If the critical high grade to bonanza grade mineralization in the Epizonal (orogenic) gold system around the Kingsway/Queensway projects is located at at open pitable depths then that is a game changer in terms of both economics and exploration. If the ultimate pay zone (Swan Zone look-alike) was located at a depth of 1km then the risk/reward would be a LOT poorer. But if Labrador Gold got parts of the same Epizonal Gold System(s) as New Found Gold and the depth is similar then this is an insanely positive thing. Never forget that exploration gets exponentially more costly, time consuming and difficult as depth increases. If the critical high grade regime was believed to be located at similar depths as Fosterville then the risk/reward would be materially worse.
With the above in mind I think the investment in Labrador Gold by the largest insider of New Found Gold, at a premium, really does speak volumes.
No one knows more about the geology than New Found Gold and their largest insider just tipped their hat in terms of the potential at Labrador Gold’s Kingsway Project. As the saying goes: Follow The (Smart) Money
* October 5 News Release: “Labrador Gold Announces Initial Results of Soil Sampling at Kingsway Property”
- Gold concentration up to 2,203ppb (2.2g/t Au) with 50 samples greater than 100ppb (0.1g/t Au)
- Four areas of significant gold in soil anomalies with values up to 898ppb Au adjacent to Appleton Fault Zone
- Anomalies cover a total strike length of 2.1km and are coincident with a shear zone outlined over 2.5 km
TORONTO, Oct. 05, 2020 (GLOBE NEWSWIRE) — Labrador Gold Corp. (TSX.V:LAB | OTCQX:NKOSF | FNR: 2N6) (“LabGold” or the “Company”) is pleased to announce initial results of the soil sampling survey at its 77km 2 Kingsway Project near Gander, Newfoundland. The Kingsway project is located within the highly prospective Gander Gold Belt along strike to the northeast of New Found Gold Corp’s gold discovery announced earlier this year. Soil sampling has now been completed with 7,740 soil samples collected over 16 grids. Results for 3,125 samples covering three grids on the Kingsway South license are reported here.
… So in other words Labrador Gold has been finding even more (golden) smoke and it is indeed proximal to the Appleton Fault Zone. This would of course suggest that this area has a continuation of the gold system(s), which New Found Gold is getting incredible hits in, a bit farther to the south-west.
* October 5 News Release: “Labrador Gold Announces Start of CSAMT Survey at Kingsway Property”
TORONTO, Oct. 08, 2020 (GLOBE NEWSWIRE) — Labrador Gold Corp. (TSX.V:LAB | OTCQX:NKOSF | FNR: 2N6) (“LabGold” or the “Company”) is pleased to announce that a CSAMT geophysical survey is currently underway at its 77km 2 Kingsway Project near Gander Newfoundland. The Kingsway project is located within the highly prospective Gander Gold Belt along strike to the northeast of Newfound Gold Corp’s gold discovery announced earlier this year.
Controlled Source Audio Magnetotellurics (CSAMT) is an electrical geophysical technique that measures resistivity in the subsurface down to depths in excess of 500 metres. The resistivity profiles can be used to target silicification associated with gold mineralization as well as deep structures such as the Appleton Fault Zone.
“We are excited to get the CSAMT survey underway as it will aid us in effectively targeting potential gold mineralization at depth along the Appleton Fault Zone and associated structures,” said Roger Moss, President and CEO of the Company. “It will complement the property wide soil sampling and VLF-EM surveys that are expected to produce anomalies for further follow up by the upcoming initial drilling program.“
I know Quinton Hennigh is a very big fan of CSAMT surveys and has had great success with it in Fiji with Lion One and in Japan with Irving Resources. As the NR states it is basically a very effective tool in terms of highlighting where fluids have come up from deep within the earth. That coupled with overlapping gold in soil anomalies should be able to highlight where the gold bearing structures are located in the ground. In other words I see this as a big value add and should up the chance of success for Labrador Gold’s future drill campaigns a lot.
Labrador Gold is cashed up and is aggressively exploring directly on strike from the hottest discovery in Canada currently. These Epizonal (orogenic) Gold Systems have true tier 1 potential and one does not need a lot of tonnage for it to potentially be worth billions as evidenced by Kirkland Lake’s Fosterville Mine. Both Labrador Gold and New Found Gold will be exploring simultaneously and both companies will benefit in case each of them have further success due to the obvious synergies that would be produced. Furthermore, the fact that this is all located in a tier 1 jurisdiction coupled with what looks to be a very shallow Epizonal Gold System are two factors that greatly increases the Reward side of the Risk/Reward calculation.
I expect New Found Gold to keep producing good drill hits in their currently ongoing 100,000 m drill campaign and that’s why I think this whole area will keep getting hotter and hotter. This will of course benefit all players in the region but it’s Labrador Gold which is directly on strike from the high grade to bonanza grade discoveries and the company is not sitting idle. In fact, Labrador Gold is very aggressive and is doing everything it can to have the best possible chance of success for the coming maiden drill campaign.
I reached out to Roger Moss and got the following quote in regards to what shareholders might expect in the future:
“Data from the recent geophysical and geochemical surveys are still coming in and the LabGold team is hard at work compiling it together with the extensive historical work already completed at Kingsway. This is being done within the framework of the excellent structural studies recently completed by our consultants. We are excited to start testing the resulting anomalies during our upcoming drill program.”
I view Labrador Gold as a high risk/high reward play with the potential for a tier #1 discovery in a tier #1 jurisdiction.
Note: Even though success here looks more likely than the average junior I don’t think one should “bet the farm” on any pure exploration play. There are no guarantees in this business. Just better or worse risk/reward cases.
Some Amateur TA
To me it looks like the stock has completed a successful re-test of the long term horizontal resistance zone which it broke out of in July (Big break outs/downs tend to lead to a re-test before continuing. Recently the stock seems to have broken out of the downward resistance line in blue. All in all I think the odds are pretty good that an uptrend has just started which should be driven by both news/anticipation for Labrador Gold as well as some excitement rubbing off on the stock as New Found Gold continues to drill its massive 100,000 m drill program…
Note: This is not investment advice. I am not a geologist nor am I a mining engineer. This article is speculative and I can not guarantee 100% accuracy. Junior miners can be very volatile and risky. I have bought shares of Labrador Gold in the open market and I was able to participate in a private placement. I can buy or sell shares at any point in time. I was not paid by any entity to write this article but the company is a passive banner sponsor of The Hedgeless Horseman. Therefore you should assume I am biased so always do your own due diligence and make up your own mind as always.
Erik Wetterling aka “The Hedgeless Horseman”
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