This article will be about Rackla Metals and the company’s highest priority target which is expected to be drilled any day now. I have been working on this article for the last couple of weeks and when I was about done there was a news release out (today) so I had to update it. I have taken a relatively large position in Rackla for a technically  pre-(drill)-discovery story for reasons that I will go into. As I own shares, family members own shares, and the company being a new (passive) banner sponsor you must consider me biased. I cannot guarantee the accuracy of the information in this article so do your own due diligence. There will be personal opinions and forward looking statements. For your own sake assume I may buy or sell share at any time and never invest in anything just because someone else is. This is a High Risk/High Reward case where success is absolutely not guaranteed. This is not investing advice or a buy recommendation.

What makes Rackla so interesting is that I get another shot at another “Valley” type discovery, like what Snowline Gold produced a few years back, and made it a >$1 B story.  Snowline made their discovery from relatively blind drilling, under a soil anomaly, and it took some time to find the high-grade guts of the system at “depth”. What sets Rackla’s “BiTe” target apart from Snowline’s Valley system is that it outcrops. In a big way. There is in fact >550 m stretch of high gold-in-talus values at the base of a 400 m high mountain face which appears to be mineralized all the way to the top.

Resources

In short Rackla’s “Grad” target offers a very rare opportunity where limited drilling can have extremely high impact. The target is very large, readily visible, and meaningfully de-risked. I see it as a Valley type target, perhaps even bigger, but with the twist that it is literally sticking out of the ground.

The slide above was first included in my Snowline Gold article a few years back but I am glad to be able to use it again as it very much is relevant in this case. Again, the difference being that since Rackla’s target is readily visible, the de-risking of this target might be even quicker than at Snowline’s Valley target.

“The size of the prize, the cost of the test, and your chance of success.” 

– Craig Perry on exploration

… I think the BiTe target is almost as good as it can get for a grassroot target on all three accounts.

  1. Size of the prize: Very large
  2. Cost of the test: 4,000 m of drilling + channel/trench sampling could be enough to prove a company making deposit
  3. Chance of Success: >500 m gold-in-talus below, 38m at 1.8 gpt from trenching the bottom of the face, and veining is seen all the way to the top (including extreme vein density).

Most gold systems require a lot more than say 5,000 m of drilling to infer any meaningful endowment. Great Bear’s Dixie project required some 500,000 m of drilling to show a >5 Moz resource. In Snowline’s case one could pretty much see >5 Moz endowment after 35 holes and that was not even an up to 1,300 x 500 x 400 m3 outcropping target (Size of the prize). Because the BiTe target is sticking out of the ground for 400 m vertically it is quite easy to know where to drill test it (cost of the test). Good gold numbers all along the contact of the scree slope and the mountain face suggests the face is indeed the source of the gold in talus. The channel sample in the face further confirms that the bedrock is indeed a source for gold and that there is potential for 1.8 gpt grades over at least 38 m widths in bedrock (Chance of success).

For a High Risk/High Reward pre-discovery play I kinda think this is as good as one can ask for. That does not mean it is going to be a wild success. What I mean is that it’s not super high risk given the talus and trench results. The potential prize is very visible and it is of Valley size or even bigger. And in case of success the revaluation/de-risking pace can be quite extreme as was the case for Snowline.

Some guidelines for RIRG systems from mainly Craig Hart:

  • Grade
    • “Gold grade is, therefore, mainly controlled by vein density”
    • “Usually those sheeted vein arrays… We typically get 3, 4 or 5 veins per meter… And that’s what would typically give us 1 gpt gold.”
  • Best Area of a RIRGS
    • “Preferred sites of intrusion-hosted Au mineralization are above the cupola, where exsolved fluids will accumulate, and mineralized fractures developed in the pluton’s apex and shoulders.”
  • Carapace Size
    • “… These carapaces sometimes are a kilometer and half thick… So there is quite a bit of space to play with.”

What to Look Out For Before Drill Results

I am not sure if Rackla is going to announce how the core looks and how many veins they are encountering, like Snowline did in the early discovery phase, but if they do then one should pay close attention. Also I believe there will be trenching done on top of the ridge as well as maybe on the faces. If the ridge trenching shows encouraging results then there is evidence for mineralized bedrock from bottom to top of the outcropping system.

Size of The Prize

The BiTe target is located withion the 1.8 by 1 km North Nahanni Pluton (intrusion) and shows very impressive scale:

 

 

… The altered & mineralized zone is believed to be up to around 550 m wide at the talus contact on the right side as evidenced by the results from the talus samples just below:

(width)

 

Zoomed out view which also shows the 180 m stretch that assayed 3.68 gpt:

 

(I have added the light blue lines and text)

 

… The distance from the top of the ridge to the scree slope contact is around 400 m. Thus the visible target is up to ~550 m wide and up to ~400 m high. Note that nothing says that the potential orebody could not go down for quite some distance past the scree slope contact. Evidence of this comes from samples that I believe are taken from the bedrock one the other side of a creek that cuts through the talus:

(Green circle added by me)

 

Now we have two dimensions to work with in terms of visible target size. The picture below shows that the third dimension appears to show remarkable potential with a theoretical strike of 1.3 km:

 

(Green circle added by me)

 

Flash News – July 8 NR Update:

Following along the base of the cliff from the 2024 BiTe discovery outcrop, the geological team has extended mapping and sampling along the western extension of the 550m talus anomaly. Mapping to date has extended the occurrence of sheeted veins for an additional 300m to the west of the original discovery. Multiple vein sets have been identified cutting the intrusion throughout this area. Sheeted vein sets are of quartz and quartz-tourmaline with bismuth sulphide minerals observed in both.

 

 

… So it appears the mineralization actually extends past the already impressive 550 m talus anomaly and that is evidenced by actual veining(!).

Best Parts of a RIRGS

The highest grades in a RIRGS are expected to be located in the top of the cupola and into the brittle carapace of the intrusion. The main targets are these “vein arrays” that are located in the apex and shoulder. These veins are usually very narrow but carry quite a lot of gold so it adds up:

 

 

Thankfully is is believed that the intrusion that hosts the BiTe zone has been eroded down to an almost perfect level and that it is indeed the Carapace which is outcropping:

 

 

 

Below is how eroded the Valley discover is believed to be for reference:

 

(The red areas represent the Carapace)

 

All else equal it looks like the intrusion at the Grad property is more intact than the intrusion which hosts Snowline’s Valley deposit. Thus the main target, which is the carapace, might be more intact at the Grad target.

In the RIRGS model below you can see “vein arrays” that are stacked across the short side of the elongated intrusion:

(Light blue “rails” added by me)

 

I think this rhymes with the target zone apparently cutting across the short side of the Grad intrusion unless I am mistaken:

 

 

The carapace needs to be brittle so it can shatter and allow vein arrays to form. And the more veins the better. I dare say that this bedrock, at the base of the south face, thankfully looks shattered and riddled with veins:

 

 

So the area of the BiTe which one can walk up to at the base of the cliff appears to be shattered with a lot of veins. We also know the high gold grades in the talus as well as the rock samples grading up to 92 gpt and a 40 m trench running 1.8 gpt over 38 m. We know there is gold THERE. Is it the only place and mother nature arbitrarily, and conveniently, put the best part of the system “readily accessible”? Maybe. Maybe not… The mountain has at least been visually examined and these next slides shows different types of veins and vein orientations across and around the mountain faces:

 

 

… Suffice it to say it looks very encouraging as it appears that the mountain sides have different types of vein arrays from bottom to top. Thus it could be that most of the BiTe zone coming out of the ground, might indeed be mineralized, and hopefully economically so. And of course if there is another thing to ponder as well which is how deep the mineralization could go.

 

 

Again, if this is a more intact intrusion than Valley it could potentially have more depth potential than Valley I guess. Below is a slide which includes a long section of the 9 Moz (0.89-1.21 gpt) Valley deposit:

(Not exact scale but approximately)

 

 

Apparently one does not want the surface area of the intrusion to be too big as it suggests it might have been eroded past the top of it which is expected to contain the best parts. As soon as it reaches 3, 4 or 5 km and beyond it apparently goes down in interest level as per Craig Hart. This box is thankfully also checked for the Grad intrusion as it measures around 1.8 km by 1 km and appears to be  a bit larger than the intrusion hosting the major Valley deposit:

(The Grad intrusion and Snowline’s Valley intrusion approximately to scale)

 

… I wonder if it is a good sign for the potential prize if the Grad intrusion is more intact, as in less eroded, and is still larger than the Valley intrusion.

Quinton Hennigh, who was one of the early investors into Snowline, recent comments on Rackla:

This new project, Grad, that they’re going to drill this year is absolutely hands down an outcropping discovery in my view, and if you look back to the discovery news release they talk about finding this thing— this is last year, last season — it’s in a valley that really has never seen any prospecting which is remarkable to think in North America we still have places thank God where you can walk up a valley that nobody’s ever prospected before.

And they found a great deal of outcropping mineralization, basically they found a mountain something like 400 meters from bottom to the top, and over a strike length of I think a little over 500 meters they chip-channeled this granite, this intrusive rock with sheeted quartz veins. They got over a gram gold per tonne, I mean wow I can’t think of anything in North America that’s left like this, it’s really extraordinary to see a grassroots discovery made like this.

Inside of that 500 meters I think there was something like 160 or 180 meters, but it was much higher grade, it was like 3 g/t. So, this thing in my book demonstrates it can generate grade, that’s the key ingredient at Valley, and it’s also got size. In fact, and I don’t like to disparage one deposit for another because I think Valley’s a wonderful deposit and it’s going to make a great mine, but if you look at the scale of this thing at Grad it’s absolutely enormous.

I mean you could actually fit maybe two or three Valleys inside of the overall gold trend that they’ve discovered in this mountain range. So exciting, yes, sheeted quartz veins sticking out of the ground, good gold assays over broad widths.

I’m so excited that I’m actually heading up to the Yukon in mid-July, I think I’m going to be at site on the 16th, they start drilling early July is what I’ve heard recently so I’m hoping that we’ll see a new discovery, a new reduced intrusive discovery this year.

Potential Scale

While it is early days I think it is worth thinking about the _Potential_ prize here in the Grad target and the BiTe zone. Below I have a few scenarios just to give a sense of what scale and grade is required for different endowments:

(Specific Gravity of 2.6 t/m3 used)

 

In the slide below I have added a box with two dimensions, to get a sense of how big a 400 x 400 m area is, as it relates to the theorized target zone:

(Approximate scale)

 

Below is a slide taken from Tectonic Metal’s deck which shows the approximate dimensions and endowments of some famous RIRG deposits:

 

 

I would note that these deposits have a vertical extent of around 500 m. I have to assume that it has something to do with how deep one can make an open pit and not necessarily because there is no mineralization beyond 500 m depth. But like the case of Fort Knox the initial drilled out resource was probably not as deep as the pit is today but rather the pit deepened with time:

 

 

 

Now given that a large volume of potentially mineralized rock is what is forming the mountain at Grad the initial strip ratio could be close to zero as per Simon Ridgeway in a recent interview. If one would end up mining that one can also ponder how much of the potential target at depth could also be mined before the strip ratio becomes unbearable:

(Just added a blue line to represent a potential open pit that would include a lot of material beneath the mountain)

 

A dream scenario would of course be something like a Valley type deposit outcropping plus another Valley type deposit able to be mined at depth if you get my point. Basically what Grad has going for it is if the size end up being stupendous then it might also be more accessible to mine and monetize than if the whole orebody was limited to “below ground”.

As mentioned early in the article I think what makes Rackla almost unique is a) The size of the outcropping target and b) How quickly it could potentially be de-risked/revalued. With some channel samples around the outcropping base and channel samples at the ridge one is de-risking a huge volume of rock assuming the grades are not sub-economic (Snowline uses a cut off grade of 0.30 gpt). If the company then drills around the base, plus holes like this shown in the picture below from the mountain ridge, then a huge volume of rock could be de-risked with limited work/drilling:

(White arrows represent possible drill orientations from the ridge)

Flash update – July 8 NR:

“Sampling has commenced on the ridge top 450m to the north and 350m vertically above the BiTe zone.  A large gossan and mineralized veins on the ridge are evidence of a large hydrothermal system. The quartz & quartz-tourmaline veins have been observed along the entire 160m length of ridge line that has been walked to date and these can be seen extending downwards on both the north and south cliff faces (Figure 3).”

 

 

… So now there is even more evidence that there might be mineralized vein arrays from the top to the contact of the scree slope below (if not deeper still).

In summary this news release has de-risked the vertical extent of the target as well as having de-risked and expanded the width of it. In other words it has increased the chance that this target delivers and it has hiked up the total potential of it. Lastly, there was also a section about what they saw at the South face of the ridge:

 

 

… Note this snapshot of a vein array showing “Over 50 veins per metre”. To put this into context I will re-iterate these insights from Craig Hart:

  • “Gold grade is, therefore, mainly controlled by vein density“
  • “Usually those sheeted vein arrays… We typically get 3, 4 or 5 veins per meter… And that’s what would typically give us 1 gpt gold.“

Other rules of thumb according to ChatGTP:

 

 

Below is an example of drill holes from the Valley deposits where it shows approximate vein density within the holes:

 

(Red parts are >15 veins per meter)

 

As one can see in the next slide the assayed grades were indeed the highest in and around the highest density intervals:

 

Snowline’s Valley deposit showed exceptional vein density in some parts:

 

I guess the only thing we can say right now is that evidence of a bedrock hosting over 50 veins per meter at Grad is a very good sign when it comes to potential grade. With that said it does mean it must run high grades and we still have no idea if it is localized or extensive. But all else equal this news of evidence for exceptionally high vein densities being present is of course a very good sign for the target.

In summary this is what I think this news release has added:

 

 

In bullet points:

  1. Greatly increased the width of apparent mineralization (300m+)
  2. De-risked the top of the system thanks to confirming veining on top of the ridge and down both sides from it
  3. Confirmed the presence of exceptionally high vein densities at the top of the system and thus suggesting there is potential for high grades in the system

More “Third Party Validation”:

I note that Tom Garagan who is one of the founders of B2 Gold as well as ex Senior VP of Exploration since 2007 has joined the Rackla board. As he just recently retired from his position with B2 Gold I have to assume that he was very much involved with B2 Gold’s decision to take a strategic position in Snowline Gold (Which is working out wonderfully for B2 Gold). To have this person join Rackla a few months ago I think says something about his excitement for another RIRGS target in the form of Grad.

 

A Prominent Investor

Rackla also has a very avid buyer of shares…

 

This Alejandro person owns a ton of Rackla metals and have been adding millions of shares in the open market since May. I recognized the name “Gubbins Cox” from Snowline Gold’s SEDI filings which shows another “Gubbins Cox” with a massive position worth a couple of hundred million dollars:

 

 

From some sleuthing it appears that Alejandro, which appears to have insatiable appetite for shares of Rackla, is the son of one of the largest shareholders in Snowline Gold:

 

 

And his father/family owns the mining company Alpayana which is currently acquiring the $250 M MCAP company Sierra Metals:

 

 

Alpayana is a multi-mine producer in Peru:

 

 

In summary you have Quinton/Crescat who was one of the first people to appreciate, and pounded the table on, Snowline’s Valley discovery early on as a big backer. You also have a member of the family which owns a large Peruvian mining company, and have made boatload on Snowline Gold, as probably the largest shareholder with 30 M shares backing it. Lastly it appears that one of the founders of B2 Gold, and who recently was VP Exploration for B2 Gold (I assume he was involved when B2 Gold decided to become a strategic shareholder of Snowline Gold, join the board of Rackla. Lets hope their noses are as good as they were when they sniffed out Snowline Gold! The financial support and strong hands does not hurt either.

Closing Thoughts

I see Rackla as technically a High Risk/High Reward story given how early stage it is. With that said I think it is remarkably de-risked compared to almost any other technically “pre-discovery” storie I know of. That in combinate with the sheer size of the prize makes it currently a unique High Risk/High Reward bet in my portfolio. The Grad target could amount to nothing economically viable. It could also amount to something economically viable all the way up to another Valley type deposit or perhaps even bigger. Not only do I like the continuous de-risking of the target but I also like the increasing size of it coupled with how exceptionally quick it could potentially be de-risked on a major scale. The coming trench samples in combination with the maiden 4,000 m drill campaign could theoretically be enough to infer something very large and potentially world class I think. Given that the target is outcropping in a major way it could theoretically have a quicker de-risking curve than even Snowline and its Valley discovery.

For reference Snowline had a Market Cap of C$73 M in February 2022 after the few first holes had been released:

(The date on this slide is wrong as the presentation states February 2022 and not February 2021 which is seen in the cap table)

 

… Note that during the Valley discovery there was no big mineralized system outcropping so one had no “real idea” of how large it could be and later we would know that the first holes were not in the guts of the system. I think Rackla can therefore have a potentially quicker time revaluing in case of success since it is much easier to visualize the prize from the start. Anyway, 8 months later the Market Cap of Snowline had already reached C$400 M and beyond:

 

 

… At the time only a few holes into what is not the higher grade core of the system had been drilled but it was revaluing thanks to it being easy to imply the scale was there already:

 

 

Again I think Rackla has the potential to infer something as large, or even larger, through trenching and drilling. This is of course possible thanks to the fact that it is outcropping and one can channel/trench sample the ridge, as well as perhaps both faces 400 m below, coupled with drilling for a quick 3-dimensional picture.

I have to believe that there is at least a 30% chance that Grad is as good as it looks. And it is looking so good that the blue sky potential could be an oversized Valley discovery. So lets play with the idea that there is a 70% risk of a 60% paper loss in case Grad underwhelms. And if it delivers the revaluation potential could be up to $1.3 B (Snowline) and beyond. With C$10 M in cash and a tight share registry it could be quite a move and unlike Snowline money will not be spent drilling “blindly” under a soil anomaly for starters.

I expect there to be continuous de-risking leading up to drill assays. I expect/hope for more encouraging visuals and maybe some positive assays from trench sampling before the assays from the drill results are out. In case the stock gets super hot and starts pricing in a bit too much without corresponding de-risking I may take some money off the table. Right now I feel comfortable with a MCAP of $70 M given what is known about the target… A $200+ M MCAP without more news might make me a bit uncomfortable however. In hindsight any price will look either too low (success) or too high (failure) as always. Nobody has a crystal ball so we have to simply try to guesstimate at what price it is a good bed.

What does success look like? I don’t know but Grad is fairly remote so I would think 3-5 Moz at 1+ gpt or 3 Moz at 1.5 gpt could be required. This is not a low threshold which is the main hurdle (risk). One thing to note is that mineralization will likely not be super homogenous and even if there is 10+ Moz monster there like Fort Know it does not mean that every intercept will have 1 gpt mineralization over hundreds of meters. there are patches of concentration in Fort Knox:

(Red parts grades 1 gpt or higher)

 

Amateur TA

Weekly Chart

Looks like a break out from a very large consolidation:

 

 

Daily Chart

I don’t trade based on charts/TA so I mostly look at stuff like this for fun:

 

 

 

Note: I own shares of Rackla Metals and the company is a passive banner sponsor so consider me highly biased. Always do your own due diligence and form your own opinions. Investing in junior miners can be very risky and never invest money you cannot afford to lose. This is not investing advice. I cannot guarantee the accuracy of the information in this article. I share neither your losses or your gains. Assume I might buy or sell shares at any time. I will not be able to hold anyone’s hands 24/7.

Best regards,

The Hedgeless Horseman

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