Engineer Gold Mines Ltd., (TSE-V: EAU) has spent over 15 years pulling together the 18,319 hectare land package rife with high grade gold deposits over a 25km trend in Northwestern British Columbia, and investors are starting to take notice! Still, at only $10 Mn total market cap, shares of the company have plenty of room to run. The newly acquired Tag property alone is estimated to contain $50 Mn USD worth of gold and they have just released initial 2020 Exploration results outboard of the historic Engineer Mine site.
Major indicators point to sustainably high gold prices
As the Fed holds treasury rates near zero and maintains its record-high $7 Bn balance sheet, investors are rightfully looking to gold as a safe haven and a hedge against a bleak economic outlook. There are some of the reasons why many are calling 2020 the new gold rush with top asset managers attending the party as well. Warren Buffet recently disclosed a $565 Mn stake in Barrick Gold Corp, the world’s second largest gold miner. Ray Dalio’s Bridgewater Associates LP, the world’s largest hedge fund is now holding gold ETFs to the tune of more than $1 Bn[1]. While major players like that aren’t able buy junior and mid-cap mining companies, since they would need to buy several entire companies to make a significant impact on their returns, these moves are an expression of confidence in the long term value of the metal whether on a relative or absolute basis. Roughly 8 months after the start of lockdowns (depending on which country you look at), we are seeing mixed signals from all corners of the market. Interest rates are so low that a high-yield record was just set with a yield below 3% in one case[2]! The Federal Reserve doesn’t plan to raise interest rates through 2022, tech stocks are soaring, US banks are writing off loans, and unemployment remains above 10%.
While many gold stocks have surged, there may be more value than ever before in looking at the overlooked juniors flying under the radar. Engineer Gold Mines Ltd. (TSE-V: EAU) continues to forge ahead on their plans to realize the full value of the historic Northwestern BC deposits and with the existing mill on site, their ability to self-fund (once the mill is back up and running) will ensure future value accrues to the shareholders with minimized dilution.
A bar in the hand is worth….
According to the Wall Street Journal, part of the problem for mining companies is that gold is getting harder and harder to find without moving into more difficult jurisdictions or other hard-to-mine areas. “The average cost to find an ounce of gold was $62 between 2009 and 2018, more than double the cost for the previous decade, according to Minex [Consulting]”.
This is great news for investors in Engineer Gold Mine’s stock, further amplifying the value of Engineer’s proven resources in Canada, a very mining friendly jurisdiction.
Mine grades aren’t what they used to be
According to Metals Focus, a precious metals consulting firm, “The average mine grade has fallen from over 10 grams a ton in the early 1970s to around 1.46 grams a ton last year.” When you read about these grades of gold, it’s easy to get excited about the news coming out of Engineer’s properties. One such example is the Discovery Trench, included in the Wann River prospect, where historic samples returned grades of 263 g/t!
In an August 6 release, President, Andrew Rees, “Now that the Company has acquired the land it deems important to the Engineer Gold Project, and with gold prices recently breaking record highs, we will immediately focus on obtaining the necessary approvals to complete high grade (+1 oz/t Au) annual bulk samples utilizing the Company’s operational mill in place. The Company’s objective will be to leverage bulk sampling operations to proceed with project wide exploration on what could be a significant epithermal gold project.”
New property
The company recently added the adjoining “TAG” deposit to their portfolio which according to reports filed with the regulators, contains 650,000 ton coming in at 3 grams per ton. At current price levels that gold is worth about $50 Mn once the metal has been mined, milled, and refined. Above the value of the gold, the company also acquired the exploration and development work already completed at Tag, and expects it to “provide a wealth of data to Engineer’s technical team and immediately enhance the geological understanding of the Engineer Project.” What this means, is that it not only adds quality deposits, but actually increases the value of the existing deposits through this data and understanding.
What Have You Done Lately? Current Exploration
The focus of current exploration is on two targets to the north of the historic Engineer Gold Mine. These include the gold bearing Happy Sullivan veins in Target A, and Shear B where along the trend, significant historic soil anomalies occur. Within Target A, the 42.2 g/t Au sample doesn’t appear to have been followed up on, leaving the potential for a rich yield from that area.
Engineer Gold Mines Ltd. is actively exploring and developing the land package and we expect the press releases to keep on coming as they forge ahead toward monetization. This is a truly exciting opportunity to get in before the rest of the market take notice.
[1] wsj.com/articles/warren-buffetts-berkshire-hathaway-joins-the-gold-rush-11597682998
[2] https://www.barrons.com/articles/fed-is-pushing-junk-bond-yields-ratings-below-3-51597096159
