For a clear template on how to move fast and create value in the mining sector, there’s no better model than Kenorland Minerals Ltd (CVE:KLD).
This is a company that in a few short years has gone from being a germ of an idea to a fully-fledged and well-funded exploration vehicle with a suite of impressive gold assets and some major gold mining names as partners.
Is this easy to do?
Of course not.
But if you have the right skills, the right kind of luck and the right experience, it’s not beyond the realms of possibility either. And in the case of Kenorland, it may only be just the start.
“We started this company in 2016,” says chief executive Zach Flood.
He and three other geologist friends got together to pool ideas and funds to create what was initially conceived of as a project generator.
The relative youth of this new team, combined with their clear competence in the sector, was enough to bring in John Tognetti, the chairman of Haywood Securities, as a shareholder, and thus, almost from the outset Kenorland had an air of respectability about it too.
Tognetti’s confidence wasn’t misplaced. Kenorland’s team of geologists went out and began staking ground.
Five years on, and Kenorland now boasts joint ventures with two of the biggest names in metals and mining, Sumitomo (TYO:8053) and Newmont (NYSE:NEM), and for a long period teamed up with Freeport McMoRan (NYSE:FCX) on a project in Alaska too.
Things really began to accelerate last year, though, as the gold price started edging towards US$2,000 an ounce.
“The highlight of 2020 was a discovery we made with Sumitomo at Regnault on our Frotet project,” says Flood.
“We hit 29 metres grading 8.5 grams per tonne gold, and although it’s super early days, it’s clear that we’ve tapped into a broad gold system which looks like it’s got the potential to turn into something significant.”
That discovery, combined with the blue-chip backing, and the prospectivity of the other assets all pointed towards the desirability of a formal listing.
“We were private till the beginning of this year, and then we reversed into Northway Resources,” says Flood.
The company raised C$10mln in the process, brought in some institutions from Quebec, and immediately began the preparations for a further drilling campaign at Regnault, funded by Sumitomo, and which officially got underway on 4 March.
The plan is to drill 9,000 metres this time round, and then to move on to its other frontline asset, Healy in Alaska, and drill a further 4,000 metres there.
And, while it’s too early to say anything meaningful about the results of the programme, it probably won’t be too long before the market takes a real interest.
“It’ll be a really exciting year in terms of news,” says Flood.
“We’ll be drilling from now until the end of August or early September.”
Depending on what sort of results come out of Regnault, it’s always possible drilling might go on even longer, all though at this stage Flood won’t be drawn on the likelihood of that.
What is certain is that after the current round of drilling at Regnault Sumitomo will go to 80%, and that Kenorland will then have to take a view on what happens with the remaining 20%, which, under the terms of the agreement could gradually drop down to the 2% net smelter royalty if no other action is taken.
“We’ll follow the 20% as far as we can go, but our objective is to monetize that interest down the road,” says Flood.
Here, he’s playing to Kenorland’s strengths again.
“We are by no means developers,” he says.
“We do not have that skillset at all. Our business is discovery.”
Regnault looks a big one - indeed, Flood reckons it will require a substantial number of metres of drilling to get anywhere near a meaningful resource
But it’s not the only one. At Healy in Alaska, which Kenorland has optioned from Newmont, there’s never been any meaningful drilling prior to this upcoming summer season.
And at Tanacross, also in Alaska, Kenorland has 45,900 hectares of ground under licence which looks highly prospective both for porphyry copper and gold.
There’s a lot to be thinking about and a lot to be getting on with. But one thing’s for sure, the newsflow from Kenorland Minerals is not going to be dull, and it’s likely to light up a lot of dials.