Brett Richard, chief executive of newly-listed Canadian explorer Goldshore Resources Inc. (TSX-V:GSHR, OTCQB:GSHRF) is keen to emulate the growth trajectory of Kirkland Lake Gold's Detour Lake project with his company's Moss Lake asset, which is also in Ontario.
The former has grown to be the second-largest gold mine in Canada, hosting the largest gold reserves, and in September 2021, Kirkland increased the project's measured and indicated (M&A) resource by 10 million ounces to nearly 15 million ounces at a grade of around 1 grams per ton (g/t). It has a mine life of around 22 years.
But eight years ago the Detour project was much like Goldshore's Moss Lake project, said Richards. Currently, Moss Lake sits on a resource of around 4 million ounces of gold at 1.08 g/t but there is potential to 'significantly' grow that.
"This is a project very much like Detour. It's about a gram. Eight years ago they were exactly where we were - around 4 million ounces - at a gram. We are trying to take some big strides and some big swings towards Detour," he explained in an interview with Proactive.
Famously low-risk
You don't need to have a degree in geology to see the comparisons. Moss Lake, like Detour, sits in Ontario - a famously low-risk mining jurisdiction - and covers a large land package at nearly 15,000 hectares. It is also already fairly advanced, sitting on a 20 kilometre (km) long mineralized trend, where there has been a plethora of historical work, yet it has been relatively under-explored.
The main deposit at Moss Lake has been drilled previously over 2.5 km and to depths of 300 metres (m) with 376 holes. The project also includes the North Coldstream mine, which reportedly generated significant amounts of copper, gold and silver, the East Coldstream deposit and the Hamlin zone. All of these areas have been drilled historically.
Previous drill assays at Moss Lake, for example, have included 1.19 g/t gold over a long intercept of 163.1m and Richards expects this pattern of low grade/long lengths to be repeated when Goldshore starts putting out its own drill results.
Moss Lake also already boasts a preliminary economic assessment (PEA) from 2013, which showed a pre-tax net present value (NPV) of C$601 million at a gold price of US$1,700 an ounce. Updated in 2020 to reflect the project and its economic environment today, that NPV figure moves to around US$1 billion at US$1,700 gold.
"This is not a risky exploration play. This is not about scout drilling. Using an alphabetic metaphor, this is about taking a project that's already at 'L'; as we're not starting at 'A', we're already at 'L' and we're taking it to 'O'. Somebody else will take it through the rest of the alphabet, towards financing, construction and production." said the Goldshore CEO.
Drilling has started
Goldshore started drilling in late July this year, marking the start of a 100,000m program, initially at the Moss Lake deposit, with four rigs expected to be turning by November. Drilling will move onto the other more copper-focused targets, like North Coldstream and Hamlin Lake later in the program.
Richards said he expects the program to be completed by September 2022, at which point the company will begin preparing an updated resource estimate, with a brand new PEA earmarked to be ready by the end of 2022. The CEO said he expects to be actively looking, armed with a stack of new, positive data, for a partner and an exit early in 2023.
"What we are trying to do is increase the size of the resource, the quality of the resource to maximize the throughput in order to get the economics much higher," he explained. "I want this to be as easy and as simple as possible for someone to understand and take away, creating value as quickly as possible is the strategy" he said.
Thus, the firm is already working to de-risk the project as much, and as quickly, as possible. The team is actively engaged with its Indigenous Partners / First Nations - a step vital to the environmental, social and corporate governance (ESG) requirements needed in mining today. It has also kicked off environmental baseline studies with a view to speeding up permitting and bringing cashflow forward.
Goldshore has also begun metallurgical testing, which historically showed gold recoveries of up to 85%, and has shown that could be lifted to up to 95% through adjusting the processing flowsheet. This alone would instantly add US$100 million to the project's NPV, said Richards.
"These are things that junior mining companies don't do but development companies do," he said.
Plenty of potential
So for the investor, there is a lot of potential upside here. Richards noted that if Goldshore was now trading at a normal multiple to its NPV indicator, it would have a market cap of between C$180 million and C$300 million rather than its current C$55 million. The explorer is also trading at around $14 an ounce compared to a peer group average of $50 per ounce.
"I see that as not being undervalued, I see it as being an opportunity for investment entry," said Richards. But he added: "Yes, obviously we are undervalued but the story is not out there. The story is only as valued as the market is efficient to understand it."
So how did Goldshore get its hands on the project? It all started, said Richards, when he (then working in private equity) caught up with Galen McNamara CEO of Summa Silver, and David Garofalo, former CEO of Goldcorp Inc until its sale to Newmont in 2019, in Vancouver late in 2020 and they ended up discussing potential gold projects, which had 'size and scale' and the name Moss Lake came up.
Roll on to January 2021, and the then private Goldshore agreed to buy the asset from Wesdome Gold Mines in a deal worth a total of C$57 million, the same day as it agreed a reverse takeover of Toronto-listed Sierra Madre Developments - creating the new gold developer. Garofalo now sits on Goldshore's strategic advisory board and McNamara is its chairman.
Concurrently, Goldshore completed a C$25 million financing and the new gold company started trading in Toronto on June 4, 2021. Wesdome retains a 30% stake in the firm and has two representatives on the board.
Indeed, Goldshore is financially backed by some very big hitters in the mining industry, boasting an impressive management team and board (insiders own 28% of the stock).
CEO Richards is a former senior executive at Katanga Mining and was also at Kinross Gold, Avocet Mining (AIM:AVM) PLC, and Midnight Sun Mining; Doug Ramshaw, a director, is president of Minera Alamos and a director at Great Bear Resources (TSX-V:GBR). On the strategic advisory board with Garofalo there is also Craig Parry, current chairman of Skeena Resources, and Adrian Rothwell, founder and director of KORE Mining.
In terms of cash, Goldshore Resources has around C$10.5 million, which Richards said will see the company through until May next year and he has no doubt he will be able to get more when the time is right.
"I am more worried about executing on our objectives and our objectives are to get this to the finish line and deliver as much value as possible," he said.
So with its strong team, focused strategy and a solid outlook for safe-haven gold, along with a project brimming with potential, the Goldshore journey looks like it could be one to keep an eye on in coming months.
Contact the author at giles@proactiveinevstors.com