Research #1

When initiating coverage on Golden Dawn Minerals Inc. 2 weeks ago, the stock traded at $0.16 CAD (today at $0.39 CAD). When initiating coverage on Aurvista Gold Corp. in May, the stock traded at $0.23 CAD (today at $0.30 CAD). Obviously, the early bird catches the worm. Pistol Bay Mining Inc. has nearly 14 million shares issued and outstanding, and a current market capitalization of less than $750,000 CAD.

According to the company, other worthwile projects are presently seeked to create shareholder value. Once the ongoing financing has been closed, some of the proceeds are expected to be invested into its 100% owned Dixie Zinc-Copper Project in the prolific Red Lake Mining District of Ontario. This project was acquired already last year, when the commodity markets were culminating in its depressed state, hence it may turn out as a superb bargain (especially when exploration starts and succeeds). Of all commodities, zinc enjoys one of the most positive fundamentals for higher prices going forward and appreciated by almost 50% so far in 2016.

On top of that, Pistol Bay owns the 3 uranium projects C4, C5 and C6 in the Athabasca Basin of Saskatchewan, located adjacent to the Wheeler River / Phoenix Deposits of Denison Mines Corp. and Cameco Corp. Pistol Bay optioned this project to Rio Tinto Exploration Canada Uranium Corp., who informed the company that they will continue exploration on this property in 2016. Rio Tinto previously announced its intention to exercise its option to acquire 100% interest by paying $5 million CAD within the next 3.5 years and granting a 5% net profits interest to Pistol Bay. 

Once the ongoing financing has been closed, Pistol Bay Mining Inc. will be in a position to start working actively on its Dixie Zinc-Copper Project. A systematic program of exploration will be developed, including drilling after having defined precise targets. Previous operators demonstrated significant zinc-copper mineralization with drilling on some of the claims (caution: historic results which need to get confirmed with new drilling):

Dixie 17: 7.34% zinc and 1.4% copper over 9.5 m.

Dixie 19: 6.33% zinc and 1.5% copper over 3.55 m, as well as 9.71% zinc over 1.25 m. These intersections were at vertical depths of 262 and 350 m respectively. No deeper drilling was done on this target, despite the interpretation that the top of the conductor was at 375 m below surface.
Hence the potential exists for the discovery of a high-grade zone with the upcoming drill program.

Dixie 20: A bit north of Dixie a second, much larger, and much deeper conductive body was identified. The conductive body, a resistivity low interpreted from inversion modelling of magneto-telluric data, has an irregular shape, but extends over a length of 1,800 m.

Noranda drilled 7 holes on the property and calculated a (historic) resource estimate of approximately 135,000 t at an average grade of 14% zinc. A historic hole (0.98% zinc and 1.13% copper) may have only scratched the upper part of this zone. Down-hole electromagnetic surveying indicates that this hole had penetrated a large (up to 800 × 800 m) conductive body close to its edge. Follow-up drilling may discover a significant new zone.

The western two-thirds of the property, including the Dixie 17 and 18 zones, has not been covered by deep-penetrating geophysical surveys. The principal zinc mineral, sphalerite, is not electrically conductive, and the absence of strong electromagnetic conductors should not be taken to mean that zinc is absent. The 3 known VMS zones (Dixie 17-19) have not been fully closed off by drilling and are partly open at depth, especially the Dixie 19 zone with the geophysically interpreted deep zone below the historical drill holes.

Rockstone is excited to have initiated coverage on Pistol Bay as early as today because, in light of its current market valuation, significant shareholder value could be produced, especially after closing the ongoing financing and starting to work on the Dixie Project. An opportunity with scarcity value, as Rockstone believes.

The geophysical anomalies identified on the Dixie properties should be followed up with a new drilling campaign:

The Confederation Lake Belt in the Red Lake Mining District is home to numerous VMS (“Volcanogenic Massive Sulphide”) deposits and showings. The largest VMS deposit to date in this region is the South Bay Mine, which produced between 1971-1981 approximately 354 million pounds of zinc, 58 million pounds of copper and 3.7 million ounces of silver (with average grades of approximately 11% zinc, 1.8% copper and 73 g/t silver).



Company Details

Pistol Bay Mining Inc.
Suite 205 - 1717 Haro Street
Vancouver, B.C. V6E 4T1 Canada
Phone: +1 604 369 8973

Shares Issued & Outstanding: 13,520,757

Canadian Symbol (TSX.V): PST
Current Price: $0.055 CAD (July 29, 2016)
Market Capitalization: $0.7 million CAD

German Symbol / WKN (Frankfurt): 0QS2 / A12DZH
Current Price: €0.034 EUR (July 28, 2016)
Market Capitalization: €0.5 million EUR

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Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.

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Name: Pistol Bay Mining Inc.
Canada Symbol: PST
Germany Symbol / WKN: 0QS2 / A12DZH
Shares Issued & Outstanding: 13,520,757
Phone: +1 604 369 8973

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