The new article by Marc Davis on today´s profound news from Golden Dawn Minerals Inc. cuts right to the chase. This news is truly a ground-breaker as it puts more than half a billion dollars on the scales!
A few days before Christmas 2017, the company announced the takeover of the J&L Project near Revelstoke in BC, one of the largest undeveloped gold projects in Western Canada with historic resources of nearly 2 million ounces of gold equivalents.
Today, Golden Dawn published an updated resource estimate, compliant with NI43-101
Total J&L resources have now been increased to 2.4 million ounces of gold equivalents – a remarkable 20% boost representing some 400,000 ounces of gold, which have an insitu value of 532,000 USD at a current gold price of 1,330 USD/ounce.
Most interestingly, this resource expansion was mainly achieved with a drill program that took place in 2012 but was not included in the 2012-PEA (as it was based on a Technical Report from 2011). This demonstrates the extraordinary expansion potential with future drill programs!
The new calculation is significant as resources increased from about 730,000 ounces of gold to 1,351,000 ounces of gold equivalents in the drill indicated and measured resource, also thanks to the very high-grade zinc component of this gold-silver-rich deposit.
Also quite impressive is the insitu value of the current 2.4 million ounces of gold equivalents 3.2 Billion USD. (Note that the 2.4 million oz AuEq. include Inferred Mineral Resources with a lower level of confidence than that applied to an Indicated Resources and must not converted to a Mineral Reserve. It is reasonably expected that the majority of the Inferred Mineral Resource could be upgraded to an Indicated Mineral Resource with continued exploration.Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.)
As Marc Davis emphasizes in his article (see below), Golden Dawn is on a mission to create substantial shareholder value with its well-diversified portfolio of small- to medium-scale gold mining projects in the near-term (Greenwood Projects) and the simultaneous, independent development of a large-scale mining project (J&L Project) over the next few years.
Golden Dawn Announces a New “Company-Maker” Gold Inventory
By Marc Davis
Golden Dawn Minerals continues to consolidate its grip on one of Canada’s most under-explored gold belts, namely the Greenwood Mining Camp.
Over the past few years, the company has been steadily building up an inventory of small gold past-producing gold mines and deposits – all of which are being groomed for near-term production.
This time around, the company’s latest acquisition should make a big splash.
Golden Dawn just served notice that it plans to take its gold producing aspirations to a new level. It did so by optioning the gold-rich J&L gold project in southern British Columbia.
An independently calculated resource calculation demonstrates that a total of 1.35 million gold equivalent ounces in the Measured and Indicated category have been delineated. Additionally, a total of 1.08 million gold equivalent ounces have also been outlined in the Inferred category.
This consists of 8,548,000 tons in measured, drill indicated and inferred categories with an average gold equivalent grade of 8.09 g/t (gold per tonne). See the table below.
With a total of 2.43 million gold equivalent ounces in all three categories, this makes the J&L Project one of the largest undeveloped gold resources in Western Canada.
Building on a “Company-Maker” Gold Asset
The J&L Property is located 35 kilometres north of Revelstoke. And what’s most significant about this new jewel in the crown for Golden Dawn is that it still has scope for further expansion beyond its known asset base.
In fact, historic work has also shown J&L to contain several paralleling to en-echelon, shear-hosted, replacement-style, gold-bearing sulfide-rich mineralized zones. All the mineralized zones remain “open” (continuous) for expansion, including the Main Zone which was traced up to 3000 meters along strike on surface and drill tested for1,500 meter.
Furthermore, the deposit is located in one of the world´s safest, most mining-friendly district, Revelstoke, southeastern BC – which is rich with historical mining and established infrastructure.
The well-defined J&L gold asset has seen periodic exploration by numerous operators, resulting in 311 drill holes totalling 40,886 metres of exploratory drilling. The property also benefits from about three kilometers of underground development, including two mine portals that access sub-surface mine workings and a fleet of underground mining equipment.
A former operator, Huakan International Mining, paid 10.79 million for the deposit and advanced it to the point of a Preliminary Economic Assessment (“PEA”) in 2012. However, work ceased in 2014 due to a cyclical slump in the mining business.
The property also benefits from having road access via paved highways and forestry roads. Additionally, it has an easy access to a railroad, with a 100%-owned rail siding and load-out facility in Revelstoke. The property’s infrastructure includes on-site facilities, including a 40-person camp, as well as maintenance buildings and workshops.
According to the company’s management “Golden Dawn commences the first term of the option agreement by conducting an updated preliminary economic assessment (PEA) at a cost of approximately 250,000. The company has no further financial obligations until this study is complete, which is expected to take 5-8 months.
Upon the foundation of robust economics evidenced by the updated preliminary assessment (UPEA) of the project, the company will then finance the cost of the Pre-feasibility Study (PFS) which is estimated to cost 6 million. This study is estimated to take 24 months from date of completion of the PEA.
The company must then pay 15,000,000 shares and a further 8 million to earn is 51% of the J&L Mine and Property. Upon completion of the (PFS) pre-feasibility study, the company has the option to purchase the remaining 49% of the J&L Mine for an additional 30 million.
The PFS will determine the viability to purchase the additional 49% of the project. This is a well thought out option agreement from Golden Dawn’s perspective, by staging the financial commitments with de-risking the project, and by advancing the level of confidence post each study. The pre-feasibility study will include infill surface and underground drilling to upgrade the inferred resource to at least a drill-indicated resource, and increase all levels of current resources.”
A former investment banker, company President Wolf Wiese has spent the past 22 years in the mineral exploration business. Among his accomplishments, he was the driving force behind Canadian Metals Explorations Ltd. (now Hard Creek Nickel Ltd.) from 1995 until 2004.
His skills are complimented by company COO and Chief Geologist, Dr. Mathew Ball, Ph.D, P.Geo, who has over 30 years of worldwide experience, including underground precious metals mine development programs.
Dr. Ball has a deep knowledge of lode and epithermal gold-silver, porphyry copper-gold and related skarn deposits, all of which occur in the mineral-rich Greenwood area of southern BC.
Management is also backed by a heavy-hitting board, including members such as industry icon, Stephen M. Leahy. Leahy was the founder of North American Tungsten and its Chairman and CEO from 1993-2013. With 250 employees and CDN 100 Million in revenue, North American Tungsten produced annually some 4% of the world’s primary tungsten concentrate.
Golden Dawn considers the J&L project as a stand-alone project, fully independent from the company’s portfolio of other projects in the Greenwood region. All told, it represents a significantly advanced-stage project that will be groomed with the intention of becoming a prospective near-term gold producer.
Other Gold Deposits Readying for Near-Term Production
The company also owns a collection of advanced-stage projects, including past-producing mines that were mothballed during the depths of the last commodity downturn.
In fact, Golden Dawn used the end of the last mining super-cycle to put together a strategic portfolio of prospective properties in the Greenwood Mining Camp for pennies on the dollar, including 30-plus past-producing mines, along with a modern 200/400 ton per day processing plant ( a mill).
The Greenwood Mill seen above should soon be processing gold from the Lexington Mine
Significantly, this is the first time in the history of the Greenwood Mining District that all these historic mines, deposits, and showings have been consolidated.
These acquisitions have now made Golden Dawn the second largest landholder in the Greenwood gold belt. In the near-term, it gives the company´s shareholders leverage to rising gold prices by way of three low-cost, near-term gold production opportunities, namely the Lexington, Golden Crown and May Mac mines.
There is an inventory of at least 170,000 ounces of high-grade gold in the measured and indicated categories in the Lexington and Golden Crown Mines. The Lexington is expected to be the first mine to re-open. Golden Dawn has completed the de-watering of the mine and is rehabilitating the Lexington mine for production in the second quarter of 2018.
With a predicted ceiling of 2 million to complete reactivation of both Lexington and the nearby Greenwood Mill, this is a mere drop in the bucket compared to the forecasted revenues.
Speaking of revenue, investors are expected to celebrate the commencement of cash flow as early as Q2 of 2018 as both the Lexington mine and the Greenwood Mill are fully permitted to re-open. It is worth noting that the Lexington mine most recently operated in 2008 and is in good working condition.
With estimated all-in sustaining costs hitting a paltry US 786 per ounce, Golden Dawn shareholders may also enjoy a US 500 operating margin at Lexington based on today´s gold prices. This mine is expected to benefit from a payback in less than two years.
Another key takeaway is that the company’s small past-producing mines and other deposits are all located within a radius of 15 kilometres of the company’s wholly-owned processing facility.
This new J&L company-maker acquisition gives Golden Dawn leverage to a favourable re-rating for its share price.
Also the company is on the cusp of doing something very rare for an exploration and development “mining junior”. It is graduating to the illustrious ranks of the world’s relatively few gold miners.
This newly-found credibility promises to make the company particularly attractive to speculators and value-oriented investors, alike. This is because it gives them all the best of both worlds a leveraged proxy to rising bullion prices, as well as a chance to own shares in what promises to be a growing gold producer.
All told, the more past-producing mines that Golden Dawn revitalizes, the more cost-cutting synergies can be achieved to further strengthen the company’s bottom line. This will become particularly significant assuming Golden Dawn is able to bring the J&L deposit into production.
Furthermore, all of the company’s gold projects are ideally located in one of the world’s most politically stable, well-established mining jurisdictions. In itself, this is a key de-risking dynamic that should benefit the company’s growth profile.
Accordingly, the advent of cash flow in 2018, as well as the development of the prospective company maker J&L deposit, should prove to be powerful value drivers in the coming months.
Such a reality, along with the advent of plenty of encouraging news flow, promise to build considerable intrinsic value into the company’s share price.
About the Author Marc Davis has a deep background in the capital markets spanning 25 years. He is also a longstanding financial journalist, having worked for leading digital financial news agencies in North America and in London’s financial centre. He is also a former business reporter for CBC Television. Over the years, his articles have also appeared in dozens of digital publications worldwide. They include USA Today, CBS Money Watch, Investors’ Business Daily, the Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post and AOL. Marc Davis has been compensated by Golden Dawn Minerals Inc. to write and publish this article and holds a long position in Golden Dawn Minerals Inc.
Shares Issued & Outstanding 127,143,073
Canadian Symbol (TSX.V) GOM
Current Price 0.26 CAD (01/22/2017)
Market Capitalization 33 Million CAD
USA Symbol (OTC) GDMRF
Current Price 0.196 USD (01/22/2017)
Market Capitalization 25 Million USD
German Symbol / WKN (Frankfurt) 3G8A / A1XBWD
Current Price €0.169 EUR (01/22/2017)
Market Capitalization €22 Million EUR
Report #22 “Perfect Match Golden Dawn Minerals Takes Over Multi-Million Ounce Gold-Silver-Zinc Project in BC“ (December 19, 2017)
Report #21 “Golden Dawn Minerals Strengthens its Management Team“ (December 7, 2017)
Report #19 “New Drill Results from Golden Crown Show New Potentials“ (November 5, 2017)
Report #18 “High-Grade Gold and Copper Drill Results Near Surface at Golden Crown“ (November 1, 2017)
Report #17 “Rapid Progress with the Reactivation of Mine and Mill“ (October 25, 2017)
Report #16 “Dewatering Start! Gold Production Expected in Novembert“ (August 22, 2017)
Report #15 “Golden Dawn receives Mine and Mill Permits and Rockstone publishes a Site Visit Report“ (June 21, 2017)
Report #14 “Golden Dawn Minerals getting increasingly attractive with latest acquisition plans“ (June 6, 2017)
Report #13 “Golden Dawn in the spotlight of the press “ (February 9, 2017)
Report #12 “Gold and Gold Stocks The Best Hedge Against Trump and Other Uncertainties“ (January 31, 2017)
Report #11 “Golden Dawn Discovers New Prospect For A Possible World-Class Deposit“ (January 26, 2017)
Report #10 “Golden Dawn discovers 10 g/t gold over 15 m at surface and delivers top results from the underground“
Report #9 “Golden Dawn passed environmental and safety inspection, provides progress report on Greenwood projects“
Report #8 “Coverage on Golden Dawn"
Report #7 “Golden Dawn Minerals B.C.´s next powerhouse gold miner?“
Report #6 “Golden Dawn acquires several major past producing mines and becomes largest land holder in the Greenwood District next to Kinross“
Report #5 “Golden Dawn moving rapidly toward renewed operation“
Report #4 “Starting Shot for the May Mac Mine“
Report #3 “Ascend from explorer to producer secured A Just-in-Time success story par excellence “
Report #2 “Golden Dawn secures funding to go into gold production in BC “
Report #1 “Perfect timing to go into gold production in British Columbia“
Disclaimer Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist. The author holds a long position in Golden Dawn Minerals Inc. and is being paid a monthly retainer from Zimtu Capital Corp., which company also holds a long position in Golden Dawn Minerals Inc. Cautionary Statement The June-2017-PEA is preliminary in nature and it includes Inferred Mineral Resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as Mineral Reserves. Mineral resources that are not Mineral Reserves do not have demonstrated economic viability. There is no certainty that the PEA will be realized. Golden Dawn Minerals Inc. (the "Company") would like to clarify that its decision to proceed to extract mineralized material from the Lexington, Golden Crown and May Mac mines for processing at its facility located at the Greenwood Precious Metals Project was not based on a Feasibility Study. The Company cautions that, in such cases, there is increased uncertainty and higher economic and technical risks of failure. The Company notes that, since the mining and processing infrastructure is in place, it intends to proceed to trial mining and processing on the basis of Mineral Resource Estimates and the Preliminary Economic Assessment.