Two, huge land packages with history of very high-grade past producing mines
Spin-off of Fosterville South: FSX delivered as much as a 5X return for investors in 2020
Proximate to Kirkland Lake’s world-class Fosterville Gold Mine
Gold mining stocks have always had more luster for investors than other mining companies. Among gold mining stocks, high grade gold opportunities have always commanded the most attention – and the highest premiums.
For those who subscribe to this view of the mining industry, you will definitely want to take a closer look at Leviathan Gold Ltd (TSXV: LVX).
as it just went public.
Why? Three words: very high grades.
New gold company, hot exploration story
Leviathan Gold is the new spin-out of Fosterville South Exploration
(CAN:FSX / US:FSXLF). Leviathan (TSXV: LVX)
holds two large, prospective land packages in what is arguably one of the hottest districts on the planet today for high grade gold mining
The Lachlan Fold Gold Belt in Victoria State, Australia hosts one of the world’s most lucrative gold mines currently in production. Kirkland Lake Gold’s now-legendary Fosterville Gold Mine
has transformed Kirkland Lake (US:KL / CAN:KL) from a successful mid-tier gold mining company into a very successful emerging senior producer.
The Fosterville Mine boasts metrics that will make any serious gold mining investor drool.
- Production of 619,366 ounces of gold (2019) at an average grade of 39.6 g/t
- 98.8% gold recovery
- Cash costs of US$119 per ounce (AISC of US$291/oz)
The mine has current gold reserves in excess of 2 million ounces, but “[d]rilling continues to intersect high-grade gold results in multiple zones”. Kirkland Lake itself spent roughly $CAD30 million in additional exploration in 2019 alone.
While the Fosterville Mine is the Crown Jewel of the Lachlan Ford Gold Belt, it is far from the only prospective opportunity in this gold district.
Kirkland Lake’s success in this region came recently. Discovery of the ultra high-grade gold at Fosterville (in the Swan Zone) only came in 2016 – even though Fosterville commenced gold production back in 2005. However, high grade gold mining in the State of Victoria dates back well over a century. Australia is gold country, and currently the world’s #3 gold producer.
A number of smaller scale (but high grade) gold mines went into production in this district, beginning in the mid-1800s. These were generally crude, low-tech mining operations because the high-grade gold ore was near surface – and easy to process.
Inexplicably, high grade gold mining in this district petered out early in the 1900s. These high grade, near-surface gold land packages lay dormant for roughly a century.
Enter Fosterville South Exploration.
Fosterville South sits with a wealth of exploration properties
Bryan Slusarchuk, the CEO of Fosterville South carved his reputation in polymetallic mining, most notably as CEO of mid-tier gold producer, K92 Mining (CA:KNT / US:KNTNF). Polymetallic mining requires particular prowess in metallurgy to optimize recoveries of all metals contained in the ore.
What got Slusarchuk interested in the mono-metallic gold mineralization and five large land packages that Fosterville South acquired?
high-grade gold mineralization. Near surface. Very mining-friendly geology. And all five projects are located in a ~50-mile radius to the south, southeast and southwest of the Fosterville Mine.
Where is the best place to explore for gold? Near an existing gold mine.
Where is the best place to explore for a multi-bagger gold mining opportunity? Near one of the world’s most lucrative gold mines.
Fosterville South itself has already delivered that multi-bagger return for investors.
Going public just as gold mining stocks took off in 2020, FSX ran from CAD$1.10 to a high of CAD$5.35 – before the whole industry pulled back toward the end of 2020.
But Fosterville South had a ‘problem’. It has too much highly prospective gold mineralization to be efficiently explored by one junior exploration company – even a particularly well-capitalized junior like FSX.
These gold properties had already laid dormant for a century. Fosterville’s management made the decision to spin-out the two, large prospective land packages to the southwest – Avoca and Timor – to unlock the value in those projects as quickly as possible.
And so Leviathan Gold (TSXV: LVX)
Leviathan (TSXV: LVX) prepares to build on Fosterville South success
Leviathan CEO Luke Norman
is one of the true visionaries in the gold mining industry. Norman got involved in the resource sector in the 1990s while working as an investment banker.
By the late 1990s, Norman became convinced that gold was due for a major breakout from its long-term bear market that began in the 1980s. He left his consultancy business and got involved in the gold mining industry.
What followed was a 10+ year bull market for gold. Norman’s past and current ventures in gold mining include being the co-founder of Gold Standard Ventures Corp
(CAN:GSV / US:GSV) and US Gold Corp
Those companies’ operations are also located in “gold country”. But in this case, it’s the prolific gold mineralization in Nevada and the U.S. southwest.
What brought Norman nearly halfway around the world to take the reins for Leviathan Gold?
high-grade gold mineralization. Near surface. Very mining-friendly geology.
This isn’t greenstone exploration: moving into unexplored (but prospective) gold geology hoping to make a significant gold discovery. This is brownstone
exploration: going where other companies have already successfully mined (high grade) gold, and looking to build on those past successes.
The historical numbers for Avoca and Timor illustrate the potential of Leviathan – and the reason why Fosterville was eager to spin out (and monetize) these assets.
High grade historic gold mining at the Timor Project (>9 g/t gold). Very high grade historic gold mining at the Avoca Project (>32 g/t gold
) – Fosterville-like numbers.
Brownstone and greenstone exploration opportunities
While the immediate focus is on brownstone mining targets, these are enormous land packages. Avoca is a 106 km2 gold tenement. Timor is 121 km2 in size. Plenty of space (and prospective geology) for greenstone exploration on these projects once the most attractive brownstone targets have been mapped out.
It won’t take long for Leviathan to get started. CEO Norman is planning initial drilling for January. And Leviathan is cashed-up as it begins exploring these two, exciting gold projects.
The Company raised CAD$12.9 million in an oversubscribed financing in December – huge numbers for a junior gold mining startup. It’s not just the management of Leviathan that is eagerly anticipating the first drill-bit hitting the ground.
Making Leviathan even more appetizing for gold mining investors is that the geography around its two projects is just as “friendly” as the geology.
Many gold exploration projects can only be accessed by air, due to the rocky and even mountainous geography. Both Avoca and Timor are situated in relatively flat terrain – farming country – with potential road access.
Of equal importance, all historic mining at Timor and Avoca occurred at depths of 100 meters or less
, with much of the mineralization beginning at surface. Known mineralization is all near surface, while the potential exists to dramatically expand upon mineralization through exploration at greater depths.
The right time for gold
Some investors may be leery of the gold sector at the moment.
The price of gold is roughly 10% below its recent all-time (nominal) high. Sentiment for the mining stocks has slipped considerably from the strong bull market conditions that persisted through most of 2020.
In fact, Dynamic Wealth Research sees this as a superb buying window
for gold assets. We recently made our case as to how/why current monetary and financial conditions support a permanent
bull market for gold.
What if we’re wrong?
The advantage of investing in high-grade opportunities in the gold mining sector is that such high-grade projects are largely immune to market conditions.
Kirkland Lake Gold is making huge profits producing gold at its Fosterville Mine at a cash cost of US$119 per ounce – with gold currently well above $1800 per ounce.
But even if (somehow) the price of gold fell by half, the Fosterville Mine would still be producing gold at a gross margin of over 600%. That’s a pretty good worst-case scenario for any company or investor.
Great Bear Resources (CAN:GBR / US:GTBAF) has produced as much as a 35-bagger
for investors since it made its high-grade gold discovery in Ontario.
But it had already produced a 15-bagger for investors during a bear market for gold mining stocks.
The right company in current market conditions
High grade gold projects offer incredible upside potential for investors in a bull market. But they also provide strong downside protection – even in bear market conditions.
In contrast, most sober investors are becoming increasingly terrified of the bubble prices that permeate both the S&P 500 and NASDAQ. As investors chase momentum in these markets, “downside protection” is non-existent.
Leviathan Gold (TSXV: LVX)
is a well-capitalized junior mining company that just went public, even as the drills are already starting to turn on its high-grade gold projects.
Leviathan (TSXV: LVX)
offers far more upside potential than the most-popular NASDAQ tech darlings. It’s exploring for gold on properties:
- Known to host very high-grade gold
- In one of the world’s most exciting districts for gold mining opportunities
- In one of the world’s safest gold mining jurisdictions
In a world of increasingly uncertain markets, Leviathan Gold (TSXV: LVX)
represents a risk/reward proposition that will tantalize serious investors.
DISCLOSURE: Leviathan Gold is a client of Dynamic Wealth Research.