If you're unfamiliar with American Eagle Gold Corp. (AE:TSXV), it is, despite its name, a Canada-based mining company focused on exploring gold and copper deposits across North America.
The firm's flagship asset is its NAK copper-gold property, located near the town of Smithers in the western coastal Canadian province of British Columbia. The large site is located in the Babine Copper-Gold Porphyry district in the province's center.
This copper-gold porphyry deposit occurs in the Stikine Island Arc Terrane, which hosts various highly-concentrated copper porphyry holdings. The site is associated with the Babine Intrusive Suite, an Eocene-age feature known for hosting the Bell, Granisle, Morrison, Hearne Hill, and Dorothy/Duke copper-gold deposits.
The Catalyst: Permission and Funding to Drill
On May 10, American Eagle Gold Corp. announced receipt of a 5-year drilling permit for the NAK copper-gold project. The permit is in effect immediately, with a provisional expiry date of March 31, 2028. With the receipt in hand, the firm's 6,000-meter drill program at the NAK site is expected to commence in the coming weeks.
The permit announcement came just two days after the firm disclosed a strategic financing initiative with mining giant Teck Resources Ltd. (TECK:TSX; TECK:NYSE), which will make a key investment through a private placement. Teck Resources' investment of just under CA$3 million will fully fund the 2023 drill program on the NAK Project. 2023's program will be focused on follow-up work with east-west step-out drilling and begin to uncover the true size of the potential deposit.
The program is also expected to expand and better define the orientation and distribution of the higher-grade zones of dike-hosted bornite mineralization, expand the known footprint of the high-grade at-surface south gold zone, and step out and investigate the highly prospective southern margin of the main Babine stock porphyry.
"Our 2022 program was a great success in demonstrating the enormous potential at NAK," explains Anthony Moreau, CEO of American Eagle Gold. "Now, with a fully funded 2023 and a five-year drill permit, we have flexibility, greater knowledge of the geology, and the right partners and team to select drill locations that enable a program that truly delineates NAK's size and grade."
American Eagle told Streetwise that Teck is also not simply lending financial support but its technical expertise as well. Moreau said, "They have guided us to drill a couple of holes around 1,000 meters southeast. If we hit there, it will completely open up the property and create what I define as a billion-dollar drill hole."
The company intends to enlarge the scope of NAK while seeking out a high-grade source for all distributed materials.
Why This Sector? Onshore Base and Money Metals
Gold has always been a great hedge against market chaos, with base metals like copper providing a similar, though less impactful, escape asset from fickle fiat currencies.
American Eagle told Streetwise that Teck is also not simply lending financial support but its technical expertise as well.
As Michael Lebowitz explained in a recent realinvestmentadvice.com piece, "By owning gold, investors are not necessarily hedging against a government default but ironically betting the Fed will increasingly misuse monetary policy to help the government avoid defaulting."
"That may not be the exact thesis gold investors signed up for, but there is ample evidence linking gold prices to Fed behaviors."
With a looming debt ceiling fight crowding out almost all current U.S. financial news, proven reserves of hard assets in the ground in America's northern neighbor offer an arguably undervalued safe harbor.
Why This Company? Large, Local, Accessible Reserves
The NAK project's copper-gold target exhibits many signs of a robust and large-scale system. Historical drilling, while shallow, defined a near-surface copper-gold system with a footprint greater than 1.5 km by 1.5 km. Drilling in 2022 showed that the property holds substantial deep potential but remains largely untested at depth.
As technical analyst Clive Maund explained, "The work that American Eagle has been doing on its NAK property is good and has borne fruit."
That same drilling also showed that near-surface mineralization potential was significantly larger than historically defined.
The property is road accessible and home to many target areas that already coincide with forest industry clear cuts. As such, drilling can be undertaken year-round, and no helicopter support is required. It is situated close to past-producing mines like Bell and Granisle and so already surrounded by excellent site-specific infrastructure.
Moreau noted that "Being in Canada and having great infrastructure gives us an advantage over most other junior miners." Newmont Corp. (NEM:NYSE)
American Eagle Gold Corp.'s main objective is to advance this newly revitalized prospect into a major discovery, with drilling expected to commence in early June.
Moreau also spoke about the team at American Eagle Gold. He pointed out that the company's geologist, Charlie Greig is the founder of GT Gold (now owned by Newmont Corp. (NEM:NYSE)), a company that made a nearby discovery. GT Gold sold for around US$400 million a few years back. Moreau showed optimism in having a geologist with such a track record for success.
American Eagle is also in the top percentile when it comes to general and administrative versus exploration spending, noted the company. It puts the majority of its money into the ground, which Moreau believes gives investors a brighter opportunity for discovery and shareholder return.
In addition to the new permitting and new funding, American Eagle Gold Corp. has also secured an updated exploration agreement with Lake Babine Nation, an agreement that's in line with the anticipated five years of licensed drilling commencing in June.
Moreau told Streetwise, "The Babine Region is going to be the new Golden Triangle but with better access."
As technical analyst Clive Maund explained in a March 11 briefing, "We bought American Eagle Gold Corp.=. way too early back in January and ended up with a serious paper loss as it continued to drift lower and lower on financial woes. But the work that American Eagle has been doing on its NAK property is good and has borne fruit."
"Within 10 minutes of the news appearing, an email was sent out to subscribers saying that the stock was an immediate Buy."
He continued, "Monday morning, it got a massive vote of confidence when the news emerged that it is to receive a major strategic investment by the mighty Teck Corp., which is Canada's preeminent copper producer."
Maund went on to say, "This news means that the company no longer has financial problems and can now move ahead boldly with its ambitious 2023 drilling program at its potent NAK property," Maund opines. "Small wonder then that on Monday morning's news, the stock broke out, gapping higher on strong volume out of the fine Cup and Handle base shown on our 6-month chart. Within 10 minutes of the news appearing, an email was sent out to subscribers saying that the stock was an immediate Buy."
"It didn't gain much on the day from its opening price," he explains, "but it doesn't matter because this news of the Teck investment in the company is a game changer and means that we can expect the stock to continue to advance to much higher levels from here, especially if gold really starts to pick up as looks likely."
"Since today's move marks just the start of a major revaluation of the stock, especially if good drilling results are forthcoming later in the year, the stock remains a strong speculative Buy at the current price."
Streetwise Ownership Overview*
Moreau believes the reason American Eagle is currently undervalued is due to investors not knowing much about it. He said, "Buy it while you can." He finished by saying, "At a market cap of around CA$13 million, there is only upside."
Ownership and Share Structure
According to Reuters, 19.07% of American Eagle's shares are held by management and insiders. Chairman Stephen Stewart has 12.53%, with 10.21 million shares. Director Alex Stewart has 4.56%, with 3.71 million. CEO and Director Anthony Moreau has 1.74%, with 1.42 million. Vice President of Strategic Engagement Derek Teevan has 0.25%, with 0.20 million.
17.68% is held by strategic investor Teck Resources Ltd., with 14.40 million shares.
36.75% is with institutional investors.
The rest is with retail.
The company had a market cap of CA$13 million. It has 95 million shares outstanding, with a free float of 51.53 million.
|Want to be the first to know about interesting Gold investment ideas? Sign up to receive the FREE Streetwise Reports' newsletter.||Subscribe|
1) As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of American Eagle Gold Corp.
2) Owen Ferguson rote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
For additional disclosures, please click here.