Gold and silver have had a good run lately but the DSI (Daily Sentiment Index) is suggesting a pause may be in the works. Gold hit a reading of 91 on Friday May 15th while silver showed 88. While I am convinced the actions of the Fed in unleashing a flood of dollars will result in hyperinflation in the metals and deflation in real terms for all of the bubbles, corrections are part of investing. There are so many wonderful stories out there right now that have not caught fire that I think correction or not, juniors are the only game in town.
And for new subscribers to the DSI Jake has a sale on right now for up to 50% off until June 1st. I find the DSI the most useful took in investing. Other than my articles, that is.
Eagle Plains is a project generator company. They hold a number of projects of various kinds in western Canada and do deals with other juniors for cash and shares. If one of their deals does well they do well and haven't had to pay their way.
Since investors are as incapable as I am of keeping track of a dozen or more projects usually investors will pay X for the biggest and most important project. They will pay ½ X for the 2nd most important and potential and maybe 1/10th X for the rest of the stable. It's frustrating to project generator companies to know that they are not getting full value for each of their properties.
So in 2006 Eagle Plains spun out a great copper project located near the Galore Creek project of Novagold into a company they named Copper Canyon. Because it had a lot of copper. There literally was a creek running bright blue from the copper.
It took another five years for someone to get interested. Novagold bought Copper Canyon in 2011.
There wasn't a giant premium paid to the shareholders of Copper Canyon but Eagle Plains owned a lot of shares and generated substantial value for something that investors weren't giving them anything for.
So in April of 2018 Tim Termuende made a similar deal spinning off various projects to a new company to be known as Taiga Gold Corp. (TGC:CSE; TGGDF:OTCBB). Taiga Gold shares the same management as that of Eagle Plains. And Eagle Plains retained 12 million shares of TGC as part of the deal.
Taiga's lead property is the Fisher gold project adjacent to the Seabee/Santoy Gold mines owned by SSRM (Formerly Silver Standard [and I liked the name Silver Standard a lot better]). SSRM did a deal on the Fisher gold property that calls for them to get a 60% interest for spending $4 million on exploration and paying Taiga $400,000 in cash with a $100,000 yearly advance royalty on production. So far SSRM has spent over $10 million and done 79 holes of over 35,000 meters. They can increase their ownership of Fisher by paying Taiga $1 million.
SSRM believes the Santoy Shear extends 20 km on the Fisher project. That's the ore host for the Seabee/Santoy deposits. Santoy is a low cost producer for SSRM having produced over 112,000 ounces of gold in 2019 at a grade of 9.56 g/t and a cost of $464 an ounce in US pesos.
On the 14th of May Taiga announced results for 23 of the 31 drill holes completed in the 2020 winter program at Fisher. Some 14 of the 23 holes reported meaningful gold results with visible gold in 5 of the holes. An additional 8 holes are in the process of being assayed.
This is one of those zero brainer type investments. SSRM didn't spend $10 million on drilling unless they had a real good idea of what they will find. At some point they will write a check to Taiga for $1 million and own 80% of the project. The only issue for investors would becoming up with a value for the remaining 20% of the project. Seebee has been mined out and Santoy has a 1.5 million ounce 43-101 resource.
It's a low cost producer, surely SSRM will have a back of the envelope calculation for how much gold they believe they can find on the Fisher project. SSRM will buy out Taiga at some point.
Since I happen to believe we are going to see far higher prices for gold than resource investors can imagine today, will the takeover be early or later? I'd rather see it later because with a $14 million market cap today Taiga is absurdly cheap.
Taiga is an advertiser. I have bought shares in the open market and been in the last private placement. Do your own due diligence
Taiga Gold Corp.
TGC-C $0.18 (May 15, 2020)
TGGDF - OTCBB 79.4 million shares
Taiga Gold Corp. website
Bob Moriarty founded 321gold.com, with his late wife, Barbara Moriarty, more than 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.[NLINSERT]
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