With names like Bullseye, Luckystrike, and Hotspot we'd forgive you
for thinking this is a tangy BBQ sauce review. That said, on Thursday Golden Sky Minerals Corp. (AUEN:TSX.V; LCKYF:OTC) published some mouth-watering drill results on its Hotspot property in Yukon that pushed the stock up almost 20% on volume exceeding 43,000 shares in intraday trading on November 18.
"These results are truly exciting, as they demonstrate that a near-surface, auriferous system exists on the Hotspot property."
--Cameron Dorsey, VP of Exploration, Golden Sky
Buyers were triggered by drill hole HS-21-02 on Hotspot that averaged 0.85 gram gold over 102 meters, including a tasty section grading 2.97 grams per tonne gold over (2.97 g/t gold) 24.1 meters.
Even more impressive was the subsection of the original 102-meter intercept contained a juicy 1.05-meter zone grading 42.4 g/t gold – news that set chatrooms abuzz on CEO.ca with the idea that Golden Sky might be drilling off a low-sulfidation epithermal copper-gold porphyry system.
One post by @engineer said: "19.25 million shares outstanding its (sic) a tight one. … Excited to see the next holes!"
In the coming weeks, Golden Sky will publish the results from the three remaining holes in the junior's four-hole, 1,317-meter drill program that was completed earlier in the fall on the 100%-owned Hotspot. A company spokesperson says the assay lab said the Hotspot drill results would arrive more than a week ago.
A qualified person must review the drill results before they're published. If the results are similar to those released on November 18, they could provide another catalyst for the share price.
"When I came to this company in basically December 2019, I said from $0.20 to $20 in six years or less. And I'm sticking to that," John Newell, president and CEO of Golden Sky, tells Streetwise.
Newell notes that NOVAGOLD Resources Inc. (NG:TSX; NG:NYSE.MKT) and Rainy River Resources performed in a similar fashion over similar timeframes.
The junior has about $3.5 million left in the kitty to end the year. However, there are $0.60 and $0.80 warrants outstanding worth a combined $10 million. If those were exercised, Golden Sky would have about $13.5 million to work with in 2022.
Technical analyst Clive Maund reported that he bought Golden Sky Thursday morning, after the drill results had reached the market, leading AUEN to break out of a holding pattern it had been fixed in since August (see the six-month chart below).
Maund's analysis: "Although it may initially seem disappointing that it lost most of its intraday gains by the close (November 18), with an apparently bearish 'shooting star' candlestick forming, the very high volume on this breakout suggests that it is genuine so the retreat later in the day and the deceptive drop in the accumulation line are thought to signal nothing more than overhanging supply kicking in from those who 'didn't get the memo' about the results and having been frustrated by the earlier non-performance sold onto the higher price, driving it back down."
Golden Sky's one-year chart from StockCharts.com suggests that there is more upside to come (see chart below).
Maund writes: "The one-year is interesting as it shows us that all of the action from the May spike higher until yesterday's breakout constituted the handle of a cup and handle base and yesterday it started to break out from this pattern."
"It has yet to clear the resistance at the top of the pattern, which is what brought it back down in the late trade yesterday, but the impressive volume suggests that it will soon proceed to do so, he asserts.
He adds: "Having bought yesterday morning (November 18) we therefore stay long and it is a buy on any dips and provided the price is not far above last night's close."
In 2020, Golden Sky's discovery hole at Bullseye intersected 1.34 g/t gold over 72 meters from just 4.5 meters below surface. The intercept included a 6.09-meter sweet spot grading 7.72 g/t gold.
The initial program used reverse-circulation drills that could not go any deeper. The 2021 drill program is the first to use drills with diamond drill bits.
Hole HS-21-02 was drilled to test the western extension of a gold-in-soil anomaly measuring about 600 meters by 400 meters outlined by Golden Sky in the Sure Bet zone. The anomaly marks the southwest end of a 1.6-kilometer gold-in-soil trend that extends to the northeast, where it remains open.
"These results are truly exciting, as they demonstrate that a near-surface, auriferous system exists on the Hotspot property," says Cameron Dorsey, Golden Sky's vice president of exploration.
In addition to Hotspot, Golden Sky also has the Bullseye and Luckystrike projects in Yukon.
The road to reach Newmont Corp.'s (NEM:NYSE) 5.1-million-ounce (5.1 Moz) Coffee gold project and Western Copper and Gold's Casino copper-gold porphyry project (5.72 Moz gold, 30.26 Moz silver, 3.58 billion pounds copper) runs next to Golden Sky's Luckystrike property – which hasn't seen any work yet.
Newell says he's considering spinning out Luckystrike and Bullseye into a new company, while keeping Hotspot, the Eagle Mountain gold project, which is in northern British Columbia's Cassiar district, and Rayfield, a copper-gold project in southern British Columbia, under the Golden Sky umbrella.
"That's what's going on in my head right now. I would like to consolidate that district," Newell says. "To move the needle for majors, you have to have a district and you have to have gold. That's what I'm working on in the background.”
Golden Sky trades in a 52-week range of $0.28 to $0.80 with roughly 19.2 million shares outstanding.
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