Goldshore Resources Inc. (GSHR:TSX; GSHRF:OTC; 8X00:FSE) is accelerating the exploration of its 100%-owned Moss Lake project in northwest Ontario, increasing its number of drilling rigs from six to as many as 10 this summer as it continues to see promising results.
With a historical 4 Moz Au resource, the company believes its 100,000-meter drilling campaign can expand that to 10 Moz and Tier 1 status.
Analyst Paul O'Brien of Velocity Trade Capital also sees promise there. On April 22, Velocity initiated coverage on the company with an Outperform rating and a target of CA$0.85 per share, saying there was acquisition potential.
"We expect other large‐tier producers to take note of a Canadian‐based, large (multi‐Moz) Au deposit in a first‐class region with potential for hundreds of thousands of (ounces) annual gold production and multi‐decades mine life," O'Brien wrote.
Goldshore trades at a "deep discount" to its peers, but Velocity estimated that gap could shrink later in the year as more results are released.
"I think the trajectory of value that we're going to create for our shareholders is going to be much deeper than other gold mining companies or other gold equities, simply because the starting point, the valuation that we're seeing today, is quite depressed even compared to our peer group, let alone to our project economics," Goldshore Chief Executive Officer and Director Brett Richards told Streetwise Reports.
On May 5, Goldshore released assay results from hole MQD-22-014 showing 128.3 meters at 1.05 g/t Au from 121.3 meters. It said it found new high-grade gold mineralization open in all directions, including visible gold in a northern parallel structure. That drilling returned 16 meters at 5.31 g/t Au from 477 meters, the company said.
Exploring a Historic Property
Exploration at Moss Lake began in the 19th century. The company said 2.7 million tonnes was mined up until 1950, and there were drilling campaigns and geochemical/geophysical programs undertaken in the 1980s and 1990s. A preliminary economic assessment (PEA) was completed in 2013.
Goldshore went public in 2021 after a reverse takeover of the company formerly known as Sierra Madre Developments Inc. and acquired Moss Lake from Wesdome for CA$57 million. Wesdome continues to have a 22% stake in the company.
The property has 282 mining claims over a total area of more than 14,000 hectares, including gold and base metal-rich deposits occurring over a mineralized trend more than 20 kilometers in length.
Richards said the next steps for Moss Lake include the drilling program, a geophysical survey, metallurgical test work, a new PEA in Q1 2023, and preparing the project from an environmental, social, and governance standpoint.
To help pay for it all, the company has nearly CA$20 million in its treasury, thanks in part to a CA$10 million private placement closed in April. The offering was comprised of 6.46 million common share units at a price of CA$0.50 per unit, 9.62 million flow-through units at CA$0.60 per unit, and 1.4 million charity flow-through units at $0.71 per unit.
'Focus Remains on Gold'
However, O'Brien said Goldshore could benefit from help funding future exploration at the site.
"We estimate the Company to seek a JV partner, a cornerstone investor or option partner to reach various milestones … in exchange for equity ownership in Moss Lake (project level)," he wrote.
"It is very possible that we (joint venture) with a major in 12 to 24 months and gain more exposure to the upside than a simple transaction to sell the asset."
—Goldshore Chief Executive Officer and Director Brett Richards
Such a partner could participate in financings, provide annual funds for exploration, and "secure an initial 10% equity ownership in Goldshore or eventually monetize part of Wesdome's holding," the analyst said.
"It is very possible that we (joint venture) with a major in 12 to 24 months and gain more exposure to the upside than a simple transaction to sell the asset," company CEO Richards said.
And there's potential for more than just gold at Moss Lake. Goldshore said analysis of underground data returned assays in the range of 1% to 15% copper and 0.1% to 0.5% cobalt. Such high levels of cobalt had not been recognized there in the past.
"The focus remains on gold," Richards said. "We have some serious copper expressions on our northeast and southwest properties, and we'll drill them out. Some of them will have cobalt. … But that's a secondary priority for us."
Goldshore has 115.46 million shares outstanding, a market cap of CA$48.89 million and trades in a 52-week range of CA$0.98 and CA$0.39.
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1) Steve Sobek compiled this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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