The next year will be critical for junior explorer Western Exploration Inc. (WEX:TSX.V;WEXPF:OTC) as it looks to expand the resources on its 6,000-hectare Aura gold project in northern Nevada.
The company said 2,000 meters of drilling is underway at the project’s Doby George deposit, where it is looking to finish a preliminary feasibility study next year on a 5,000 to 7,000 tonnes per day (tpd) open pit heap leach mine.
With backing from the likes of Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), it also plans to drill in 2023 on its new Gravel Creek discovery, with a preliminary economic assessment to follow in 2024.
The hope is to expand Aura’s resource of more than 1 million ounces gold (Moz Au) and more than 10 Moz silver (Ag).
“It’s an interesting prospect right now,” U.S. Global Investors portfolio manager Ralph Aldis said.
But the largest investor in the company, at 66%, is Golkonda LLC. The family investment vehicle’s managing partner, Marceau Schlumberger, told Streetwise Reports that it’s the quality of those mineral assets and the experienced leadership at Western, which was formed in 1997 but only went public last January, that attracted such heavy hitters.
“It's not just a financial investment play by guys like us at Golkonda,” Schlumberger said. “It's also a strategic asset for one of the top five majors (Agnico Eagle) in the world.”
It was Gravel Creek that caught the attention of U.S. Global Investors portfolio manager Ralph Aldis. Samples show high-grade underground sulfides in the deposit of 245,000 ounces at 5.81 grams per tonne Au equivalent (g/t Au Eq) indicated and 443,000 ounces at 5.02 g/t Au Eq equivalent inferred.
U.S. Global owns stock in the company and has been following it for 20 years, he said.
“It’s an interesting prospect right now,” Aldis said.
The goal is to grow the resource at Aura, which is made up of the Doby George, Wood Gulch, and Gravel Creek deposits. It's 100% owned by Western and is about 32 kilometers north of the Jerritt Canyon Mine, in operation since 1981.
Precious metals mineralization at Aura was initially discovered at the Doby George prospect in the 1960s, but it wasn’t until the 1980s that Homestake Mining Co. discovered the Wood Gulch deposit. It produced about 646,000 tons at 2.87 g/t Au and 3.1 g/t Silver (Ag), with recoveries of 65% Au and 30% Ag.
“They said this is a new discovery in a highly prospective area where no other majors currently have an interest,” Marud said. “So, they’ve invested about US$14 million in our company since 2017.”
More than 1,200 drill holes have been completed on the Aura project totaling more than 200,000 meters. At Doby George, 827 drill holes were completed for a total of 115,217 meters, of which Western completed 74 drill holes for a total of 22,642 meters.
Doby George is the westernmost deposit. It’s an “open pit at surface deposit that’s open pit heap leachable, one of the highest grade undeveloped, open-pit deposits in Nevada,” Western’s Chief Executive Officer Darcy Marud told Streetwise Reports.
Drill results from Doby George are expected to come in this fall, Marud said.
Gravel Creek is a newer discovery with five exploration targets within 2.5 kilometers of the current resource estimate over a true width of 20 meters. Western discovered Gravel Creek in 2013 based on geologic similarities to the Wood Gulch mine. The company has completed over 80 drill holes at Gravel Creek and several metallurgical studies. Western said the mineralization is amenable to bulk underground mining.
'Not an Infinite Commodity'
The discovery at Gravel Creek is why Agnico, which owns 18% of the company, invested in Western, Marud said.
“They said this is a new discovery in a highly prospective area where no other majors currently have an interest,” he said. “So, they’ve invested about US$14 million in our company since 2017.”
Marud said they also receive technical support from the major.
Western hopes to connect the Gravel Creek and Wood Gulch deposits, creating a “much larger footprint” with 2 to 5 Moz Au.
According to Marud, the area is an under-explored area of Nevada, which with 5.58 Moz, hosted 84% of U.S. gold production in 2019. The state has historical production of more than 185 Moz.
But investors need to realize that precious metals are not an infinite commodity, he said. They may be volatile in the markets right now, but they are always a good long-term option.
“I think gold and silver are always seen as a safe haven around the world,” Marud said.
Schlumberger said it’s a good market to protect your net worth.
“We have a very uncertain global environment,” he said. “People are highly exposed right now . . . Gold is an extremely important part of your portfolio to protect against destruction of value.”
Ownership and Share Structure
Golkonda LLC, a syndicate of dozens of high-net-worth investors, owns about 66% of the company. Management and directors own about 2.8%, and other institutions own about 5.6%, the company said.
Western Exploration has a market cap of CA$34.35 million and has about 30.7 million shares outstanding, 10.4 million of them free floating. It trades in a 52-week range of CA$2.55 and CA$0.98.
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1) Steve Sobek wrote 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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