“Gold and Silver are money, everything else is credit”. The wise words once proclaimed by J.P. Morgan hold a heavy truth when reflecting on these past few years. Since the middle of 2019, the world has contributed to an uncanny surge in the price of gold, steadily rising roughly 63% from its bottom of $1270 on May 2, 2019 to an astounding $2070 on August 6, 2020. Many contributing factors can attest to this success, but plain sight narrows in on the focus of the profound funding of debt by the hands of governments, contesting a global crisis for which they have no spare capital. Predictably enough, with such uncertainty facing global economies, history shows that asylum can be found in precious metals for all who fear turbulent markets.
According to the 2020 CBGR survey, 20% of central banks intend to increase their gold reserves over the next 12 months, compared to just 8% of respondents in the 2019 survey. The increase is particularly notable as central bank buying has reached record levels in recent years, adding around 650 tonnes in 2019 alone. One nation well prepared to benefit from the outpouring support directed towards the shiny metal happens to be amongst the world’s biggest producers and have been for years, Australia. Predictions have been made that as of 2021, Australia will overtake China as the global leader for the highly sought after precious metal. Impeccably timed, none the less, as forecasts anticipate 2021 to be a record-breaking year for gold production at 4,962 tonnes.
Mining Down Under
Two of the world’s top mining companies call Australia home, a prominent nod to the successes of a nation and its massive reserves available. BHP Group (NYSE: BHP), with its headquarters located in Melbourne, boast an astronomical $158 billion market cap, and is among the world’s top producers of major commodities such as copper, iron ore, metallurgical coal, oil, energy coal and gas. Rio Tinto (NYSE: RIO) is also headquartered in Melbourne, and currently sits on its equally impressive $90 billion market cap valuation, specialized in producing a range of materials such as aluminum found in smartphones and cars, titanium found in household products, iron ore for steel, and copper for wind turbines. The largest gold mining company active in Australia is Newcrest Mining Limited (TSX: NCM) with a current market cap valuation of $21 billion. The company produced an amazing 76.4 tonnes of gold in 2018, 40% of which came from Australian mines.
Australia managed to produce a record 328 tonnes of gold for the 2019-2020 financial year, a record for any 12-month period worth roughly $25 billion at the time. The continents largest gold producing mines at the time were Newcrest’s very own Cadia Valley, producing 843,338 ounces, Newmont’s Boddington Mine with 673,000 ounces, Kirkland Lake’s Fosterville Mine with 664,191 ounces, Newmont’s Tanami Mine with 495,000 ounces and the AngloGold Ashanti and IGO Tropicana Mine joint venture producing 463,556 ounces.
The price to extract gold seems to hold an advantage as well, with Kirkland Lake’s Fosterville managing to achieve the lowest cost mine in the world. The Fosterville Mine managed to accomplish a 34% cost improvement in 2019 to bring its all-in sustaining cost (AISC) for gold down to a remarkable $291/oz. Notably, the Fosterville Mine can be found in the state of Victoria, who finds itself on the outside looking in at the top three most prolific regions for gold production down under. This title belongs to Western Australia, followed by New South Wales and Queensland. While Western Australia produces most of the country’s gold, the nation’s top-producing gold mine can be found where the first gold rush of Australia began, New South Wales.
New South Wales
New South Wales have been established as a prospective state for gold exploration and production since the 1850s. It is the second largest gold producer in Australia with a gold endowment exceeding 3160 tonnes. NSW hosts a diverse range of opportunities for the discovery and development of gold deposits where gold is produced as either the principal commodity or as a by-product. One prominent factor when considering exploration with hopes of mining in New South Wales is simply time. The NSW government exhibits a pro-mining mindset, with processes for exploration applications obtained within 45 days, whereas other states such as Victoria can take up to a year. There is no requirement to demonstrate financial capacity in NSW, and staking costs, refundable bond payments, and work commitments are minimal by Australian Standards. With such strong government support, it appears that the goal is to make NSW the number one state for new exploration and resources investment in Australia.
Cadia Valley holds recognition as Australia’s biggest mine, overtaking Western Australia’s Boddington Mine back in 2018 for the title. In the early 90’s Newcrest Mining discovered the Cadia Hill gold-copper porphyry deposit and in 1994 Cadia East was discovered. Cadia mine is comprised of a series of large underground and open-cut gold and copper mines, while Cadia East is an underground panel cave mine. For 2018-2019, Cadia Mine produced an astounding 912,778 troy ounces of gold, and when considering where the price of gold stands today, the value translates to almost $2 billion dollars.
Eager to find the next big mine, and with the prosperous New South Wales region in focus, JNC Resources Inc. (CSE: JNC) announced on December 8th its intention to acquire two large historically producing land packages from Southern Precious Minerals Limited, expanding its land holdings outside of the United States and into Australia, setting themselves up for long term success. Following in the footsteps of other successful Canadian junior miners such as Novo Resources (TSXV: NVO) discovery at Beaton’s Creek and Kirkland Lakes (TSX: KL) high grade Fosterville discovery, JNC is preparing to become the next value added mining stock of 2021.
JNC is a North American mining exploration company, with a goal of developing under-explored properties looking to benefit from deal flow generated by its strategic partnership and growth opportunities. For more information, visit their website at https://jncresources.com/
Malebo and Solomons
Malebo, the first of two properties to be acquired by JNC can be found in the central-south region of Australia in the Lachlan Orogenic belt, which covers roughly 159 square kilometers and contains a series of prolifically mineralized accretionary terranes which host several economically important mineralized deposits. Much of the mineralization is structurally controlled low sulphide in nature and manifesting as auriferous short, lenticular, blocky quartz veins hosted within oada sandstone units. A potential controlling factor of this mineralization may be the regional NNE/SSW striking Narriah Fault, which spans a 35 km strike across the application area. Mineralizing fluids are potentially related to regional metamorphism and/or granitic intrusive during the middle-late Silurian. The relationship between a regional structure juxtaposing moderate grade metamorphic rocks, gold-bearing quartz veins, and gold-arsenic-silver-minor lead geochemistry, is consistent with an orogenic gold target type.
These systems show the potential to have significant depth extension and considering Malebo has been largely under-explored due to a thin cover of recent sediments, historical reports show samples of high-grade deposits and reveals the potential for significant gold resources throughout several past mines and prospects, with compelling results that demand the need for further exploration.
- Prospectors Reef is a historic gold mine, associated with structurally controlled quartz veins, once reported head-grade bulk samples upwards of 31 g/t Au.
- Egans Prospect contains a series of shallow historic shafts, drives, pits and costeans. Samples collected in 1974 assayed up to 270 g/t Au, 3500 g/t As and 840 g/t Pb being typical of orogenic gold mineralization throughout the region. Visible gold has also been noted.
- Malebo Mine hosts several shallow exploration shafts. Samples collected in 1971 assayed up to 4.5 g/t Au and 71 g/t Ag.
Solomons, the second property to be acquired by JNC can be found in the north-east portion of the New England Orogenic Terrane region and covers roughly 139 square kilometers. This region contains island-arc and continental-arc gold-mineralized belts, occupied by broad alluvial gold fields and several economically important gold deposits. Mineralisation is of an orogenic quartz vein type. Such systems typically comprise high grade lodes with significant depth extension. The license includes 12 historic gold mines and prospects which follow a large linear NE/SE trend, yet the license is largely under-explored. Historical records from small-scale production indicate grades of up to 132 g/t Au and 1648 g/t Ag. The region continues to remain underexplored since the gold-rushes of the early 1900’s.
- Gumboot Reef contains a small, historic exploration adit that was driving into a gossanous zone with quartz veinlets. Historic grades of up to 64 g/t Au were reported.
- Solomons Mine consists of several shallow shafts. Historic assay of up to 132 g/t Au and 1648 g/t Ag cited. Mineralization is regarded as a vein type - possibly a low sulphidation epithermal.
- Dunbible Gold Mine comprises a single shaft which was sunk to a depth of almost 20 m. Historic assays of up to 13 g/t Au cited.
- Rixons Gold Mine hosts several shallow adits and shafts in an area of noted for reasonably sized gold nuggets. Further work required.
Noted exploration objectives for JNC will be to determine the application area and define precious and base metal targets that may be suitable for economic exploitation. The initial exploration activities will focus on assessing existing gold prospects noted via detailed geological mapping, followed by targeted drilling, with ambitions of defining a resource. In parallel, regional geophysical and geochemical assessments will be carried out to assess the tenement wide potential for detection of new targets across the underexplored Narriah fault. Field work will initially focus on field sampling of historic records and prospects, in tandem with extensive soil geochemical sampling, to swiftly identify and concentrate on the highest value drill targets.
Reviewing the historic strikes comprehends that gold is most definitely present in Malebo and Solomons, likely to be in substantial quantities. If high grades at any of the historic targets can be confirmed and expanded through the planned exploration efforts, JNC will surely find themselves lined with suitors ready to pounce on the opportunity to convert the properties into what could be the next big sequence of mines in Australia.
Value Added
Looking closer at the share structure, the company currently operates with a mere 20 million shares outstanding, with the float consisting of only 17 million shares based on insider holdings of roughly 15%. Not only does this allow for flexible share dilution to raise money for exploration, but with such a low float, any amount of positive feedback from its ongoing exploration efforts has the potential to escalate the market cap rapidly. The risk associated with investing in any gold explorer will always be imminent, but considerations towards developments such as JNC and its program seem to outweigh the disadvantages and offer a realistic expectation that the company has only one direction to go.
With 2020 drawing to conclusion, shareholders will eagerly be awaiting the announcement of what lies ahead for JNC and its newly acquired assets. With the assumptions of a robust 2021 on the horizon, JNC appears to be on the straight and narrow to provide intrinsic value to all who place confidence in its efforts. As investors we typically dream of uncovering such value plays, quietly accumulating on said speculations before patiently awaiting generational profits, of which JNC seems to have the realistic potential of fulfilling. While the current $14 million market cap seems underwhelming, when one considers the estimated increase to the price of gold in 2021 and the multitude of prosperous Australian exploration stories to date, the question remains for how long?
JNC Resources Inc. (CSE: JNC) last traded at $0.71
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