An initial drilling program is a nervous time for all concerned – mining company executives and investors alike.
Spectacular success could immediately launch the company. Spectacular failure could sink the ship.
SKRR Exploration (CAN:SKRR / US:SKKRF) just reported the assay results from its first drilling on the Company’s flagship Olson Gold Project. The results fall in between those two extremes.
SKRR intersects two intervals of significant gold mineralization
SKRR reported solid drill results from Olson. Gold mineralization includes the following intercepts.
-- 39.80 meters @ 1.09 g/t gold, including 7.62 meters @ 3.44 g/t, including 1.53 meters @ 13.80 g/t
(hole DDH OL20004)
-- 31.04 meters @ 0.51 g/t gold
(hole DDH OL20005)
-- 1.53 meters @ 13.5 g/t gold and 1.24 meters @ 1.14 g/t gold and 1.21 meters @ 2.54 g/t gold
(hole DDH OL20002)
Not a “home fun”, but definitely successful results (full results can be viewed in an Appendix immediately following this article).
This was shallow drilling. To conserve investor capital, management chose to restrict drilling on these holes to an average of ~150 meters depth (18 holes spread over 2,981 meters).
The significant gold intercepts in holes DDH OL20004 and DDH OL20005 (31.04 meters gold and 39.80 meters gold respectively) started virtually right at surface.
Even at lower grades, near-surface deposits of gold are commercially economical (with friendly metallurgy) via open pit mining. Open pit mining not only significantly reduces the cash costs to produce gold, it radically reduces the capital costs to construct a mining facility.
Also very encouraging were the indications of high-grade gold mineralization:
- 1.53 meters @ 13.80 g/t gold (DDH OL20004)
- 1.53 meters @ 13.5 g/t gold (DDH OL20002)
This is the prize that SKRR is really chasing with gold exploration on its collection of Northern Saskatchewan gold properties.
For mining investors new to SKRR, its five gold projects are all proximate to SSR Mining’s (US:SSRM / CAN:SSRM) lucrative, high-grade SeaBee Mining Complex.
SeaBee is a multi-million ounce gold mining operation producing gold at under US$500 per ounce, with head grades approaching 10 g/t gold.
SKRR’s gold exploration is led by two award-winning mining veterans: Chairman of the Board, Ross McElroy and Advisor to the Board, Ron Netolitzky. Both are intimately familiar with mining geology in Saskatchewan.
So even though this is greenstone exploration, it wasn’t a big surprise to see SKRR hit gold with several of its first drill targets.
Indeed, for investors who have been tempted by SKRR (but haven’t yet taken a position), these may be exactly the drill results you were looking for.
SKRR now an even more attractive investment
Why?
On the one hand, exploration risk at Olson is now significantly lower. “Spectacular failure” is off the table as an option. Investors know there is gold to be found on this property.
On the other hand, with gold mining stocks currently depressed, SKRR stock hasn’t moved that far (yet) off of these initial successful results.
SKRR is currently trading at CAD$0.30. That’s a ~20% gain from where it was trading before the drill results came out.
However, even with the gain, SKRR still has a market cap of only CAD$11.2 million. The stock could run a considerable distance still off of the results from these drillholes simply from improved sentiment for gold mining stocks.
As an added bonus for investors taking a position now, SKRR is just getting a second drilling program underway on its Leland Gold Project. More drill results to (potentially) move the stock.
Precious metals mining stock valuations are currently depressed across the board, despite the relatively robust prices for gold and silver.
That’s bad news (at present) for mining executives. But it’s good news for mining investors.
The same assets that investors were scooping up – eagerly – during the strong rally for these stocks in 2020 are now priced at a fraction of these previous levels.
Gold mining stocks are currently “on sale”
Mining investors have frequently heard that refrain in recent years. But with the price of gold currently at $1836 per oz (and up $266/oz year-over-year), getting these stocks on sale now offers excellent profit potential.
Operating gold mines are seeing surging cash flow and profits, but you would never know this based on the current price of most gold mining stocks.
Investors in most equities are currently terrified about the bottom falling out from under their bubble-priced stocks. In contrast, gold mining stocks represent an extremely strong value proposition.
That’s an archaic concept to the momentum-chasing traders in today’s markets. But to real investors, real value still means something.
Gold mining stocks are a grossly undervalued asset class as a whole. And within this asset class, SKRR is priced very attractively versus its peers – as it prepares to launch its second drilling program.
DISCLOSURE: The writer holds shares of SKRR Exploration. SKRR exploration is a client of Dynamic Wealth Research.
