Emgold Mining Corporation (TSXV:EMR) and a subsidiary of Rio Tinto are chasing what could be a giant copper porphyry target
Keith Schaefer, Investing Whisperer | April 22, 2021 | SmallCapPower: One of the greatest horse traders of all time may see his dream come true in the next five weeks. Dave Watkinson, CEO of Emgold Mining Corporation (TSXV:EMR) has kept shareholders in the game over the last few years by doing property deals that generated millions in non-dilutive capital.
And his best deal—by far—is being drilled right now by Kennecott Exploration, a subsidiary of one of the largest mining companies in the world—Rio Tinto. Emgold’s stock—now just $0.07—bears watching as the results come in.
The Rio Tinto subsidiary is drilling Emgold’s New York Canyon property in the prolific Walker Lane Trend of western Nevada. But Emgold and Kenecott/Rio Tinto are doing something a little different—they’re chasing what could be a giant copper porphyry target, not the standard gold play typically sought in these parts.
Porphyries are the most exciting type of geology to drill because they are HUGE and uniform—which means that if you hit a winner, you are likely to find the same geology over a very large area. That’s why one drill hole can create tens to hundreds of millions of dollars of value—which of course, sends penny stocks soaring.
It’s exactly the opposite of a high grade underground gold vein system or low-grade open pit gold heap leach system that juniors normally chase here.
We all know the odds in plays like this—but Kennecott/Rio Tinto likes what they see at New York Canyon to commit to spending up to US$22.5 million to earn up to a 75% interest in the property.
Drills mobilized on March 22—so drilling is well underway now. There is an opportunity to invest in this little known gem right now, given that its value could soar with successful drilling results.
If this drill program hits, the story of how Watkinson got this property will go down as a Legend.
Watkinson has kept a database of properties in Nevada for years, specializing in assets right beside former mines or assets that sometime become available in a down market. Nevada is consistently at or near the top of best jurisdiction for mining investment.
When the CEO of another junior gold explorer unfortunately passed away, its new CEO wanted to divest of its U.S. assets, and New York Canyon became available.
Whether you call it luck or skill or diligence or experience—or just being in the right place at the right time—Watkinson was not only able to acquire New York Canyon for C$50,000 in cash and C$500,000 in Emgold shares (about US$425,000), he was able to flip it to Kennecott/Rio Tinto for US$22.5 million in exploration commitments before the ink was dry on him acquiring it.
Kennecott/Rio Tinto ended up paying some of Emgold’s acquisition costs for the property as part of their transaction.
For those of you who are not math geeks, that’s a 50x return, or 5,000 per cent! I wish my stocks had the same percentage wins as Watkinson’s property deals!
New York Canyon has actually had a lot of work done on it over the last 50 years—over 42,000 meters of drilling—but nobody with any real money has gone after the Copper Queen porphyry target there since the 1970s.
By far, the most interesting historical hole on the property that shows the copper-moly potential is MN-42, which intersected 1,020 ft of 0.41% Cu, 0.012% Mo, 4.5ppm Ag, and 0.1 ppm Au from 560 ft to 1,580 ft at the Copper Queen prospect (true width unknown). It was drilled by Conoco in 1977—so I have to tell you it was done before there was NI 43-101 Standards of Disclosure or CIM Standards.
When you come up with 1,000 feet of very good (excellent?) mineralization like that, you want to follow that up with modern exploration. Kennecott/Rio Tinto have the budget to do that.
Going back decades, Conoco drilled the Copper Queen deposit and estimated an internal (this is non-NI 43-101 folks!!) 142 Mt inferred resource grading 0.35% Cu, 0.015% Mo, 0.1% Zn, 4 ppm Ag, and 0.1 ppm Au.
The prior operator, a junior that Emgold bought the property from, was focused on exploring for a small, open pit heap leachable oxide copper skarn deposit called Longshot Ridge that they could use SX/EW technology on. They did complete an NI 43-101 Technical Report with an indicated resource of 16.3 Mt at 0.43% Cu and a inferred resource of 2.9 Mt of 031% Cu at Longshot Ridge. Emgold’s geologists also treat this estimate as historic and have not verified it according to NI 43-101 Standards of Disclosure or CIM Standards.
Kennecott/Rio Tinto are looking for The Big Kahuna—a deeper porphyry system Copper Queen that may also be the source of the oxide skarn mineralization at Longshot Ridge and other known targets on the property. And hole MN-42 is a great sign that something is down there.
Watkinson says: “The potential is that there is a deeper porphyry system that’s associated with near-surface skarn mineralization at New York Canyon. Skarn-type deposits are formed in a similar process to porphyry deposits.
“Skarns often develop due to replacement, alternation, or contact metasomatism (compositional changes associated with chemical reactions to fluids) of surrounding country rocks adjacent an intrusive body.”
“In the case of Longshot Ridge, the skarn is found closer to surface where mineralized fluids bled into the permeable sedimentary limestone rocks adjacent to felsic intrusive rocks. Kennecott/Rio Tinto is looking for the potential source of the skarn mineralization, believed to be a large porphyry system at depth. They’re looking more for a hundred-million-ton-plus combined porphyry/skarn system”.
“They plan to twin MN-42, drilled in 1977, with one their holes. Results should be exciting if they compare with historic assays. They’re going to put a hole into a geophysical target that’s never been drilled called Ideal. In addition, they plan several holes in the Longshot Ridge area”.
Watkinson said, in his opinion, there was a period of time where companies typically drilled off 100-200 Mt porphyry systems. But then, in the last 20 years, they were exploring to try to find billion-ton systems. Now they appear to be moving back to the smaller 100-200 Mt deposits because the capital cost to develop these billion-ton deposits became prohibitive.
New York Canyon will ultimately have to achieve both the size and grade to make it attractive for a major like Kennecott/Rio Tinto to continue moving on with. The grade in several historical holes that would be typical of grades found in porphyry systems that are being mined today. So, the question becomes what’s the size of it, right?
Emgold shareholders get a free ride here—again. This is what Watkinson does. The numbers will be in shortly, and with copper up at five-year highs, success has a good chance to be rewarded.
Copper prices are expected to rise as the Covid-19 pandemic ends and China’s economic plants—and US President Biden’s plan to electrify all federal vehicle fleets—lead to increased copper demand. Cleantech = copper. Hopefully Emgold becomes the Copper Queen.
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