Fosterville South Exploration Ltd. (TSXV:FSX) has a huge land package that has high-grade historical production
Keith Schaefer, Investing Whisperer | May 11, 2020 | SmallCapPower: Fosterville South Exploration Ltd. (TSXV:FSX) is the newly-listed junior that owns the ground:
1) Due south
2) on the same fault
3) with the same geochemical and geological signatures as the highest grade, lowest cost mine in the world today – Kirkland Lake Gold Ltd. (TSX:KL) (NYSE:KL) Gold Mine–in south-central Australia.
(The following article was originally published on investingwhisperer.com on May 1, 2020)
Fosterville Gold Mine–in south-central Australia.
It’s a huge land package — totalling almost 1,400 km2 — that has high-grade historical production on it, and is only a couple hours from Melbourne.
There is a large amount of high-grade historical work, and Fosterville South’s recent work has shown a couple of geochemical anomalies 3-5 km long.
In particular, the Lauriston property, due south of Fosterville, is a potential flagship asset for Fosterville South.
The Fosterville Gold Mine was the engine that took Kirkland Lake from $1.62 – $62 in four years — a 40 bagger. FSX is a long way from $62 of course, and is now trading …hey, close to $1.62!
I’ll explain below the great geological detective work that local prospector and geologist Rex Motton did to stake this incredible land package — early. VERY early. He grew up there and spent his teenage years before becoming a geologist, prospecting within the belt
As the potential of the ultra-high-grade Swan Zone became apparent, he quickly reverse-engineered the geology that led Kirkland Lake to this incredible discovery.
And he then rushed out to stake just under 1,400 km2 of ground — much of it due south of the mine along the same fault structures as Fosterville —before the rest of the geological & investment community knew what the Swan Zone would do for Kirkland Lake’s stock. This was early in 2017.
Now the Aussie geologist has partnered with some of the management team behind K92 Mining (hottest management group in the business) and some very well-known and uber-successful mining titans to bring Fosterville South – FSX-TSXV — to the public markets.
How To Catch A Swan
When Kirkland Lake acquired the Fosterville Gold Mine, it was not a big deal — with just 244koz of gold reserves grading 7.0 g/t.
In fact, the geology at Fosterville starts off with low grade (1 g/t) oxide mineralization at surface — perfect for a low-cost heap-leach operation that can generate cash flow quickly.
As you get below 40 metres though, the geology turns to sulphides and gets higher grade — 3-10 g/t. And for most of its modern existence Fosterville was a small mine producing 100-130koz/year at moderate grades of 3-6 g/t.
After Kirkland Lake bought the mine in 2016, they drilled deeper (into what is known as the Phoenix Zone) the results improved, still with disseminated gold in sulfides but at higher grades. The Phoenix Zone was just a taste of what to come.
Kirkland Lake continued down — 1,200 to 1,400 feet. That is where they hit the motherlode… where they caught the Swan… quartz veins that had bonanza grades.
Here are the gold grades reported in this press release from Kirkland Lake in 2018:
289 g/t over 6.0 metres Estimated True Width (ETW)155 g/t over 9.9 metres ETW423 g/t over 3.2 metres ETW215 g/t over 5.9 metres ETW
Imagine what any of these dream-like holes would do for an exploration stock trading under $2?
But there was no gold rush — perhaps because Fosterville South’s Rex Motton had quickly staked all of the key land rights as this super high-grade news broke, and before North American investors really understood what was about to happen. All that ground is now in Fosterville South FSX.
There has always been gold in this region. Now we know there is even more gold further down. But with the stock just listed a few days ago, this is ground floor opportunity for Fosterville South shareholders today.
Now Fosterville South Is Going Swan Hunting
The name says it all, obviously. Fosterville South’s land package is located directly to the south of Kirkland Lake’s Fosterville Gold Mine. But it isn’t just the “closeology” to the Fosterville Gold Mine that has the smart money so excited.
It is the geology.
Rex Motton knew how important the edge of Selwyn Block is — it runs directly through the Fosterville Gold Mine in the north and down directly through Fosterville South’s claim further south.
Motton and the Fosterville South team will hunt for more Swans along this edge, called the Selwyn Margin. All of the targets at Lauriston have the same indicator minerals (antimony and stibnite) — that led Kirkland Lake to the Swan Zone .
Now look at the map further below.
Previous drilling on the Selwyn Margin here has already come up with VERY high gold grades near surface. There is actually historical production reported on Lauriston at 20/gt, or half ounce material.
This is not a grassroots property, but it has a grassroots valuation! Historic drilling here shows double digit grades and nobody has ever taken the drilling deeper like Kirkland did to find where the Swan Zone is.
Thanks to Kirkland Lake, the geology here is now more fully understood.
Between location, geology, tight share structure (i.e. low market cap), specialty mining funds rushed to participate in Fosterville South’s financing.
This isn’t Smart Money… it’s THE Smartest Money… institutional funds that are run by geologists, engineers and technical types.
Fosterville South has a huge land package and being beside and on trend to Kirkland’s Fosterville Gold Mine is appealing….
.. But the true excitement from the smart money is because FSX appears to have the right type of rock. The showings here are big regional structures, the gold is disseminated exactly as a geologist wants to see it, and the rocks are the right age.
As Rex says himself: “The signature’s right, the structural setting’s right, the rocks are right. Without actually getting out there and drilling it, everything else says we’re in the right spot.”
I’ve had two long interviews with Rex, but I don’t want to make this story too long or complicated. In future stories, I’ll explain Rex’s thinking on his other key assets, and how he hooked up with some of the key people from the K92 Mining team.
The key point being that you can potentially find a bevy of Swan Zones in the geological structure that Fosterville South has. For Fosterville South shareholders all it is going to take is one Swan to turn this stock into the next Kirkland Lake.
DISCLOSURE: I am long Fosterville South.
Although opinions expressed are my own, this article was reviewed, issued on behalf of and sponsored by Fosterville South. Fosterville South paid for the dissemination of this article. Further information about the projects, including some of the key risks and assumptions can be found on SEDAR.com including within the 43-101 document. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.
Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.
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