Turmalina Metals Corp. (TSXV:TBX) is the next venture from the backers of K92 Mining Inc. (TSXV:KNT)
Capital Ideas Media | January 28, 2020 | SmallCapPower: Turmalina Metals Corp. (TSXV:TBX) is the next high grade, tightly structured venture from backers of K92 Mining Inc. (TSXV:KNT) – the hottest team in the junior gold sector, this according Keith Schaefer of Investing Whisperer.
(Originally published on Capital Ideas Media on December 17, 2019)
The stock price of K92 Mining has rocketed this year, up from 70 cents to $2.61 (nearly 400%) as their Kainantu Mine keeps churning out more and more gold at over 20g/t (half an ounce or better).
K92 MINING INC (TSXV:KNT) | 1YR CHART
Early investors in K92 have made as much as 15x their original investment. Turmalina Metals is their next venture – and it just listed.
And they already have a high grade discovery – in fact, their San Francisco project in Argentina may be the top of one of the highest-grade gold-copper tourmaline breccias ever discovered. (A breccia is a rock consisting of angular fragments cemented together.)
Super-high-grade gold results that are close to surface – 36.9 metres of 6.3 g/t gold and 122 g/t silver in one hole and 85 metres of 4.4 g/t gold and 109 g/t silver – were released at the IPO.
There are over 65 more breccias identified on their property – the nearest one only 200 metres away. That makes San Francisco look more like a district than a property.
A new 15-hole program will soon be underway – as well as work on breccias they’ve
already discovered.
They have packaged all this up in a tight share structure – with only 49 million shares out, the market cap of the company was just $25 million, and the enterprise value – where you subtract the cash in the kitty or add the debt – was only $18 million. K92 now has a market cap over $500 million.
Here’s the simple math on the potential that exists here at this early stage with Turmalina. K92 has 20x the market cap of Turmalina. Only 14 million of the shares are freely-tradeable.
Turmalina has a much tighter share structure than K92 did then – increasing leverage for investors.
In one sense, that’s all you need to know. But Turmalina has one of best creation stories of any junior mining company I’ve ever been involved with – and I’ve been doing this since 1991.
Three Worldly Geologists with One Focused Goal:
Find the Single Best South American Gold Project
Everything seems to happen so fast in the stock market. K92’s share price has soared higher and now this team has another gold venture ready to go.
In the real world though these things take a lot more time and effort.
Two years ago, a group of wealthy mining entrepreneurs including K92 Mining founder Bryan Slusarchuk tasked three of the top geologists on the planet with one goal: find the best advanced stage high-grade gold deposit in South America.
One of these men was Dr. Rohan Wolfe, now the CEO of Turmalina.
Wolfe helped discover the Merlin Molybdenum-rhenium deposit in Australia, but his real value-add for Turmalina comes from another part of his resume: he spent five years working for mining legend Robert Friedland scouring everything in the Americas. He spent up to 200 days a year on the road, as Friedland’s Gold Hunter in South America.
As Wolfe began his search, he kept running into one man: Chico Azevedo. Chico had a very similar resume: he had spent 35 years looking for gold deposits in South America, the last six years in the same “Gold Hunter” role for South African mining giant Gold Fields.
Wolfe recruited Azevedo. Between them they had seen almost every gold asset in South America there was to see – or so they thought.
After two full years of searching through hundreds of projects the geologists found two high grade, massively under-explored, drill ready projects.
They got their next round of funding, and they’re now public – and the drill has been turning and producing some ultra high grade gold results already.
San Francisco de Los Andes
High Grade and Low Capex Potential
Asset #1 – where the very high grade drill results came from – is called San Francisco de Los Andes.
San Francisco has been privately owned for decades. It has never been exploited with modern mining techniques.
It’s high grade; in fact it is one of the highest-grade tourmaline breccias ever discovered.
The private owner of the property mined it off and on for decades, but only at the surface level – but the really big prize is much deeper.
The target shape of the San Francisco deposit is like an inverted carrot. The Turmalina team believes that the deeper you go the wider it gets and not just wider, but also higher grade.
Turmalina has found that at 50 meters the deposit is already twice of what it is at the surface.
The team has been drilling at San Francisco and the early results are spectacular. Drilling will quickly re-start, and if experience is any guide, those results will be a major catalyst for the stock in the coming weeks and months.
This is exactly how K92’s share price was driven up over 500% in the last 18 months.
Long term the regional exploration upside around San Francisco is huge. The property has been massively under-explored. San Francisco is just 1 of more than 60 breccias that are in the JV area.
San Francisco is a perfect project for a junior gold miner. It isn’t at altitude, it is in a mining-friendly region with infrastructure (home to 12 operating mines, five in construction) and labour and carries no political risk.
Most importantly it is a very high grade, potentially low capex target.
The second asset, which is called Turmalina, is similar in many ways and is the same geological model. While all of the attention right now is on San Francisco – and rightfully so given the great start there – this second project could also potentially add some additional sizzle down the road.
The Market Wants This Type of Stock
Turmalina Metals is exactly the kind of stock that investors want to own in this sector right now.
The market loves the K92 team. The market loves high-grade assets especially now at the start of a bull market in gold.
This is when investors and institutions are just coming back into the sector. They don’t want bloated share structures and old stories. New money in the sector will focus on proven financial backers with fresh assets and high grade.
That is why K92 Mining turned into a five-bagger in 18 months.
Management and directors are loaded with shares, just as they were with K92 where they have been richly rewarded because of it.
It could happen fast, but if Turmalina Metals turn into an overnight success, it will have been two long hard years in the making.
I think this dream team can make Turmalina a second major success for them and shareholders –just getting it to the same market cap as K92 over time makes it a 20-bagger from here.
Keith Schaefer says he has 82,500 shares at 54 cents and he’s buying more.
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Disclosure: Neither the author nor his family own shares in any of the companies mentioned above.
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