Tough equity markets for junior exploration companies has one potential gold producer pressing pause on its project in the Shebandowan area, west of Thunder Bay.
Management at Goldshore Resources believes there is enough gold in the ground for its Moss project to become a 200,000 to 300,000-ounce a year producer. But it’s a difficult slog to raise between $700 million and $800 million to develop an open-pit mine.
“This is a real project and this will get built into a mine one day,” said Richards in a recent web call to shareholders.
Richards feels the markets are not recognizing the scale, grade and mineral upside of the company's property, a 100 kilometres west of the city. Goldshore's share price has steadily tumbled from $1.20 a share in August 2020 to $0.15 this week.
With gold reaching all-time highs at more than US$2,100 an ounce, Richards said there’s a disconnect between the gold price environment and gold stocks, making it difficult to raise capital to develop the project.
The Vancouver company decided to halt intensive exploration work last November and is keeping activity at the site to a minimum.
The company has two deposits — Moss and East Coldstream — 13 kilometres apart on a 14,300-hectare property, with plenty of mineral upside. The deposits sit on a 35-kilometre long mineralized trend.
Goldshore Resources has filed an updated resource estimate, combining both deposits, that increases the indicated resource at Moss by 23 per cent and boosts the gold grade by 11 per cent over last year’s estimate.
The Moss contains 1.53 million ounces, grading at 1.23 grams per tonne of gold within almost 39 million tonnes of material. The inferred resource stands at 5.2 million ounces, grading 1.11 grams per tonne contained within 146.24 million tonnes.
The company has identified new zones and has mapped and sampled 36 targets on the property that offer opportunities for further discoveries.
Richards called Moss’ resource potential “substantial.”
Drill logs in the area go back to the 1800s and its North Coldstream prospect was once a historic copper and gold mine. They’ve also identified a handful of large base metal anomalies that they want to drill.
Richards said management has been doing some soul searching on whether to spend the money to drill off the rest of the property.
While the company said it’s comfortably cashed up for the next 24 months, it’s electing to go intconservation mode. Management is taking a salary reduction and they’re keeping their staff small. Richards is transitioning to interim CEO but is keeping his board seat.
The strategy, Richards said, is they “will let the market come to us,” in the hope of seeing better value for their shares.
Moss is in a past producing mining camp that has seen a resurgence in exploration in recent years.
Richards said infill drilling of the deposits and step-out drilling is in the cards at some point to move the project from a preliminary economic assessment stage toward a prefeasibility study, but he couldn’t put a date on it.
Like many optimists in the junior mining space, Richards predicts these are the “early stages of a really strong gold run,” a coming bull market that he believes will be the largest in his 37 years in the exploration business.
A recent news release said Goldshore plans to run a small drill program this summer on an outlying prospect on the property called Vanguard as part of an earn-in obligation with Thunder Gold.
