Comstock Metals Makes a New Discovery in the White Gold District.
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As the dog days of summer roll on there is a group of men and women working tirelessly to find new gold discoveries in the Northern reaches of Canada. As we’ve discussed in numerous past newsletters, the White Gold District remains the most exciting, emerging gold camp in Canada.
Volume on the TSX Venture and major exchanges picked up this week after the ECB basically guaranteed it will do whatever it takes to hold the EU together. With the Federal Reserve, ECB and Bank of England all meeting next week, it should give gold and precious metal equities a bump. As July gives way to August and investors begin to anticipate and prepare for a more robust and profitable fall period, we expect the Venture to build positive momentum.
Exploration companies continue to spend record amounts on project development; and although significant gold discoveries are being made, the economics behind each discovery will determine which companies are ultimately pursued by majors.
On Wednesday, July 25th, our client and Featured Gold Company, Comstock Metals, announced a discovery that exceeded many expectations.
Comstock M(CSL:TSXV)etals has returned 3.74 grams per tonne gold (g/t Au) over the entire 75 metre length of one of its most recent trenches at its QV Gold Project in the Yukon. The company also announced that “in comparison, initial trench results of Kinross Gold Corporation’s White Gold deposit, 15 km to the south of the QV, returned 1.3 g/t Au over 37.5 m from the Golden Saddle zone; initial trench results from the Coffee Project of Kaminak Gold Corporation included 2.3 g/t Au over 21.0m and 11.45 g/t Au over 5.0 m.”
Trenching is very significant for an exploration project as it taps into the bedrock and is a great indicator of mineral systems.
Comstock’s project (QV Project where the results were found) is adjacent to Kinross’ Golden Saddle Deposit in the heart of the White Gold District.
Our team first introduced Comstock Metals back in early May of this year at a price of $0.15 per share.
The stock exploded this past Wednesday, trading as high as $0.23 with several million shares trading hands. Unfortunately it closed Friday at $0.165 per share thanks to a late day sell-off. Given that the company is working on completing the second tranche of its latest financing, such a sell-off doesn’t come as a surprise. Nevertheless, the consolidation is a welcomed sight as the company’s latest results have clearly garnered a ton of new interest in its Yukon project.
We knew this summer’s exploration program in the Yukon would be pivotal for Comstock; and its President and CEO, Rasool Mohammad, has delivered. You may remember from our initial report on the company that Rasool had already made a name for himself by drilling 213.9 metres (m) of 1.63 g/t gold (g/t Au), starting at 11.70 metres depth, with another company he runs. Needless to say, that particular stock went up many times in value following the results.
Comstock was an obvious choice for our team as Rasool Mohammad has proven in the past, and continues to prove, he knows how to find gold.
Rasool has been working closely with Shawn Ryan, the famed ‘Prospector of the Year’ who was instrumental in the Golden Saddle and Coffee Deposit discoveries. Shawn and his crew have been working Comstock’s QV Project where the new discovery was made.
Volume has Spiked
After trading just 11,000 shares this past Monday and 59,400 shares on Tuesday, Comstock was suffering from the low volume days of summer like most other Venture stocks. However, that all changed on Wednesday morning as Comstock shares were promptly halted due to pending news.
Comstock announced that it had returned 3.74 grams per tonne gold (g/t Au) over the entire 75 metre length of Trench VZTR12-06. After this announcement was made public and Comstock shares resumed trading, investors rushed in.
Comstock shares took off as high as $0.23 (a 63% increase from the previous close) in early trading as 2.6 million shares traded hands on Wednesday. With that stated, Comstock closed only 3 cents higher for the day at $0.17 per share. This market is still very risk averse.
Often when increased liquidity hits such a market, investors who may have been holding for a while, with little chance to sell for a profit, have knee-jerk reactions and quickly hit the sell button.
Regardless, discoveries like Comstock’s are why we participate so heavily in the junior market.
Note: Nearly 6 million shares of Comstock were traded in the final three days of this past week.
Although Comstock’s share price has only marginally increased from our introduction price of $0.15 per share, it has executed on its game-plan despite the horrid market environment on the Venture.
Read the entire news release about Comstock’s new discovery in the Yukon by clicking here.
The numbers do not lie. It should be noted that from a geographical standpoint, the QV claims are similar in size to Golden Saddle (Kinross). There is much room to explore and potentially expand the current zone (discovered within QV claims) which is open in all directions. We included this video in our May report (regarding Comstock’s Yukon project) and the company is executing its plan to a tee. Have a listen by clicking on the image below.
Below is an excerpt from our initial introductory report on Comstock Metals:
“What our team found most interesting was the structure shown on the left side of the below photo. Comstock’s positive soil sampling and trenching appears to line up with the Golden Saddle discovery made by Underworld, which led to its buyout by Kinross.
Comstock plans on finding out if the trend continues with the first ever drill program planned for the project. The White Gold District continues to be at the epicentre for junior gold discoveries in Canada and will no doubt bring in the herds once again.
Additionally, the famed prospector, Shawn Ryan, is a technical advisor to Comstock, a large shareholder in the company and will be leading the planned soil sampling and first ever drill program. Being a few months ahead of this program was also critical to our introduction of Comstock Metals at this time.”
The above excerpt was written on May 6th 2012 – more than 2 months prior to Comstock’s new discovery.
It’s important to note that Comstock Metals QV claims (10,325 hectares or 25,514 acres), located 78 km south of Dawson City in Yukon Territory, were optioned from Yukon prospector Shawn Ryan in June 2010. Shawn Ryan was instrumental in the discovery of Kinross Gold’s Golden Saddle Deposit, which hosts 1.50 million ounces of gold in the 43-101 compliant resource categories, and he also helped Kaminak Gold in the discovery of their flagship Coffee Project in the Yukon. The QV claims are contiguous with the Kinross gold discovery claims.
Comstock has delivered on its scheduled development thus far and is planning a follow-up drill program on the QV Gold Project.
Comstock’s Strategic Location:
In recent months, Comstock announced the discovery of porphyry-style gold mineralization from its core drilling program at the Corona Project in Mexico and a follow-up drill program for late 2012 is planned. The company holds an option to earn up to a 75% interest in the Corona Project pursuant to an earn-in agreement.
The Corona Gold Project falls along trend with Fresnillo’s Orisyvo Gold Deposit. Orisyvo hosts a 9.2 million ounce gold deposit and is less than 15km away from the Corona Gold Project.
Click here to read our initial report on Comstock with additional information on the Corona Project.
For now, attention remains on the QV Gold Project and Comstock’s new discovery in the White Gold District of the Yukon. As the White Gold District continues to grow in notoriety and hundreds of millions of dollars are spent on exploration, we expect the investment community to continue to embrace this region. If gold makes a comeback this fall, as we expect it will, the White Gold District and the TSX Venture are going to come roaring back into the minds and portfolios of investors.
All the best with your investments,