We believe that we are in a new gold bull market, as evidenced by negative real and nominal interest rates and over US$5.5B in funds flowing into physical gold ETFs. Our view is that smaller companies outperform in a bull market. Three keys to look at when investing in junior gold equities include scarcity, catalysts and potential.
Brixton Metals Corp.
Brixton Metals Corporation (TSXV:BBB) is a precious metals exploration and development company focused on advancing its wholly-owned projects toward mine development. The company was listed in December of 2010. The Company is seeking JV partners for one of more of its projects.
We believe that a new bull market has started in gold. This along with investor interest, caused us to host a pair of gold conferences in New York and Toronto, last week. Each conference was opened by Derek Macpherson, VP Research at Red Cloud, highlighting why we believe we are in a new bull market, and 3 keys to investing in it (link). Followed by presentations from Tonogold Resources (OTC:TNGL), Brixton Metals (TSXV:BBB), Mawson Resources (TSX:MAW), Fiore Gold (TSXV:F), Minera Alamos (TSX:MAI), NxGold (TSXV:NXN), Gran Colombia Gold (TSX:GCM), Orford Mining (TSXV:ORM), Pacton Gold (TSXV:PAC), Aquila Resources (TSX:AQA) and RNC Minerals (TSX:RNX).
Brixton has announced results from the Thorn Project where it hit 555m at 1.97 g/t AuEq. We are particularly encouraged by the presence of mineralized porphyry clasts within the hole and evidence of multiple styles/pulses of mineralization. These results suggest Brixton is getting closer to a significant porphyry discovery at Thorn – more follow up drilling is required. Based on these results, we are incorporating Thorn in our valuation (previously zero value ascribed), increasing our fair value estimate to C$0.40/sh (was $0.28/sh), reflecting a 10% chance for a significant porphyry discovery.
Impact: Mildly Positive
Brixton announced the start of drilling at its Atlin project alongside results from its soil and rock sampling program completed in May 2019. We continue to believe that Atlin could be the next Barkerville, based on historic placer mining, high-grade drilling results and a district scale land package (1,004 km2). Brixton’s current drill program at Atlin should generate news flow throughout the summer.
Introducing our inaugural Exploration Preview, which focuses on names within our coverage universe with drill bit torque. We review the exploration potential and try and quantify the potential impact on the share price should the company be successful in delivering results. We believe that exceptional drill results can create value regardless of where we are in the commodity cycle. Our top ideas are highlighted in Figure 1 below and will be presented in a similar alphabetical order within this document, bifurcated for precious and base metals focus.
Brixton announced its intention to kick-off its 2019 exploration program with a 1,000m hole at its Thorn Project before shifting focus to Atlin. Our fair value estimate is C$0.28/share, underpinned by our belief that Atlin has the potential to deliver a significant gold discovery. We currently ascribe zero value for Thorn in our estimates, but work to date suggests the project could yield a copper-gold discovery.
Impact: Mildly Positive
Brixton continues to deliver drilling success in the Cobalt camp expanding a recently discovered high-grade silver-cobalt zone in addition to discovering a shallow kimberlite. We believe Brixton’s Atlin project has the potential to yield a significant gold discovery in 2019 and believe the current valuation is underpinned by its multiple prospective projects in North America.
Brixton’s Atlin project has the potential to deliver a major discovery and we are pricing that possibility into our numbers. Based on some exceptional historic results, this district scale land package has the potential to deliver a major gold discovery. Similar to the Barkerville gold project, it is a historic placer mining camp and Brixton has already started the work to unlock its hard rock potential. We believe it is important to highlight that Brixton has now started to focus on Atlin to assess its discovery potential.
News from the 11 drill holes at Brixton’s Hudson Bay project comes as an exciting step forward, compounding on the ongoing exploration success at the nearby Langis mine. The Hudson Bay project is located in the Cobalt Camp, where ~500 Moz Ag and ~50 Mlb Co have historically been produced. Results support our thesis that Brixton remains an undervalued explorer with multiple prospective assets in North America.