Barry FitzGerald: Gold may be down but the fun continues for Riversgold in Alaska
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Barry FitzGerald writes his legendary Garimpeiro resources column weekly for Stockhead
A $US40 per ounce decline in the gold price in the last 30 days has taken the shine off the local gold sector.
It doesn’t matter that the gold producers remain extremely profitable, as the recent crop of June quarter reports demonstrated.
That’s because it’s the US dollar price that matters to investor sentiment, and presently at least, sentiment in the sector has taken a big hit.
But there is still fun to be had among the lightly capitalised junior explorers whose share price leverage to a decent discovery remains independent of daily gold price gyrations in response to the latest tweet from Donald Trump.
A big bunch of juniors will be heading to Kalgoorlie early next month in the annual jostle for investor and industry attention at the Diggers & Dealers bash. And their exploration blue sky will again be their main sales pitch.
There will be a notable absence this year — well-known exploration geologist and former brewer Allan Kelly, managing director of last October’s multi-country gold exploration float, Riversgold (ASX:RGL).
That’s because Kelly is making his way to south-west Alaska’s Kuskokwim Mountains to oversee Riversgold’s 2018 exploration field season in the group’s hunt for a multi-million ounce gold deposit in the prolific Tintina gold belt.
There can be no delay in getting over there because the field season for explorers in that frigid part of the world only runs from June through to early October.
Riversgold’s Tintina interests were the key interest in its initial public offering last October.
But because the weather had well and truly closed in by the time the IPO got away — raising $6.1m at 20c a share in addition to a $2.5m cornerstone investment by Evolution Mining — getting onto the ground in Alaska had to wait until now.
It could well be worth the wait given the size of the prize Riversgold is chasing, and the fact that it is currently trading at 14c a share, a “discount’’ to the IPO price and valuing the company at $12 million.
Riversgold has three 100 per cent owned projects in south-west Alaska (Luna/Quicksilver, Kisa and Gemuk) with the common theme of being prospective for large intrusion-related gold (IRG) deposits, a deposit style that put the Tintina belt on the map as one of the world’s major gold provinces.
The region is home to the giant 45 million ounce Donlin Creek gold deposit — owned by Canada’s Barrick and Novagold — about 150km to the north of Riversgold’s area of interest.
Donlin is in the permitting phase for a project development capable of more than 1 million oz of annual production.
Riversgold’s Alaskan projects are in their infancy but Kelly knows them well as he was kicking their rocks as far back as 1997 when he was a young field geologist for WMC Resources (now part of BHP).
Donlin was known as “only’’ a 2 million oz find back then.
Kelly recalls finding visible gold when sampling the rocks at Quicksilver. While it was interesting stuff, WMC pulled out shortly after.
But Kelly didn’t forget and the ground was pegged years later for eventual inclusion in the Riversgold IPO.
There is a 5km prospective zone between the Quicksilver prospect where sampling of the outcropping material returned rock chip samples grading 37.5g/t gold, and the Luna target which has returned 64.7g/t gold.
Before heading off to Alaska, Kelly made the point to Garimpeiro that as Donlin’s 45m oz are pretty much contained within a 2km zone, there was definitely enough room for a multi-million deposit at Luna/Quicksilver.
The proof of that will be in Luna/Quicksilver being tested by the drill bit.
They use portable drilling rigs mounted on helicopters in that part of the world. Riversgold plans to have one on site soon and will then get busy drilling various Luna/Quicksilver targets for the first time.