Genesis Metals; Drilling a Catalyst for Cheap #gold Junior

The following interview of President & Director Jeff Sundar of Genesis Metals (TSX-V: GIS) / (OTCQB: GGISF) was conducted by phone and email from September 28th-October 3rd.  I’ve posted 3 high-quality guest posts on Genesis since February, 2 by Brian Leni, P. Eng of Junior Stock Review, and 1 by Jay Taylor. 

Brian Leni, P. Eng, in July 

Jay Taylor, in April

Brian Leni, P. Eng, in February

I’ve spoken with both Jeff and Chairman CEO Brian Groves many times.  I reman impressed with the Company’s business plan, management & technical team, exploration program and shareholder base.  Without further introduction, here’s the interview of Jeff Sundar.   

Please describe Genesis Metals for readers unfamiliar with the Company.

Genesis Metals (TSX-V: GIS) / (OTC: GGISF) is a junior gold exploration company that is advancing the Chevrier Gold deposit in Quebec, Canada.  The foundation of Genesis was built on our proven technical team.  The Company has an excellent group of exploration professionals that have a track record of discovery with both majors & juniors.  We recently completed a $4 M institutional financing with name brand investors in the gold (“Au“) sector. 

Our main project is located near Chibougamau, Quebec along the Fancamp Deformation Zone, 15 km northeast of the high-grade Monster Lake gold discovery, and 15 km northwest of the past-producing Joe Mann gold mine.

We are funded for a 10,000 m drill program (50 holes), which is well underway.  Note:  {On October 3rd the Company released results on a successful twinned hole, and 8 additional holes}

What makes Quebec a world-class mining jurisdiction? 

From a jurisdictional standpoint, it doesn’t get much better than Quebec when it comes to mining investment attractiveness.  The Fraser Institute recently ranked Quebec 3rd in Canada and 6th in the world.  The long history of mining in Quebec means that most regions of the belt are quite accessible, relatively near infrastructure such as highways, rail & power.  Not to mention a skilled labour force. 

Another key aspect is that many First Nation / native land claims have been settled in Quebec (unlike other provinces in Canada).  For example, the Cree First Nation near Chibougamau has seen many mining projects developed responsibly.

What’s so special about the Abitibi Greenstone Belt?

To give the readers a broader context, the Chevrier deposit is located in the prolific Abitibi Greenstone Belt (“AGB“) located across the provinces of Ontario & Quebec.  Having produced over 170 M ounces of gold, the AGB ranks in the top 3 or 4 regions of the world for gold production.  

The old adage still rings true, that the best place to look for new mines is close to existing ones.  We are witnessing a resurgence of exploration in the AGB as lower production grades are becoming economic due to improved operating efficiencies.  This is perhaps most obvious when we look at the number of large open pit mines that are being developed compared to traditional underground mines.  Open pits can operate profitably at much lower grades than underground deposits.

Please describe your flagship asset, the Chevrier gold project.

As mentioned, our large (120 sq. km), 100% owned, Chevrier deposit is located about 30 minutes south of the town of Chibougamau in the Chibougamau Mining District, which has produced nearly 7 M ounces Au.  IAM Gold has commited to spend $17 M to earn 70% of the Monster Lake gold discovery just 15 km southwest of us. 

Historic work at Chevrier returned thick intersections of gold and high-grade intervals both at surface and at depth.  Strike length of the Main Zone is continuous along a strike length of about 1.2 km.  It has a current NI 43-101 resource of 4.5 M tonnes at about 2 g/t, equal to 295,000 oz (Metchem 2010 NI 43-101 Report) and the South Zone has a ‘target potential’ of between 8.5 – 9.0 M tonnes, grading 1.8 to 2.2 g/t Au.  

On October 3rd you announced drill results and the discovery of a new zone of mineralization.  How important is this news?  

We’re excited by the results of trenching and a twinned hole that we reported today from Phase 1 drilling at Chevrier.  We plan to complete a total of 50 holes in 2 phases.  The twinned hole drilled near the southwestern margin of the Main  Zone, returned 2.94 g/t Au over a true width of 37.4 m (starting at 74.6 m down hole) including 14 g/t Au over a true width of 4.1 m.  

Importantly, this twinned hole, which is better than the historical one drilled by Geonova in 2002, confirms the tenor of mineralization at the Main zone

We also are pleased with channel sampling within Trench 29, located to evaluate the source of an Induced Polarization (“IP“) geophysical anomaly has identified a new area of gold mineralization that returned 2.55 g/t Au over 2.3 m.  This new discovery is 5 km north of the Main Zone in the northeastern part of the property, demonstrating that there’s potential to for new discoveries away from the Main & South Zones.

The Chevrier project is currently made up of two zones, the Main & South zones. Please explain.

Our team looked at this project in late 2015 during the depths of the bear market.  After our due diligence was completed, we believed there was potential for a much bigger deposit than stated in the 2010 43-101 technical report.  To prove this possibility, we needed to firstly understand what controlled the gold mineralization – what type of rocks, type of alteration, etc.  We then could work towards more efficiently targeting areas for expansion of gold mineralization.

If you read page 19 of the report you see multiple historical calculations that are larger than the number of ounces stated in the report.  The report also suggests that the South Zone could contain 8-9 M tonnes of 1.8 to 2.2 grams gold.  If true, that would be roughly twice the size or tonnage of the Main Zone as it currently stands.

So, if you add it up, we may already be there between these two zones, we may already have a fairly significant gold resource.  

Over the next 12 months we would like to bring both zones into an updated 43-101 resource.  It should be emphasized that the historic core was selectively sampled & assayed.  It may seem surprising to readers, but in the 1990’s and even into the early 2000’s, companies would drill holes, but only assay limited sections of core.  We are re-sampling the historic core to see if opportunities may have been overlooked.

Sprott & Osisko could have invested in Genesis at an earlier or later stage of exploration, why did they choose to invest in June?

In June we closed a $4 million dollar institutional financing that included Eric Sprott, Osisko Mining and Quebec Government sponsored funds SIDEX & SDBJ.  I believe these parties see the potential we have at the Chevrier deposits.  I also think this is validation of the jurisdiction and our technical team.

Every company claims to have a very good, or excellent management, Board & technical team.  How does your overall team stand out?

Firstly, Brian Groves is our CEO.  He was the former Manager of Corporate Development of Placer Dome in Canada and had worked in senior management in other major mining companies. ….so he is very familiar with the type of projects that a major mining company would be looking for.

Andre Liboiron is the Exploration Manager for Chevrier.  Andrew is a Quebec native with more than 26 years’ experience as a geologist in Quebec, as well as internationally.

The company was founded by star geologists, Adrian Fleming and Rob McLeod. Rob as your readers may know, is the CEO of IDM Mining and Adrian Fleming was the former VP Exploration for Placer Dome, Golden Star and Miramar.

I should also mention John Florek is a Director and co-founder.  John was the Senior Geologist for Barrick Gold at the famous 30 M ounce Hemlo Gold deposit in Ontario.  John was also the Senior District Exploration Geologist for Placer Dome in Red Lake.

Genesis recently completed a phase 1 program of 26 drill holes (4,875 m), plus 24 trenches.  What were the primary goals?

Our goals were to test 3 IP geophysical anomalies and to start the drilling into the Main Zone for confirmation and possible expansion purposes.  50% of the holes were directed at the Main Zone.

How will phase 2 (5,000 m of drilling to begin in 2h of September) differ from phase 1?

We will be evaluating the East Zone which we believe has very good potential.  We mentioned earlier that previous assaying of historic core was very selective.  This selectivity is even more profound in the East Zone.  Firstly, you have a base metal company (the old Falconbridge Copper) drilling holes on a Au target.  We will also be evaluating our drill holes into the Main Zone from Phase 1.  

We are awaiting assay results, but we believe we have successfully figured out a major control on mineralization within the Main Zone.  If we are correct, we will be drilling additional holes in the Main Zone.  Our phase 2 program is not carved in stone – we designed it to have flexibility.

Thanks Jeff, excellent stuff as always.  I look forward to the next batch of drill results.  

Brian Leni, P. Eng, in July 

Jay Taylor, in April

Brian Leni, P. Eng, in February

Disclosures:  The content of this interview is for illustrative and informational purposes only.  Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research[ER] including but not limited to, commentary, opinions, views, assumptions, reported facts, estimates, calculations, etc. is to be considered implicit or explicit, investment advice. Further, nothing contained herein is a recommendation or solicitation to buy or sell any security.  Mr. Epstein and [ER] are not responsible for investment actions taken by the reader.  Mr. Epstein and [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Mr. Epstein and [ER] are not directly employed by any company, group, organization, party or person. Shares of Genesis Metals are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they consult with their own licensed or registered financial advisors before making investment decisions.

At the time this article was posted, Peter Epstein owned shares in Genesis Metals and the Company was an advertiser on [ER].  By virtue of ownership of the Company’s shares and it being an advertiser on [ER], Peter Epstein is biased in his views on the Company.  Readers understand and agree that they must conduct their own research, above and beyond reading this article. While the author believes he’s diligent in screening out companies that are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. Mr. Epstein & [ER] are not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts & financial calculations, or for the completeness of this article. Mr. Epstein & [ER] are not expected or required to subsequently follow or cover events & news, or write about any particular company or topic. Mr. Epstein and [ER] are not experts in any company, industry sector or investment topic.