Gold Line Resources; in the right place, at the right time, with the right team

posted in: Finland, Gold, Sweden | 0

Gold prices are on the move again, currently at US$1,940/oz. Junior management teams that acquired or optioned properties when gold was a lot lower are looking pretty damn smart. Gold Line Resources [“GLR”] (TSX-V: GLDL) / (OTCQB: TLLZF) has an exciting portfolio of six 100%-owned / controlled early-stage + moderately advanced gold exploration properties.

Scandinavia, especially Sweden; great place to live, work & mine for gold

Three of the six projects are in the sweet spot of northcentral Sweden’s famous Gold Line Mineral Belt (“GLMB”) and another is in the Skellefteå belt. When these properties were acquired in April 2019, gold was 33% lower at ~US$1,300/oz.

GLR is led by a very impressive team of executives, board members & advisors, especially for a company with an Enterprise Value [“EV”] {market cap + debt -cash} of just C$14M. EMX Royalties & Eric Sprott are shareholders.

As far as gold jurisdictions go, Sweden & Finland are really attractive. For instance, Scandinavian countries consistently score in the top-10 for overall quality of life.

While some readers are drawn to the familiarity of the U.S., Canada & Australia, geographical diversification is always a good idea. In several critical ways, Sweden & Finland are more mining-friendly than N. America & Australia. This article will focus on GLR’s Swedish properties.

ESG & security of supply has been front & center with regard to sourcing essential materials like REEs from China or uranium from Kazakhstan / Russia. Recently the world’s been reminded (yet again) that security of energy supply is crucial.

Not since the Middle East oil embargoes of the mid-1970s has energy availability & affordability been so uncertain. Luckily, nuclear, wind, hydropower & bioenergy make Sweden a desirable jurisdiction for power compared to the U.S. & Australia.

Sweden & Finland rank #1 & #2 of 27 EU countries in terms of the percentage of power generated from renewable sources. Renewable energy is not just greener, like nuclear power it enjoys consistent pricing under long-term contracts and can be low cost, especially when oil & natural gas prices are soaring.

Sweden’s cost of industrial-use electricity is less than half that of B.C., Canada’s & South Australia’s. According to management, Sweden has one of the lowest electricity prices in Europe and northern Sweden has the lowest electricity prices in Sweden.

Where will the next few decades’ worth of mined gold come from?

In looking at the top-18 gold-producing countries of 2021, something really stands out — fully 50% of them [in red] are high-risk jurisdictions for one or more reasons. Look no further than the countries ranked #1 & #3 to see what I mean. China & Russia!?!

Clearly, top-5 rated Australia, the U.S. & Canada will continue to be critically important producers, but they can’t meet the world’s growing needs.

Sweden is well-known for its low corp. income tax rate, no mineral taxes, and well-developed access to major infrastructure incl. rail, roads, power, water, mining services/equipment, and skilled, well-educated labor.

Scandinavia leads the way in electrifying transportation & underground mining fleets. Boliden is electrifying its heavy transport trucks in the north of Sweden.

A number of well-mineralized belts are found in Sweden, but they’re underexplored as foreign mining companies were not allowed to operate on their own in the country until 1992. This means Sweden has some of the most prospective greenstone belts on the planet.

Readers might notice many companies chasing “underexplored” districts, but often these areas are underexplored for good reason — extreme climate or elevation, local community opposition, water or environmental challenges, or safety concerns.

Is Gold Line Resources the cheapest house in an excellent neighborhood?

It’s vital for readers to recognize the significance of GLR’s properties in Sweden’s GLMB. Three of the Company’s properties surround a more advanced project owned 55% by Agnico Eagle Mines [“AEM”] & 45% by Barsele Minerals.

Importantly, Agnico (or an acquirer of its 55% stake) can earn an incremental 15%, (to 70%) by delivering a Pre-Feasibility Study. The implied market valuation of 100% of this flagship 2.41M oz. (2.4 g/t gold) Indicated + Inferred mineral resource is ~C$138M.

From 2015 to 2021, 158,439 m (422 holes) have been drilled, but only results up to 2018 are in the 2019 resource estimate. That’s a lot of drilling done very close to GLR’s properties. Barsele’s best interval was a blockbuster 5 m of 84 g/t gold.

Barsele’s board would never sell its 45% stake near today’s share price of C$0.47 when shares traded as high as C$0.82 ten months ago. In fact, the board has been trying to buy out its partner’s 55% interest and almost did last year.

That company’s CEO said in an interview that he’s confident there are 5-10M ounces on the 34,500 contiguous hectares. Importantly, preliminary metallurgical tests delivered gold recoveries of up to 92.6%. Is this metallurgy indicative of the entire district?

A significant gold mining complex will be built very near GLR’s GLMB properties

GLR’s three properties will almost certainly play a prominent role in that mining complex. If it turns out the entire district is well-mineralized, there could be a new 400k+ oz./yr. gold mine with a long mine life coming to northern Sweden.

That mine would be worth billions of dollars, yet GLR’s EV is only C$14M.

Valuing the Agnico/Barsele JV project provides an important readthrough to GLR. If that pre-PEA project is worth ~C$138M, then GLRs three properties totaling nearly 43,000 ha should be worth considerably more than C$14M to an acquirer looking to roll up the district.

Who should care about gold in Sweden? Perhaps Kinross, Boliden, B2Gold, or Rupert Resources? Each is already active next door in Finland. And of course, Lundin Mining & Boliden have mines in Sweden. Eldorado Gold is a mid-tier producer with mines in Turkey, Greece & Romania. Dundee Precious Metals operates in Bulgaria.

Other mid-tier producers + Majors would benefit from diversification into Scandinavia. Newcrest Mining, Gold Fields, Northern Star, Endeavour Mining, Fresnillo (which has a stake in Barsele), Evolution Mining, Yamana & Alamos Gold come to mind.

Turning briefly to Finland, GLR has a small but high-grade historical Inferred resource of ~275k [gold Eq.] ounces at a grade of ~4.5 g/t. Management sees the potential to identify multiple deposits across the belt. The OIJÄRVI project is quite promising, there are 232 intercepts {from 292 shallow holes} grading > 2 g/t.

The best interval was 22.6 g/t Au + 126.3 g/t Ag over 8 m (true width) from 102.5 m. Delineating a million Au Eq. ounces is the goal for 2023.

Back to Sweden, Gold Line’s PAUBÄCKEN (PB) property is a 16,724 ha license that sits several km from Dragon Mining’s [C$45M EV] past-producing Svartliden Mine Complex, which is being restarted to process ore from Dragon’s Fäboliden project ~30 km to the south.

PB could become a valuable satellite deposit for Dragon, or it could be a significant part of other GLMB deposits including GLR’s LÅNGTJÄRN & BLÅBÄRLIDEN.

Another scenario could see all three companies {Dragon Mining, Gold Line Resources & Barsele} come together, perhaps under the wings of a mid-tier or Major producer. Being by far the lowest valued company in any M&A scenario in northern Sweden is a compelling attribute.

LÅNGTJÄRN is a 22,336 ha package at the northern end of the GLMB. It’s thought to be an extension of the AEM/Barsele JV project. Prior exploration found extensive mineralization, but there’s been limited drilling. Management sees strong potential for expansion of the mineralized zones and for new discoveries.

CONCLUSION

Gold Line Resources (TSX-V: GLDL) / (OTCQB: TLLZF) owns or controls several well-located properties, five in Sweden & another in Finland. Three of the Swedish properties are pre-maiden resources, but have seen limited drilling. These properties surround a very attractive & valuable JV project with a 2.41M oz. / 2.4 g/t gold resource, valued by the market at ~C$138M.

With gold at US$1,940/oz., serious ongoing geopolitical upheavals, inflation, debt issuance & money-printing soaring, commodities (hard assets) offer great protection & diversification. Gold juniors with strong mgmt. teams & assets in world-class jurisdictions — possibly poised to make new discoveries — offer a compelling risk/reward proposition.

Gold Line’s EV at C$14M (share price C$0.11) could prove to be an excellent entry point as smart money players including Eric Sprott invested at $0.16/share earlier this month.

News flow will be robust for the remainder of the year. Readers should consider taking a closer look. Please take a few moments to review the latest corp. presentation.

Disclosures/disclaimers: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about Gold Line Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market-making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of Gold Line Resources 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 will consult with their own licensed or registered financial advisors before making any investment decisions.

At the time this article was posted, Peter Epstein owned stock in Gold Line Resources and the Company is a former advertiser on [ER]

While the author believes he’s diligent in screening out companies that, for any reason whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will be (or have been) successful. [ER] is 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 or future content. [ER] is not expected or required to subsequently follow or cover any specific events or news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.