Kal Kotecha PhD
Gold prices have been surging in recent days following Britain’s referendum decision to leave the European Union. Always a boon when global instability sets in, gold is valued at $1,317/ounce (Gold Price, 2016) as of my writing of this article – a price that hasn’t been seen for two years (mining.com, 2016). Granted, gold prices received a major boost when Brexit was first announced, analysts are forecasting a continuing upward trajectory for gold as the year progresses. Ned Schmidt, editor of the Value View Gold Report contends that Brexit is a once-in-a-lifetime event and stated that all arguments against holding gold have now been crushed. Schmidt expects gold to continue its climb and head to $1,400/ounce with prices eventually topping $1,900 next year (MarketWatch, 2016).
Global instability will continue, as nationalist groups in other member countries of the U.K. will push their populace to follow Britain’s lead in the form of “Brexit Contagion” (The Telegraph, 2016). The Telegraph reported that a survey published on June 27 by the European Council on Foreign Relations found that insurgent anti-EU parties are calling for a total of 33 popular referendums in the coming year to determine their people’s opinion on membership in the EU. The mere announcement of a referendum from any other major member of the European Union will have a growth effect on gold prices – and consequently on junior mining companies in the gold market.
One company positioned to benefit from gold’s rising price is WestKam Gold Corp. (TSX.V – WKG) (“WestKam” or the “Company”). WestKam is a Canadian gold exploration company focused on developing the 100% owned Bonaparte Gold Project Near Kamloops, British Columbia. We profiled WestKam in April, 2016 and since then the company has made exciting announcements that have catalyzed its stock price to nearly double over the course of three months. Having moved from a price of $0.04 per unit in April, the stock is now valued at $0.07. As stated by the Globe and Mail, Westkam’s “net income grew by 56.75%, year over year, to a loss of $0.00 per share during the most recently complete quarter. This was the among the strongest growth seen by any company in this industry” (The Globe and Mail, 2016).
WestKam Gold Corp. (TSX.V – WKG) – Share price movement – The Globe and Mail
The Company’s stock price will continue to grow due to macro and microeconomic forces. As discussed above, gold’s continued surge will positively impact the junior mining sector as investors seek out stable companies associated with gold with which to store their assets. WestKam Gold Corp. is poised to benefit from these forces in particular, because the Company is prepared to take exploratory action on its Bonaparte property.
A leader in its sector, WestKam’s Bonaparte property offers value that will impact its stock price in the short and long term. The Bonaparte Property consists of diverse resources across its area, which are defined as the “Discovery Zone” and “Cooler Creek Zone”. Within the Discovery Zone, which is the area that has been primarily explored since 1984, a 3,425-ton bulk sample from one of the high grade vein systems produced a grade of 26 g/t Gold (0.75 oz/ton Gold). Within the Cooler Creek Zone, which is the area drilled and tested in 2015, a new vein assayed 7.88 g/t Gold (0.253 oz/t Gold), 38.4 g/t Silver, 0.33% Copper and 28.6 g/t Tellurium over 1.0 meters.
Map of WestKam’s Bonaparte Property – WestKam Gold Corp. website
As noted in our April article, it is important to consider the substantial mining entities in the region. Specifically, New Gold Inc. operates its Blackwater Project, an open-pit gold and silver mine, within an hour of the Bonaparte Property (as seen on map above). New Gold Inc. is working toward its growth strategy by achieving “External growth through additional value enhancing merger and acquisition opportunities” (New Gold, 2016). The logistical and resource advantages that the Bonaparte Property can deliver to New Gold Inc. indicates potential for a merger or acquisition to occur. This would significantly enhance WestKam’s share price in the long term – a clear win for all stakeholders involved.
On April 20, 2016, WestKam received a permit from the British Columbia Ministry of Energy and Mines for the purpose of extracting a 10,000 tonne bulk sample from the Company’s Bonaparte Project. The permitted design of the Bulk Sample program includes extension of the existing decline approximately 245m through to the Grey Jay / Crow Vein system. In early June, the Company reported that it had acted on its permit, as a crew had been mobilized to initiate dewatering of the existing underground decline and site commissioning on the Bonaparte property. Dewatering of the flooded underground adit began on May 29th and was completed on June 1.
WestKam has since reported that they have earned approval for their 10,000 tonne bulk sample program and have mobilized their remaining mining equipment and personnel to arrive at the site this week. Compressed air, water, electrical services and ventilation will be installed and once in place, advancement of the decline will begin. Extraction of the resources will commence the week of July 4. These actions represent short term value for the Company’s stock price, as the announcements WestKam will be making in the coming months will legitimize the value of the Bonaparte property adding more resource measurements to its arsenal.
Bonaparte Project IP Survey Results Diagram – Westkam Gold Corp. website
The Company has a history of marketing success both in its mining yields and in properties themselves. The last bulk sample that WestKam sold fetched nearly $150,000 for 161.950 Troy Ounces. Even more impressive, several members of WestKam’s management team, including President & CEO Matt Wayrynen, have had success in the junior mining sector in the past. As Director of his last venture, Quinto Mining, Mr. Wayrynen helped raise millions of dollars and advanced a Quebec iron ore property to a viable project. Quinto Mining sold to Consolidated Thompson Iron Mines in June 2008 for a share value equal to $175 Million. Later, Consolidated Thompson was sold to Cliffs Resources for nearly $5 Billion, thanks in large part to the efforts Wayrynen forwarded to advance the Quebec property. When WestKam’s bulk sample program has been completed, it may market the extracyed resources as it has done in the past to generate revenue for its long-term operations. Such a sale will directly benefit the Company’s shareholders, as its stock value will increase upon the announcements surrounding a sale.
With WestKam’s track record of adhering to strict timelines and meeting goals, we implore our readers to take action in the near future and invest resources in the Company as there is significant potential for short term gains. WestKam was recently profiled by Mining MarketWatch Journal with the publisher supporting this claim, stating that “within months we expect WestKam to have some spectacular new releases. More importantly, we see the big picture unfolding quickly as the develop cuts a 10 by 12 foot drift through a series of high-grade veins and stockwork, affirming in the process the findings of a British Columbia Geological Survey report that indicates the property has potential for large copper-gold porphyry, similar in nature as to what has been demonstrated at nearby Highland Valley Mine (Teck) and New Afton Mine (New Gold)” (Mining MarketWatch Journal, 2016).
As tangible minerals are extracted from the Bonaparte mine over the next three months and announcements are made regarding the resource measurements in the 10,000 tonne bulk sample, WestKam Gold Corp.’s (TSX.V – WKG) share price should continue its upward trajectory, benefitting shareholders who invest in this company now.
Kal Kotecha PhD
Foster, Peter et al. “Brexit Contagion: UK Vote Raises Fears of a Tsunami of EU Membership Referendums.” The Telegraph. Telegraph Media Group Ltd., 28 June 2016. Web. 28 June 2016. http://www.telegraph.co.uk/news/2016/06/28/brexit-contagion-uk-vote-raises-fears-of-a-tsunami-of-eu-members/
Saefond, Myra. “Why Gold May Hit $1,500 by Year’s End – and It’s Not Just About Brexit.” MarketWatch. MarketWatch, Inc. 26 June 2016. Web. 28 June 2016. http://www.marketwatch.com/story/why-gold-may-hit-1500-by-years-endand-its-not-just-about-brexit-2016-06-24
“Spot Gold.” Gold Price. Gold Price Pty. Ltd., 28 June 2016. Web. 28 June 2016. http://goldprice.org/spot-gold.html
“The Globe and Mail – News.” The Globe and Mail. 28 June 2016. Web. 28 June 2016. http://www.theglobeandmail.com/globe-investor/markets/stocks/news/?q=WKG-X
“WestKam Gold Corp. Prepares for 10,000t Bulk Sample, Last Two Bulk Samples Averaged 26.5 G/T and 16.28 G/T Gold.” Mining MarketWatch. 28 June 2016. Web. 28 June 2016. http://www.miningmarketwatch.net/
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