Kal Kotecha PhD
When I look at prospective companies to invest in, one important trait that I seek is consistency. I look for consistent improvement in the company’s financial statements, consistent innovation or deployment of best practices, and most importantly in the junior mining sector; I look for consistency in reaching the targets the company sets for itself across functional areas. Working largely with speculative resources, junior mining companies need to implement a level of stability to their operation by setting targets and timelines and reaching them within reasonable margins of error. WestKam Gold Corp. has achieved this stability through its diverse property resources and commitment to reaching operational goals.
WestKam Gold Corp. (TSX.V – WKG) (“WestKam” or the “Company”) is a Canadian gold exploration company focused on developing the 100% owned Bonaparte Gold Project Near Kamloops, British Columbia. A veteran of the industry, the Company was incorporated in British Columbia on October 2, 1984 as Consolidated Goldwin Ventures Inc. Effectively on April 30, 2012 the Company changed its name to WestKam Gold Corp., which coincided with a significant change in management and direction. The Company’s strategy is to identify, acquire, explore and develop precious and base metal deposits amenable to low production costs and high operating margins, focusing on properties with low entry level costs. WestKam has delivered consistent progress since its managerial change, implementing a successful exploration program, a drill campaign and identifying additional resources outside of its initial discovery zone. This has been achieved while maintaining effective relations with nearby First Nations tribe Stk’emlupsemc te Secwepemc Nation.
Announced in November of 2015, WestKam intends to raise up to $1,954,000 by way of a non-brokered private placement of units (the “Offering”) and flow-through units of the Company at a price of $0.03 per unit. The proceeds of the Offering will be used to conduct a Phase II work program on the Company’s Bonaparte property, to repay outstanding debt and for working capital and general corporate purposes. Phase II expenses will primarily be directed toward an expansive underground 220m drill program on the Bonaparte property along with legal and accounting costs, marketing, rent and office costs, consulting fees and management fees.
WestKam currently boasts a share price of $0.04 – an increase on its original offering price of $0.03 per unit in November 2015. As noted by the Globe and Mail, “WestKam Gold Corp. shares have gained 60% year to date. Shares have outperformed the S&P TSX by 44.58% during the last year” (The Globe and Mail, 2016). The increase has coincided directly with gold’s stellar performance in the first quarter of 2016, which has benefited many junior mining companies. Recently gold prices have fluctuated but we expect the price to rebound and remain firm across the year, catalyzing junior mining companies such as WestKam with it. This is affirmed by Michael Armbruster, founder at Altavest who suggests “gold is likely to benefit from some key “tailwinds.” Those tailwinds include central banks moving to negative interest rates and investors looking to diversify into alternative investments due to heightened U.S political uncertainty and mixed messages from the U.S. Federal Reserve” (MarketWatch, 2016). As has been the trend historically, stalwart gold succeeds during times of uncertainty, and the currency, market and political fluctuations all point to smooth sailing for investors of gold and its compliments.
WestKam Gold Corp. – 3 Month Share Performance
(The Globe and Mail, 2016) Consistent growth in share price across 2016
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, including President & CEO Matt Wayrynen, team have had significant success in past mining ventures. 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. These marketing successes align directly with the theme of consistency that has pushed WestKam and its Bonaparte Property forward in recent years, and without doubt, history is the best predictor of future behavior.
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. The diversity in resources of the still relatively unexplored property posits a major advantage for the Company and its investors in that it can look to extract and sell these individual resources, or the property at large to a major mining company, based on timely conditions presented by the market.
Looking at the map above, it is important to note the additional mining entities in the region. Specifically, New Gold Inc. operates its New Afton Project, an open-pit gold and silver mine, within an hour of the Bonaparte Property. New Gold Inc. is working toward its growth strategy by achieving “[E]xternal 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. Due to the average grade at the New Afton Mine, Weskam’s high grade gold deposit would be a great fit helping to enhance New Afton’s average grade. This would significantly enhance WestKam’s share price – a clear win for all stakeholders involved.
WestKam’s enduring consistency in reaching targets and timelines since 2014 gives me confidence in their capacity to continue to reach their goals and produce positive results for shareholders, capitalizing on the bull gold market we are experiencing. Beginning in 2014, WestKam implemented a series of programs designed to exploit the full potential of its Bonaparte Gold Project. These programs are highlighted as follows:
2014 Exploration at Bonaparte
• The 2014 exploration program was completed in November 2014, advancing both of the property’s key targets:
o Shear-hosted, high-grade gold mineralization in quartz veins (Discovery Zone), and
o Bulk tonnage, porphyry copper-gold target
• The 2014 field program included mapping and prospecting, 3D IP and magnetic geophysical surveys and soil geochemistry
• The Voltera 3D IP and ground magnetic surveys produced information that substantially extended the strike length of the high-grade Discovery gold zone trend and a multi-phase intrusive
2015 Drill Campaign at Bonaparte
• The 2015 drill exploration program was completed in October 2015, representing an important follow-up to the results achieved in 2014
• Key objectives of the program included:
o Evaluate high-grade gold intercepts in the “Discovery Zone” along the Grey-Jay vein system at depth and along strike
o Evaluate historical and anomalous Cu-Au soil geochemical results overlying IP chargeability and resistivity anomalies
2015 Drill Campaign Achievement
• Upon testing, the drill exploration program identified a large new target area called the Cooler Creek Zone
• Drilling encountered veins in granodiorite with the same type of mineralization as the Discovery Zone
• The hole assayed 7.88 g/t Gold, (0.253 oz/t Gold), 28.4 g/t Silver, 0.33% Copper and 28.6 g/t Tellurium over 1.0 metres
WestKam Gold Corp. is prepared to act on the results of its 2015 Drill Campaign by conducting Phase II of its work program which, as highlighted earlier, will consist primarily of drilling in 2016. The Company is operating in a favourable market for gold with fluctuating political and currency conditions and gold prices not seen since in 30 years. This suggests that there is potential for a major mining company to purchase the property to fully extract its resources and capitalize on gold’s pricing boom.
For investors looking to diversify their portfolio by adding a junior mining company that will achieve stock success as a complement to gold over the year, the enduringly consistent WestKam Gold Corp. (TSX.V – WKG) is worth a serious look.
“New Gold Inc. – Company Information.” New Gold Inc. Web. 05 Apr. 2016.
“The Globe and Mail – Stock Quote.” The Globe and Mail. Web. 04 Apr. 2016.
SAEFONG, Myra. “Gold Scores Biggest Quarterly Gain in Nearly 30 Years.” MarketWatch. Web. 04 Apr. 2016