by Peter Epstein, MBA

Strong drill results have confirmed & expanded the Bend Vein target on Scottie Resources’ 100% controlled Bow property. During September, the Company completed 878 meters of diamond drilling, two km NE of the 100%-owned past-producing Scottie Gold Mine located in the Golden Triangle (“GT“) of northwest British Columbia, Canada.

Readers are reminded that Scottie Resources Corp. (TSX-V: SCOT) owns or controls 18,500 hectares, all in the GT, across seven properties, contained in two groups of contiguous parcels. Some properties border Ascot Resources (between Ascot’s Premier Mine & Red Mountain projects), others border Pretium Resources’ property south of the world-class, high-grade, operating Brucejack mine. Pretium’s enterprise value (“EV“) is $3.3 billion.

Very high-grade gold at Bow, Scottie Gold & Summit Lake properties

Drill hole SR19-11 hit an interval of 73.3 g/t gold (“Au“) and 71.0 g/t silver (“Ag“), or (74+ g/t Au Eq.) over 4.3 m, (true width 80%-90%). That blockbuster interval included 1.9 m of 152.5 g/t Au plus 143.6 g/t Ag, equal to (154+ g/t Au Eq.). Additional drill results are expected as soon as this week. Importantly, all of the reported intervals to date are near-surface, between 25 & 85 m in depth. The best intercept in the latest batch is between 25.5 & 30 m.

According to Scottie’s CEO & president Bradley Rourke,

“These new assays confirm the superb results of previous studies and demonstrate a truly under-explored high-grade gold & silver target. Past drilling on the Bend Vein only probed to a vertical depth of ~55 m. Our drilling this season proves that the mineralized structure extends deeper. We substantially increased the strike length of known mineralization. Drilling in the 2020 season will allow us to further prove the scale of this structurally-controlled, high-grade vein deposit.”


Scottie’s technical team integrated historical and recent (2018 / 2019) exploration work into new structural models to better understand the geometry of mineralization. Prior to the Company’s 2019 drill program, the Bend Vein had only 1,525 m of drilling. No exploration-style drilling had been done to test along the Bend fault structure to assess the potential of a bigger system.

Management is thrilled that drilling in 2019 substantiated the very high grades contained in the historically known ore block, and extended the structure both at depth and along strike. The drill campaign (so far) has already shown gold mineralization expanding east an additional 375 m. 2020 is off to a great start! Over the past year, management has achieved excellent bang for their exploration buck, with more results any day now.Previous drilling on the Bend Vein returned the following select high-grade assays.

Notice that drill hole SR19-11, mentioned above, had a [grade x thickness] of 318. Compare that to these other [high-grade] intervals in the GT in 2019. Also, the midpoint of each interval’s depth is provided. Scottie’s blockbuster interval is at 28 meters depth, the average of peers is 115 meters.

Surface grab samples at Summit Lake look very promising….CEO Rourke & VP exploration Thomas Mumford, PhD are ecstatic over the latest drill results, and also recent surface samples from the much larger Summit Lake property.

The above surface (grab) samples were reported three weeks ago. The best eight (in green) range from 11.0 to 62.8 g/t Au Eq., and average 22.2 g/t Au Eq. There are high-grade showings of copper, lead, zinc & silver, (884 g/t = 28.4 troy oz./t Ag). Summit Lake, Bow and the past-producing Scottie Gold mine total 5,672 hectares. As can be seen in the map above, the top half of this three-property contiguous block borders Pretium.These impressive Summit Lake samples were reported about a month after even more exciting samples were announced on November 14th. The best four samples are listed below left. They come from the newly discovered Domino zone on the 100%-owned Scottie Gold mine property.

Referring to the Domino zone, VP of Exploration Dr. Thomas Mumford commented,“These initial sample results are exciting, their distribution and high-grade nature fit spectacularly well with our working geological model. This mineralized structure will be a high-priority drill target for the 2020 field season. The potential that it may connect to the Scottie Gold Mine mineralizing system make this an exceptional discovery. Sampling of many of these sites was only possible due to significant glacial retreat in recent years. We are eager to get back on the ground to find and delineate additional drill targets.”

Scottie Gold mine property hosts past-producing mine

We already know for certain that the Scottie Gold mine property hosts high-grade mineralization, from 1981-1984 it produced over 95,000 ounces of gold at a tremendous average grade of 16.25 g/t. That’s a much higher grade than Pretium’s world famous Brucejack mine is currently producing at (~9 g/t).

In addition to high-grade production records, there are some outstanding historical drill results at the Scottie Gold mine project as well. How about 108.3 g/t Au over 3.4 m, or 107.7 g/t Au over 4.2 m? Not bad at all! All known mineralization on Bow & Scottie Gold, from a total of 525 drill holes, is found at shallow depths. I find it encouraging that these blockbuster grades were found across 3.4 & 4.2 meters; not merely half-meter, one-hit wonders.

Mining M&A in N. America & the gold price making big moves!

Three big gold deals were announced in 4Q 2019 alone, including Kirkland Lake’s plans to acquire Detour Gold. If Detour is taken out, Pretium would be one of the last single-asset gold companies in Canada. Brucejack, situated less than 30 km from Scottie, is one of North America’s lowest-cost / highest-margin producers.

Pretium is 234x the size of Scottie Resources. If it’s not acquired, it might try to acquire one or more GT juniors like Ascot, GT Gold, Skeena Resources, Tudor Gold or Garibaldi Resources. As an aside, Seabridge Gold is also a potential acquirer. Those companies, with EVs ranging from $84 to $217 million, could in turn look to buy a company like Scottie Resources, with an EV of $14 million.

I don’t mean to overplay a takeout thesis, but, the gold price is now at US$ 1,576/oz., up ~US$ 112/oz. since U.S. impeachment proceedings & Iran / N. Korea troubles commenced, and up ~US$ 300/oz. from the low of 2019. Gold in $USD is the highest it’s been in 80 months. Furthermore, 2019 was reportedly the biggest year for gold mining M&A in N. America since 2010.

Neighboring Pretium & Ascot valuations bullish for Scottie

Looking at the map, it’s clear why Pretium might want to acquire Scottie Resources. Or, at least move to control the three properties where Pretium & Scottie share a border. Scottie’s valuation is so low relative to Pretium’s that it might be cheaper to pursue Scottie’s properties than to drill virgin areas on Pretium’s existing footprint.Perhaps more likely — look at the map again — Ascot certainly has a compelling reason to care about Scottie, and the company’s digestible EV of $14 million is right in Ascot’s sweet spot. Ascot has multiple projects & properties, but only one with evidence of very high-grade mineralization like that of Scottie’s Bow (new drill results), Scottie Gold mine (past production + historical drill results + new surface samples) & Summit Lake (new grab samples).

Ascot’s EV of $210 million is 15x that of Scottie, and its share price is up 85% in the past two months alone, resulting in Ascot trading at $8,631/ha vs. $766/ha for Scottie. While Ascot’s Red Mountain & Premier projects have substantially more drill holes on them, both have lower gold grades, and high-grade mineralization starting roughly 100 meters deeper than that of Scottie’s near-surface deposits.

Tudor & GT Gold have giant intercepts of sub 1.0 to 1.5 g/t Au Eq. as thick as one kilometer or more. Grade x thickness readings for these assays are quite good, but drilling & mining through 1,000+ meters of rock can be costly & time consuming, especially if the projects are far from critical infrastructure.

Garibaldi’s assets in Canada are base metal (especially nickel + copper) heavy. Diversification into high-grade gold & silver could be an attractive option. With an EV of $96 million, it too could comfortably afford to make a run at Scottie. After 2020’s drill results (I believe Scottie is thinking about 5,000 m of drilling, subject to adequate funding), the company will be well more advanced.

Soon after 2020 drill results, one or more resource estimates likely

Within 12-18 months, management should be able to deliver a robust NI 43-101 compliant resource estimate from one or both of the Scottie Gold & Bow properties. In 2H 2021, shareholders might receive a third-party Preliminary Economic Assessments (“PEA“). In my opinion, Scottie could secure a JV or farm-in partner as soon as next year, upon which time funding requirements would drop dramatically.

Located at the southern end of the GT, Scottie’s properties are an easy drive of about an hour, on paved roads, from Stewart, BC. For the most part, infrastructure in the southern portion of the GT is significantly better than the middle & northern regions.

Conclusion

With gold prices and M&A activity up substantially, all eyes are on the Golden Triangle. However, not all of the GT juniors have had recent drilling success. Not all are focused on shallow, high-to-ultra-high-grade gold deposits. Not all have good infrastructure. Not all own or control 100% of sizable land packages. Not all have enterprise values of $14 million or less.

Scottie Resources (TSX-V: SCOT) is blessed with many positive attributes and has successfully advanced its flagship properties very nicely in 2018-19 with limited capital expenditures. There have been three major initiatives over the past several months, and three fantastic outcomes.

Disclosures: 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 Scottie Resources, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not 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 under any circumstances 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 Scottie Resources are highly speculative, not suitable for all investors. 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 shares of Scottie Resources and the Company was an advertiser on [ER].