The market reaction was muted when Genesis Metals Corp. (GIS:TSX.V; GGISF:OTC) hit 8.73 g/t gold over 21.35 meters in a late 2017 drill hole at its Chevrier gold project in Quebec. It was a sign of the times: The high-grade intercept, announced on Jan. 22, 2018, came during a grinding bear market for gold explorecos.
Bitcoin has been stealing the show lately as it advances towards US$20,000. But gold remains in an uptrend, despite the yellow metal's recent correction. After gaining 18% in 2019, gold is up about 19% year to date as governments around the world accelerate money printing in response to the COVID-19 pandemic. That backdrop makes high-quality gold juniors an interesting contrarian play.
On Thursday, Genesis announced more wide intervals of high-grade gold mineralization, in an area dubbed the Fox Zone within Chevrier's Main Zone deposit. GM-20-76 intersected 13.03 g/t gold over 10.74 meters, from 99 meters downhole—among the best intervals at the deposit on a gram-meter basis. GM-20-77 hit 7.49 g/t gold over 4.6 meters starting at 82.5 meters, within a broader interval assaying 2.16 g/t gold over 34.3 meters.
This time the market took notice: Genesis shares climbed 21.4% ($0.045) to $0.255 cents on high volume following the news, but the stock has since slumped. It's deja vu all over again—gold's recent drop from above US$2,000 an ounce (oz) to under $1,800/oz is making investors skittish, combined with some tax-loss selling.
At the project level, however, the high-grade intervals—combined with phase 1 results that also tagged plenty of high-grade gold—are incrementally changing the complexion of Genesis's Chevrier resource. The company is targeting high-grade shoots both within and underneath the pit outline from the 2019 resource estimate. The Main Zone and East Zone at Chevrier host estimated Indicated resources of 423,000 ounces of gold at an average grade of 1.22 g/t and Inferred resources of 303,000 oz at 1.27 g/t, according to the latest resource estimate (combined pit-constrained and underground resources at a cutoff of 0.3 g/t Au in-pit and 0.95 g/t Au underground; Feb. 6, 2019 NR).
"We're defining a nice area of high-grade there that we'll be following up in 2021," Genesis CEO David Terry said in a phone interview.
The two highlight holes were drilled into the same zone (Fox) as GM-17-42, the hole that hit 8.73 g/t gold over 21.35 meters, but in the opposite direction. Fox is located in the Chevrier Main Zone, in the southwest portion of the Main Zone resource pit. Genesis is focusing on six subzones—Fox, Mouse, Grouse, Lynx, Squirrel and Mole—containing the newly recognized high-grade shoots.
Even if the animal spirits have yet to arrive for the Genesis shares, the high-grade ounces are building at Chevrier, located in the Fancamp Deformation Zone of Quebec's Abitibi Greenstone Belt. Highlights from this year's phase 1 program included (June 2 & July 7 NRs):
- 9.71 g/t gold over 3.65 meters from 89.5m downhole (GM-20-63)
- 9.73 g/t over 4.5 meters from 113.5m downhole, 9.64 over 2.3 meters from 162.5m downhole, and 14.4 g/t over 2.2 meters from 182.5m downhole (GM-20-64)
- 3.99 g/t over 3 meters from 99 meters (GM-20-61)
Phase 2 assays are pending on another 14 holes representing 4,400 meters, out of a total 24-hole, 6,200-meter program. One of those was a 900-meter hole testing depth extent, which is typically good on these types of gold systems. In addition to defining high-grade shoots in phase 2, Genesis also tested new exploration targets and drilled step-outs on historical high-grade holes outside resource areas.
The company is also resampling some historical core and plans geophysics in the next couple of months. Follow-up drilling at Chevrier could resume in early 2021. Once the remaining phase 2 assays come in, the company will compile a new Chevrier model that will inform next year's exploration program, Terry says.
Genesis shares could be poised to outperform peers once juniors catch a bid, considering:
- Assays pending on high-grade gold targets, backstopped by ounces in the ground;
- Estimated $3 million in the treasury for follow-up drilling;
- Top technical team;
- Mining-friendly jurisdiction and good infrastructure;
- Backing of the Discovery Group, one of Canada's top mining houses.
James Kwantes is the editor of Resource Opportunities, a subscriber supported junior mining investment publication. Kwantes has two decades of journalism experience and was the mining reporter at Vancouver Sun, the city's paper of record.
[NLINSERT]Disclosure: James Kwantes owns Genesis Metals shares and Genesis is one of three Resource Opportunities sponsor companies. This is not investment advice. The article is for informational purposes and all investors need to complete their own due diligence.
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