Marvel Discovery Corp. (MARV:TSX.V; IMTFF:OTCQB) has a lot going for it. I've written several articles on this company, typically describing its cheap valuation relative to peers. Yet everything I've written came BEFORE Marvel set out to become a significant claims holder in the red hot Newfoundland gold play. Last week, Marvel staked an additional 274 claims totaling 6,850 hectares to its Gander South claim group, within the highly prospective Gander zone.
These new claims are ~10 km north of 10,250 hectares staked on June 8th. The company now has 17,100 hectares in the heart of the Central Newfoundland Gold Belt (CNGB), contiguous with New Found Gold's [NFG] Queensway project. Gander South, and other Newfoundland holdings, position Marvel as an important gold junior in the province. While there are >50 publicly listed companies with properties in Newfoundland and Labrador, only a dozen have meaningful property holdings within an hour's drive (70 km) of Ground Zero.
Will Marvel Discovery be the fastest growing Newfoundland gold junior of 2021?
Ground Zero is NFG's Keats Zone, where a blockbuster discovery hole in late 2019 (19 m at 92.9 g/t gold), put the CNGB at the center of the high-grade gold exploration world. However, back then gold was around $1,475/oz. In the ensuing nine months, it hit an all-time high of $2,070/oz., sparking the ongoing, modern-day gold rush/claims-staking frenzy we see today.
Experts are increasingly noting similarities in geological setting and character of Newfoundland mineralization to that of both the Abitibi Greenstone Belt (AGB) of Ontario and Quebec, and the Bendigo-Fosterville goldfields in Australia. If these parallels prove to be informative, it would really bode well for growing Newfoundland stakeholders like Marvel Discovery. Since the early 1900s, the AGB has produced over 180 million ounces of gold and 15 billion tonnes of copper (+silver and zinc and other base metals).
A month ago, NFG shocked the world yet again with one of North America's best gold assays of the century: 25.6 m @146.2 g/t gold = 3,743 gram-meters. That 3,743 figure is more than Great Bear Resources' seven best holes combined. NFG's Enterprise Value (EV) {market cap + debt – cash} has soared to ~$1.8 billion! (pre-maiden resource estimate).
Other significant Newfoundland juniors include Marathon Gold, Anaconda Mining, Sokoman Minerals, Exploits Discovery, Labrador Gold, Maritime Resources, Matador Mining and Sassy Resources. Marathon has a strong 5 Moz project entering production in 2023. Anaconda is in production (~18,000 oz/yr) at one of its three projects. Matador has a growing 1 Moz deposit and a preliminary economic assessment (PEA). Labrador Gold, Exploits and Sokoman already have high-grade discoveries under their belts, (but they're still pre-maiden resource)—with an average EV of ~$163 million.
Ambitious goal to triple in size to ~100,000 hectares this summer
In a recent Proactive Investors interview, largest shareholder and CEO Karim Rayani stated that the company plans to grow its portfolio in Newfoundland from ~28,000 to as many as 100,000 hectares this summer. That would make Marvel a top-10 precious metal claims holder in the province.
Why is size so important? The top eight Newfoundland-focused gold juniors have announced at least 421,000 meters of drilling for 2021 (in varying stages of completion). Two hundred thousand (200,000) meters is being done by NFG. Imagine how many exciting press releases this drilling might generate.
Depending on where management secures the land that takes them to 100,000 hectares, Marvel could soon have a top-6 holding [of property within 70 km] of Ground Zero, which would be a formidable footprint to show potential partners. I asked Mr. Rayani where he's looking to expand, but he couldn't tell me, except to say, "in desirable areas."
Two of Marvel's longer-held Newfoundland properties are Victoria Lake and Slip. Victoria Lake shares structural settings with Marathon's world-class, 5 Moz Valentine Lake project. Historical grab samples at Victoria Lake returned up to 15.5 to 24.9 g/t gold. The Slip project has similar structural settings as NFG's Queensway. Slip has historical surface samples grading as high as 44.5 g/t gold.
Marvel doing the right things at the right time in Newfoundland's modern day gold rush
To be clear, even if Marvel's team locks down 100,000 hectares, there can be no assurances that any of the prospective hectares will host interesting mineralization, not to mention economic grade. However, in any red hot area play the tried and true method is absolutely to grab as much land, in what appears to be the best places, as fast as possible.
Make no mistake, New Found Gold's properties are going to become a mine. That means surrounding juniors (if they don't develop mines themselves) will be prime takeover targets as satellite deposits to mining operations that spring to life later this decade.
Readers should recognize that most of the land scooped up by juniors will be uneconomic, but the call option value of well situated property is compelling. Consider that the Keats zone is ~50 hectares in size (open at depth and along strike), but could already contain millions of ounces of gold on just that small footprint. By far Labrador Gold's most important property, Moosehead, comprises 7,700 hectares, yet that company's EV is ~$250 million (pre-maiden resource estimate).
Rayani and other smart money investors, most notably Eric Sprott, are accumulating properties in this area play. Obviously, not every junior will make it big like NFG. In fact, most will never even climb to the ranks of Marathon, Labrador Gold, Anaconda or Sokoman. However, over the next 12–18 months, several companies with tiny market caps will enjoy substantial gains in market valuation; there's a decent chance Marvel will be one of them.
The (potentially) high-grade Blackfly gold project in Ontario could be a company maker
Readers are reminded that Marvel Discovery is far from a one-trick pony. In prior articles I outlined how cheap the valuation was based on its portfolio of prospective properties. While the EV has increased, at $9 million it still appears undervalued. If Rayani can deliver 100,000 hectares in Newfoundland, the value of that land bank alone would easily be >$9 million (in my opinion).
Investors would be getting all the other assets for free. One "other" asset is the 1,296 hectare Blackfly Gold project in Ontario (~14 km southwest of Agnico's Eagle's 5.6 million ounce Hammond Reef project). Diamond drilling of 16 holes is expected to start next month. Historical intervals included 1.1 meters @ 15 g/t gold and 2.0 meters @ 11 g/t gold.
Earlier in June, assays from 78 surface samples at Blackfly were reported. Four graded >10 g/t gold, the highest was 24.3 g/t. These select samples (not necessarily representative of the entire deposit) included some visible gold, indicating the potential for both vein-hosted and broad disseminated/stringer mineralization. Assays on another 180 samples will be released in coming weeks.
Blackfly is very exciting. It's in the up-and-coming Atikokan gold camp. This year's exploration program follows up on last year's compilation of historical info and high-resolution airborne magnetics/time-domain EM data collection. Geological mapping indicates alteration/mineralization for up to 5 km. Grab samples at the historical shaft area included grades of 85.6 and 167 g/t gold.
Blackfly's drill program this summer could be a game-changer for that project. If drilling at Blackfly hits high grades over multiple meter widths, then that property alone could be worth more than the company's entire EV of $9 million. In addition to Blackfly and the growing excitement in Newfoundland, Marvel also has promising Red Lake Ontario gold properties that could see exploration later this year.
Readers should consider watching Marvel Discovery (TSX-v: MARV) / (OTCQB: IMTFF) as multiple press releases are expected. News of securing properties, sample assays and drill results from Blackfly will keep shareholders busy well into the 4th quarter.
Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.
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