If you're unfamiliar with American Eagle Gold Corp. (AE:TSXV), it is, despite its name, a Canada-based mining company focused on exploring gold and copper deposits across North America.
The firm's flagship asset is its NAK copper-gold property, located near the town of Smithers in the western coastal Canadian province of British Columbia. The large site is located in the Babine Copper-Gold Porphyry district in the province's center.
This copper-gold porphyry deposit occurs in the Stikine Island Arc Terrane, which hosts various highly-concentrated copper porphyry holdings. The site is associated with the Babine Intrusive Suite, an Eocene-age feature known for hosting the Bell, Granisle, Morrison, Hearne Hill, and Dorothy/Duke copper-gold deposits.
The Catalyst: Permission and Funding to Drill
On May 10, American Eagle Gold Corp. announced receipt of a 5-year drilling permit for the NAK copper-gold project. The permit is in effect immediately, with a provisional expiry date of March 31, 2028. With the receipt in hand, the firm's 6,000-meter drill program at the NAK site is expected to commence in the coming weeks.
The permit announcement came just two days after the firm disclosed a strategic financing initiative with mining giant Teck Resources, which will make a key investment through a private placement. Teck Resources' investment of just under CA$3 million will fully fund the 2023 drill program on the NAK Project. 2023's program will be focussed on follow-up work with east-west step-out drilling and begin to uncover the true size of the potential deposit.
The program is also expected to expand and better define the orientation and distribution of the higher-grade zones of dike-hosted bornite mineralization, expand the known footprint of the high-grade at-surface south gold zone, and step out and investigate the highly prospective southern margin of the main Babine stock porphyry.
"Our 2022 program was a great success in demonstrating the enormous potential at NAK," explains Anthony Moreau, CEO of American Eagle Gold. "Now, with a fully funded 2023 and a five-year drill permit, we have flexibility, greater knowledge of the geology, and the right partners and team to select drill locations that enable a program that truly delineates NAK's size and grade."
Why This Sector? Onshore Base and Money Metals
Gold has always been a great hedge against market chaos, with base metals like copper providing a similar, though less impactful, escape asset from fickle fiat currencies. As Michael Lebowitz explained in a recent realinvestmentadvice.com piece, "By owning gold, investors are not necessarily hedging against a government default but ironically betting the Fed will increasingly misuse monetary policy to help the government avoid defaulting."
"That may not be the exact thesis gold investors signed up for, but there is ample evidence linking gold prices to Fed behaviors."
With a looming debt ceiling fight crowding out almost all current U.S. financial news, proven reserves of hard assets in the ground in America's northern neighbor offer an arguably undervalued safe harbor.
Why This Company? Large, Local, Accessible Reserves
The NAK project's copper-gold target exhibits many signs of a robust and large-scale system. Historical drilling, while shallow, defined a near-surface copper-gold system with a footprint greater than 1.5 km by 1.5 km. Drilling in 2022 showed that the property holds substantial deep potential but remains largely untested at depth.
As technical analyst Clive Maund explained, "The work that American Eagle has been doing on its NAK property is good and has borne fruit."
That same drilling also showed that near-surface mineralization potential was significantly larger than historically defined.
The property is road accessible and home to many target areas that already coincide with forest industry clear cuts. As such, drilling can be undertaken year-round, and no helicopter support is required. It is situated close to past-producing mines like Bell and Granisle and so already surrounded by excellent site-specific infrastructure.
American Eagle Gold Corp's main objective is to advance this newly revitalized prospect into a major discovery, with drilling expected to commence in early June.
Why Now?
In addition to the new permitting and new funding, American Eagle Gold Corp has also secured an updated exploration agreement with Lake Babine Nation, an agreement that's in line with the anticipated five years of licensed drilling commencing in June.
As technical analyst Clive Maund explained in a March 11 briefing, "We bought American Eagle Gold Corp. way too early back in January and ended up with a serious paper loss as it continued to drift lower and lower on financial woes. But the work that American Eagle has been doing on its NAK property is good and has borne fruit."
"Monday morning, it got a massive vote of confidence when the news emerged that it is to receive a major strategic investment by the mighty Teck Corp., which is Canada's preeminent copper producer."
"This news means that the company no longer has financial problems and can now move ahead boldly with its ambitious 2023 drilling program at its potent NAK property," Maund opines. "Small wonder then that on Monday morning's news, the stock broke out, gapping higher on strong volume out of the fine Cup and Handle base shown on our 6-month chart. Within 10 minutes of the news appearing, an email was sent out to subscribers saying that the stock was an immediate Buy."
"It didn't gain much on the day from its opening price," he explains, "but it doesn't matter because this news of the Teck investment in the company is a game changer and means that we can expect the stock to continue to advance to much higher levels from here, especially if gold really starts to pick up as looks likely."
Streetwise Ownership Overview*"Since today's move marks just the start of a major revaluation of the stock, especially if good drilling results are forthcoming later in the year, the stock remains a strong speculative Buy at the current price."
Ownership and Share Structure
According to Reuters, 19.07% of American Eagle's shares are held by management and insiders. Chairman Stephen Stewart has 12.53%, with 10.21 million shares. Director Alex Stewart has 4.56%, with 3.71 million. CEO and Director Anthony Moreau has 1.74%, with 1.42 million. Vice President of Strategic Engagement Derek Teevan has 0.25%, with 0.20 million.
17.68% is held by strategic investor Teck Resources Ltd., with 14.40 million shares.
36.75% is with institutional investors.
The rest is with retail.
The company had a market cap of CA$ 9.78 million. It has 81.47 million regular shares outstanding, with a free float of 51.53 million.
