Business Focus: Gold exploration in politically-safe, world-class gold camps.
Flagship Asset: Thomas Ogden Project 50/50 joint venture with Goldcorp featuring 8KM of strike length of the Porcupine-Destor Break, Timmins Ontario.
Developing Asset: Squid East joint venture with GTA Resources in Matson Creek area of Yukon.

Listed TSXV: MEK
Listed OTC: MCREF
Shares Outstanding: 98.5 M
Cash and Marketable Securities (September 30, 2013) $2,261,812
52-Week High: $0.08
52-Week Low: $0.02
Price December 2, 2013: $0.025
Market Cap: $2.96 million
Telephone: 709 256 6060
MetalsCreek.com
Twitter.com/MetalsCreekRes

Junior Gold Exploration Stocks in a Nutshell: A Tale of Three Charts

There is no getting around it: 2013 has been a tough year for many companies in the TekTrader Advisories Portfolio. In fact, these are the toughest times we’ve seen since the Financial Crisis of 2007 and the resulting TSX-V market bottom in Q4, 2008. Rather than talk conspiracy, politics or propaganda of how we got here, let’s stick to the facts of where we are: Gold has been downtrending for the past 9 quarters, with a steep decline since the start of Q3, 2012. This constitutes a net loss of about $540 per ounce, roughly -30% over the past year alone. With this macro picture in mind, it makes sense that junior gold explorers will suffer, with even the strongest companies sharing the pain.

1Year Gold

1 Year TSX-Venture


1 Year Metals Creek Resources (TSX-V: MEK)


Case in point, the above chart for Metals Creek Resources (TSXV: MEK) shows remarkable similarity to both the one year gold and TSX-V charts, with MEK’s saving exception being a less precipitous drop. Moving into Q4 2013, volumes have noticeably tightened and the stock may now be rolling off true long-term support. It’s hard to imagine the price softening further: Metals Creek’s cash value is about $0.03 cents / share, the company is well-managed, and the flagship Thomas Ogden Project has recently shown remarkable high-grade gold intercepts, especially considering this year’s limited drill campaign. With new drilling at Ogden announced November 7, 2013, we continue to accumulate and average down, a strategy typically anathema to our approach at TekTraders Advisories. But in this case, we’re unwilling to miss the big upside swing if pending results confirm a significant new discovery.

Flagship Asset Recap – Thomas Ogden Zone (TOG):

The Ogden claims cover eight kilometers of strike length of the Porcupine-Destor Break between Goldcorp’s Dome Mine and Lake Shore Gold’s West Timmins development project. This property is held under a joint venture in which Metals Creek owns 50%, and Goldcorp owns 50%, with MEK remaining the operator of the project.

The project’s current exploration focus is the Thomas Ogden Zone (TOG), which lies right along the Porcupine-Destor Fault within a zone of albitized sediments and strongly silicified felsic porphyries with associated pyrite and arsenopyrite mineralization. As seen in the graphic below, the zone features two parallel porphyry units.

Thomas Ogden Porphyries & Notable Intercepts – December 2, 2013


The TOG gold zone is near surface and consists of porphyry-style mineralization with associated pyrite, strong silicification and visible gold, with few sulphides. This zone has been traced over 400 m on surface, and the anomalous area is open along strike, to the east, west, and at depth. Deeper porphyry-style mineralization is also present with associated arsenopyrite, pyrite and silicification. At the northern ultramafic contact within the sedimentary rock, a second zone of deep gold mineralization is also present. Both types of mineralization are open along strike and at depth.

Thomas Ogden Zone News Update:

The Thomas Ogden Zone’s 2013 drilling highlights include holes TOG 13-25 which returned bonanza-grade gold intercepts of 12.53 m of 210.19 g/t Au, including 0.93 m of 2732.64 g/t Au, and TOG-13-27 which returned 9 m of 49.96 g/t Au including 1.0 m of 434.77 g/t Au. Previous drilling has confirmed that the discovery zone is an easterly plunging alteration zone within the Porcupine-Destor Fault, typical of other deposits along strike, and the discovery zone remains open.

Near-Term Catalysts & Future Plans – Thomas Ogden Zone:

Metals Creek’s eight-hole Spring 2013 drill program focused on drill testing down dip and along strike with high-grade intercepts corresponding with fold hinges. It appears that these fold hinges are functioning as collection units for significant clusters of gold mineralization. It is important to note that discovery intercepts this year are extremely high grade. Even at this early stage, the results compare favorably with those that have led to the Timmins Camp’s most recent mineable deposits. As of November 7, 2013 Metals Creek has resumed diamond drilling, specifically targeting shallow gold mineralization at the TOG Zone. The goal of course is to continue to prove up the discovery beyond the high grade intersections added this Spring, while establishing the geometry of the Thomas Ogden Zone. At this time, drilling is underway, with news pending.

Developing Asset Recap - Squid East, Yukon:

Metals Creek acquired Squid East through staking in the Dawson Range gold district in 2011 and there are no underlying royalties or other interests on the property. Three of the claim blocks are located in the Matson Creek area, close to the Matson Creek placer gold camp, and the fourth block is located west of the Yukon River, 40 km north of Kinross Gold’s White Gold property. The claims were staked to cover a number of gold geochemical anomalies that compare favorably with those found overlaying recently discovered gold deposits in the White Gold camp.

Yukon Property Locations – December 2, 2013


Exploration activities on Squid East for 2013 so far consist of trenching and drilling programs funded by way of joint venture with GTA Resources (TSXV: GTA).

GTA Resources can earn from 51% up to 70% of the project interest over a five year period. To earn an initial 51% interest, GTA must make cash payments of $60,000 over three years, issue a total of 2,000,000 shares over three years, and incur work expenditures of $2,000,000 over three years with Metals Creek remaining the operator during the earn-in period. Once a 51% interest is earned by GTA, either a 51/49 joint venture will be formed, or GTA may elect to earn an additional 19% interest to bring its total property interest to 70%. GTA may increase its interest from 51% to 70% with an additional payment of $210,000 and 400,000 shares within 120 days of the 3rd anniversary date and incurring an additional $1,000,000 in exploration expenditures by the 5th anniversary. GTA would assume operatorship once it had earned a 51% interest.

Squid East News Update:

Announced August 6, 2013, Metals Creek’s trenching results revealed a new gold discovery named the “Exploits Zone” at Squid East. Bedrock mapped in the trenches consisted of heavily bleached and weathered broken rock which is considered to be in place and is typical for the White Gold District. The host rock to the gold mineralization consists of sericite schist with local quartz veining, and local hematite alteration.

Initial trenching focused on a strong northwest trending gold and pathfinder soil anomaly, with chip sampling from recently completed trench E4-3 returning 1.96 grammes per tonne (g/t) Au over the entire 22 m trench length, that included a higher grade interval of 6.39 g/t Au over 4.0 m. Individual chip samples within this zone were 2.0 meters long and ranged from 0.25 g/t to 8.55g/t Au. Trenching was limited to 22 m within this portion of the trench due to frost conditions at both ends. Notably, mineralization hasn’t been cut-off in terms of zone width and remains open in all directions. Additional, final assay silver results announced September 12, 2013 demonstrate the new zone has significant silver mineralization with a final composite across the zone of 1.96 grammes per tonne (g/t) Au and 160.5 g/t Ag over 22 meters. This trench also contained a higher grade zone of 6.39 g/t Au and 513.5 g/t Ag over 4.0 meters.

Following up on the outstanding trench results, were results of a four-hole drill program released October 8, 2013. The drill program targeted mineralization recently reported from the completed trenching program and has an associated strong northwest trending gold plus pathfinder element soil anomaly. The results show the new zone to have significant gold and silver mineralization returning assay results up to 1.54 grammes per tonne (g/t) gold (Au), 114 g/t silver (Ag) and 0.31% lead (Pb) over 21 meters (m) in hole SE13-002. This hole also contained a higher grade zone of 2.43 g/t Au and 185 g/t Ag and 0.47% Pb over 12 meters. The initial three holes appear to have all collared in the zone and the fourth hole, which was drilled in the opposite direction, was drilled down dip and remained in the interpreted footwall for its entire length.

This program was designed to obtain a better understanding of the style of mineralization and geometry encountered at the Exploits Zone, with the fundamental goal of finding a bedrock source to the strong gold and pathfinder soil anomaly defined in 2012. So far, results show trenching and drilling may only have clipped the eastern side of a gold-silver alteration system that remains wide open for expansion. The intersected mineralization is entirely oxidized and the combined gold and silver values make this zone of special interest in the White Gold District.

Squid East Exploits Trench Results and Notable Intercepts – December 2, 2013


Near-Term Catalysts & Future Plans – Squid East:

Most notably, results released from the Exploits Zone so far compare favorably to other significant initial trenching results in the White Gold District, including Kaminak’s 3.2M + oz Au Coffee Project, which began with trench assays of 2.3 g/t Au over 21.0 m. With a target of this calibre, we can expect additional trenching, and a robust drill program, likely targeting the newly-discovered gold-silver alteration system in Q2-Q3 of 2014.

Summary & Investment Case:

The most challenging aspect of any bear market isn’t the wealth destruction on the way down, but rather having the conviction to stick with favorite companies—or to go even further by averaging down. With this in mind, we’ve chosen to go deeper with a few select issuers; chief among them is Metals Creek Resources.

Although overlooked by the market, the company’s 2013 drill results at Ogden and Squid East have validated our faith in both management’s savvy and each project’s geological potential. Our best thinking suggests the Thomas Ogden Project may be a few short holes from the next big Timmins discovery, while the Exploits Zone has all the same, early-stage earmarks of Kaminak’s Yukon standard-bearer, Coffee Creek.

Metals Creek remains well funded, with efficient G&A cost savings noted throughout the company’s recent financials. More importantly, management has shown a knack for well-structured deals with both major companies and teams of proven explorationists. The company’s float is appropriately sized and liquid, an achievement in-and-of itself in this tough market. We consider the stock a bargain, at a discount to cash value and featuring massive potential upside. With the share price rolling off the 52-week low and TOG Zone results pending, we are seizing the opportunity to add materially. And if the next batch of results confirms our suspicions, this will be our last chance to buy stock anywhere near these prices.

To good trading and even better investing,

Adam Greene
TekTrader Advisories Inc.