Metals Creek Resources (TSX-V: MEK)
The Best Place to Look For Gold is in the Shadow of Headframes
Message: TekInvestor’s Fundamental Evaluation: Metals Creek Q2 2014
TekInvestor’s TekTraders Fundamental Evaluation:
Metals Creek Resources (TSXV: MEK) Q2 2014 - UPDATE
April/28/2014
Metals Creek Resources (TSXV: MEK) Q2 2014 - UPDATE
April/28/2014
Business Focus: Gold exploration in politically-safe districts including Timmins, Ontario and the Yukon’s Matson Creek Camp. Graphite exploration in the James Bay Lowlands, Arc of Fire District.
Flagship Assets: Thomas Ogden Project 50/50 joint venture with Goldcorp featuring 8 km of strike length of the Porcupine-Destor Break, Timmins Ontario.
Developing Assets: Feagan Lake Graphite project, 100% owned with 12 claims immediately west adjacent to Zenyatta’s Albany, the largest and only high-purity hydrothermal Graphite deposit being developed in the world. Squid East Project in Matson Creek area of Yukon.
Listed TSXV: MEK
Listed OTC: MCREF
Shares Outstanding: 98.5 M
Cash and Marketable Securities (December 31, 2013) $1,935,535
52-Week High: $0.08
52-Week Low: $0.02
Price April 25, 2014: $0.04
Market Cap: $3.94 M
Telephone: 709 256 6060
MetalsCreek.com
Twitter.com/MetalsCreekRes
Two Telling Charts – What A Difference A Few Months Make:
Looking back to Q4 of last year, the TSX Venture Index stalled out at 934 on November 29, 2013 and down-trended to a bottom of 886 on December 17, 2013 – the 2nd lowest close since the depths of the financial crisis. At the time of our last update, December 2, 2013 we sensed capitulation and went long on Metals Creek Resources, accumulating between $0.02 - $0.025 throughout tax loss season. Whether it was savvy, intestinal fortitude, or just good luck – we made the right call. The index rebounded smartly +14.6% since that time, breaking through both the 50 and 200-day moving averages in the last week of 2013, followed by support around the 200-day moving average in February 2014, and leading to a mid-month (50/200 day MA) Golden Cross.
1 Year TSX-Venture
We’ve also seen good action and appreciation in Metals Creek’s market thought Q1 - Q2 2014. Share price has increased 100% since December’s lowest point, moving though both the 50-day and 200-day moving averages, with a (50/200 day MA) Golden Cross appearing mid-April. These technical events, backed by strong North American equity markets, give us confidence that we’re in the early stages of a new junior bull market, and with MEK, we’re positioned to capture significant upside in the coming months.
1 Year Metals Creek Resources (TSX-V: MEK)
Flagship Gold Asset Update – Thomas Ogden Zone (TOG):
The Ogden claims cover 8 KM of strike overlaying the Porcupine-Destor Break between Lake Shore Gold’s West Timmins project and Goldcorp’s Dome Mine. This asset is held under a 50/50 joint venture with Goldcorp, with MEK remaining the project operator. The project’s current exploration focus is the Thomas Ogden Zone (TOG), which lies along the Porcupine-Destor Fault within a zone of albitized sediments and strongly silicified felsic porphyries. The zone features two parallel porphyry units.
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 Recent Highlights:
The Thomas Ogden Zone’s 2013 drill program concluded with exciting new highlight holes (January 16, 2014) including TOG-13-38 which returned 54.65 meters (m) of 1.89 grammes per tonne (g/t) Gold, including 25.70m of 2.79 g/t Au and hole TOG-13-36 which returned 17.05m of 1.90 g/t Au, including 6.05m of 4.21 g/t Au. Two other holes completed in this latest drill program, TOG-13-35 and TOG-13-37 were drilled below the eastern plunge of the gold zone, confirming the location of the lower contact.
Over the past 3 years, Metals Creek has drilled 50 holes at Thomas Ogden, which confirms the discovery zone is an easterly plunging alteration zone within the Porcupine-Destor Fault, typical of other deposits along strike. Metals Creek’s 2013 drill programs focused on drill testing down dip and along strike with high-grade intercepts corresponding with flexures within the TOG Zone stratigraphy. It appears that these fold hinges are functioning as collection units for significant clusters of gold mineralization.
Thomas Ogden Long Section – January 16, 2013
Near-Term Catalysts & Future Plans – Thomas Ogden Zone:
The results from TOG-13-38 and TOG-13-36 were an excellent conclusion to 2013’s exploration season. These infill holes confirm the continuous nature of the gold mineralization within the Thomas Ogden Zone and point to continued expansion of the resource potential. Discovery intercepts throughout 2013 are extremely high grade, similar to those that led to the Timmins Camp’s most recent mineable deposits. Most notably, the discovery zone remains open, with exploration news pending in Q2 – Q3 of 2014. We await news of further drilling.
Developing Graphite Asset Update – Feagan Lake, Arc of Fire District
Metals Creek’s recently-staked Feagan Lake Project is located in the emerging Arc of Fire District, James Bay Lowlands, northwest of Hearst, Ontario. This area has been largely ignored in the past as a result of poor outcrop exposure and younger Phanerozoic (460-360 Ma) cover rocks, up to 200m thick, overlying the prospective Archean rocks. Recent advances in airborne electromagnetic (EM) technology have allowed deeper penetration/resolution through the Fe-deficient shallow marine carbonate/clastic sediments to target favorable geological and structural settings within the underlying Archean.
Arc Of Fire Company Locations & Geophysics
Metals Creek’s claims cover several magnetic lows on the western edge of an oval shaped, 27km x 74km intrusion which hosts Zenyatta’s Albany Graphite Project. The 12 claim, 175 unit contiguous claim block is tied onto Zenyatta’s western boundary. Overall, the large intrusion has a magnetic high signature with round pockets having magnetic low anomalies, which are the target of numerous exploration companies as a potential source of the ‘high purity’ (hydrothermal) graphite found at the Albany Discovery.
Metals Creek’s Three Magnetic Lows Compared to Zenyatta’s Albany Magnetic Low
The area’s known mineralization has been described as occurring in breccia pipes with dimensions in the order of 200 m by 400 m. It is believed that the graphite breccia pipes that exist on Zenyatta’s Albany project are similar to kimberlite pipes (diatremes) and are likely to occur in clusters along structural corridors.
Near-Term Catalysts & Future Plans – Feagan Lake:
Metals Creek has recently completed a VTEM plus time domain airborne over previously identified magnetic lows resulting in the discovery of several prospective electromagnetic (EM) anomalies.
New Strongly Conductive Feagan Lake Graphite Target vs. Zenyatta Discovery
One anomaly in particular returned a strong conductive response on all channels within a magnetic low (March 26, 2014). As such, The Feagan Lake Property has strong potential to host a high purity, vein type graphite deposit with the discovery of several new EM anomalies within mag lows similar to Zenyatta Ventures recent discovery. Exploration news is pending.
Developing Asset Update - Squid East, Yukon:
Metals Creek’s 100%-owned Squid East project was acquired through staking in the Dawson Range gold district in 2011. 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 – April 28, 2014
Metals Creek’s 2013 exploration season 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, and remains completely open. The new discovery is within the unglaciated portion of the west central Yukon terrain, proximal to an existing placer mine and is trail accessible.
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 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.
Squid East Exploits Trench Results and Notable Intercepts
Squid East Recent Highlights:
As of January 14, 2014, Metals Creek reported results from bottle roll cyanide extraction tests from the Exploits Zone. Six samples were collected from the main trench and two drill holes, and these were submitted for both fire assay and bottle roll cyanide analyses. Gold grades for these six samples ranged from 0.71 grammes per tonne (g/t) Au to 9.99 g/t Au. The bottle roll cyanidation process confirmed 92% average leachable gold recovery from drill core and trench samples, demonstrating the weathered material could potentially react well to inexpensive, heap leach extraction methods.
Near-Term Catalysts & Future Plans – Squid East:
Results from the Exploits Zone so far compare favorably to other significant initial trenching and early drill 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. So far, MEK’s 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 combined gold and silver values make this an excellent early-stage target. With a target of this calibre, we can expect additional trenching, and a focused drill program, likely targeting the new gold-silver alteration system in Q2-Q3 of 2014. We await news of further drilling.
Summary & Investment Case:
The Venture Index’s rally off the bottom of December 17, 2013 is now over 4 months old. Despite falling through the 50-day moving average in late March, we suggest this was rational profit-taking in a temporarily overbought market. Lending further credence to this theory, the index resumed bullish trend throughout April, and appears ready for another upside break through the 50-day MA. As such, our investment rationale is simple: The market is tentative, but it is a bull market. And to borrow a thought from Dennis Gartman, in bull markets, we can be only long or neutral. We’re glad to have accumulated Metals Creek in December of 2013, and both the venture index and MEK’s chart give us plenty of reasons to stay long, and potentially accumulate further—in this case, on signs of strength.
We remain impressed with the financial acumen shown by Metals Creek’s management. Despite the 2011 - 2013 bear market the company remains well funded, and the float is manageable and liquid. With a market capitalization of just under $4 million, nearly $2 million in the treasury, and exploration underway on three top-tier targets, we consider the stock a bargain.
These factors aside, we invest in Metals Creek due to the quality of the company’s three key assets. Recent, high-grade drill results at Ogden and Squid East demonstrate significant, immediate exploration potential in keeping with management’s exploration theses. The Thomas Ogden Project may be a few holes from becoming the next big Timmins discovery, while the Exploits Zone has the same, early-stage characteristics of Kaminak’s Yukon flagship, Coffee Creek. This said, we’re keenly interested in the Graphite exploration potential at the new Feagan Lake Project. Immediately west-adjacent to Zenyatta’s Albany deposit, Feagan Lake’s outstanding three mag lows, one with a strong all-channel response, are the best undrilled targets in the Arc of Fire District. With all this in mind, and the price of admission hovering around $0.04, the investment potential is equally striking.
To good trading and even better investing,
Adam Greene
TekTrader Advisories Inc.
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Adam “TekInvestor” Greene is an investment educator with a passion for analysis and discussion of all types of money-making ideas. TekTrader Advisories Inc. manages private equity portfolios that enhance growth through speculative investing in TSX-V and OTC listed junior stocks in the natural resource and tech sectors. A credentialed scientist and member of the Market Technician’s Association, Adam regularly publishes stock technical updates and freely shares his personal investment strategies with followers and subscribers. The TekTraders Speculative Portfolio is hosted on Stockhouse.com.
Disclaimer: Adam “TekInvestor” Greene is not a certified financial analyst, licensed broker, or qualified investment professional. Nothing within any report, technical update, blog, commentary, website, interview, email, text, online content and all other types of private or instant communications constitutes investment advice or an offer or solicitation to transact securities listed or otherwise. All reference information is obtained from public documents and content available on company websites, regulatory filings, various stock exchange websites, and stock information services. While the information is provided in good faith and believed to be reliable and accurate, no guarantees are implied. Information may not be complete or correct and is provided without any legal responsibility or obligation to provide future updates. Adam Greene and TekTrader Advisories Inc. accepts no responsibility, or assumes any liability for any direct, indirect or consequential losses arising from the use of the information. The information contained in any report, technical update, blog, commentary, website, interview, email, text, online content and all other types of private or instant communications is subject to change without notice, may become outdated, and will not be updated. All reports, technical updates, blogs, commentaries, website postings, interviews, emails, texts, online content and all other types of private or instant communications reflect Adam Greene’s personal opinions and nothing more.
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