Klondike Gold – Searching for the Mother Lode22 min read


“The placers dwindle, but the veins that gave rise to the placers are inexhaustible.”

 

A line from The Age of Gold, by H.W. Brands, depicting sentiment towards ‘hard rock gold’ during the California Gold Rush. This realization – gold found via placer mining was but a fraction of the california 49erhydrothermal source held in the hard rock – would change exploration and mining practices forever.

For hundreds of years, gold has been discovered through placer mining. In this rudimentary practice, Mother Nature has done most of the work, having separated the gold from rock. Hard rock gold, usually found in quartz veins, is understood as the source of placer deposits.

The Making of the ‘Mother Lode’ – Thank Californians

 

During the iconic California Gold Rush, the discovery of the “Mother Lode,” as it was christened, “inspired awe in the gold-hunters.” In his book on the multifaceted history of the California Gold Rush, H.W. Brands stated,

“The mere thought of this huge body of ore lying beneath the foothills set the crustiest miner quivering.”

 

The discovery of gold in California took place in 1848, some 50 years before the precious metal would be found a few thousand kilometers to the North – up in the legendary Klondike (we will explain the significance of this shortly).

Modern estimates by the U.S. Geological Survey estimate about 12 million ounces of gold were removed in the first five years of the California Gold Rush. Produced strictly through crude placer California Gold Rushmining (shovelled and panned), this is an astounding feat.

By the mid 1880s, historians estimate hydraulic mining in California recovered 11 million ounces of gold. By the late 1890s, dredging extracted more than 20 million ounces.

By necessity, Californians began chasing the gold deeper, adopting quartz mining as their method to go after the ‘mother lode’. It involved superior geology, metallurgy, engineering, physics and chemistry. Hard rock mining led to shafts as miners followed outcroppings and gold bearing veins deep underground.

According to various sources, Between 120 and 200 million ounces of gold have been produced in California since that first discovery. This makes the Klondike’s approximate 20 million total ounces of gold production seem rather small… and that’s a good thing from our vantage point.

The Klondike’s Mystery

 

Approximately 20 million ounces have been mined from the river beds, creeks and surrounding top soil in the Klondike. We speculate that, as was the case in California, many times that exists in the hard rock source(s), which no one has discovered yet. And we’re certainly not the only ones who believe this…

On August 1st, Sunny Freeman of the Financial Post published an article titled, In search of the motherlode: Why Yukon is experiencing a 21st-century gold rush.

We have been writing and producing videos about this precise topic for years. This “mysterious mythology,” or what geologists have been searching for since the first gold discovery in 1896, is the source of the Klondike placer gold fields. In all the years of gold production, there has never been a hard rock gold mine in the Klondike. All of the 20 million ounces mined have come near the surface in riverbeds and topsoil. The world’s largest gold companies are surely aware of this.

And, as this gold market heats up (gold is up nearly 12% year-to-date) amidst a declining U.S. dollar, majors are not sitting idle.

Gold's 1-Month Chart
Gold’s 1-Month Chart

 

According to Sunny Freeman’s article mentioned above, “Companies including Goldcorp Inc., Newmont Mining Corp. and Barrick Gold Corp. have lined up to invest more than US$600 million in the Yukon since 2016 – more than anywhere else in the world.”

Check out the action in the Yukon over the past 14 months – reported in Freeman’s Financial Post article:

  • May 2016: Goldcorp buys Kaminak Gold for $520 million
    (We wrote about this company’s rise in The making of a Junior Gold Buyout: the Kaminak Story)
  • December 2016: Agnico Eagle pays $14.5 million for 19% of White Gold
  • March 2017: Newmont signs property earn-in with Goldstrike worth as much as $53 million
  • April 2017: Barrick signs property earn-in and strategic investment deal with ATAC worth as much as $63 million

The above represent three of the top four gold producing companies in the world. All of them have taken a meaningful stake in the Yukon over the past 14 months. The only one not included is AngloGold Ashanti, a company focused in Africa.

 

Top Producing Gold Stocks

 

Enter Klondike Gold Corp. (KG: TSXV). This junior explorer has one of the largest land packages in the Klondike and its board recently approved an 80-hole drill program. With well-known shareholders that include famed billionaire mining investor Frank Giustra (as of June, Mr. Giustra owned directly and indirectly roughly 14.5% of Klondike Gold Corp.), a healthy treasury and Frank Giustrabeing in the midst of its most aggressive work program to date, we felt now is the ideal time to release this report on Klondike Gold.

Klondike Gold | A Long Time Coming

 

We’ve been covering this company’s story for three years, have made handsome profits from its stock on more than one occasion, and visited its assets in the Klondike for the past three summers. After spending a few days on its project with the company’s President and CEO a few weeks ago, it became apparent just how ambitious Klondike Gold’s plan of attack is.

Klondike Gold

You see, Peter Tallman, the company’s CEO, explained where and how he is hoping to discover the source of gold mined in and around the Eldorado and Bonanza Creek beds. Combined with the Victoria Gulch (a smaller creek that leads into the Bonanza), Klondike believes this placer gold may have come from its Lone Star target – where it is currently drilling (assays expected shortly). To date, solely from placer mining, these creeks have produced approximately 8 million ounces of gold…

Klondike Gold History
Pinnacle site visit last month: Before heading out to the Lone Star target, Peter Tallman gave a brief history lesson on the legendary Klondike Gold Rush.

 

As you will see from the video below, 100 hundred+ years after the original Klondike Gold Rush, the placer miners are still busy in the region, some with significant operations, quietly making a mint.

Klondike Gold began hitting on its Lone Star target last summer. Its exploration narrative is starting to mature and the company is as well capitalized as we’ve ever seen it with roughly $7 to $8 million in its treasury – well capable of executing an ambitious work program. Furthermore, we believe that Tallman and his company’s years of experience in the Klondike give them an exploration insight edge. Let us explain…

 

Klondike Gold
Pinnacle site visit: With years of mapping, surveying, sampling and drilling in Yukon, a member of Klondike Gold’s team shows us the expansive, proprietary databank of geological info the company has accumulated.

 

In the summer of 2016, drilling at Lone Star encountered near-surface gold mineralization across broad widths of more than 30 meters. The results covered a strike length of 700 meters and remain open in all directions.

Klondike Gold Property Map

A couple highlights from last season’s drilling:

Hole LS16-58 struck gold from 6.5 meters to 43.5 meters, totaling an interval of 37 meters averaging 2.4 grams per ton. Hole LS16-59 struck gold between 16.5 meters and 44.2 meters, averaging 1.2 grams per ton over 27.7 meters.

See more results here.

N.B. Kaminak’s Coffee Deposit in Yukon had total indicated gold mineral resources of 3.0 million ounces or 63.7 million tons averaging 1.45 grams per ton gold at the time of its approximate CAD$520 million buyout by Goldcorp.

Klondike is attempting to define a multi-kilometer strike length

 

According to the company, “The 700 meter drilled length of gold-mineralization encountered at Lone Star is associated with a 1,500 meter induced polarization (“IP”) anomaly (the length of the survey, target remains open) and a 4,000 meter long gold-soil anomaly, as compiled from various c.1980’s exploration efforts.”

The 2017 exploration season is attempting to demonstrate mineralized continuity. In fact, the title of Klondike Gold’s August 1st press release is:

“Klondike Gold Confirms Along-Strike Continuity, Intersects 1.6 g/t Au over 30.7 meters at Lone Star Target”

 

CEO Peter Tallman summed it up best:

“The Company has achieved a number of important milestones with the discovery of large, bulk tonnage style mineralization on its Klondike district property.  At the Lone Star target, recent systematic drilling confirms continuity of near-surface gold mineralization along strike over 750 meters.  Step out holes, 500 meters in one direction to Pioneer and 700 meters in another to O’Neill, both have lithologies containing visible gold which potentially doubles the Lone Star mineralized target length to 2 kilometers if these zones can be connected with ongoing exploration.  Our current focus is continuing to expand the footprint of gold mineralization at the multi-kilometer long Lone Star target, one of four gold-bearing targets identified in the Eldorado Creek – Bonanza Creek area.”

 

If proven, a 2-kilometer mineralized trend length would be the largest we’ve ever featured from a gold explorer.

Klondike Gold’s Lone Star History

 

The Lone Star mineral claim has quite a history. In fact, between 1911 and 1914, the Lone Star prospect produced an unknown amount of gold from surface with some reports showing the grade near 5 g/t.

Lone Star mineral claim - Victoria gulch
Lone Star mineral claim – Victoria gulch

 

Klondike Gold – Lone Star Today

 

As an exploration company, when you are ‘on the gold’ as they say, it’s best to keep drilling. And that is precisely what Klondike Gold is doing.

The company is cashed up, having just completed a $5 million financing near the current trading price. And to that, even in the dark days of the gold bear market a few years back, Klondike Gold has never had an issue raising capital. When most other explorers packed their bags and went home back in 2014 and 2015, Klondike was progressing forward, never missing a work season thanks to its ability to raise capital. We attribute this to Peter Tallman’s unique rolodex and ability to attract some of the most famous Canadian financiers there are – including billionaire mining financier and founder of Yorkton Securities, Frank Giustra.

Peter and Alex
Peter always welcomes a chat with our team and relishes talking about geology. His passion for exploration and mining is truly contagious.

 

Peter always welcomes a chat with our team and relishes talking about geology. His passion for exploration and mining is truly contagious.

Lone Star Drilling in 2017 Has Begun

 

Already in 2017, announced August 1st, a total of 18 holes have infilled and all intersected near-surface gold mineralization at the Lone Star target. These results spanned a 750-meter length, primarily in the western and central portion of the target. The company confirmed,

“The relative step out locations of the O’Neill and Pioneer drill hole intersections are also listed, with a total potential mineralized length of nearly 2 kilometers.”

And yet, the vast majority of results are still pending – hence the timing of this report. Two things to consider:

“Thus far in 2017, the drill program has completed 35 holes. Assays for the earliest 11 holes have been received, including 9 holes in this news. Twenty-four holes are still in the lab queue, while drilling continues.”

 

Lone Star Drilling
Pinnacle site visit: Drill site at Lone Star

 

Only 9 holes have been reported. Also, it was announced on August 1st that the Company’s Board of Directors approved a 20 hole expansion of the drill program to 80 holes. The rest of this summer and into fall are going to be very active for Klondike Gold, with news flow to boot. The company is drilling now in an attempt to connect the Pioneer and O’Neill targets, which could result in a 2km trend line of gold mineralization. If assays are strong and the company can prove continuity through more discoveries of near surface gold, all in a region roughly 20 kilometers from Dawson City, industry heads will turn.

 

In The Yukon Proximity is King

 

 Klondike Gold's camp in Dawson City
Klondike Gold’s camp in Dawson City

 

Having been to Klondike Gold’s camp just last month, we can tell you it is roughly a 20-minute drive on a well-maintained road from all the amenities of Dawson City. There are placer mining operations all along the road to Klondike’s Lone Star project. Proximity and low all-in sustaining costs so often come down to cheap power, good roads and a readily accessible workforce.

 

Wrapping Up

 

From our view, Klondike Gold has built-in advantages over many juniors. The company’s President and CEO, Peter Tallman, has been a part of teams responsible for two discoveries, one gold and one antimony, going into production – both located in Canada.

Well financed, with roughly $7 to $8 million in the treasury (July corporate presentation reported approximately $3 million in treasury and Klondike just completed a $5 million financing this month), Tallman and his team will likely be able to take many swings in the iconic Klondike – a luxury few junior gold explorers currently have. What’s more, according to Sunny Freeman on August 1st, “Companies including Goldcorp Inc., Newmont Mining Corp. and Barrick Gold Corp. have lined up to invest more than US$600 million in the Yukon since 2016 – more than anywhere else in the world.”

Gold traded to a high of US$1,292 an ounce Friday, and we expect this trend to continue. Ray Dalio, arguably the most successful money manager there is, who also runs the largest hedge fund in the world, shocked the media this week when he recommended buying gold amidst current political uncertainty with North Korea. Far from a gold bug, Dalio went even further, recommending investors allocate 5-10% of their portfolio to gold…

We own shares of Klondike Gold. Recognize that we are biased as the company is an advertiser client. Please take responsibility for practicing your own thorough and independent due diligence. Learn about the risks associated with investing in exploration companies of this nature. Pick your spots…

From our perspective, the potential reward justifies the risk of putting our name behind Klondike Gold (KG:TSXV). Based on the early success of drilling at the Lone Star target so far this season, the Company’s Board of Directors agreed to ramp things up, approving a 20 hole expansion of the drill program to 80 holes.

 

And we won’t have to wait long for news…

 

Finally, Klondike Gold has dozens of drill core soon to be assayed. Therefore, results should be steady through August into the fall season – hence the timing of this report.

All the best with your investments,

 

PINNACLEDIGEST.COM

 

A Trip to the Klondike – Pinnacle On Site

 

 

Klondike Gold Stock Information

Stock symbol: KG – trades on the TSX Venture

Stock price (CAD$): $0.33

10-day avg. volume (approx): 440,000

Market capitalization (approx): CAD$23 million (source: Bloomberg)

Regional Players in the Yukon

 

Online Resources

VISIT KLONDIKE GOLD ONLINE

SEDAR FILINGS

Klondike’s Corporate Presentation

Klondike Gold
Click to view

 

Disclosure, Risks Involved and Information on Forward Looking Statements:
Please read carefully before proceeding.

THIS IS NOT INVESTMENT ADVICE. All statements in this report are to be checked and verified by the reader.

This report may contain technical or other inaccuracies, omissions, or typographical errors, for which Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, assumes no responsibility.

Important: Our disclosure for this report on Klondike Gold Corp. applies to the date this report was released to our subscribers (August 13, 2017) and posted on our website. This disclaimer will never be updated, even after we buy or sell shares of Klondike Gold Corp.

In all cases, interested parties should conduct their own investigation and analysis of Klondike Gold Corp. (“Klondike” or “Klondike Gold”), its assets and the information provided in this report.

Forward-Looking Statements:
All statements in this report, other than statements of historical fact should be considered forward-looking statements. These statements relate to future events or future performance. Forward-looking statements contained in this report regarding past trends or activities should not be taken as a representation that such trends or activities will continue in the future. Undue reliance should not be placed on forward-looking statements because we can give no assurance that such expectations will prove to be correct.

All statements, other than statements of historical fact, included herein including, without limitation, statements about the planned exploration of Klondike Gold’s projects, growth potential, the size, quality and timing Klondike Gold’s exploration, potential mineral resources, future trends, strategies, objectives and expectations are forward-looking statements. Forward-looking statements are based on assumptions and involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Klondike Gold to be materially different from any future results, performance or achievements expressed or implied in this report. Such factors include, among others, the following risks: the need for additional financing; operational risks associated with mineral exploration; fluctuations in commodity prices; title matters; environmental liability claims and insurance; reliance on key personnel; the absence of dividends; competition; dilution; changes in project parameters as plans continue to be refined; increased infrastructure and/or operating costs; the volatility of Klondike Gold’s common share price and volume and the additional risks identified in the management discussion and analysis section of Klondike Gold’s interim and most recent annual financial statement or other reports and filings with the TSX Venture Exchange and applicable Canadian securities regulations.

Forward-looking statements are often, but not always identified by the use of words such as “seek”, “anticipate”, “plan”, “aim”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe”, “budget”, “scheduled”, and similar expressions. Much of this report is comprised of statements of projection.

Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

We caution all readers of this report that even if a new discovery was made by Klondike Gold on any of its projects, there is no certainty that it would be economically viable. Furthermore, past historical production in the region is not indicative of future production potential.

Risks and uncertainties respecting mineral exploration companies are generally disclosed in the annual financial or other filing documents of those and similar companies as filed with the relevant securities commissions, and should be reviewed by any reader of this report. In addition, with respect to any particular company, a number of risks relate to any statement of projection or forward statement.

Investors are cautioned not to consider investing in any company without looking at said company’s regulatory filings and financial statements. Every reader of this report should review Klondike Gold’s regulatory filings and financial statements (found at SEDAR).

We Are Not Financial Advisors:
PinnacleDigest.com is an online financial newsletter owned by Maximus Strategic Consulting Inc. We are focused on researching and marketing for resource and technology public companies. Nothing in this report should be construed as a solicitation to buy or sell any securities mentioned anywhere in this report (specifically in regard to Klondike Gold Corp.). This report is intended for informational and entertainment purposes only! The author of this report, and its publishers, bear no liability for losses and/or damages arising from the use of this report.

Be advised, Maximus Strategic Consulting Inc., PinnacleDigest.com and its employees/consultants are not a registered broker-dealer or financial advisors. Before investing in any securities, you should consult with your financial advisor and a registered broker-dealer.

Never, ever, make an investment based solely on what you read in an online newsletter, including Pinnacle Digest’s online newsletter, or internet bulletin board, especially if the investment involves a small, thinly-traded company that isn’t well known.

We Are Biased:
Most companies featured in the Pinnacle Digest newsletter, and on our website, are paying clients of ours (including Klondike Gold Corp. – details in this disclaimer). In many cases, we own shares in the companies we feature. For those reasons, please be aware that we are extremely biased in regards to the companies we write about and feature in our newsletter and on our website.

Because Klondike Gold Corp. has paid us CAD$120,000 plus gst to provide our online advertising and marketing services, you must recognize the inherent conflict of interest involved that may influence our perspective on Klondike Gold; this is one reason why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor and a registered broker-dealer before investing in any securities mentioned in our reports.

Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, its officers, directors, employees, and consultants shall not be liable for any damages, losses, or costs of any kind or type arising out of or in any way connected with the use of its products or services, including this report. Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, its employees, consultants and affiliates are not responsible for any claims made by any of the mentioned companies or third party writers in this report. You should independently investigate and fully understand all risks before investing. We want to remind you again that PinnacleDigest.com is often paid editorial fees for its writing and the dissemination of material. The clients (including Klondike Gold Corp.) represented by PinnacleDigest.com are typically exploration-stage companies that pose a much higher risk to investors than established companies. When investing in speculative stocks of this nature, it is possible to lose your entire investment over time or even quickly.

Disclosure of Compensation & Stock Ownership:
Set forth below is our disclosure of compensation received from Klondike Gold Corp. and details of our stock ownership in the Company as of August 13, 2017:

Maximus Strategic Consulting Inc., owner of PinnacleDigest.com, has been paid CAD$120,000 plus gst to provide online advertisement coverage for Klondike Gold Corp. for a 34-month online marketing agreement. The company (Klondike Gold Corp.) has paid for this coverage. The coverage includes, but is not limited to, the creation and distribution of reports authored by PinnacleDigest.com about Klondike Gold Corp. (reports such as this one), as well as display advertisements and news distribution about the company on our website and in our newsletter. We (Maximus Strategic Consulting Inc.) have bought and sold shares of Klondike Gold Corp. in the past. We (Maximus Strategic Consulting Inc.) currently own shares of Klondike Gold Corp. and intend to sell every share we own of Klondike Gold Corp. for our own profit. All shares we (Maximus Strategic Consulting Inc.) own of Klondike Gold Corp. will be sold without notice to our subscribers. Please recognize that we benefit from price and trading volume increases in Klondike Gold Corp. Please recognize that we are extremely biased when it comes to Klondike Gold Corp.

PinnacleDigest.com’s past performance is not indicative of future results and should not be used as a reason to purchase any security mentioned in this report or on our website.

The past success of members of Klondike Gold’s management team, insiders and advisory team are not indicative of future results for Klondike Gold.

All information regarding Klondike’s stock price and market cap was sourced from Bloomberg and/or the company’s website. There are no guarantees that these figures are accurate or complete.

Cautionary Note Concerning Estimates of Inferred Resources:
This report and/or supportive documents used in the research process of this report may use the term “Inferred Resources”. U.S. investors are advised that while this term is recognized and required by Canadian regulations, the Securities and Exchange Commission does not recognize it. “Inferred Resources” have a great amount of uncertainty as to their existence, and great uncertainty as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of “Inferred Resources” may not form the basis of feasibility or other economic studies. U.S. investors are also cautioned not to assume that all or any part of an “Inferred Mineral Resource” exists, or is economically or legally mineable.

Mineral resources which are not mineral reserves do not have demonstrated economic viability. The estimate of mineral resources may be materially affected by environmental, permitting, legal, title, taxation, socio-political, marketing, or other relevant issues.

Maximus Strategic Consulting Inc. and PinnacleDigest.com (including its employees and consultants) are not chartered business valuators; the methods used by business valuators often cannot justify any trading price for most junior stock exchange listed companies. Klondike Gold Corp. is a junior stock exchange listed company.

Any decision to purchase or sell as a result of the opinions expressed in this report OR ON PinnacleDigest.com will be the full responsibility of the person authorizing such transaction, and should only be made after such person has consulted a registered financial advisor and conducted thorough due diligence.

Information in this report has been obtained from sources considered to be reliable, but we do not guarantee that it is accurate or complete. Our views and opinions regarding the companies we feature on PinnacleDigest.com and in this report are our own views and are based on information that we have received, which we assumed to be reliable. We do not guarantee that any of the companies mentioned in this report (specifically Klondike Gold Corp.) or on PinnacleDigest.com will perform as we expect, and any comparisons we have made to other companies may not be valid or come into effect.

To get an up to date account on any changes to our disclosure for Klondike Gold Corp. (which will change over time) view our full disclosure at the url listed here: http://www.pinnacledigest.com/disclosure-compensation/

Under no circumstances is this report allowed to be reposted, copied or redistributed without the express consent of Pinnacle Digest.

Learn how to protect yourself and become a more informed investor at www.investright.org

Trading in the securities of Klondike Gold Corp. should be considered highly speculative.