FRE

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There’s only so much you can learn in meetings and by combing through the official reports provided by the company. Sometimes you need to get your boots dirty, literally and figuratively, and visit the projects yourself to truly understand a company’s potential.
We flew to Nevada to visit Fremont Gold’s (FRE.V) Gold Bar project with CEO Blaine Monaghan, President Dennis Moore and VP Exploration Clay Newton.

The visit

We visited the Gold Bar and Gold Canyon projects in the first week of February and were positively surprised by the existing infrastructure. Elko is only a 30-minute flight (if the pilot can find the runway) from the large international airport at Salt Lake City, which has several direct flights to Europe on a daily basis.

It’s easy enough to get into Salt Lake City and Elko from pretty much anywhere within the Americas and Europe, and from Elko it’s a 3 hour-drive down to the project with the majority of the trip on paved highways. The final few kilometers are on a well-maintained dirt road that is one of the access routes to McEwen Mining’s Gold Bar mine, which is in the final stages of the construction phase.

So, from an accessibility point of view, the location of Gold Bar and Gold Canyon is excellent. There are still some buildings and equipment on site but the previous owner is currently removing them and should finish the job within the next few months (Fremont owns the mineral rights but doesn’t own the buildings). While we were on site, contractors were busy safely dismantling the buildings and equipment.

 

We were briefed by Dr. Clay Newton, in a warehouse of sorts, and he explained his exploration theory for the Gold Bar and Gold Canyon deposits (see later). After this technical briefing it was a short drive on the well-maintained dirt roads to the Gold Bar open pit where almost 290,000 ounces of gold were mined and recovered from less than 4 million tonnes of rock, indicating an average head grade of about 2.2 g/t gold. After viewing the historic Gold Bar mine we visited the drill rig, which was gearing up for the first drill hole (the drill program has been completed by now, see later).

If there’s one thing we would like to emphasize again, it’s the fact Nevada lives and breathes mining. As one of the main economic drivers of the state, new investments in mining are absolutely welcomed. In both the town of Eureka and the city of Elko, locals were happy to hear about new exploration efforts in the region. That’s refreshing because in some jurisdictions they are absolutely hostile to it. Nevada’s mining-friendliness isn’t just a hollow phrase; mining companies are welcomed with open arms as government and the local population understand and support mining.

The exploration theory that’s currently being tested

It’s always interesting to learn about new exploration theories but it’s even more interesting having a structural geologist with a doctorate’s degree explain it. The next image is important to fully understand why Fremont picked up its claim blocks.

Roberts Creek in a regional geologic and property framework
Roberts Creek in a regional geologic and property framework

The blue/grey/green zones are the paleozoid bedrock levels which are considered to be the ‘upper plate’ of the underlying structures. It’s pretty straightforward: the blue zones very likely don’t carry any mineralization and should be considered as barren and that’s why Fremont’s claims are focusing on the yellow zones (alluvium rocks, tertiary volcanic) and the pink zones (the lower plate rocks that have been separated from the upper plate rocks by thrust faults), which is where McEwen Mining’s Gold Bar mine will be located.

The pink zones are every intriguing as these lower plate rocks are the main host for the Carlin-type deposits. From the previous image, all you need to remember is that the yellow and pink areas are the most prospective to find gold mineralization. And in the next image, the faults are very important to understand why Fremont Gold has been drilling at this exact spot:

Permitted Drill Holes and Mercury Soil Anomalies to the Southeast of Historic Gold Bar Mine
Permitted Drill Holes and Mercury Soil Anomalies to the Southeast of Historic Gold Bar Mine

At Gold Bar we see three different faults, the two NE faults are relatively parallel while a third fault, the NNE fault appears to be intersecting the two NE faults. That’s interesting as the most western NE fault appears to have offset the Millsite deposit from the main Gold Bar mine, which is located closer to surface than Millsite (which appears to have dropped down by approximately 150 meters).

Fremont Gold Site Visit - FRE

Newton’s exploration model is based on the theory that a similar offset and drop has occurred at the eastern NE fault. That is why the company is targeting the edge of the NNE fault in the hopes of finding a gold deposit beneath the alluvium cover. The decision to drill that target was further strengthened by the NW trending geochemical structure identified by a soil sampling program.

So why didn’t the previous operators think about this, you may ask. Atlas Precious Metals was mainly looking for the low-hanging fruit in near-surface oxidized gold deposits it could easily leach. That’s good news for Fremont Gold as it can apply its own exploration models to potentially finding more gold deposits or mineralization at both Gold Bar and Gold Canyon.

Fremont Gold has now completed the reverse circulation drill program at Gold Bar. The samples are being prepared for shipping and will be announced once they have been received and approved by the company. We would expect to see assay results in early April.

Due to the bad weather in Nevada (we weren’t joking when we said the pilot couldn’t find the runway on our first pass into Elko), Fremont Gold has elected to delay the planned 500 meter diamond drill program at Gold Canyon until conditions improve. It makes no sense to stubbornly push ahead with the drill program, endangering the safety of the employees. Additionally, not moving drill crews up there will also help to maintain a good relationship with neighbor McEwen Mining (MUX.TO, MUX), which is rushing to complete the final construction phase of its own Gold Bar mine.

We also expect the Roberts Creek claim block to get some additional attention this year. Last week Fremont Gold announced the discovery of several gold-in-soil anomalies that appear to coincide with four fault structures and a magnetic anomaly (ideally you’re looking for magnetic lows (in blue) surrounded by magnetic highs (in orange-red)). As you can see on the next image, Fremont has already selected two targets that it would like to drill at Roberts Creek.

Gold in soils in relation to projected faults from the range and Roberts Creek
Gold in soils in relation to projected faults from the range and Roberts Creek

Fresh blood and fresh money

In October, 2018, the former CEO of Fremont Gold, Dennis Moore, stepped down and was replaced by Blaine Monaghan. Moore remains as president of Fremont and is focusing his energy on making a new discovery while Monaghan is utilizing his capital markets expertise to increase the profile of Fremont and raise capital.

Some of you will remember Blaine Monaghan from his time with Columbus Gold (CGT.TO) and Allegiant Gold (AUAU.V), where he gained valuable experience in the Nevada gold space in his capacity as Vice President Corporate Development. However, Blaine has also worked for five companies that were subject to M&A, including Canplats (which was acquired by Goldcorp for $300M in 2010), and has helped raise more than $100 million in the process.

And Monaghan immediately did what he was supposed to do: raise cash for Fremont Gold so the company could continue to develop (and execute) its exploration plans. The company closed a C$1.23M financing which consisted of 8.79 million units in December, with each unit consisting of one common share as well as half a warrant with a strike price of C$0.20 valid for two years.

Conclusion

This site visit reinforced our belief that if you truly want to understand a company’s potential you have to go out into the field and view the projects yourself. And after meeting with Dr. Clay Newton, and learning more about his exploration model, we’re confident that a great deal of potential remains at Gold Bar and Gold Canyon. With a soon-to-be producing mine next door, Fremont Gold’s mission is relatively simple: find enough ounces that could entice McEwen to make an offer, either at the project level or corporate level, or to be a stand-alone operation.

However, the above isn’t Fremont Gold’s only plan of action. In addition to its projects in the Gold Bar district, it also owns a number of earlier-stage projects that it believes have great potential for new discovery of which the North Carlin project appears to be high on Fremont’s list. Management believes that North Carlin has the potential to deliver a discovery story analogous to Gold Standard’s 2012 discovery at Railroad. But that is a story for another day.

In short, we believe that Fremont checks all of the boxes (people, projects, and jurisdiction) and is worth a close look at these price levels.

Fremont Gold Site Visit - FRE

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Disclosure: Fremont Gold is a sponsor of the website, we also have a long position. Please read the disclaimer

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