Blackwolf Copper and Gold: The Next Frank Giustra 10-Bagger?

In a bull market correction, the proper investment behavior is to accumulate quality stocks for the long term. This is easier said than done, since in these phases we tend to be overly anxious and gun shy! So, buying equities that have already corrected quite a bit is the way to go. 

Blackwolf Copper and Gold (BWCG.V), the recently created Frank Giustra vehicle, fits the bill. After hitting a high of 49 cents, Blackwolf has experienced a significant correction. We believe that accumulating shares around the current price of 33 cents, provides a favorable risk/reward scenario in a bull market.

Monday, June 5, 2023

Are you feeling nervous?

From the October lows to the recent highs, gold has gone up 27%. The GDX, the large cap mining index, went up 68.8%. Not bad for a couple of months! Yes, bull markets start with a bang.

No doubt we are now in a correction (or consolidation) phase and the GDX is already down 12.4%. As we know, nothing goes up in a straight line.

As one might expect, sentiment towards the yellow metal sector has been deteriorating. Most institutions, investors, traders, as well as private investors rely on seasonal patterns, and it is often said that they will not come back on the buy side before mid-summer.

Although seasonal patterns only account for a very small percentage of the changes and they can be quite erratic, they could be right!

On the other hand, these same professionals were all bragging on March 6 during the largest mining convention in the world that they had sold their junior mining stocks because of the “PDAC curse”. Contrary to expectations, the GDXJ went up another 30% in a straight line!

 Accumulate quality precious metals stocks during this correction? 

Since market timing is so difficult, especially for short term movements, a better strategy is to take advantage of market weaknesses in your favorite stocks to increase your overall positions in the sector. Of course, to be able to do this, one must not already be fully invested.  

To be able to employ this strategy with some psychological comfort, it is much easier to stick with the highest quality management teams.

The Blackwolf Copper and Gold dream team

It is said that Frank Giustra, who is actively involved in the strategic direction of Blackwolf Copper and Gold, has created more millionaires in Vancouver than anyone else. This legendary investor has the ability to spot long-term bull markets in the gold sector and create the perfect vehicle to ride the rising tide. In 2001, Giustra founded Wheaton River Minerals, which enjoyed a fantastic run before being bought out by Goldcorp for US $2 Billion some years later. In the following secular rise in gold, this dedicated entrepreneur did wonders with Endeavour Mining.

Rob McLeod, the President and CEO has a brilliant track record. This creative geologist was the founder and VP Exploration of Underworld Resource acquired by Kinross Gold for $140 million after announcing an initial resource estimate of over 1.4 million ounces at the White Gold deposit in the Yukon.

Blackwolf is still unusually cheap

With 90 million shares fully diluted, the market capitalization is under $30 million. This comes just after an $8.5 million equity raise. By accumulating shares of this company around or under current price of $.33, an investor is not paying much more than Frank Giustra himself, who purchased 10 million shares of the placement at $.20. He now owns 13.4% of the company.

For an enterprise value of around $20 million, there are three potential wins: 

  1. The expandable high-grade Niblack Property with already a total resource of 840,000 Au Equivalent ounces at a grade of 4.32 g/t in all categories
  2. A consolidation play in British Columbia 
  3. Last, but not least, a very promising exploration play in Alaska.

Niblack Project: 840,000 Au equivalent ounces at a grade of 4.32 g/t in all categories

The current market capitalization of Blackwolf is more than covered by the existing high-grade resource at Niblack. An investor pays an enterprise value of $25 per ounce in the ground, which is pretty unbeatable for an asset located in British Columbia with great infrastructure. 

A compelling consolidation play in British Columbia

Everybody talks about mergers and acquisitions.

Everybody dreams about area consolidation.

Everybody frets about win-win deals.

This usually is comparable to the idle chatter of Prufrock’s everyday life in the poem by T.S. Eliot: “women come and go talking of Michelangelo”.

Yes, as we all know, it is extremely difficult in this junior mining world to persuade any CEO to let go of his ego and comfortable remuneration and be part of an accretive consolidation! In this difficult world, shareholder interest is often a figment of the imagination.

But here one has on their side, Frank Giustra, who has a very unusual ability to persuade and get things done.

This consolidation idea is not pie in the sky, since on March 21, 2023, an MOU was already signed between Blackwolf Copper and Gold, Goliath Resources (GOT.V), Dolly Varden Silver (DV.V), New Moly LLC, and Coast Copper (COCO.V). The MOU aims at jointly studying the viability of using New Moly’s Kitsault Project as the potential site for a centralized polymetallic processing facility that could accept material from the companies’ respective deposits located at or near tidewater in northwestern British Columbia or Southeastern Alaska.  The companies are currently undertaking a full economics study on New Moly’s permitted mine site.

This hub and spoke model could do wonders for all mining companies involved.

June drilling at Cantoo, Southeast Alaska

Most exciting for Rob McLeod is that for first time a very promising property will be drilled (5000m). Drilling plans will be determined in the upcoming weeks and a drill is already in Hyder.

Could Blackwolf hit in the first rounds of drilling?

Quite possibly, because a 30 meter outcrop shows spectacular high-grade gold and at the bottom of the formation rock samples showing 1 kg/t silver have been discovered.

With these attributes, no wonder Crescat Capital, the famous gold fund led on the geological front by Quinton Hennigh, is a shareholder.

Bottom line: an attractive entry point on a potential stellar performer

After hitting a high of 49 cents, Blackwolf has seen quite a correction. Given that Blackwolf has C $8.5M in cash, a 43-101 established resource, and an EV of around C $20 million, we believe that at prices around 33 cents, BWCG presents an attractive entry point for what could be a stellar performer in this precious metal bull market.

Disclaimer: SGL does not provide investment advice and is not a registered investment advisor.  Always do your own due diligence before making an investment. Investing in securities, especially junior miners, can be risky and never invest money you cannot afford to lose. SGL cannot guarantee the accuracy of the information in this post. SGL has attempted to present the information fairly, but it or its contributors may own shares of BWCG so bias cannot be excluded. SGL and its contributors have no relationship with BWCG. SGL or its contributors may buy or sell shares in the company at any time.  

SGL makes no representations, and specifically disclaims all warranties, express, implied, or statutory, regarding the accuracy, timeliness, or completeness of any material on this website. You should seek the advice of a securities professional regarding any stock transactions. SGL cannot guarantee in any way that it is providing all of the information that may be available. Please do your own due diligence before buying or selling any security.

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