THH – Burin Gold (BURG.V): Recently Listed Newfoundland Gold Play Backed by New Gold

Dec 23, 2021

I find myself concentrating more and more of my portfolio to the top tier jurisdictions nowadays. I think it makes sense given some of the headlines coming out of Latin America and Africa for example. A good jurisdiction has several positives or shareholders. One, it means that success will likely fetch a higher value relative to the same success in a worse jurisdiction. This skews the Risk/Reward in favor for shareholders (Same amount of risk should have higher pay off potential). Two, the likelihood of shareholders keeping any potential success is higher which also skews the Risk/Reward. On that note I remember the billionaire Tom Kaplan expecting there to be “a bubble within a bubble”. What he was alluding to is that he believes that when the gold sector gets really hot he expects gold companies in tier #1 jurisdictions to become a bubble within a gold bubble since a lot of people are expected to flock into the safest mining plays.

Burin Gold (BURG.V) is a recently listed, and therefore rather unknown, gold explorer which controls a district scale land package in Newfoundland. Unlike some of the other Newfoundland gold players Burin is working on a district of High-Sulphidation Gold Systems and not Orogenic Gold Systems.

The company is backed by New Gold and Insiders own 19.5% of the company. Other smart money includes Crescat Capital and Plethora.

• Website: LINK
• Video Presentation: LINK

My Case For Burin Gold

With around C$6.9 M in the bank I get a discovery play in one of the absolutely best jurisdictions in the world for only ~US$7.8 M in Enterprise Value at $0.44/share. With such a higher insiders ownership I can be quite sure that management’s incentive is to create as much value as possible as efficiently as possible for shareholders. On that note I would like to point out that there are people from success stories such as Marathon Gold involved ( Phillip C. Walford who is Chair of The Board is the ex President & CEO of Marathon Gold and Sherry Dunsworth is ex Senior VP Exploration of Marathon Gold). The fact that New Gold is involved brings further assurance that the district scale land package has merit and that larger producers can see themselves acquiring and building a mine here. The low Enterprise Value means that not a lot of success is priced in and therefore I as a shareholder am not paying much for any potential which also means less risk.

I could see myself holding on to Burin Gold for a few years and would not be surprised if the company would already have drilled up a resource by then and ultimately rewarding my patience with a multi bagger.

Many Boxes Ticked:

• Tier #1 jurisdiction
  • Value of success will be above average and shareholders will not see the project taken away from them
• High Insider Ownership
  • Management is aligned with shareholders
• People
  • Philip Walford: Ex President & CEO of Marathon Gold
  • Sherry Dunsworth: Ex Senior VP of Exploration of Marathon Gold
• District Scale Land Package
  • A long runway for growth which theoretically could mean growth over a number of years going forward
  • Higher blue sky potential
• Major Miner as Shareholder
  • Signals that the project has a lot of merit/potential
  • Signals that this is an area where a miner could see a mine actually getting built
• Cashed up
  • Plenty of ammo to drive exploration and news flow
  • No financing pressure on the stock price to be expected
  • Could endure a poor market for quite some time
• Mineralization already confirmed(!)
  • Very limited first pass drilling returned intercepts up to 10.8 m of 4.43 gpt Au
  • Channel sample sup to 20.0 m of 9.34 gpt Au
• The Most Important Factor: PRICE
  • … Only US$7.7 M in Enterprise Value. 

Company Summary:

Project Location

Burin’s flagship project is called Hickey’s Pond Paradise Gold Project and is located on the Burin Peninsula in Newfoundland. This is obviously one of the best areas in the world to find a gold deposit today and what makes things even better is that a) Burin has a large land package and b) The projects has a lot of going for it in terms of infrastructure:

The project is accessible from the Burin Highway, there is a 138 kV power line adjacent to the property, its accessible from tide water and there are no known environmental liabilities. Permitting is also superbly efficient as evidenced by getting drill permits in under 30 days from the day of application. Suffice it to say, it does not get much better than this for an exploration project.

Hickey’s Pond

If we zoom in on the Hickey’s Pond part of the project we have alteration strike of >2 km which is part of a much larger alteration system:

Although it is still quite early stage, the company has been working (privately) for a few years, and was able to uncover some good smoke prior to drilling:

Last year the company did their first scout drilling campaign that only included seven shallow drill holes. With such a small drill campaign the chance of getting any good results is of course low, even if there would be an economic deposit in the area, but the results were actually pretty good (Very good in light of the limited campaign):

One hole was lost but the other six all intersected significant zones of gold mineralization. Also note how the chargeability anomaly appears to correlate with gold mineralization.

Schematic drill section:

Even though these were not “barn burner” drill results it is important to understand that the earlier stage a project is, and the more limited the drilling, the higher importance one should put on ANY good drill results. Burin Gold highlights this fact by adding this next slide in the presentation which is based on a very good study done by Kenorland Minerals:

The study concluded that any early stage drill campaign consisting of less than <4,000 m that managed to hit a >50 gram-meter intercept should be considered as highly significant/promising. Burin’s best intercept in its VERY limited 1,026 m maiden drill campaign was 65 gram-meters.

Blue Sky Potential

So far the company has only done one scout drilling campaign, with gold mineralization hit in every hole, over ~700 m of strike. That is of course a very good start and I bet the company can drill up quite a bit of ounces just from the 700m of confirmed strike. If we look beyond the Hickey’s Pond target there are multiple corridors with multi-kilometer strike potential left to explore. In other words Burin Gold has just scratched the surface here and I could see several years worth of growth and news releases in the slide above.

Path Forward – Catalysts

The company has hit the ground running after listing and will shortly begin a >10,000 m drill program at Hickey’s Pond and a >2,500 m drill program on pipeline targets. Since drilling has the biggest potential in terms of affecting value of a junior it is nice to see the company be this aggressive right off the bat. After the >12,500 m of drilling is done the implied value of the company might have increased substantially and be worth a lot more than what it currently is priced at…

It appears that insiders believe that as well since they have been upping their shareholdings in the open market:

Closing Thoughts

With an Enterprise Value of US$7.8 I think the case is pretty obvious and that risks are to the upside. They already know they have gold with a 100% hit rate in the maiden scout campaign. If this turns out to be a multi million ounce deposit over the coming years it could be worth quite a lot given the tier #1 jurisdiction and great infrastructure. The coming 12,500 m of drilling might be enough to infer a decent starter resource and create Margin of Safety higher than the current valuation.

As always I am not betting the farm on any early stage exploration company but this is a “no brainer” inclusion in my diversified, growth focused mining portfolio given the outstanding Risk/Reward opportunity I see.

Recapping The Case

• Tier #1 jurisdiction
  • Value of success will be above average and shareholders will not see the project taken away from them
• High Insider Ownership
  • Management is aligned with shareholders
• People
  • Philip Walford: Ex President & CEO of Marathon Gold
  • Sherry Dunsworth: Ex Senior VP of Exploration of Marathon Gold
• District Scale Land Package
  • A long runway for growth which theoretically could mean growth over a number of years going forward
  • Higher blue sky potential
• Major Miner as Shareholder
  • Signals that the project has a lot of merit/potential
  • Signals that this is an area where a miner could see a mine actually getting built
• Cashed up
  • Plenty of ammo to drive exploration and news flow
  • No financing pressure on the stock price to be expected
  • Could endure a poor market for quite some time
• Mineralization already confirmed(!)
  • Very limited first pass drilling returned intercepts up to 10.8 m of 4.43 gpt Au
  • Channel sample sup to 20.0 m of 9.34 gpt Au
• The Most Important Factor: PRICE
  • … Only US$7.8 M in Enterprise Value. 

Note: I own shares of Burin Gold and the company is a passive banner sponsor of The Hedgeless Horseman. Therefore consider me biased, do your own due diligence and make up your own mind. Junior miners can be very risky and volatile. Never invest money you cannot afford to lose.

Best regards,

The Hedgeless Horseman