Gold Terra Resource's Leveraged Exposure to Rising Gold Prices with High-Grade Yellowknife Project in Canada

• Gold Terra Resource Corp CEO Gerard Panneton shared his views on the current gold market. He discussed how investors should evaluate gold producers, developers and explorers based on their risk tolerance and potential returns.
• Panneton emphasized that high-grade gold projects typically provide better margins compared to large low-grade deposits. This is because they have lower operating costs per ounce of gold produced.
• Investing in junior gold exploration companies offers the potential for the greatest returns if they make a significant discovery, but this comes with high risk. Gold Terra aims to mitigate this risk by focusing on its high-grade, brownfield Yellowknife Project (YP) in Canada's Northwest Territories.
• Gold Terra's 2020 acquisition of the past-producing Con Mine from Newmont Mining was a major milestone for the company. The Con Mine comes with extensive existing infrastructure which is estimated to cost over $150 million to build today, significantly reducing future capital costs for Gold Terra.
• Gold Terra's goal is to delineate a resource of at least 1.5-2.0 million ounces of high-grade gold at YP to support building a 2,000 tonne per day mining operation. To achieve this, the company is refining its exploration strategy to focus on near-surface drilling targets that can generate positive news flow and value in the current market environment.

As the gold price continues its bullish run, reaching all-time highs, investors are increasingly looking at opportunities in the gold mining sector. In a recent interview, Gerald Panneton, CEO of Gold Terra Resource Corp (TSXV:YGT), provided his insights on the current gold market and how investors should evaluate gold producers, developers and explorers.

Understanding Gold Mining Investments

Panneton categorized gold mining investments into three main groups based on risk tolerance:

Physical gold - For investors with zero risk tolerance.

"If you want to have upside on gold price and take zero risk, just buy gold, physical gold, not paper gold."

Gold producers - Offer exposure to rising gold prices and margins but limited growth potential as they must continuously replace depleting reserves.

Junior gold companies - Provide the highest potential returns but also the greatest risk.

Panneton noted, "The reward, the plus value appreciation on investing in a junior with the right project, with the right team, the right people that know how to develop and create that value, is your biggest return, no question."

The Case for High-Grade Gold Projects

When evaluating gold projects, Panneton emphasized the importance of high-grade ounces.

"My focus on high grade is margins. If you produce, for example, the average all-in cost around the world is somewhere between $1,500 to $1,700 an ounce. Fruta del Norte, which is a 10 g/t operation, produces high grade with Lundin Gold, is below $1,000 all-in. That is what high grade can do for you."

In contrast, large low-grade deposits may offer size but come with higher costs and slimmer margins.

"When we go into those big low-grade deposits, size matters, but at the same time the cost is heavier and the margin is mainly on saving dollars on volumes. You basically invest a lot more money to produce a huge amount of volume of rock, which equals risk, into a smaller margin."

Gold Terra's Yellowknife City Gold Project

Gold Terra Resource Corp is focused on advancing its high-grade Yellowknife City Gold Project (YP) in the Northwest Territories of Canada. The project benefits from its location in a past-producing gold district with extensive infrastructure already in place.

"The cost of drilling is $200 per meter all-in. Our geologists, our technicians live in Yellowknife, we don't have to bring them, we don't use helicopters for our drill program," explained Panneton. "You can go and get your coffee and 10 minutes later you are at the drill site. How often can you do this?"

Con Mine Acquisition: A Game Changer

A key component of Gold Terra's strategy is the 2021 acquisition of the past-producing Con Mine from Newmont. Panneton worked for 18 months to secure the deal, which will see Gold Terra acquire 100% of the Con Mine for C$8 million.

Interview with Executive Chairman Gerald Panneton

Exploration Strategy and Goals

Gold Terra's primary goal at YP is to define a resource of 1.5 to 2.0 million ounces, which Panneton believes is the threshold required to justify building a mine given the project's favourable location and infrastructure.

While the company had hoped to hit this target through deep drilling, Panneton acknowledged they must refine their strategy given current market conditions and their treasury. As a result, Gold Terra will focus on near-surface targets that are cheaper to drill while still generating value and news flow for investors.

"You can refine your project and adapt to the current market but still generate value and create value, it's no question," said Panneton.

Conclusion

The company's high-grade Yellowknife City Gold project, with the newly acquired Con Mine, offers significant exploration upside in a tier-one jurisdiction with extensive infrastructure.

While investing in junior gold companies comes with risk, Gold Terra is working to mitigate this through a prudent exploration strategy focused on generating value and advancing the project up the development curve to derisk it for investors.

With a proven management team, a high-grade gold project in a top jurisdiction, and a clear strategy to create value, Gold Terra Resource Corp stands out as a junior gold company worth considering for investors comfortable with the inherent risk of the sector.

The Investment Thesis for Gold Terra Resources

• High-grade gold project (YP) in Canada's Northwest Territories with existing infrastructure from past-producing Con Mine
• Acquisition of Con Mine for C$8 million provides $150 million in infrastructure and reduced capex
• Goal to delineate a 1.5-2.0 million ounce resource to justify mine development
• Experienced management team refining exploration strategy to generate value in current market conditions
• Potential for significant returns as project is advanced and de-risked, especially if gold price continues to appreciate

Macro Thematic Analysis

The current macro environment, characterized by economic uncertainty, low real yields, and unprecedented monetary and fiscal stimulus, has created a highly bullish backdrop for gold. As investors increasingly seek safe-haven assets to preserve wealth, gold has emerged as a preferred option, sending prices to all-time highs.

This shift in sentiment towards hard assets is likely to drive a sustained bull market in gold, not dissimilar to what was seen coming out of the 2008 financial crisis. As Gerard Panneton noted,

"That price hike over the last year is just the starting of a big issue on the gold price because gold is so valuable and not replaceable, and you cannot create gold, you can only buy gold or find gold, (it) will eventually rate the gold price and everything will trickle down to the juniors."

In this environment, gold equities provide leveraged exposure to a rising gold price. And while producers may be the initial beneficiaries, the real outsized returns for investors will come from identifying high-quality junior companies with the right projects, people and strategy to create value. For investors willing to tolerate some risk, now appears an opportune time to be positioning for this thematic. Selectively choosing junior gold companies, such as Gold Terra Resource Corp, may prove a very profitable strategy as this gold bull market plays out. As the tide rises, companies with great assets with solid supporting data may attract a flood of capital, potentially generating the sort of 10-20x returns Panneton alludes to.

"I know that when somebody invests in a junior that is well run, with a good project, you're paying maybe $10 an ounce. However, your reward could be 10 times, 15, 20 times, if you're with the right project and the right team."