K2 Gold (KTO) - Californian Gold Dreamin'

K2 Gold is a junior gold explorer with a bit of variety when it comes to its assets: they are situated in California, the Yukon and Alaska. The company is one of the 8 companies within the impressive Discovery Group, which is a good sign.

The main focus right now for K2 Gold is on developing its recently acquired Mojave property in Southern California, a 5,830ha oxide gold project with supplementary base metal targets. Some of the key highlights of the Mojave gold project indicate that K2 Gold might be onto something fairly good. It looks like there could be high-grade, at-surface oxide gold, and the US$25M of historical expenditures on the project from prior operators has delivered some useful data and some rudimentary infrastructure. The mineralisation of the Mojave gold project is currently at the resource definition stage, and now K2 Gold is funded through to YE/20, it will look to push ahead with its advancement.

Matthew Gordon talks to Stephen Swatton, 15th July 2020

The share price leapt up at the end of June. Why? Some high-grade numbers from new targets at the Western Target Area at Mojave were a real source of excitement:

1. Stega – 5.14 g/t Au over 11.6m from rock chip sampling. Solid grades.
2. Soda Ridge – Rock samples up to 3.28 g/t Au, up to 909 g/t Ag, up to 2% Pb, and up to 3.9% Cu. More solid grades.
3. Soda Ridge – 600m x 700m, open, gold in soil anomaly with 51 samples returning >100 ppb Au. This is a significant mineralisation.

California has historically proven to be something of a nightmare when it comes to obtaining mining permits; handily, K2 Gold has just got its drill permit over the line. Announced on 13th July, the company is going to deliver a 16-hole RC drill programme on the 'gold-rich' eastern side of K2’s 5,830 ha property:

1. The 16-hole drill programme is now permitted, and K2 Gold has sufficient cash to finance it.
2. K2 Gold has already earmarked a lightweight RC drill rig from Canada.
3. The programme will "probably" begin by September.
4. Phase 1 anticipates completion of 16-holes from 4 locations at the 'Dragonfly' and 'Newmont' target areas
5. Around 3,200m of drilling is expected to be completed.

Once these holes are drilled, the data will be evaluated. K2 Gold has already applied to complete a subsequent 30-hole RC drill programme. K2 Gold hopes to complete the second drill programme next near, by which time it will have a good idea of whether this is a resource worth pursuing further. Swatton acknowledges that the phase 1 programme is likely to be expensive because of the need to complete a "helicopter-supported" programme. It's wildfire season soon in California, and this could affect the timescale and increase costs. Swatton aims to secure a helicopter from the same place he wants to get his drill rig: Canada.

So, what's the plan? K2 Gold plans to grow by acquiring further mineral properties in North America and by leveraging the past success of Chairman, John Robins, the founder of Kaminak Gold. Investors may well be intrigued to hear that Kaminak sold the Coffee deposit, a multi-million-ounce gold resource, to Goldcorp for US$520M in 2016. Robins' good reputation with the market is likely to be key to securing K2 Gold's future prosperity. The company is in a better position than most gold juniors to secure adequate financial resources for the projects it acquires or discovers.

COVID-19 has created challenges for the Canadian management team because of the 2-week quarantine for overseas travellers to the States, but the company has American consultants helping the company out on the other end. It's all up in the air at the moment, and decisions will be made on a week-to-week basis. The company is an explorer-developer but it has no cemented exit strategy just yet; however, becoming a producer is not the modus operandi of the company.

What did you make of Stephen Swatton?

Company Website: https://www.k2gold.com/