Signal Gold (SGNL) - Exploration to Stick a Wedge in the Lassonde Curve

Signal Gold Inc. is a TSX and OTCQX -listed gold mining and development company, focused on the advancement of its projects in Nova Scotia and Newfoundland. The Goldboro project of the company is a 592-hectare land package located 175 km northeast of the city of Halifax. The company published a feasibility study of the Goldboro gold project in 2021, which includes highlights such as an 11-year life of mine with an average gold production of 100,000 ounces annually. The after-tax NPV5% of the project is CAD$ 328 million with an after-tax internal rate of return (IRR) of 25.5%. The projected after-tax payback period is 2.9 years.

The company announced in September 2022 that it had appointed Auramet International, LLC as the financial advisor for the financing of the Goldboro gold project. The role of Auramet International, LLC will be to work with Signal Gold Inc. to advance the project financing of the Goldboro gold project, as well as to advise on the structuring of the finance packages as well as the negotiation thereof and its closing.

Signal Gold Inc. on the 25th of October 2022, announced that it would begin winding down the current operations of its Point Rousse project. The winding down entails the company completing the mining of its Argyle deposit, from where the project will be placed in care and maintenance. The project will be able to produce USD$ 8 million in cash flow by February 2023, which the company will be able to implement towards the advancement of its Goldboro project.

The company plans to complete the permitting and environmental baseline studies of the Goldboro gold project by the end of 2023. Signal Gold Inc. further plans to conduct detailed engineering studies of the project, including the project’s feasibility study update to take into account inflation and various technical updates. of the Goldboro gold project and to update the project’s re-costing to enable the company to initiate project construction at the end of Q1 2024. The company aims to commence the production of gold at the Goldboro gold project by mid-2026.

The Current Gold Market

Kevin Bullock the president and CEO of Signal Gold Inc. believes that even though the current gold market may be at a low point, it will turn and provide again as in the past an opportunity for wealth creation.

Bullock states that the market is cyclical in nature and that throughout his career he has seen various cycles unfold. He likens the investor sentiment to a theatre, where those who are rushing to exit the market, will be those that rush to re-enter it as well.

“I look at it through the lens of having been through several of these phases: these up and down cycles throughout the markets, when people are climbing over each other and injuring each other to get through the exit door, that to me means that people will soon be doing that through the in-door to watch the new movie that's next. Right now, everybody's scrambling to get out.”

Bullock explains that due to various factors, the price of gold is not reflective of its true value. He however believes that this will change in the future, and at such a time will provide investors with good returns. Bullock believes that this is the ideal time to invest and that investors will see returns on their investments.

“I think that will come back and I think that we're ready for an uplift in the gold price and a strong final leg, or final couple of legs, to this bull gold market that I think we've been in for some time. This is a pause, so it takes a lot of determination and grit to invest in a market like this, but it is time to invest. We always look back in hindsight and say, man, I should have put some money in when I thought everything was falling apart. They are called cycles for a reason, they will continue.”

Bullock believes that the current gold market is the ideal time to implement a contrarian investment strategy. Contrarian investment is the term used to refer to an investment strategy in which an investor purposefully goes against the grain. A contrarian investor buys when most of the market is selling and sells when most of the market is buying.

“I remember back in 2001, a group that I was involved with purchased the Macassa mine for USD$ 5 million. Everybody said we paid USD$ 6 million too much. Gold was at around USD$ 290 per ounce. We ended up pushing through with that project and turning that junior company into something called Kirkland Lake Gold, which kept progressing to its sale, not long ago, to Agnico Eagle. That started with a USD$ 5 million purchase when everybody said gold was going off the map. That was contrarian for sure.”

Projects

The asset portfolio of Signal Gold Inc. consists of the Goldboro Gold project, located in Nova Scotia, the Tilt Cove Gold project and the Point Rouse project, both located in Newfoundland. The Goldboro project is a 100%-owned project, with no royalties or streams. The company published a feasibility study of the Goldboro gold project in 2021, which includes highlights such as an 11-year life of mine with an average gold production of 100,000 ounces annually. The after-tax NPV5% of the project is CAD$ 328 million with an after-tax internal rate of return (IRR) of 25.5%. The projected after-tax payback period is 2.9 years.

The Point Rousse project of the company is an operating asset which will produce between 20,000 and 21,000 ounces in Q4 2022. The project also hosts the only operating gold mill and in-pit tailings facility in Newfoundland.

The Tilt Cove project is a high-grade area with more than 35 km of prospective strike. The company is underway re-evaluating its Newfoundland projects and considering strategic alternatives to maximise their value.

Point Rousse operations suspension,

Signal Gold Inc. on the 25th of October 2022, announced that it would begin winding down the operations of its Point Rousse project. The winding down entails the company completing the mining of its Argyle deposit, from where the project will be placed in care and maintenance. The project will be able to produce USD$ 8 million in cash flow by February 2023, which the company will be able to implement towards the advancement of its Goldboro project, Bullock explains.

“One is that the mine life at Point Rousse operations had the Pine Cove pit, the original pit that had a mine life of 6 years and that was extended by about 8 months. Then the decision was made to start mining some very small satellite deposits. They are extremely difficult to mine, however, we were able to make the first couple work. We're not closing; we're actually winding down over time while we mine out this final Argyle satellite pit, which should generate USD$ 8 million of cash flow into about the end of January, February of next year.”

The company decided to wind the operation down, according to Bullock, due to its primary focus being the Goldboro project as well as the inherent risk associated with the continuing operations at the Point Rousse project after the completion of the Argyle deposit.

“The reality is it's the mine life - 22 months. It's less than 2 years. People don't start mines unless they're going to go for 8+ years. Granted, we have infrastructure that has been bought and paid for, but we now have another project that we need to concentrate on, and if we have any glitches to the plan in the next 22 months, such a short timeframe, and you can't pivot within that because they're such small pits, it could really hurt the company.”

Goldboro permitting and financing

Signal Gold Inc. on the 3rd of August 2022, announced that it had been advised by the Nova Scotia Minister of Environment and Climate Change that the Goldboro Gold project had been approved subject to the terms and conditions outlined in the approval. The project's approval allows the company to initiate site-specific permitting processes, including industrial approval and the application for mining leases and land leases. Bullock explains the company’s elation regarding the tentative approval as follows:

“We submitted our environmental assessment registration document truly believing we'd have one or two requests for further information. It actually got approved with conditions at the first pass, and we are one of the first ones to get that since Touquoy received theirs 5-6 years ago. That was a big step for us because once the environmental permit is received, the rest are a little easier in the sense that you know you're working towards something that's going to happen by doing all the things right as opposed to it going to happen? It's cleared the environment; it's most likely going to go ahead.”

Signal Gold Inc. announced in September 2022 that it had appointed Auramet International, LLC as the financial advisor for the financing of the Goldboro gold project. The role of Auramet International, LLC will be to work with Signal Gold Inc. to advance the project financing of the Goldboro gold project, as well as to advise on the structuring of the finance packages, the negotiation thereof and its closing.

Future

The company plans to complete the permitting and environmental baseline studies of the Goldboro gold project by the end of 2023. Signal Gold Inc. further plans to conduct detailed engineering studies of the project, including the project’s feasibility study update to take into account inflation and various technical updates of the Goldboro gold project. The company will also update the project’s re-costing to enable the company to initiate project construction at the end of Q1 2024. The company further aims to initiate the application process for the necessary Industrial permits. 

“The main things are the industrial approval, which is the approval to develop the mine based on the receipt of the EARD approval. We are now working towards industrial approval, which allows us to mine, and that takes things to a further level: 80% finished detailed engineering on some things in Nova Scotia, so being more technically sound on the work up front before starting and getting that permit. There's also the fisheries offsetting.”

The company aims to commence construction of the Goldboro gold project by the end of 2024, with Bullock explaining that the procurement of all long-lead items as well as the obtaining of various permits is required by March 2024.

“We are determined to be shovel-ready with all our permits in hand in March 2024. It's another year and a few months of final permitting and detailed engineering and long-lead item orders, a lot of pre-permit work to be done then we should be able to start building in the second quarter of 2024.”

Signal Gold Inc. plans to continue with its exploration initiatives, which include a 4,000 m drilling program underway as it continues to advance the project. Bullock explains that the company must focus on keeping excitement in the market regarding the Goldboro project, enabling further value creation for the company and its shareholders.

“The Lassonde curve, when you're in that flat area of the curve, trying to develop something and people lose interest, we're going to stick a wedge in that and create excitement. That wedge is going to be drilling west of the current resource. I'm answering the question in a different way, but it's our plan to keep the excitement on the project while we're trying to develop it. It also keeps the excitement going, it keeps people waiting for those drill results, etc, if things take time for the market to turn around.”

To find out more, go to the Signal Gold website