Sokoman Minerals (TSX-V: SIC) - Qualifying for ‘Super’ Flow Through Capital

Sokoman Minerals Corp. is a discovery-oriented company with projects in Newfoundland and Labrador, Canada. The company’s primary focus is its portfolio of gold projects. Its flagship asset is the Moosehead gold property along the Central Newfoundland Gold Belt. The company is also active on its district-scale Fleur de Lys project in northwestern Newfoundland, which is targeting Dalradian-type orogenic gold mineralization similar to the Curraghinalt and Cavanacaw deposits in Northern Ireland, and Cononish in Scotland.

Matt Gordon caught up with Tim Froude, Director, President, CEO, and Director,  Sokoman Minerals. Tim is a graduate of the Memorial University of Newfoundland and has been active in the mineral exploration business for over 30 years. Over that time, he has worked with a number of highly regarded firms including Inco Ltd, where he spent nearly 10 years working on projects in North America and overseas, and was part of the team that discovered the Bobby’s Pond massive sulphide deposit in Central Newfoundland. Tim is also directly responsible for the discovery of the Valentine Lake gold deposit in Central Newfoundland, currently under advanced-stage exploration by Marathon Gold. Over the course of his career, Tim has worked for a number of successful junior companies including Altius Minerals Corp, Cornerstone Resources, Crosshair Exploration and Mining Corp, and Golden Dory Resources. He served the latter three companies as Vice President of Exploration. He also spent 1 year serving as Executive Director of the Newfoundland and Labrador Chamber of Minerals Resources, now Mining NL.

Company Overview

Sokoman Minerals Corp. is actively participating in a strategic alliance with Benton Resources Inc, through three large-scale joint venture properties including Grey River, Golden Hope lithium prospect, and Kepenkeck in Newfoundland. Sokoman now controls independently and through the Benton alliance over 150,000 hectares (>6,000 claims - 1,500 square kilometers), making it one of the largest landholders in Newfoundland, Canada’s newest and rapidly-emerging gold districts. The company also retains an interest in an early-stage antimony/gold project (Startrek) in Newfoundland, optioned to White Metal Resources, Inc, the Crippleback Lake (optioned to Trans Canada Gold Corp.), and the East Alder project (optioned to Canterra Minerals Corp.). The company has a 100% interest in the Iron Horse project in Labrador that has Direct Shipping Ore (DSO) potential. The company was founded in 2006 and is headquartered in Toronto, Canada. It is listed on the Toronto Stock Exchange (TSX-V: SIC).

Sokoman Minerals is a junior exploration company focused on gold and lithium in the provinces of Newfoundland and Labrador, Canada. The company currently has three active projects where drills are deployed. The company is in the process of wrapping up drill programs for these projects. This fall, the company is looking to publish ongoing news flow on the drill results. The news flow will help the company spark interest in the market and revive the stock price that has been suffering for the past few years.

At the Great River project, the company is about to finish the drill operations. It is also drilling the flagship Moosehead gold project and the Kraken lithium prospect, located west of the Great River project.

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Material Grades

In recent press releases, the company posted high-grade drill results that were well-received by the market. The company is cognizant that the system is capable of producing hits like these. The current hit is being ranked in the company’s 10 top drill holes. The significance of this hit comes from the point of origin and its physical appearance. The company anticipates that a new system is developing either within or parallel to the main eastern trend where the intersection is based. The high-grade portion had grades of 10m at 42g. By including the mineralized rocks located up-hole and down-hole, the company found grades of 39m at 12.5g. These grades are found 100m deeper than any previous modelling done on the eastern trend. This hit opens up the possibility for a potential zone extension. The intersection is open in three directions, including the north and south.

Interestingly, the company has chased the prospect to a 360m down plunge from the surface. It found similar grades at depth. The system seems to be either changing to hybrid or is a combination of two gold mineralized systems coming together. The company is looking to analyse the hole through tele-viewing with a down-hole camera that can help determine the direction of the vein and other structural information. The company has re-engaged Dr. David Coller, a consultant from Ireland to help analyze the hole. Notably, Dr. Coller played an instrumental role in outlining the first structural plans and series for the deposit. The collaboration will help the company develop a more focused program as it moves forward with the new intersection.

Sokoman Minerals has identified two discrete styles of mineralization that were seen in multiple places throughout the drill programs. The high grades are within the 300g-400g range. These grades are either superimposed upon or superimposed by a second system that doesn’t carry the same high grades.

The brecciated veins have grades averaging between 1g/t-5g/t. In this particular setting and hole, the company found that the brecciated veins are actually contributing up to 15g/t-16g/t. The company anticipates that this is more of an influence from the high-grade system that is feeding grades into the pre-existing brecciated system. This is an example of a higher-grade system merging with a slightly lower-grade system. The high-grade material is present within 1-2 discrete veins that are between 2m-5m thick, which is exceptionally high. The company is using a side that will run in and support about 2g/t into the wall rock to provide 8m-12m of the total thickness.

The company hasn’t had such high material grades except for a hole back in either phase 1 or phase 2 when the drill operation wasn’t targeted in a specific direction. This was hole 17 which returned 24m at 33g in grades. This hole was drilled down-dip, oblique to the system. The two key features of this deposit are the vein thickness and the presence of two distinct styles of mineralization.

The current finding is not considered an anomaly because the company has seen past instances where the intersecting mineralization led to unexpected results. One such example is the footwall splay, an offset off of the main eastern trend. Last week, the company also reported an intersection in the eastern trend. This intersection could potentially be a developing footwall splay zone.

This mine is comparable to the Fosterville asset that features off-angle shoots and splays that form a part of what is seen in the Swan zone. The company is looking to determine the dip direction for this new potential splay. Currently, the company is in discussion with the drilling contractor to wedge off the first hole. Wedging off the drill hole will enable the company to determine the zone’s incoming and outgoing directions. In case the zone turns out to be an intersection, the company will determine how the intersection is positioned in the zone. This will help it in targeting future drill holes.

Drill Operations

In the previous quarter, Sokoman Minerals had a $70M cash flow. At the time, the company had drilled 14,000m out of a 100,000m drill program. The company has been cautious with its spending. It is looking to finish 100,000m of drilling by year-end at the Moosehead project and on the two JV (Joint Venture) programs where the rigs are currently deployed. The company anticipates that following the completion of the 100,000m drill program, it will still have about $3M-$4M in equity. The company does not intend to spend beyond its means and is closely monitoring the balance sheet on a weekly basis.

Sokoman Minerals is managing multiple projects with the help of Benson Resources, a high-quality, first-rate partner. The latter is currently managing the 3 JV projects. At Grey River, the drill is deployed over the hill, a few miles into the county. Benson Resources’ team is handling operations at the Golden Hope lithium prospect. The Kepenkeck gold project is lower on the priority list, and the company hasn’t been able to focus on it. It has plans to focus on the 100%-owned Moosehead and Fleur de Lys projects which are yet to reach the desired drill state. As a result, these projects do not require human and financial resources at this point in time.

Prior to committing drill operations at the Fleur de Lys asset, the company is looking to gain insight into the Grey River and Kepenkeck projects. Through geochemical analysis, the company has found substantial anomalies at the Fleur de Lys project that require drilling. However, the company isn’t looking to overextend its team and resources by commencing drilling on the project at this time.

Assay Results

For its gold business, the assay turnaround times are improving. The company was informed by Eastern Analytical, its exclusive gold analysis lab, that the planned extension is now up and running. The lab worked on the extension for the majority of 2021 and a large part of 2022. Currently, the company has less than 1,000 samples pending at the lab, representing all or parts of about 15 drill holes. Once the assay turnaround times go back to normal levels, the lab could provide assay results within 2-3 weeks.

For the lithium business, the assay turnaround times appear to be going in the opposite direction. Despite switching labs, the company is still awaiting assay results from the 3,000m drill program. The waiting times have gotten even longer. The company is looking to get back about half of the assay results within the next 2-3 weeks. These results would serve as meaningful press releases.

The Market Landscape

Currently, the market is displaying signs of investor fatigue. There are numerous projects in Newfoundland that have tens of thousands of metres of core drilled.

Sokoman Minerals’ CEO recently met with Eric Sprott in Gander, Newfoundland. According to the company, the spirit of cooperation in Newfoundland is really good. The company brought out a part of the core from the new drill hole from the last release to Gander Gold. It was laid out in Newfound Gold’s building alongside other cores.

Assay results from Newfoundland-based companies have been a major factor in sustaining the excitement surrounding the region. Lab Gold and Prospector Metals have also put out some really good drill results in the past two weeks. The two companies operate at the north end of the belt. Gander Gold is also publishing favourable drill results. These results demonstrate that a lot of supply is available for the market.

Sokoman Minerals anticipates that by 2023, when all the assay results are back in, the market will be in a much better place and that the Central Belt will have a gold play that is better defined.

Lithium Assets

At the Kraken Lithium project, Sokoman Minerals had a short drill program in the spring where the company drilled a few holes. There is ongoing pressure from the market to drill. Despite this, the company wanted to hold off drilling for the time being.

It’s unknown how long the market will be in a favourable position. This is why the company drilled a few holes in order to gain a better understanding of the lithium deposit. The drill operations helped the company in verifying the existence of in-situ, and potentially economic levels of lithium for the first time in the province, which is a major milestone.

At the market side of the equation, the company took the drill results and turned them into a compelling story. The company needs to drill between 3,000m-5,000m in order to gain a good foothold. The mineralization found at the deposit is exposed over a 2km area at the surface. The company has several surface targets that need testing, however, without the trenching information, and knowing the system’s behaviour in the ground, testing the strike length wouldn’t be an ideal strategy.

The company now understands that there is folding in the system and that the limited number of holes drilled in phase 1 were likely drilled underneath and above the folds.

The company concluded the program with 3,200m drilled and put out limited information on the same. It is now cutting dykes that are up to 27m thick. These dykes are substantial in size and carry lithium mineralization in places. The company is currently awaiting the assay results for the drill operations. The drill program ended recently, while the camp remains on-site. The company’s team is currently trenching other targets, getting ready for phase 3.

Based on visuals, the company anticipates that the grades would be in the 1%-2% range. It is important to note that visual analysis isn’t the right estimation strategy, especially for metallic minerals. While the thickness remains to be determined, the spodumene concentration within the dykes is expected to have promising results. The Kraken Lithium project is a 50/50 JV with Benton Resources. Both parties pay their share of the expenses at the end of each quarter.

Sokoman Minerals’ CEO had a detailed discussion with Eric Sprott in Gander. About 50% of the conversation was focused on lithium. Mr. Sprott has shown a strong interest in gold, silver, and lithium. The company intends to spin out the lithium asset. Once all the results are in, it will be able to make an accurate assessment of the project’s potential size. Following this, the company will be in a position to put a leading-edge value on the property. The asset will be spun out and a part of it will be offered to shareholders in both companies in the form of dividends. Next, both companies will raise capital through an IPO (Initial Public Offering) or through other means.

The spin-out process is underway and the company’s lawyers are working on the legal aspects. Sokoman Minerals does not intend to further dilute the company in order to fund a non-gold project. However, it is looking to evaluate the lithium project to a point where it can be taken to the next level, where the Kraken project will be a new company.

The company is open to entering JV with companies that have larger balance sheets in order to capture project value. Benton Resources has done an excellent job in marketing the project. It has had the best drill results of any company in the country in the past few years. Benton Resources has done a commendable job with exploration as well. Based on the numbers published by Paradigm last Christmas, there’s already a 1Moz-2Moz resource, which justifies a large portion of the company’s market cap.

Sokoman Minerals does not have a resource at this point. It continues to hit holes 100m away. As per the company, the resource will change in the next 3-6 months, hence there isn’t any point to develop a resource for the time being.

Following the announcement from last week’s drill results, the company saw an appreciation in its stock price, which jumped from $0.20c to $0.28c. As per the company, the stock prices have been better for the past few months. Based on a BNN article, the current nickel prices aren’t being reflected in a lot of junior companies that have posted interesting drill results. This appears to be a sector-wide issue as opposed to a metal-wide issue.

In the case of critical metals, lithium would qualify for a slightly different type of financing. According to the company, lithium can attain a super flow-through type pricing. This is one of the major reasons that the company is looking to spin out its lithium asset in a new vehicle with a dedicated team. The company anticipates that the spin-off will cause the market to respond. The company intends to reward its shareholders by spinning off the lithium asset.

At the Fleur de Lys asset, the company has been highly methodical in its approach. It is looking to publish recent results on the asset through a new press release within the next 3-4 weeks. So far, the company has reported great gold counts with lots of pristine grains. These results suggest that the previously overlooked geology is indeed permissive and features rocks that potentially contain gold. By spinning off the asset, the company will be able to de-bloat its portfolio, while at the same time, realising the true value of the lithium project.

Targets 2022 and Beyond

Sokoman Minerals is currently drilling at the Grey River asset. Drill operations at the Kraken asset were halted after 3,200m. The company does not plan on drilling further until the assay results are back. The assay results are expected to trickle in over the next 2 weeks. At the Moosehead project, the company is looking to drill 25,000m with 3 rigs. This includes one drill on the barge. Notably, barge drilling is about 15% more expensive. While the Moosehead project provides excellent access, the company does require the use of a helicopter in order to position some of the equipment. The asset has 2 paved highways that run through it, including the trans-Canada highway, making it easy to access.

To find out more, go to the Sokoman Minerals website