Gold bulls need to be patient these days, as the Fed continues its policy of interest rate hikes to combat inflation. The yellow metal tends to move in an inverse relationship with the dollar, and with the Fed raising rates at a rapid clip, the dollar has been strengthening while gold weakens.
However, gold’s story doesn’t end here. In the not-so-distant future, the Fed's policy could trigger a recession, or the record-high US government debt could compel the central bank to lower interest rates, providing an opportunity for gold to rebound.
In an environment where rate rises have halted, or even begun to decline, gold looks to be in a good position to return to form.
That’s certainly the hope of Carlyle Commodities Corp. ($CCC, $BJ4, $DLRYF), which owns a gold project with an existing gold resource in the heart of British Columbia.
Newton: A valuable gold asset surrounded by great infrastructure
Located 100 kilometers from Williams Lake in central British Columbia, Carlyle’s Newton project is surrounded by supportive infrastructure.
In a province where much gold-hunting activity is focused on the Golden Triangle in northwest BC, Newton provides a much-easier-to-explore alternative to the Golden Triangle’s forbidding terrain.
Morgan Good, Carlyle Commodities’ CEO, comments, “Newton’s section of British Columbia has highway and logging roads directly to the property. There’s power, there are roads, there’s water, and exploration can happen year-round.” That infrastructure advantage makes Newton’s 861,400 ounces of inferred gold and 4.68 million ounces of inferred silver that much more valuable.
Carlyle acquired the project from Amarc Resources, who alongside prior operators conducted approximately 35,000 meters of drilling and more than C$25 million spent towards the project allowed for the resource to take shape.
Amarc decided to sell the project to Carlyle to focus on its core strategy of developing copper-gold porphyry deposits in British Columbia. Carlyle picked up the project during a down period for gold, so the upside here is substantial, as the company’s market cap does not reflect the value of this asset.
Photo: The Newton gold project has excellent conditions for year-round exploration and development activities.
A good analogy of the nearby Blackwater project
A key reason why Carlyle is high on Newton’s upside is its proximity and similarities to the Blackwater project 180 kilometers to the north. Artemis Gold owns Blackwater and is on the verge of beginning construction on an open-pit mine at the project. Blackwater boasts 12 million ounces of gold, and Artemis sports a market cap of around $850 million.
According to Jeremy Hanson, Carlyle’s VP of Exploration, “Newton and Blackwater are very analogous. They’re the same deposit type in the same age felsic rocks, they have similar alteration patterns, and the mineralization is similar as well.”
Good elaborates, “Blackwater is just under 12 million ounces and Newton is just under 1 million ounces, but they’ve drilled approximately 10 times the meters and 10 times the total drill holes.”
With Carlyle currently trading at a market cap of around $5 million, both Good and Hanson believe Newton is undervalued for the resource it already has and for what that resource can become with more exploration.
Recent drill program positions Newton, Carlyle for growth
Newton’s expansion potential should become clearer toward the end of March when Carlyle will release assays from its 2,000+meter Phase I drill program.
The company just recently completed the program, which tested the deposit at depths that have historically gone untested at Newton. Says Hanson, “We lined up a couple of deep holes going through the main resource for 400 meters. Past that we were into an untested area of the felsic rocks.”
If these holes show that Newton’s resource extends at depth, that opens the deposit up to substantial expansion. As it stands, Good sees the potential to extend Newton along strike as well. “If we just increase drill density and drill along the mineralization footprint, we are optimistic we can grow the resource to 2-3+ million ounces over the coming 12-24 months,” he notes.
In addition, only 10% of Newton’s land package has been explored and there are large epithermal bodies that remain to be tested.
With that $5 million market cap and a capital structure of just approximately 25 million shares outstanding, Carlyle Commodities appears ripe for appreciation, pending good drill results from Newton and a return to a gold bull market.
Learn more about Carlyle Commodities on its website as well as:
This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. This content contains sponsored advertising content and is for informational purposes only and not intended to be investing advice.
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