Three Strange Golden Amigos

Source: Ron Struthers 07/09/2024

Ron Struthers of Struthers Resource Stock Report believes that the vast majority of investors would have no clue that Zonte Metals Inc. EREPF, B2Gold Corp. BTG, and Victoria Gold Corp. VITFF have so much in common. He compares them and explains why he believes two are Buys.

A lot of news on Zonte Metals Inc. and on numerous fronts.

B2Gold Corp. released a pre-feasibility on Gramalote.

Victoria Gold Corp. is exploring the area adjacent to Zonte, which will probably go under, and Zonte started drilling at Cross Hills.

Let's start with. . .

B2Gold Corp.

^{Recent Price - $3.75}

^{Entry Price - $4.45}

^{Opinion - Buy}

B2Gold Corp. has pulled back in the last couple of months, like most gold stocks. On June 19, they released a very strong pre-feasibility report on the Gramalote Project in Colombia.

As most readers of this newsletter are aware, Zonte Metals holds disputed claims right over the middle of the Gramalote proposed open pit. This has been stuck in the Colombia courts for many years, First, previous Gramalote partner and operator, AngloGold Ashanti Ltd. AU tried to get Zonte's claims dismissed and with no success they recently dealt their 51% interest in Gramalote to B2Gold. This does give B2Gold potentially better economics with 100%.

Anglo Gold promised a full feasibility study, and now B2Gold is promising a full feasibility study by mid-2025. The problem is that full feasibility cannot be completed if they do not have a clear title to all the claims, or perhaps they could put a disclaimer in the report that it relies on a settlement with Zonte.

B2Gold will probably drag this out, but judging by how good this pre-feasibility study is, they will want to push this towards production.

Highlights:

• Significant gold production profile with low-cost structure and favorable metallurgical characteristics:

• Open-pit gold mine with an initial life of mine of 10 years, with mill processing over 12.5 years;

• Average grade processed of 1.26 grams per tonne gold over the first five years, benefiting from the processing of the higher-grade core at the Gramalote project; life-of-project average grade processed of 1.00 grams per tonne (g/t) gold;

• Life-of-project gold production of approximately 2.3 million ounces with an average gold recovery of 95.9% from conventional milling, flotation, and cyanide leach of the flotation concentrate; • Average annual gold production of approximately 234,000 ounces per year for the first five years of production;

• Average annual gold production of approximately 185,000 ounces per year over the life of the project;

• Projected lowest-quartile all-in sustaining costs of $886 per gold ounce over the life of the project;

• Annual processing rate of 6.0 million tonnes per year;

• Strong project economics:

• Life-of-project after-tax free cash flow of $1.38-billion;

• Assuming a discount rate of 5.0%, net present value after tax of $778 million, generating an after-tax internal rate of return of 20.6%, with a project payback on preproduction capital of 3.1 years;

• Estimated preproduction capital cost of $807 million (includes approximately $93 million for mining equipment and $63 million for contingency);

Gramalote has a long history of studies and technical reports that support the existing mining permit that is currently in place. The existing mining permit is currently in place for a larger-scale project, so this permit will require modification to reflect the new medium-scale project contemplated in the PEA. B2Gold anticipates the permit modification time frame will be between 12 and 18 months from submission to the permit authorities.

The PEA includes indicated mineral resources of 192.2 million tonnes grading 0.68 gram per tonne gold for a total of 4.21 million ounces of gold and inferred mineral resources of 85.4 million tonnes grading 0.54 g/t gold for a total of 1.48 million ounces of gold. The PEA assumptions include revenues using a gold price of $2,200 per ounce for the first three years of production and $2,000 per ounce over the remaining life of the project.

This is a large deposit at nearly 6 million ounces, and the limits have not been reached yet. Rough numbers show Zonte has close to 10% of the claims at Gramalote, and 10% of the US$778 million net present value in the report would be US$77.8 million or about C$106 million. That is about 15 times Zonte's current Market cap.

Victoria Gold Corp.

^{Recent Price - $0.80}

Victoria Gold Corp. was once on the Selection List but we were stopped out in 2022 at $13.70. Zonte had great benefits from Victoria Gold because VGCX was exploring right to Zonte's McConnell Jest border in the Yukon with their Raven project. In essence, Victoria Gold increased the value and potential of Zonte's project without Zonte spending a dime.

Those days are over for the foreseeable future as Victoria Gold reported a heap leach pad failure, basically a landside outside containment banks at its Eagle mine. It is located 375 kilometers north of Whitehorse and 85 kilometers north of the village of Mayo, Yukon. The site employs around 500 people.

Thankfully, nobody was hurt, but this is a massive problem that will be costly to remedy. I heard one analyst estimate of $70 million.

The big problem is Victoria is a one-mine company, and this is their only source of cash flow. They have under $30 million in cash and a lot of debt. About $180 million of debt, plus about $34 million in equipment debt facility with Caterpillar.

There will be massive dilution in the stock at best, and most likely, the company will go bankrupt, and shareholders will be left with nothing. Perhaps a White Knight arrives and buys the company for the asset, but that will depend on repair costs and probably environmental liabilities we don't know of yet. Here is a picture of the landside in a Yukon news article.

This has no negative effect on Zonte; only Victoria Gold will no longer be exploring Raven next to Zonte's border.

Fortunately, Victoria Gold had already made the discovery there.

Zonte Metals Inc.

^{Recent Price - $0.08}

^{Entry Price - $0.09}

^{Opinion – Strong Buy}

Most important, Zonte Metals Inc. has started its next phase of drilling at the K6 target on its Cross Hills project in NFLD. The last round of drilling hit some decent copper numbers, but Zonte needs to find longer intercepts, higher grades, or both.

In yesterday's news, it was highlighted, and I believe this is an important point. The company has conducted additional multi-faceted exploration to aid in better understanding the mineralizing system. The Fall 2023 K6 drilling demonstrated that the integration of the new exploration data with the initial datasets has provided a better understanding of the mineralizing system. All drill holes from the Fall 2023 program intersected copper mineralization with 11.2m averaging 0.42% copper (Cu) in the deepest drill hole, suggesting possible increasing grades with depth. The Summer 2024 drilling program aims to test extensions of this mineralization along strike and to depth.

The Cross Hills Copper Project is an IOCG system with 12 identified targets across its 25 km extent, K6 being the smallest. These targets are defined by coincident geological, geophysical, and geochemical data. Depending on the results from the current phase of K6 drilling, further drilling will continue at K6, and additional targets will be prepared for drilling using the same advanced exploration methods that led to the copper discovery at K6.

I have a Strong Buy on the stock because it started drilling where I expect more success, and the stock is cheap and near a bottom. Considering there is strong shareholder support from three major groups, there was heavy volume when it bottomed last year. The stock has been on a long downward trend, like most junior exploration stocks.

We need to see a close at $0.10 or better to break the down trend channel and than a close above $0.135 to break resistance, This could happen any time as the drill is now turning. Most investors will now hold for hopeful results.

Important Disclosures:

1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of B2Gold Corp.
2. Ron Struthers: I, or members of my immediate household or family, own securities of: B2Gold Corp. and zonte Metals Inc. I determined which companies would be included in this article based on my research and understanding of the sector.
3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports, Street Smart, or their officers. The author is wholly responsible for the accuracy of the statements. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Any disclosures from the author can be found below. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
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