A Mighty Triumph In The Yukon Is Coming – Triumph Gold Corp.

Palisade Research January 30, 2017
Category: Research

Triumph Gold Corp. (TSXV:TIG, FRA:8N61, OTCMKTS:NFRGF)

Bill Harris grew up in Whitehorse, a small town in Canada’s great white north. With open expanses, trees and rivers to the horizon, and a sparse population of 28,000, Whitehorse hails as the capital of the Yukon. The town is supported by mining and logging – there simply isn’t much else to do when you get that far north.

Gold was discovered in the Yukon on August 16, 1896. What ensued was one of the greatest gold rushes in modern history. The Klondike Gold Rush saw over a hundred thousand prospectors stampede their way north in search of riches. Yukon winters are tough though; many profit-seekers returned home empty handed. Others didn’t make it home at all. But true to its name, the Klondike Gold Rush made a few winners fabulously wealthy.

In today’s Yukon, another gold rush is in action as we speak. The days of panning for nuggets are long gone. Modern exploration techniques have ushered in state of the art drill rigs, multi-million oz. deposits, and billionaire finance partners. Case and point: Goldcorp (GG) recently acquired Kaminak’s Coffee Deposit for $520-million.

A hundred years have passed …but one thing that remains constant is the first step in mineral exploration –- the initial staking begins with the prospector, and that is where Bill fits in.

As a kid, Bill spent much of his time rummaging through Yukon’s mountains, with his father, a placer-miner, but most of all a prospector. It’s in his blood. In late 1990s, mining pumping through his veins, Bill set out to fulfill a lifelong dream.

Freegold Mountain was Bill’s childhood stomping grounds – a barren expanse, no stranger to his father’s mining expeditions. The area was discovered in 1930, when prospector P.F. Guder found lode gold on the west side of Freegold Mountain. A mini gold rush took hold, with hundreds of claims registered. For the next 80 years, the Freegold Mountain Property would be owned and explored by close to 100 individuals and companies, resulting in a complex patchwork of claims.

Bill embarked on a mission to consolidate. Eighty landowners and years of work. In 2006, Northern Freegold (now Triumph Gold (TSX-V:TIG)) IPO’d on the Toronto Venture Exchange with one of the Yukon’s most promising projects. The Freegold Mountain Project is 35 kilometers long and covering 200 square kilometers. That’s larger than Boston.

The major structural feature in this area is the northwest trending Big Creek Fault, home to some of the most prolific projects not just in Canada but in the world. Included in that elite club is Goldcorp’s Coffee Gold Project as well as Western Copper’s (TSX:WRN, Mkt Cap C$152 million) Casino Project. From the map below you can start to get an idea of the shear size of the project.

(Source: Northern Freegold Corporate Website)

The Coffee Gold Project is a high-grade, open-pit heap leach, boasting 5.2 million ounces of gold resources. The Casino Project is an open-pit, copper-gold porphyry, hosting a resource of 5.4 billion pounds of copper and 9 million ounces of gold; it was recently ranked the number one copper project in the world by Goldman Sachs.

And, Freegold Mountain is only in its infancy. It would be difficult to understate its potential. The Project is currently host to three gold deposits – Nucleus, Revenue and Tinta. Over a dozen additional targets remain undrilled. A major problem in the Yukon is infrastructure. Goldcorp is counting on the Federal Government ponying up $250 million in road upgrades to aid accessibility. Freegold has it already. A government maintained road splits the project from bottom to top.

(Source: Northern Freegold Corporate Website)

Want more? Freegold Mountain hosts at least 3.25 million ounce of gold. Taking the copper and moly mineralization into account, it is estimated that over 6 million gold equivalent ounces have already been delineated.

Compared to its peers – it doesn’t get any cheaper.

 

Enter John Anderson

John Anderson is a well known mining financier. John invested in Triumph Gold via IPO in 2006. So compelled by the merits of Freegold Mountain, John put his other work aside and raised C$17 million for the company the following year.

From 2007 to 2009, Triumph Gold embarked on an aggressive exploration and drilling schedule – 124 diamond drill holes and 81 RAB holes for a total of 34,690 meters. John raised an additional C$10 million in 2008 and 2009.

An initial resource was released, boasting over 1-million ounces of gold. But, as markets deteriorated in 2008 Freegold’s glamor took a backseat.

On May 10, 2011, Bill Harris stepped down.

John Anderson was made Chairman and the company went into survival mode. The company recapitalized after a 10-for-1 rollback in October 2014. John personally covered expenses and back-stopped a financing in the beginning of 2015.

Under the tenure of John, Paul Reynolds was hired as President, and tasked to package the project properly—with all its data and resources—to find its true potential.

With the recent market turnaround, the company has quietly undergone a transformation. During the summer 2016, prominent porphyry experts were deployed to Freegold Mountain, along with an epithermal expert who analyzed historical core at Nucleus. New zones have been discovered at surface that could potentially be the third porphyry on the property, the first being the Stoddart porphyry that was drilled in 2008, the second being in 2010. The new target is widely regarded as “the best outcrop in the Dawson Range”.

Triumph Gold recently closed a C$1.75 million financing, with the funds to going toward Nucleus, and a follow-up program on Tinta, a high-grade polymetallic deposit. Tinta is at the south-end of Freegold and along the same strike as Rockhaven’s (TSX:RK, C$22 mkt cap) Klaza deposit. The incredible thing about Freegold Mountain is that it has all the signatures of Casino-like porphyry, but is larger and includes Kaminak-like epithermal models.

New Regime, New Gold Market, New Name

Current Price: C$0.32
Shares Outstanding: 47.0 million
Market Capitalization: C$15.0 million
52-Week Range: C$0.04 – C$0.38
Cash: ~C$1.3 million

On January 25, 2017, Northern Freegold officially changed its name to Triumph Gold (TSX-V:TIG).

That same week, Triumph hired Dr. Tony Barresi as the VP of Exploration, who is a specialist in volcanogenic massive sulphides, porphyrys and epithermal deposits; a perfect fit for the Freegold Mountan Project. A more focused approach should result in a re-rating of Nucleus’ ounces, guaranteed to be a major catalyst on the horizon.

Furthermore, the beauty of Triumph’s holdings is that it is littered with several “peripheral” zones, including Tinta, Dart, and Goldy, that show excellent potential for smaller-scale, high-grade projects. These projects could be bootstrapped quickly through resource development and feasibility without impairing the major targets. Paul aims to explore Tinta, which will provide high-grade drill intercepts and earlier capital appreciation. This bootstrapping strategy has been employed by many successful junior miners: Target smaller-scale operations. Use cash flow towards developing the major-scale operations This minimizes future dilution and provides the maximum return for shareholders.

Moving forward, a lot of the risk has been mitigated by the existing resource Triumph already has. According to our analysis and after normalization, Triumph Gold is considerably undervalued compared to its peers on a dollar per ounce basis; the company currently trades at $4.63 per ounce versus an average of $30.00 per ounce.

Palisade’s Largest Position

Money talks. Palisade Global Investments has been the single largest buyer of Triumph shares in the past 12 months; we are also the largest funders, cutting $700,000 of checks into the company’s coffers since January, 2016. In fact, we now own roughly 19.7%, assuming exercise of our warrants.

What underlies our thesis? Rick Rule’s mantra on optionality relates to Triumph. The company has a large scale, low-grade resource and management has closely followed Rick’s Rules of Optionality: spend little, dilute little, do little. The payoff for shareholders is obvious – a share price appreciation in 2016 topping 700%. And as commodity prices increase, optionality will continue to favour Freegold Mountain.

Triumph Gold is sitting on over $1.3 million in cash. The burn rate is low. With the discovery of fresh targets and high-grade zones, a little money can unlock a lot of value. The 2017 exploration season may prove monumental for Triumph shareholders.

 
Palisade Global Investments Limited holds shares of Triumph Gold. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.
Did You Like What You Read? Get Our Free Exclusive Content
Enter your email below and you'll receive our 'Weekly Palisade Newsletter' covering Contrarian Ideas and Macro-Situations that the mainstream financial media ignores. You'll also get our Top Investment Ideas and Asymmetric Trading Opportunities right when we find them...
Don't worry - we respect your privacy

Get our Research for FREE