Turmalina Metals (TBX:TSXV) is the next high grade, tightly structured venture from backers of K92 Mining (KNT-TSXv) – the hottest team in the junior gold sector.
The stock price of K92 Mining has rocketed this year… up from 70 cents to $2.70 (almost 400%!) as their Kainantu Mine keeps churning out more and more gold at over 20g/t (half an ounce or better!).
Early investors in K92 have made as much as 15x their original investment. Turmalina Metals is their next venture – and it just listed TUESDAY – 2 days ago!
And they already have a high grade discovery – in fact, their San Francisco project may be the top of one of the highest-grade gold-copper tourmaline breccias ever discovered.
Super-high-grade gold results that are close to surface – 36.9 metres of 6.3 g/t gold and 122 g/t silver in one hole and 85 metres of 4.4 g/t gold and 109 g/t silver – were released at the IPO.
There are over 65 more breccias identified on their property – the nearest one only 200 metres away. That makes San Francisco look more like a district than a property.
A new 15-hole program will soon be underway – as well as work on other breccias they’ve found.
They have packaged all this up in a tight share structure – with only 49 million shares out, the market cap of the company was just $25 million, and the Enterprise Value – where you subtract the cash in the kitty or add the debt – was only $18 million. K92 now has a market cap over $500 million.
You can do the simple math on the potential that exists here at this early stage with Turmalina. OK I’ll do it for you – K92 has 20x the market cap of Turmalina. Only 14 million of the shares are freely-tradeable. Turmalina has a MUCH tighter share structure than K92 did then – increasing leverage for investors.
In one sense, that’s all you need to know. BUT… Turmalina has one of best creation stories of any junior mining company I’ve ever been involved with – and I’ve been doing this since 1991.
Three Worldly Geologists with One Focused Goal:
Find the Single Best South American Gold Project
Everything seems to happen so fast in the stock market. K92’s share price has soared higher and now this team has another gold venture ready to go.
In the real world though these things take a lot more time… and EFFORT.
Two years ago, a group of wealthy mining entrepreneurs including K92 Mining founder Bryan Slusarchuk tasked three of the top geologists on the planet with one goal: find the best advanced stage high-grade deposit in South America.
One of these men was Doug Kirwin, who played a key role in the early days of getting K92 Mining their high-grade mine in Papua New Guinea. Kirwin led the geological team that discovered the massive Oyu Tolgoi mine in Mongolia, which was developed by Robert Friedland’s Ivanhoe Mines.
Kirwin knew exactly who to call – his good friend Dr. Rohan Wolfe, now the CEO of Turmalina.
Wolfe helped discover the Merlin Molybdenum-rhenium deposit in Australia, but his real value-add for Turmalina comes from another part of his resume: he spent five years working for mining legend Robert Friedland scouring everything in the Americas. He spent up to 200 days a year on the road, as Friedland’s Gold Hunter in South America.
As Wolfe began his search, he kept running into one man: Chico Azevedo. Chico had a very similar resume, : he had spent 35 years looking for gold deposits in South America, the last six years in the same “Gold Hunter” role for South African mining giant Gold Fields.
Kirwin and Wolfe recruited Azevedo. Between these three men – Kirwin has his own network in South America–they had seen almost every gold asset in South America there was to see – or so they thought.
Here was their criteria for their South American treasure hunt:
- An asset that the public markets had never seen before – a new, fresh story
- A specific and overlooked deposit type – a high-grade, tourmaline breccia
- An advanced stage asset that could be developed and monetized FAST; i.e. not grassroots
- In an area where the community had been supporting mining for decades
- All 3 of these geologists had to agree that they LOVED it – it had to be unanimous
Criteria #1 and #5 were the toughest. They had to start looking in the large arena of family-run assets that were still private.
This, of course, would be a literal gold mine. So many assets here would not have had either proper funding or proper, modern exploration methods used.
The art-of-the-deal would be to find the right asset owned by the right family who would be willing to share in the upside of Turmalina as a public company – no small task.
But for any geologist this is a dream job… no time pressure and solely focused on finding a career making asset (or two). These three proven geologists took their time and did this right.
I’m sure it got tense at times. Sometimes two out of the three would get excited and passionate about a project but the third wouldn’t – frustrating, but the rules meant that it was time to look at the next project.
Frustrating but worth it… patience and being extremely picky pays off. After two full years of searching through hundreds of projects the three geologists found two high grade, massively underexplored, drill ready projects.
They got their next round of funding, and they’re now public – and the drill has been turning and producing some ultra high grade gold results already.
San Francisco de Los Andes
High Grade and Low Capex Potential
Asset #1 – where the very high grade drill results came from – is called San Francisco de Los Andes.
San Francisco has been privately owned for decades. It has never been exploited with modern mining techniques. It’s high grade; in fact it is one of the highest-grade tourmaline breccias ever discovered.
The private owner of the property mined it off and on for decades, but only at the surface level – but The Really Big Prize is much deeper.
The target shape of the San Francisco deposit is like an inverted carrot. The Turmalina team believes that the deeper you go the wider it gets… and not just wider, but also higher grade.
Turmalina has found that at 50 meters the deposit is already twice of what it is at the surface.
The team has been drilling at San Francisco and the early results are spectacular. Drilling will quickly re-start, and if experience is any guide, those results will be a major catalyst for the stock in the coming weeks and months.
This is exactly how K92’s share price was driven up over 500% in the last 18 months.
Medium-to-long term the regional exploration upside around San Francisco is huge. The property has been massively underexplored… San Francisco is just 1 of more than 60 breccias that are in the JV area.
San Francisco is a perfect project for a junior gold miner. It isn’t at altitude, it is in a mining friendly region with infrastructure (home to 12 operating mines, five in construction) and labor and carries no political risk.
Most importantly it is VERY high grade, potentially low capex target.
The second asset, which is called Turmalina, is similar in many ways and is the same geological model. While all of the attention right now is on San Fransisco, and rightfully so given the great start there, this second project could also potentially add some additional sizzle down the road.
The Market WANTS This Type of Stock
Turmalina Metals is exactly the kind of stock that investors want to own in this sector right now.
The Market loves the K92 team. The market loves high grade assets… especially now at the start of a bull market in gold.
This is when investors and institutions are just coming back into the sector. They don’t want bloated share structures and old stories. New money in the sector will focus on proven financial backers with fresh assets AND high grade.
That is why K92 Mining turned into a five-bagger in 18 months.
There will be a time for large, lower grade and high capex operators – as the gold bull market matures. Not now.
The share structure on Turmalina is tight… just 49 million shares outstanding. Management and directors are loaded with shares, just as they were with K92 where they have been richly rewarded because of it.
The K92 team were able to attract A Dream Team of the world’s top geologists, fund them and give them enough time to do their job right. These men have been responsible for discovering billions of dollars of economic metals.
These properties are fresh and the Market will be excited by that. The San Francisco project offers truly stunning, shallow grades and more drilling could provide a rich run of catalysts for months to come.
It could happen fast, but if Turmalina Metals turn into an overnight success, it will have been two long hard years in the making.
I think this Dream Team can make Turmalina a second major success for them and shareholders – just getting it to the same market cap as K92 over time makes it a 20-bagger from here.
I’ve got 82,500 shares at 54 cents and I’m buying more.
While the article contains the opinions of the author, Turmalina management has reviewed and sponsored this article. For more information regarding risks and results to date, view the company’s disclosure including the 43-101 report filed on SEDAR.com. Mining and mineral exploration is a high risk business and investing in this sector should be considered high risk. The information in this newsletter does not constitute an offer to sell or a solicitation of an offer to buy any securities of a corporation or entity, including U.S. Traded Securities or U.S. Quoted Securities, in the United States or to U.S. Persons. Securities may not be offered or sold in the United States except in compliance with the registration requirements of the Securities Act and applicable U.S. state securities laws or pursuant to an exemption therefrom. Any public offering of securities in the United States may only be made by means of a prospectus containing detailed information about the corporation or entity and its management as well as financial statements. No securities regulatory authority in the United States has either approved or disapproved of the contents of any newsletter.
Keith Schaefer is not registered with the United States Securities and Exchange Commission (the “SEC”): as a “broker-dealer” under the Exchange Act, as an “investment adviser” under the Investment Advisers Act of 1940, or in any other capacity. He is also not registered with any state securities commission or authority as a broker-dealer or investment advisor or in any other capacity.
