The Next Few Months Could be a Game Changer for this Company
Published: Wed, 02/25/15
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Precipitate Gold Corporation
Some of you know me as the editor of the Hard Rock Analyst (HRA) newsletters. It's a paid subscriber only service. No ads. No "sponsors" or other third parties paying for the upkeep. Why am I telling you this up front? Because I want to talk about a company that I helped found and continue to be a large shareholder of. My subscribers know about it and about my relationship. That relationship is why I don't rate the stock in the newsletter, though I update the story whenever there is important news. My readers know where I'm coming from and quite a few are fellow shareholders. If it works out I stand to make money on it right beside other shareholders. There's a good reason many subscribers are PRG shareholders even though HRA doesn't rate the stock. Let's start with the highlights. I fill in the detail below.
Precipitate Gold trades in Canada under the symbol PRG.V and in the United States under PREIF or PREIF.PK. The Company is poised to begin the most important drilling campaign in its history. This is exactly the sort of high potential speculative situation resource stock traders look for. It's taken a couple of years of hard work, good science and of course a bit of luck to get there but the table is set. Now is the time to look at this exciting investment opportunity. If the next drill phase succeeds the potential for triple digit gains is quite real. I think (and, yes, I'm biased) it's one of the best drill speculations out there. Let me tell you why. Management - ALWAYS a key success factor. I'm a founder of PRG.V (PREIF) but this isn't about me. Management is critical to the success of a junior resource company. My late brother David and I and our fellow founder Scott Gibson knew that. We approached some of the best names in the business and, happily, they came on board. I'm not going to rattle off the list and their CV highlights here as you can find those on Precipitate's website (www.precipitategold.com). I will make one important point about the group though. Everyone on the board of directors has direct management and board level experience with a company that made an important discovery and then sold the discovery company, generating a big win for shareholders. M&A activity is often cited by promoters as the ultimate end game for an explorer. The truth however is that very few companies manage to accomplish it. It says a lot about Precipitate's management that the entire board knows just what is involved in developing a new discovery and finding a buyer for the discovery company. That sort of experience is invaluable. Projects: The Value Driver
As you can see on the map, there are two discovered gold resources in the belt, 3.2 and 2.0 million ounces respectively. Precipitate's neighbor rocketed from $0.06 per share to nearly $2.00 in 2012 following its initial discovery results. In this largely unexplored belt, the potential for more of those kinds of discoveries and share price gains remains an imminent possibility for those companies remaining active with the drill, like Precipitate Gold. Remember that this belt was completely unexplored only a decade ago. Generating over five million ounces in gold discoveries this quickly is very impressive and highly unusual, and speaks to the prolific nature of this belt of rocks that likely still has many discoveries ahead of it. Large areas of it, including portions of Precipitate's concession still remain to be explored. That discovery potential is the reason Precipitate moved into the belt. Precipitate carried out very efficient early stage work and quickly zeroed in on the Ginger Ridge area. As a shareholder I was impressed with how cost effectively Precipitate was able to get to discovery stage. Nothing was wasted on frills and the vast majority of monies raised by the company have gone directly into the ground.
The picture on the right is a cross section through the discovery drill hole. Aside from the great high grade intercept there are a couple of important things to note. The overall sulphide intercept (shown in black in the discovery hole) is large - over 300 feet. The top of the sulphide zone is shallow, also good. You can see from the colors that the highest gold grades seem to coincide with the highest chargeability readings. Without getting too technical, one other thing about these IP sections should be kept in mind. The mathematical software used to process them tends make the chargeability highs look more "vertical" than they are. The current best guess is that the mineralized system sits at a shallow angle, not a steep one. More drilling will define the actual geometry once and for all.
The next graphic shows stacked geophysical sections of the northern portion of the original IP grid. Note the location of discovery Hole 5 which is just south of the northernmost section of the original geophysical grid on line 10. That was the situation at the end of the drill program. Precipitate had an exciting discovery hole and a targeting method that seemed to be working but didn't know how big the target was or even if they were drilling the best part of the anomaly. In order to
address these questions Precipitate returned to Ginger Ridge late
last year and completed an expanded geophysical survey intended to
trace the anomaly to the north. The graphic below on the right
includes the results of the new survey and those results are
dramatic. You can see from the cross-section that the area of
highest chargeability is indicated by the purple and mauve shading
surrounding the drill hole trace. Now, look at the graphic below and
compare it to the one that only has line 12 and 10, above. The new
geophysical lines (line 2 to line 8) extended the anomaly by 900
yards and the strongest and widest readings are on the new lines.
Lines 6 and 8 in particular show high chargeability readings that
are stronger than line 10. The anomaly is both wider and gets
stronger at a shallower depth than it does on
One of Precipitate's geologists carried out new mapping and surface sampling while the IP survey was ongoing. Since he was on site he had the benefit of the geophysical data as it was generated and could see where the anomaly was going. Outcrop is scarce on the ridge but he was able to map some rock exposures and grab some samples directly above the trace of the chargeability anomaly. Sampling returned anomalous gold and base metal grades along the trace of the anomaly, including a sample that reported 0.06 oz/ton taken 1000 yards north of the discovery hole along trend. Significantly, there were a number of samples from the area between lines 6 and 9 that reported gold and base metal values analogous to the sort of grades seen in the upper low grade portion of the discovery hole intercept. The sampling results reinforce the interpretation that the target is getting both broader and shallower. Remember that PRG doesn't think the higher grade parts of the zone outcrop. The surface samples may represent either the top of the system above the high grade or perhaps rock that was altered by the heat and pressures when the zone was formed but that are completely above the zone itself. Again, the drill will tell the tale.
Is the outcome of the next drill phase guaranteed? Of course not. The words "guaranteed" and "exploration" should never be used in the same sentence. Exploration is always risky. The best you can do is mitigate the risk with good science and careful choice of targets. Ginger Ridge does have all the pieces in place however, including a large and strong geophysical anomaly, overlying geochemical anomalies and a discovery hole testing the edge of the target that reported great gold numbers. In the high risk game of speculating on exploration results that's about as good as it gets. So far, every time PRG.V (PREIF, PREIF.PK) has done more work at Ginger Ridge the project has gotten better. That's how it's "supposed" to work but it only happens occasionally. Consistent improvement of the targets as more data is collected is the hallmark of a very good exploration project. When Goldquest made its discovery in the Tireo Belt three years ago its stock rocketed by 3000% in the space of about four months. Now Goldquest was reporting some incredibly impressive drill intercepts. I'm not expecting PRG to match those but remember that GQC had three times as many shares out and a share float at least five times the size of Precipitate when it made its discovery. Precipitate shareholders have much higher leverage in a discovery situation. Precipitate's own discovery hole was announced right before the gold price collapsed in late 2014. Bad luck for shareholders then but good luck for new shareholders who can buy the stock cheaper - after a proof of concept discovery hole - in a stabilizing gold market. If you're looking for a high risk/high reward exploration play, it's a great one.
In Toronto on February 28, 2015? Meet the management of Precipitate
Gold and 14 other companies hand-picked by Resource Opportunities,
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Interested in this type of stock? HRA looks for companies with potential to at least double over1-2 years based on, exploration success, resource growth and development of metals deposits for production or take over by larger companies. HRA also uncovers high risk/high potential exploration plays, "swing for the fences" trades that can yield returns of hundreds or even thousands of percent. Now is the time to find opportunity in the resource sector. Companies with superior management and projects have never been cheaper. HRA specializes in finding just that kind of undervalued company. 22 early stage HRA picks have been taken over in the past eight years. Click Here Now to Subscribe At This Extremely Low Trial Price - Only $9! HRA Special Delivery Alert and the HRA Journal are independent publications produced and distributed by Stockwork Consulting Ltd, which is committed to providing timely and factual analysis of junior mining and other venture capital companies. Companies are chosen on the basis of a speculative potential for significant upside gains resulting from asset-based expansion. These are high-risk securities, and opinions contained herein are time and market sensitive. No statement or expression of opinion, or any other matter herein, directly or indirectly, is an offer, solicitation or recommendation to buy or sell any securities mentioned. While we believe all sources of information to be factual and reliable we in no way represent or guarantee the accuracy thereof, nor of the statements made herein. We do not receive or request compensation in any form in order to feature companies in HRA publications. We may, or may not, own securities and/or options or warrants to acquire securities of the companies mentioned herein .HRA's editor is a large shareholder of Precipitate Gold as disclosed in this article. Neither HRA nor its editor were compensated for or expect to be compensated for the production or distribution of this article but may benefit from share price gains. You should never invest in a speculative - or any other - stock without doing your own rigorous due diligence and consulting with and independent third party investment professional. This document is protected by the copyright laws of Canada and the U.S. and may not be reproduced in any form for other than personal use without the prior written consent of the publisher. This document may be quoted, in context, provided proper credit is given.
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Great
management is key but generating outsized gains requires good
results from good projects. PRG.V (PREIF, PREIF.PK)'s marquee
project is Juan de Herrera in the Dominican Republic (the "DR"). I'm
very familiar with the DR, having followed several companies that
have been active there. There have been a couple of highly
successful mine start-ups including a small copper miner followed by
HRA until it was taken over for a 450% gain for HRA subscribers. One
area in the DR of particular interest to me is the Tireo Gold Belt.
This important new gold belt was discovered by Goldquest Mining (GQC-V)
based on theories proposed by its former CEO Alistair Waddell. The
map on the right shows the location of the Tireo Gold Belt and the
locations of Precipitate's concessions (in yellow) within it.
PRG
soil sampled and did some minor trenching at Ginger Ridge (there
isn't much outcrop) but the main exploration tool has been Induced
Polarization (IP) geophysical surveys. IP looks for accumulations of
sulphide minerals that often host economic metals. These
accumulations show as "chargeability highs" in the survey.
Alternatively, IP can look for areas of very low chargeability that
can represent things like quartz veins that can host gold and other
metals.
Precipitate
drilled six holes during its maiden drilling program. As so often
happens the best hole was one of the last pair drilled. The
geologists knew they were onto something because of the large amount
of sulphides but they didn't know the grades until the assay lab
reported them after the program was over.
line 10. The current
interpretation is that the zone may be coming closer to surface
around lines 6 and 8. The main target now extends from line 12 to
north of line 2, an overall distance of over 1100 yards.