In a time where market sentiment seems to be turning slightly negative, with a Fed pivot still up for debate, Tectonic Metals (TECT:TSX.V; TETOF:OTCQB; T15B:FSE) doesn’t seem to have much trouble raising cash, as it doing a brokered private placement at the moment, aiming at gross proceeds of C$6M. The raise is structured for 83.3% as a LIFE (Listed Issuer Financing Exemption) financing, meaning it is a short form offering, with no requirement for accredited investors or minimum investment amounts, and no 4 month hold period, and is scheduled to close on or about May 30, 2023, so if you could have an interest there is always the possibility to contact management.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.
Please note: the views, opinions, estimates, forecasts or predictions regarding Tectonic’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Tectonic or Tectonic’s management. Tectonic Metals has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.
It was good to see Tectonic’s largest shareholder Crescat Capital, holding 19.56%, participating again in this round. The share price of the issued shares will be C$0.11, and each share comes with a half, 2 year C$0.15 warrant. Dilution will be significant with about 55M shares being issued, which would mean an increase of about 23%. Actually C$5M of the financing will be under the LIFE exemption, and C$1M will be under normal terms, so with a 4 month hold period. Investors obviously wanted some extra sweeteners in this deal, as there is no hold period for most of the shares, there is a half warrant and the raise was done at a discount. According to CEO Reda, it wasn’t easy to raise this amount in these markets, so they definitely had to sweeten the deal here. Investors acquiring shares under the LIFE exemption are obliged to purchase these normal shares as well, under the ratio of 5 : 1. The proceeds will be used for the upcoming drill program at the Flat Gold project in Alaska.
Tectonic completed quite a bit of exploration on Flat in order to determine the best possible targets, by doing a metallurgical test program on historical drill core, supplemented by extensive geological, geochemical, and geostatistical modelling, relogging of the historical drill core, petrography, trenching, channel sampling, ground truthing, lineament analysis, historical geophysical interpretation, and a logistical and onsite infrastructure audit.
The metallurgical test results provided excellent results with recoveries up to 99.1%, and to 96.8% with coarse crush bottle roll tests, which can be used as a proxy for heap leach testing. These outcomes confirm the non-refractory nature of known mineralization, and have led to the design of a follow up program using column leach testing, as a next step to determine the eligibility of Flat mineralization for heap leaching, which would improve recoveries of low grade ore, increase the amount of resources and improve economics.
Tectonic is mobilizing into the field in June and drilling is expected to commence in early July. As a reminder, the Flat Gold Project is fully owned by Tectonic Metals, and is located 40km north and in the same mineral belt as the 39Moz @ 2.24g/t Au Donlin Gold Project, jointly owned and operated by Barrick and Novagold, who are spending $60M at Donlin this year. Flat is a 92,000-acre district-scale intrusion-hosted gold system with multi-million-ounce potential in the heart of Alaska’s fourth most prolific placer mining district. The property has also produced 1.4Moz of placer gold historically.
The priority target, Chicken Mountain, hosts a robust 4km long gold-in-soil anomaly where all 55 drill holes hit gold mineralization to an average drill depth of only 100 metres vertical; mineralization remains open along strike and at depth. According to historical published reports, Chicken Mountain is the likely source of the majority of the aforementioned historic 1.4Moz of placer gold mined in the area. Historic drilling from 1997 in 55 holes all intercepted mineralization, and returned pretty interesting highlights like 12.5g/t Au over 24.7m, 1.36g/t Au over 36.6m and 1.28g/t Au 31.7m with many intercepts starting from surface. Quinton Hennigh from Crescat Capital had this to say about Flat:
“I think Flat looks like a very robust reduced intrusion type gold deposit. All historic holes hit significant gold. The broad expression of alluvial gold is a characteristic as it is at Ft Knox. I think the project could easily host +10Moz at 1-2 gpt Au. Metallurgy was excellent according to recent testing, and in the near future the company has to test for heap leach capacity. Flat is a Tintina type intrusion related system. If the metallurgy is favorable like Ft Knox or Eagle, then resulting capex should be modest, perhaps $0.7-1B and AISC of $1000-1200/oz.”
This makes sense, the refractory subject has been ruled out now but the heap leach potential needs to be established yet. Oxidized deposits give Tectonic much more margin for solid economics, as a 0.5-0.6g/t heap leach grade is already economic, with much lower capex to go with that, not needing huge deposits for economies of scale as well.
Conclusion
It is good to see Tectonic Metals raising C$6M (although lots of sweeteners were needed apparently, but as the saying goes if you can get the money just take it) as this could provide funds for lots of drilling at Flat. There are many targets and historic drill results, so it shouldn’t be too hard to hit great results from the start, depending on drill collar locations of course. Drilling will start in early July, and results can likely be expected back from the labs a few months later. The potential for Flat is huge, so the current market cap of C$26.4M could be something of the past after this summer. Stay tuned!
I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.
Disclaimer:
The author is not a registered investment advisor, and currently has a position in this stock. Tectonic Metals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.tectonicmetals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
All pictures are company material, unless stated otherwise.
All currencies are in US Dollars, unless stated otherwise.
Please note: the views, opinions, estimates, forecasts or predictions regarding Tectonic’s resource potential are those of the author alone and do not represent views, opinions, estimates, forecasts or predictions of Tectonic or Tectonic’s management. Tectonic Metals has not in any way endorsed the views, opinions, estimates, forecasts or predictions provided by the author.
It was good to see Tectonic’s largest shareholder Crescat Capital, holding 19.56%, participating again in this round. The share price of the issued shares will be C$0.11, and each share comes with a half, 2 year C$0.15 warrant. Dilution will be significant with about 55M shares being issued, which would mean an increase of about 23%. Actually C$5M of the financing will be under the LIFE exemption, and C$1M will be under normal terms, so with a 4 month hold period. Investors obviously wanted some extra sweeteners in this deal, as there is no hold period for most of the shares, there is a half warrant and the raise was done at a discount. According to CEO Reda, it wasn’t easy to raise this amount in these markets, so they definitely had to sweeten the deal here. Investors acquiring shares under the LIFE exemption are obliged to purchase these normal shares as well, under the ratio of 5 : 1. The proceeds will be used for the upcoming drill program at the Flat Gold project in Alaska.
Tectonic completed quite a bit of exploration on Flat in order to determine the best possible targets, by doing a metallurgical test program on historical drill core, supplemented by extensive geological, geochemical, and geostatistical modelling, relogging of the historical drill core, petrography, trenching, channel sampling, ground truthing, lineament analysis, historical geophysical interpretation, and a logistical and onsite infrastructure audit.
The metallurgical test results provided excellent results with recoveries up to 99.1%, and to 96.8% with coarse crush bottle roll tests, which can be used as a proxy for heap leach testing. These outcomes confirm the non-refractory nature of known mineralization, and have led to the design of a follow up program using column leach testing, as a next step to determine the eligibility of Flat mineralization for heap leaching, which would improve recoveries of low grade ore, increase the amount of resources and improve economics.
Tectonic is mobilizing into the field in June and drilling is expected to commence in early July. As a reminder, the Flat Gold Project is fully owned by Tectonic Metals, and is located 40km north and in the same mineral belt as the 39Moz @ 2.24g/t Au Donlin Gold Project, jointly owned and operated by Barrick and Novagold, who are spending $60M at Donlin this year. Flat is a 92,000-acre district-scale intrusion-hosted gold system with multi-million-ounce potential in the heart of Alaska’s fourth most prolific placer mining district. The property has also produced 1.4Moz of placer gold historically.
The priority target, Chicken Mountain, hosts a robust 4km long gold-in-soil anomaly where all 55 drill holes hit gold mineralization to an average drill depth of only 100 metres vertical; mineralization remains open along strike and at depth. According to historical published reports, Chicken Mountain is the likely source of the majority of the aforementioned historic 1.4Moz of placer gold mined in the area. Historic drilling from 1997 in 55 holes all intercepted mineralization, and returned pretty interesting highlights like 12.5g/t Au over 24.7m, 1.36g/t Au over 36.6m and 1.28g/t Au 31.7m with many intercepts starting from surface. Quinton Hennigh from Crescat Capital had this to say about Flat:
“I think Flat looks like a very robust reduced intrusion type gold deposit. All historic holes hit significant gold. The broad expression of alluvial gold is a characteristic as it is at Ft Knox. I think the project could easily host +10Moz at 1-2 gpt Au. Metallurgy was excellent according to recent testing, and in the near future the company has to test for heap leach capacity. Flat is a Tintina type intrusion related system. If the metallurgy is favorable like Ft Knox or Eagle, then resulting capex should be modest, perhaps $0.7-1B and AISC of $1000-1200/oz.”
This makes sense, the refractory subject has been ruled out now but the heap leach potential needs to be established yet. Oxidized deposits give Tectonic much more margin for solid economics, as a 0.5-0.6g/t heap leach grade is already economic, with much lower capex to go with that, not needing huge deposits for economies of scale as well.
Conclusion
It is good to see Tectonic Metals raising C$6M (although lots of sweeteners were needed apparently, but as the saying goes if you can get the money just take it) as this could provide funds for lots of drilling at Flat. There are many targets and historic drill results, so it shouldn’t be too hard to hit great results from the start, depending on drill collar locations of course. Drilling will start in early July, and results can likely be expected back from the labs a few months later. The potential for Flat is huge, so the current market cap of C$26.4M could be something of the past after this summer. Stay tuned!
I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter at www.criticalinvestor.eu, in order to get an email notice of my new articles soon after they are published.
Disclaimer:
The author is not a registered investment advisor, and currently has a position in this stock. Tectonic Metals is a sponsoring company. All facts are to be checked by the reader. For more information go to www.tectonicmetals.com and read the company’s profile and official documents on www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.
