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The World’s Largest Gold Company Just Hedged A Bold Bet on Its Penny Stock Neighbor

The World’s Largest Gold Company Just Hedged A Bold Bet on Its Penny Stock Neighbor

August 17, 2021 - Yolowire


A look behind the decision, and the leadership that made it possible

Readers of this report have most likely heard of Newmont Corporation – arguably the largest gold company in the world, tenured like no other and with operations all over the world. The company is a staple of the gold industry – having been around longer than most and being involved in scores of lucrative projects over the last century.

Which is why, when we see that they make a play with its small-cap, junior mining Canadian neighbor, we have to take a closer look to know why – and decide how we are to make the most of the landscape that led to that.

Newmont Corporation (TSX: NGT) is not only the world leader in the gold sector, but also a producer of copper, silver, zinc and lead. Its world-class asset portfolio includes operations in several mining jurisdictions beyond North America including South America, Australia and Africa. It’s the only gold producer listed in the S&P 500. A long-running value creator, NGT was founded in 1921 – and is trading since 1925.

Newmont acquired the legendary Con mine in Yellowknife, Canada in 2008. Founded in 1935 and having reached a depth of 1,800 meters, the Con produced over 5 million ounces of gold up to 2005, 85% of which came from the Campbell Shear, at an incredible grade of 15g/t.

Tying it all together

While the Con mine has been inactive since 2003, it was only one section of the historic Yellowknife mining camp – which has plenty of unexplored territory and, thus, remains highly prospective. Enter Gold Terra Resource Corp. (TSXV: YGT; OTC: TRXXF).

Gold Terra, a junior gold explorer, holds a huge district-scale position just by the city of Yellowknife. Aptly named the Yellowknife City Gold Project, or YCG for short, the position is in the vicinity of the historical Con and Giant mines – which, together, produced over 14M ounces of gold.

A notably favorable location that allows for year-long access and a resource estimate of 735,000 oz as of November 2019, while impressive, only scrapes the story’s surface. The company is directed by Executive Chairman Gerald Panneton – co-founder of Detour Gold. During his time there, he managed to raise $2.89 billion in capital, and the company was ultimately sold for $4.89 billion to Kirkland Lake.

The YCG is located right next to the Con mine and across the extension of the famed Campbell Shear. Gold Terra recently acquired a 3-kilometer extension that connected their own land package and the Con – laying the foundation for a partnership that the Chairman had in mind since taking the helm at the Vancouver-based explorer.

It was a natural fit – Newmont holds the rights to the Con, and Gold Terra has an active operation right next to it – with all the equipment and infrastructure that entails. With YGT boasting a high achiever calling the shots, it was a matter of time until Newmont took notice and saw the opportunity to make the most of their adjacent mineral claims and leases.

Where there’s smoke, there’s fire

The region’s history and results are enough for Panneton to be extremely confident about the partnership. He consider that the 5% increase in their land package brings the company so much closer to the proverbial “fire” that burned in the Con and made it so productive, while being right in the middle of it and the Giant mine – which produced over 7 million ounces of gold up to 2004.

“There’s a fire somewhere, well, you’re going to see smoke. When we find gold, quartz vein on surface, that means that there’s smoke and maybe there’s a deposit somewhere.”

-Gerald Panneton, Executive Chairman, Gold Terra Resource Corp.

Gerald’s reputation precedes him – which is likely what got his foot in the door over at Newmont. However, it was his and his team’s business savvy that made it possible to strike a very favorable deal with the gold giant.

Over the feasibility study period, Gold Terra can earn in up to 30% of the claim. Subsequently, given there is a significant discovery, the terms of the deal allow them to earn up to 60%.

Respect and expectations

In a recent interview, Mr. Panneton commented on how the deal came along among other things: “They said, “Well, if Gerard is looking after that, we want a back-in right just in case.” And then so they did. But the back-end right is five million ounces. And of that is very important, so we earn our 30%, we finish a feasibility study.

Are we going to find two, three or five or six? Drilling will tell. It’s not going to be taking three years or seven years like the deal is. The deal is over seven years. But in reality, we can accomplish that over the next two to three years. And we have the money so we can do so. And the back-in right, if we find five million ounces, it’s a bonus for both. It’s a win win situation. Newmont feels good about being protected and we feel good because if we find five million ounces, we end up with two, Newmont end up with three, we get all our expense reimbursed. We get a bonus on a per gold basis found. It’s a good deal.”

Drilling is ongoing. Gold Terra trades on the TSX-V under YGT; and can be found in OTCs as TRXXF.

About Goldterra

Gold Terra Resource Corp. (TSX-V: YGT; OTC: TRXXF) is a junior gold exploration company that has assembled a highly prospective district scale land position on the doorstep of the City of Yellowknife in the Northwest Territories. The company is currently focused on expanding and delineating gold resources at the company’s Yellowknife City Gold Project. With ready access to infrastructure and multiple new high-grade gold discoveries Gold Terra is on track to re-establishing Yellowknife as one of the premier gold mining districts in Canada.

Newmont Corporation (NYSE: NEM) is the world’s leading gold company and a producer of copper, silver, zinc and lead. The Company’s world-class portfolio of assets, prospects and talent is anchored in favorable mining jurisdictions in North America, South America, Australia and Africa. Newmont is the only gold producer listed in the S&P 500 Index and is widely recognized for its principled environmental, social and governance practices. The Company is an industry leader in value creation, supported by robust safety standards, superior execution and technical proficiency. Newmont was founded in 1921 and has been publicly traded since 1925.

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