I can only go so long without writing about another gold teaser — so my deepest apologies if you’re just plain sick of the yellow shiny stuff. While I was traveling last week my mailbox filled up with questions about the “Golden Triangle” teaser, which is all about some of the small gold miners who might grow into riches as soon as British Columbia builds them a transmission line to power their mining operations.
The teaser is from Matt Badiali, for his S&A Resource Report, which is in the top five commodities-related letters over at Stock Gumshoe Reviews, and which gets a lot of attention from my readers both because the stories he spins are spectacular, and because it’s a relatively inexpensive subscription compared to a lot of the high-profile gold and energy newsletters.
But still, one doesn’t want to subscribe to a newsletter just to find a hot stock tip, right? That’s why you’re here, after all, in the land of the free and the home of the Gumshoe.
Badiali is teasing us about several of the small miners who are exploring in the Golden Triangle, and he thinks their valuations could soar when production becomes more feasible in the near future. So let’s get started, shall we?
If you’ve heard of the “Golden Triangle” it may well be because of the high-profile flameout of NovaGold — this particular triangle is the area of northwestern British Columbia, near the Yukon and Alaska borders, that includes NovaGold’s Galore Creek mine as well as dozens of other big gold (and other metal) discoveries and historically significant mines. What it doesn’t have is much infrastructure — as in roads, power lines, or power generation capacity, and it doesn’t have many people, either. They can move the people in if the money is there for mining, but the rest takes time and big investments of the type that a junior gold miner (or even a large one) is rarely able or willing to make on their own, especially for the kinds of deposits that prospectors have been finding in the area (large, relatively low-grade deposits that require energy intensive bulk mining and milling and processing of many tons of rock).
And the big transmission line that is teased is real, too — at least in terms of its potential impact. Planning was well underway for the extension of the transmission line, with NovaGold’s Galore Creek as the major electricity buyer, several years ago — and planning for the line was scrapped late in 2007 when NovaGold suspended work on the mine and reneged on its promise of $158 million toward project financing, then re-started late in 2008 when commodity riches had everyone excited about the potential of these huge deposits.
This is the flip side of the big BC hydropower equation, by the way — I’ve written before about a number of the big hydropower projects and newer run-of-river projects that supply the electricity for the grid, and have to have transmission lines built out to their locations to feed the grid, so there’s a lot of action going on with the BC grid in general these days on both the customer and provider ends (and indeed, there are some potential hydropower projects in or near the “golden triangle” that could benefit from a grid connection, too).
But today, it’s all about some of these huge gold (and other metal) deposits in the golden triangle, many of which are pretty much being held hostage against a future when cheaper electric power makes mining them more feasible … or profitable.
So that’s the essential promise — this transmission line, assuming that it really does go through over the next year or two, will make these pie-in-the-sky resources into real reserves, and the miners will become extravagantly more valuable as a result. There are dozens of miners that own projects up there, though, so which ones is Badiali teasing? Let’s look and see what clues he throws out for us:
“Why mining experts are buying shares of one small gold stock, poised to produce $12 BILLION worth of bullion on the back of a huge new government spending project…
“You see, what almost no one knows is that the new high-voltage power line — called the Northwest Transmission Line — is scheduled to cut right through the heart of one of the most isolated (and untapped) gold mineralizations in Canada… a huge pocket of underground gold formations known as the ‘Golden Triangle’… a mineral-rich zone that has been virtually off-limits to mining companies for the past 150 years because of its remote location and lack of power infrastructure.
“Says Robert Stevens, of the Association for Mineral Exploration in British Columbia: ‘The region to be severed by the Northwest Powerline, which currently lacks sufficient infrastructure, is often called the Golden Triangle because of the great geological potential of several world class mineral deposits.'”
OK, so that’s all fine and dand