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Tracker - July 29, 2021: What's Next for P2 Gold Inc?
 P2 Gold Inc was made a Bottom-Fish Spec Value rated 2021 Favorite at $0.40 on December 31, 2020 based on its new role as the post-Pretium exploration vehicle for Joe Ovsenek and Ken MacNaughton, the former CEO and Exploration VP for Pretium and its high grade Brucejack gold project in the Golden Triangle. In late February 2021 P2 Gold expanded its focus with the proposed acquisition of the advanced copper-gold porphyry Gabbs project in Nevada which will allow the company to work year round on a geology rethink play where the worst case outcome is a PEA in Q1 of 2023 which demonstrates the feasibility of open pit mining and milling the existing combined oxide and sulphide inferred resource of 73.1 million tonnes at 0.53 g/t gold and 0.26% copper. The more optimistic outcome is that deeper exploration allows the open-pittable resource to be doubled to 150 million tonnes without a decline in grade, while the bluesky exploration outcome resides in demonstrating that the near surface porphyry zones originate from an untested 450 m deep IP chargeability high anomaly interpreted to be a high K calc-alkaline intrusive center sufficiently enriched with copper and gold to support an underground block-caving mine. The basis for P2 Gold's Bottom-Fish Spec Value rated Favorite status is provided in SVR Overview Tracker March 22, 2021.
The Gabbs acquisition and exploration plans were supposed to be funded by a $16 million private placement consisting of 32 million shares at $0.50 announced in late February along with the Gabbs deal and amended in early April to include a full warrant at $0.85 for 2 years and an acceleration clause at $1.50. The evaporation of market interest in the junior resource sector by both retail and institutional audiences was so bad that P2 Gold closed only $5.94 million on May 17, 2021 of which Ken and Joe personally ponied up $3.5 million with the rest taken by retail investors. This financing comes free trading in mid September but should not pose much of a clip and flip problem. The Gabbs vendor, Waterton, which is now the largest shareholder at 15 million shares, amended the deal so that only USD $1 million was due up front with the remaining $4 million in a year. P2 Gold was able to raise another $1.75 million in flow-through which is earmarked for the optioned projects in northwestern British Columbia. Although the downsized financing left P2Gold with only $6 million working capital, it did preserve the structure of the junior so that an uptrend can develop more easily (56.4 million issued 87.5 million diluted).
The stock sagged in the aftermath of the financing while P2 Gold mobilized drill programs for the BAM and Gabbs projects. P2 Gold has 2 gold focused projects within the Golden Triangle, BAM and Todd Creek, and two CRD style silver projects to the east, Silver Reef optioned in 2019, and Natlan optioned in 2021. The BAM project is a former copper prospect where field work in 2020 generated a gold-in-soil anomaly with associated IP targets called Monarch on which P2 Gold conducted a 1,000 m drill program of 100-200 m deep holes. The target is interpreted as the sort of epithermal system associated with a deeper porphyry system which management believes is a Galore Creek type.
The holes apparently yielded decent sulphide intervals but only assays will reveal the gold-silver content. If assays are received by late August and indicate a discovery P2 Gold will drill a few more holes before winter shuts everything down. The other 3 BC properties will only receive target development work this summer. P2 Gold has completed an MT geophysical survey at Todd Creek where the goal is to find a Brucejack style epithermal system. The interpretation of the MT survey is still pending.
The primary focus over the next 18 months will be the Gabbs copper-gold project in Nevada where the goal is to deliver a PEA by early 2023. The Gabbs property hosts three spatially distinct porphyry style deposits called Sullivan, Lucky Strike and Gold Ledge for which 43-101 open-pittable inferred resources have been estimated at 26.2 million tonnes of 0.72 g/t gold and 0.248% copper for oxides and 46.9 million tonnes at 0.43 g/t gold and 0.27% copper for sulphides. Most of the resource is split 54% Sullivan and 46% Lucky Strike which are about 3.5 km apart. The Gold Ledge zone, which sits in between, has a resource of only 100,000 tonnes, but sits above a significant IP chargeability high modeled at a depth of 450 m that has not been tested.
The copper-gold mineralization is Cretaceous aged, younger than the middle Jurassic age of the Yerington cluster of substantially larger porphyry deposits 100 km to the west. The Yerington porphyries are of the calc-alkaline type that have low gold values, whereas the porphyries at Gabbs appear to be the high K calc-alkaline variety which have higher gold values. The Sullivan and Lucky Strike zones occur as sill-like monzonite intrusives within a gabbroic complex that has not been age dated. The depositional origin of these "sills" is not understood, and it is speculated that they may have linkage to an intrusive center beneath Gold Ledge. The Car Body zone to the south for which 2.8 million tonnes of 1.39 g/t gold has been estimated appears to be an unrelated, much younger low sulphidation epithermal system.
The Gabbs property has had 494 holes drilled between 1970-2011, though 320 of these holes fail the QA/QC criteria needed for 43-101 resource reporting. The average depth of past drill holes was 94 metres. Most of the historical drilling involved percussion holes. P2 Gold started a 1,500 m drill program in July 2021 consisting of about 14 core holes to a maximum depth of 250 m. The goal is to assess grades in the deeper part of the deposit and secure geological data to help define a better domain model and identify structural controls for higher grades within the Sullivan Zone. This will be followed by 8,000 m of RC drilling. An updated resource estimate is expected in mid 2022. P2 Gold has also initiated a metallurgical study using oxide mineralization from the Sullivan pit. Results are expected in late August. The overall goal is to double the existing inferred resource so as to support a future 30,000 tpd open pit operation. The data flow from Gabbs, because it mainly involves infill drilling, is unlikely to generate any sudden market move which will come gradually as investors begin to model the size of the prize, visualizing the outcome of the PEA and the economic value at various copper and gold prices. The discovery upside this year hinges on BAM results.
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