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 Tue Mar 23, 2021
Tracker: What's Next for P2 Gold Inc?
    Publisher: Kaiser Research Online
    Author: Copyright 2021 John A. Kaiser

 
P2 Gold Inc (PGLD-V: $0.600)
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Tracker - March 23, 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 2022 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 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 critical upcoming milestone is completion of a $16 million private placement consisting of 32 million shares at $0.50 which will fund the USD $5 million up front payment required to close the Gabbs acquisition and a 20,000 m mostly RC drill program that will be split between infill drilling to support the PEA and for resource expansion drilling at the Sullivan and Lucky Strike zones. After paying Waterton and issuing 15 million shares for Waterton, P2 Gold will have about CAD $10 million working capital. Assuming P2 Gold is not forced to add a warrant to the financing, it will have 76.5 million shares issued and 87.5 million fully diluted. It is reasonable to expect the financing to close by the end of April, allowing work to begin on the Gabbs project in May.

In terms of news flow the Gabbs project will not generate any potentially market moving news until P2 Gold starts drilling the deeper potential of the Sullivan and Lucky Strike zones. Even then the news will be of an incremental nature because there is no reason to expect a significant grade boost from this resource expansion drilling. A higher stock price linked to Gabbs will track the copper and gold price trend as an optionality story. The best chance for a discovery hole surprise lies with the deep IP anomaly beneath the Gold Ledge zone which sits between the Lucky Strike and Sullivan zones, but it is not clear when P2 Gold will test this target. The Bottom-Fish Spec Value rating will be upgraded to Fair or Good Spec Value once the financing has been completed and the 100% ownership of Gabbs as the new flagship is secure. The speculative discovery upside for P2 Gold during 2021 lies mainly with the three exploration plays in northern British Columbia which were optioned in mid 2020 on terms that escalate sharply after the second year. Given that these projects are seasonal where work can be done cost-effectively only in June through October, P2 Gold must make or break these projects in the summer of 2021.

The first property to be drilled in July will be the Silver Reef project where the target is a high grade silver-zinc-lead carbonate replacement style zone. The existing Main zone was drilled in 2020 with poor results, but simultaneous prospecting highlighted the Northwest Zone which aligns with an 8 km linear magnetic trend revealed by a magnetic survey last year. P2 Gold wants to know by late August if it should drill more holes before the season ends in October.

The other two projects are within the Golden Triangle which should get lots of attention this summer. P2 Gold plans to drill the Monarch target on the BAM option in July to see if it represents a Galore Creek style copper-gold porphyry system. Both BAM and Silver Reef have distinct drill targets that could generate significant discoveries this summer that at least temporarily take the limelight away from Gabbs. It is less clear what P2 Gold might accomplish this summer on the Todd Creek option where Joe Ovsenek and Ken MacNaughton see a geological context similar to Pretium's Brucejack project on which they labored during the past decade. In terms of what's next, closing that $16 million financing or some variation of it is what we are waiting for in early Q2 of 2021.

 
 

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