Galway Metals Inc (GWM-V: $0.495)
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Kaiser Watch September 23, 2022: The Painmaker is just getting started!
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(0:06:56): Why has Galway Metals scaled back its drill rigs at Clarence Stream from six to two rigs?
Galway Metals is still delineating new gold zones at Clarence Stream where the goal is to boost the district scale resource beyond the recent 2.2 million ounces reported for the 3 main zones into the 5-10 million ounce range. The current resource is similar to Marathon Gold's Valentine lake project in Newfoundland which it is developing. When the updated Clarence Stream resource came out earlier this year I created an outcome visualization using the scope and costs defined by Marathon through its feasibility study. The bad news in early September was that the CAD $305 miillion CapEx had soared into the $470-$490 million range. Worse, fear that the inflation battle will create a severe recession has pushed gold down, so Valentine is being socked at both the cost and revenue side of the equation. This has not been good for Galway's stock price and when I reran the OV using the new Valentine CapEx at spot gold the result was not pleasing. However, Galway is not yet building a mine, and the goal will be to deliver a much bigger resource than Valentine. The decision to scale back from 6 rigs operating double shifts to 2 rigs with a single shift was made in light of the deterioraiting funding environment and the brutality with which Bay Street is exploiting juniors with urgent funding needs. The disappointment abotu Galway is that drilling is only focused on the Adrian-Stewart area northwest of the northern end of the SW Deposit, what Galway calls the Golden Triangle. Other areas of the property with much more intense gold in soil anomalies will not be touched this year. The most interesting is what I call the Gabbro Dyke Complex whose geological context is not the same as the intrusion related gold system model Galway is using to generate ounces (ie the flanks of younger intrusions into the older meta-sediments near the Sawyer Brook Fault and its splays. The Gabbro Dyke Complex target needs more surface work to better define what might be controls for gold mineralization and Galway is working on that this year. The drilling done so far in the Golden Triangle area leads Mike Sutton to believe the Stewart and Adrian targets can be connected to the SW deposit to create a super-pit mining scenario. By scaling back the drilling activity Galway is only spending $1.5 million per quarter, which will leave them with $8 million at the start of 2023 and the means to carry on exploration while waiting for the funding enviornment to turn around. Galway Metals will be a great bottom-fishing target in Q4 in light of the resource junior capitulation we are witnessing.
The GLD has now lost 914,000 ounces since the start of 2022
Gold is now only 14% higher than $400 gold in 1980 adjusted for CPI inflation
Galway has only drilled the Golden Traingle target northwest of the SW deposit
The goal is connect the Stewart-Adrian mineralization with the SW Deposit to support a Super Pit
Marathon's CapEx increase for Valentine Lake forces a revision for the Clarence Stream OV
The new OV outcome at $1,644 gold drops this scenario below the NPV must meet or exceed CapEx hurdle
Fortunately Galway will have $8 million left at year end not be at the mercy of Bay Street

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