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Kaiser Watch June 5, 2024: What is a world class mirage worth?

Posted: Jun 5, 2024JK: Kaiser Watch June 5, 2024 with Jim Goddard and John Kaiser
Published: Jun 5, 2024KRO: Kaiser Watch June 5, 2024: What is a world class mirage worth?
Kaiser Watch is a weekly audio show produced by KaiserResearch.com with Jim Goddard and John Kaiser discussing the junior resource sector. The show has three parts: the first is a general topic, the second discusses developments involving the KRO Favorites which as of January 1, 2022 are no longer exclusive to KRO members, and the third is a peek inside the members only KRO Bottom-Fish Workshop. KRO is transitioning into a Do-It-Yourself research platform that covers all Canadian and Australian resource listings and which also features a Bottom-Fish Workshop where John Kaiser highlights juniors with solvable "missing pieces". Companies that graduate from the Workshop may become part of the Annual Favorites collection whose profiles and related commentary are unrestricted for non-members. Visit the KRO Favorites Dashboard for quick access to all the unrestricted Favorites related content. KRO is not sponsored or compensated directly or indirectly by public companies. The business model is based solely on membership fees which have changed for 2024 as a transition to a $200 per month auto renewal program in 2025. During 2024 individuals can register for a KRO membership at a non-refundable price of $450 for a term that expires December 31, 2024. All active KRO members will be grandfathered to renew annually at $450 on Dec 31, 2024. Sign up here for this limited $450 offer. Kaiser Watch is available at Kaiser Research YouTube and as a Podcast downloadable from KaiserResearch.com. Each episode will be made available through the publication of a Kaiser Media Watch blog report which will provide links to specific questions and include supplementary graphics. All episodes will be archived at Kaiser Watch.

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Kaiser Watch June 5, 2024: What is a world class mirage worth?
Jim (0:00:00): What does Brunswick Exploration have planned for Mirage now that the final drill results are out?

On June 4, 2024 Brunswick Exploration Inc released the final results for the winter drill program at its Mirage lithium project in the James Bay region of Quebec. I was quite aback at Brunswick's disclosure approach for what is its most promising project that CEO Killian Charles loves to gush about as having "world class" potential. Since starting the drill program in January 2024 Brunswick has provided three assay updates starting with April 25. Each press release featured a drill plan with hole locations that had labels only for the holes for which assay intervals were reported in that news release. The holes were reported in a random order, with holes 37-42, presumably the first ones drilled after last year's 36 hole program, never reported at all.

What I do not understand is why, if Mirage is not a world class mirage, the company did not provide a complete table with results for all the drill holes and a drill plan that includes all the hole numbers so that shareholders and analysts can evaluate what was accomplished. In addition, the press release just provides a cursory description and says nothing about what will be done next. Goose hunting season is over and boots are headed for the ground by every junior that has money. Why is Brunswick providing such shabby disclosure compared to other juniors run by professional teams and leaving us in the dark about what it all means and what they plan to do next?

I went to their web site to look for an updated presentation but all I found was one hidden on a sub-page with no date, though the December 31, 2023 date for the share structure page and the absence of any information about the 2024 drill program tells us this is a stale presentation from January. Brunswick burned $900,000 in overhead during Q1 of 2024 so there is no excuse for why at the start of June there is no updated presentation. The company likely has about $5 million working capital left which means the street will be coaxing it lower for a cheap flow-through financing. A professional junior would at least have provided a technical presentation summarizing all the results and providing sections for what is now known about Mirage. Such a presentation would highlight what needs to be done next. Its absence suggests that Mirage is a mirage and that the CEO will have to spend the rest of the year blathering about the discovery potential of the 725,000 ha of lithium pasture it has amassed during the past two years. The problem with that is the market is currently sour about the lithium story and only interested in an emerging discovery with expansion running room. Brunswick is tanking because its body language is not signaling it believes it has such a discovery at Mirage.

I have assembled all the Mirage data and labeled the holes for which I found numbers. The first graphic has the results for all 36 holes of the 2023 drill program which Brunswick professionally provided in its Mirage project web page. The second graphic has the results for the 2024 drilling cut and pasted into one page which makes it clear that of the 35 holes reportedly drilled assays were reported for only 25 holes. The third graphic has all the drill hole numbers plotted I could find using the most recent. I've circled the ones that have no mention anywhere that reveals their number. There are no assays for #70 and #71 nor are they labeled anywhere but I know from Killian that these were the last 2 drilled as scout holes to see the bedrock beneath the overburden and perhaps get a clue where the 3 km long micaceous boulder train came from. What is odd is that #37-42 are not labeled or reported anywhere, and if these are the un-numbered holes I have circled it makes me wonder why these were drilled first. An alternative explanation I do not dare to contemplate is that something is seriously messed up about hole numbers.

When you look at the results in a full context such as I have assembled it becomes clear that 1%-2% Li2O pegmatite has the biggest tonnage footprint in the MR6 dyke. But the sections indicate that it is horizontal and fades both to the west and to the east, making it look like a puddle with dimensions of 200 m by 200 m by 50 m thick. At 2.6 specific gravity the tonnage footprint of that puddle is only 5.2 million tonnes. The drilling to the northeast onto the Osisko optioned inlier claims is disappointing and while hole #60 had a good interval, but in the plan view map it lacks the pink coloration Brunswick has added to drill hole traces elsewhere that intersected lithium enriched pegmatite. What I find strange is that they left undrilled a 200 m gap within the Central Zone between the MR3 and MR6 dykes. I cannot speak for the technical background of the CEO, but Bob Wares has a very strong technical background and it is very odd that Mirage has been presented to the market as this fragmented mess of dykes with no direction about what is next. Even if Mirage is a mirage, tell us like it is and move on. The only plausible explanation I can think of is that behind the scenes there are negotiations involving a consolidation of various entities into a single company. The James Bay lithium supply future remains strong and important in my view, so when the market is turning its head because lithium carbonate prices are temporarily stuck at $6-$7/lb and the media is wailing obituaries for the EV sector, this is the time to pull strategic parts together.

Brunswick Exploration Inc (BRW-V)

Fair Spec Value
Mirage Canada - Quebec 3-Discovery Delineation Li

Complete table of 2023 Mirage drill results

Collection of 2024 Mirage drill result tables

Drill Plan of all Mirage drill holes with numbers added by JK
Jim (0:06:13): What do you make of the proposed merger between P2 Gold and Eskay Mining?

On June 4, 2024 P2 Gold Inc and Eskay Mining Corp, both former Favorites, were halted for an announcement that the two companies will merge on the basis of 0.2778 ESK for 1 PGLD share, roughly a 3.6:1 rollback for P2 Gold shareholders. Waterton has agreed to convert loans into stock and as the biggest shareholder must obviously approve of the plan. It certainly surprised me because in KW Episode May 24, 2024 I pointed out that at current spot prices for gold and copper the updated PEA for P2 Gold's Gabbs project clears development hurdles. And while I have long been a fan of the Eskay project's potential to deliver another VMS style world class Eskay Creek discovery, over $100 million of expenditures has delivered just a lot of smoke and occasional high grade pockets that do not hang together. Furthermore, Eskay Mining has a weak treasury so this is not a cash bailout for P2 Gold.

The merger proposal is a capitulation event. After Ken McNaughton and Joe Osvenek published the updated PEA in May they contacted their entire financial network to seek additional funding. Most did not call them back and those they did contact were not interested. The Canadian financial sector is not interested in the resource sector. Meanwhile Crescat which owns 32.3 million Eskay Mining shares was stuck. CEO Mac Balkam and Gord McMehen own another 29 million shares. The merger solves Eskay Mining's problem of trying to fund a story that looks exhausted despite exploration VP John Dedecker's best efforts by bringing into the company an advanced copper-gold project that itself has expansion potential and currently has optionality value for stronger copper and gold prices. It also brings a new set of eyes to rethink the story. Ken has intensive experience with the nearby Brucejack Mine bought out by Newcrest and now owned by Newmont. Based on all the work done he thinks the VMS model must be set aside. The merger solves P2 Gold's funding problem by shifting that responsibility into the hands of Eskay Mining management. I think this will turn out to be a win-win merger for all parties.

Eskay Mining Corp (ESK-V)

Bottom-Fish Spec Value
Eskay Canada - British Columbia 2-Target Drilling Au Ag Cu Pb Zn
P2 Gold Inc (PGLD-V)

Bottom-Fish Spec Value
Gabbs United States - Nevada 4-Infill & Metallurgy Au Cu
Disclosure: JK owns shares of Brunswick; Brunswick is a Fair Spec Value rated Favorite; Eskay Mining and P2 Gold are Bottom-Fish rated

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