Exploits hopes to make the next big gold discovery in Newfoundland

Exploits Discovery (CSE: NFLD) chief executive officer Jeff Swinoga has come from away, leaving high-crime Mexico for the warm-hearted community of Gander, N.L. 

After helping raise US$400 million as chief financial officer of Torex Gold Resources’ (TSX: TXG) El Limon Guajes mine in Guerrero state and stints at First Mining (TSX: FF) and consultant EY Canada, his new project is developing stakes near the heart of Newfoundland’s multi-billion dollar gold rush that saw Exploits stock surge by more than a third last week to 23¢ a share.

It was after the company pounced on a claim it’s calling Block H for now, right beside New Found Gold’s (TSXV: NFG) Queensway project, which hit 92.86 grams per tonne gold over 19 metres in its 2020 discovery hole and is now in the midst of a 400,000-metre drill program. New Found owns about 11% of Exploits. Also next door is Labrador Gold (CVE: LAB) with its Golden Glove and Big Vein sites reporting 6.22 grams per tonne gold over 4 metres and 44.08 grams gold over 4.28 metres, respectively.  

“We’re thrilled to acquire this property, it’s one of the best claims in the province,” Swinoga, 55, said during an interview en route to the site just outside Gander, the small community known for hosting thousands of temporary 9-11 transplants as recounted in the musical Come From Away. “We just can’t wait to get at it.”  

The stake adds to the more than 2,000 sq. km controlled by Exploits in central Newfoundland, stretching from the island’s north coast to near its southern shore and holding nine projects. The zone is sliced by fault lines — the Valentine, Dog Bay, Appleton and the Gander River Ultramafic Belt or GRUB — all formed about 480 million years ago during the closing of the Iapetus Ocean that allowed gold to migrate up from the earth’s mantle.  

After Marathon Gold (TSX: MOZ) posted measured and indicated resources (inclusive of reserves) of 64.6 million tonnes grading 1.9 grams gold per tonne for 4 million oz. contained gold  at its almost $500-million Valentine open pit project near Grand Falls, N.L, geologists consider the province’s central region one of the top gold zones in Canada. It benefits from Gander’s mining infrastructure, power supplies and access through a network of forestry roads. The region could rank after the Abitibi area straddling the Ontario — Quebec border, northwest Ontario around Red Lake and the golden triangle in northwest British Columbia. Analysts forecast first gold from Valentine in early 2025.  

Still, Exploits hasn’t made a big find yet, and the five drilling targets across three projects last year “didn’t offer meaningful gold values,” Swinoga said. The CEO was measured but not tight-lipped, affable but not boisterous, as he told how the stock rose to a high of $1.54 in July last year on the back of additional backing from lead investor Eric Sprott, who holds 18% as well as the 6% held by Sprott Asset Management. Investors were riding a wave of optimism that Exploits would surely soon announce another opportunity like Keats at New Found Gold’s Queensway, which had exploded on the scene in November, 2019.  

“Then our stock slid as froth came off the market and labs were backed up six to eight months for our assay results,” said Swinoga, who replaced company co-founder and CEO Michael Collins a year ago.  

After the region’s initial money-raising frenzy, large discoveries remain rare and some of the lustre of piling into the area may have worn off, Red Cloud Securities analyst Koby Kushner said in a phone interview.  

“Area plays, very rarely are they successful,” Kushner said. “Close-ology doesn’t mean prospectivity.”  

Exploits senior geologist Mark Richardson cautioned how pinpointing finds in the region requires extensive analysis of the orogenic structures of thrusting, folding and cross-shearing along faults when the two ancient continents of Ganderia and Laurentia collided hundreds of millions of years ago.  
 
“The gold can be nuggety and difficult to trace,” Richardson said beside Angie’s Vein (named after a favourite local restaurant), a quartz outcropping on the North Gazeebow project. “That’s why drilling is easy to miss it, and why some companies around here space their holes just 25 metres apart.”  

New methodology

Exploits, with $10 million in cash and no debt, adopted a new methodology this year with a 10-point checklist to pinpoint targets before drilling. Swinoga cut back the amount of drilling, frustrating some investors eager for a big discovery, to concentrate on research. Measure twice, cut once, as the saying goes.  
 
“We believe our probability of a gold discovery has significantly increased with our new methodology and our newly acquired claims,” the CEO said.  

Round-the-clock diamond drilling started in August at the Titan site, 42 km north of the Keats project held by New Found Gold. Drill results could be released in two months, depending on the findings, Swinoga said.  

“We are confident that we should intersect gold at Titan because it has been found historically, which is very encouraging,” the CEO said. “We’ll just need to wait for the assay results to see how much.” 

Part of the confidence comes from Swinoga’s belief in his team. It has a tech startup feel with young people who have also come from away. Exploration manager Nick Ryan, 35, returned to St. John’s after several years at the Coffee gold project in the Yukon ; geologist Nate Costello, 6’4” tall and growing a beard to rival ZZ Top, has worked in Greenland, Peru and Nevada at just 29; and low-key geologist Brad Smith, 30, brings experience from offshore oil rigs. Geologist Kasey Stone, 26, joined just two months ago from New Found Gold after she worked at national educational charity Mining Matters.  

The team’s youth is tempered by veteran guidance from Swinoga, who started with seven years at Barrick Gold (TSX: ABX; NYSE: GOLD) where he helped raise $200 million for the Bulyanhulu mine in Tanzania among other projects before spells at Hudbay Minerals (TSX: HBM), where the stock rocketed from $2 to $28, Mag Industries, North American Palladium (TSX: PDL) and Golden Star Resources.  
 
There are also Ken Tylee, 64, vice- president of exploration, with experience at McEwen Mining (TSX: MUX; NYSE: MUX), Kinross Gold (TSX: K; NYSE: KGC), and the former Goldcorp; Doug Cater, 65, who conducted due diligence on Kirkland Lake Gold’s $1-billion acquisition of Newmarket Gold in 2016, and advice from David Groves, 80, a Perth, Australia-based industry-leading expert in geology.  

The crew is analyzing some 10,000 soil samples across the Appleton North, Duder Lake and Titan South areas and intends to release a “heat map” of mineralization in a month or so showing a “smoke trail” back to a gold source, Swinoga said.  

The billowing where there’s fire image evokes the time Swinoga and a nervous Torex lawyer scuttled across the dusty Mexican desert in a decrepit red sedan, seemingly under the radar of armed thugs backing union unrest, but really in their sights all along.  

If analysts often assign a 5% discount rate on the stock of operators in riskier mining areas, what’s the premium for operating in the land of Come From Away? Swinoga laughed then pondered.  

“I joined Exploits because Newfoundland is a great province with great people, we’ve got talented exploration staff and we’re well-funded,” he said. “Having a big brother like New Found Gold was a great opportunity to be on the front lines of a potential billion-dollar company.”