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- In addition to current Yukon projects, in negotiations for JV projects in Northern Ontario.
- Very optimistic about the junior exploration space in Canada and ability to drill in old fields aided by advancements in geology, geophysics and mining techniques.
- “the job of junior exploration companies is to find that gold to replace the ever depleting asset of the majors because they have not been doing a lot of exploration”
- Plans to stick to Canada, as the geographic location they know best.
John Newell became president and CEO of Golden Sky Minerals in November 2019. He joins Lara Smith, Founder of Core Consultants to discuss the precious metals market amidst global money supply expansion, opportunities for junior miners to profit in Canada and their overall corporate strategy. The following is a transcript of the Interview:
Lara Smith: Hello. My name is Lara Smith, I’m here in Tel Aviv in my home under lockdown. I’m joined by John Newell from Golden Sky Minerals, I presume also under lockdown in Vancouver?
John Newell: Yes.
Lara Smith: Great, so John, how are you? Maybe you can tell us a little bit about Golden Sky Minerals and what you’ve been up to during this period?
John Newell: Okay. Well, I was fortunate enough to get the tap on the shoulder back in November to be the president and CEO of what was called Lucky Strike Resources and the shares were rolled back, so I took over after that and just recently changed the name to Golden Sky Minerals Corp.
We have about a little less than 10 million shares out, about $2 million in the bank, and we’re working in the Yukon. We have three projects, one is called Lucky Strike, that was the sort of flagship property sandwiched between White Gold’s properties and Newmont’s Coffee property that they inherited when they took over Gold Corp, and we have the Hot Spot, which is sort of next to Kenorland Minerals and Freeport McMoRan right on the Alaska Yukon border. And then we have a project called Bull’s Eye, which is right next to K2 Gold, that’s getting a lot of joy in drilling and so we’ve got the property that’s kind of contiguous to K2, and we’re going to try and do some work on Hot Spot and Bull’s Eye this year. We’ve applied for some work permits up there and we’ll just see what happens, but we’re pretty excited.
We’re also trying to get into Ontario because we’d like to try to find some properties to drill in Ontario later this year or next year. So we’re in negotiations and talking to companies about joint ventures and looking at projects, Northern Ontario too. And if I could actually just step back a little bit, back in the seventies when OPEC raised the price of oil from $3 to $10, Canadians, Albertans, Edmontonians and Calgarians, the entrepreneurs went back into the old fields and discovered new fields and a great industry was born out of Alberta and great companies, junior companies like Canadian Natural Resources, were really just at that time, penny stocks, and there was a whole bunch of them and many, many of those companies were taken over and advanced and did really well and the whole new industry was born out of that catastrophe back in the early seventies with the big price of oil moving. And I see a tremendous opportunity for junior exploration companies in Canada to do really well in a world that has printed a lot of money to fend off this covid crisis, and out of that, these exploration companies are actually drilling for money, that’s what I believe, they’re drilling for precious metals. And I think that there’s a real opportunity for good junior exploration companies, well-funded, to go back into the old fields and discover new ones in these very prolific districts in Canada. So I’m very optimistic about the junior exploration space in Canada right now.
So that’s kind of the theme that Golden Sky and the board at Golden Sky are trying to work towards.
Lara Smith: Well that’s a very interesting perspective because it’s almost counter intuitive. One thinks recession and the death of junior miners, and yet you’re saying it’s actually a great opportunity for junior miners right now.
John Newell: Yeah.
Lara Smith: That’s great.
John Newell: Well, if you actually go back to the thirties when Franklin Delano Roosevelt made gold ownership illegal, and he confiscated the gold from Americans, and it’s kind of rumored that they got about 7,000 tons of gold from that expropriation basically, so Americans couldn’t buy gold anymore. So they in turn, went to places like Canada and bought and helped fund a great industry throughout the 1920s, 1930s, forties, fifties at a fixed price of gold at $35. So up until the war when a lot of guys went to fight in World War Two, and then the inflationary sort of sixties, made these junior mining companies no longer profitable. Many of them were shut down. So now, with education, new geology, new geophysics, new techniques and drilling, there’s a tremendous opportunity to go back to those, [quote] old fields or old deposits and see if there isn’t more gold. And I think that there is a tremendous opportunity in Canada, a good jurisdiction with laws that, you know, protect investments to go back into these old fields. It’s already been demonstrated by many companies, the most famous being Goldcorp under the leadership of Rob McEwen, actually went underneath a mined out mine and found a whole new, very rich mine. And so that’s kind of my dream; that’s what I hope that Golden Sky can position themselves into not only the Yukon, which is a very prolific district, but also see if we can have a company that has drilling all year round. So, drilling in the Yukon and then drilling in Ontario, and try to find one of those exploration plays where we can advance it with a good geological team and hopefully be able to raise the capital to expand our goal. So, I’m extremely excited about the junior exploration space because in fact, we are digging for money, money being gold. And that’s what I believe can help a sound money that’s been sound for 5,000 years, or everybody kind of knows that, but to help Canada and investors come back from this kind of mess.
Lara Smith: Well, there is big talk on, it has to be an infrastructure led recovery, because we’ve exhausted our monetary option tools. If the whole world prints money, it almost negates the efficacy of it, and we’ve already had a period of low interest rates and we were just coming out of a period of low interest rates, and to go back to that, so it seems like it has to be an infrastructure led recovery. Whether that’s mining to kickstart the recovery, or infrastructure spending in sort of the cap, the GCC, it looks like that’s what economies, especially wealthy economies like the US and Canada have to do in order to prevent or stall this impending recession of which we’re finding ourselves in.
John Newell: Yeah. The other thing is, that if you look at a company that is working in Alaska, it’s a joint venture with American Barrack, it’s called Nova Gold. Nova Gold was breaking only a month ago is breaking to new highs, and then this mess happened and it dropped from $12.50 to $6 and 50 cents and now it’s trading at 13.50 or 13.80 or $14 I don’t know exactly, but my point is, they have 30 million ounces of gold in the Donlin Creek area and maybe more in the surrounding area, but I also maintain that, the best place for that gold is in the ground, given that we don’t really know right now, today, what the value of gold is. So yeah, big mining companies are being shut down because of covid and have the inability to mine at peak production maybe so there’s a shortage that could develop from that, but also, the price of gold, given the growth in money supply, seems to me that we don’t really know where the real price of gold is or what the actual price that it should be selling at because the despair, there’s just such a wide difference between the spot and the farther out month. So…
Lara Smith: Do you think that gold can break it’s high? It’s reached an all time high of 1900 in 2011 and the 1600 mark just over. Do you think we can breech that in this recession?
John Newell: Absolutely, I do.
I’ve done interviews where I’ve talked about specific targets for gold. I’ve gone out on a limb and my highest target is $2465 and there can be extensions off of that. And there’s logical reasons why you could expect a much higher gold price relative to the growth and money supply, et cetera. I’m extremely bullish on gold. And mind you, I have been for quite some time, and I do hope that there’s an anchor to our monetary system that brings back gold, you know, in the future.
Lara Smith: Yeah. And what about silver? If we’re going to talk gold, you got to always talk silver as a relative, cause that looks much cheaper at the moment to gold.
John Newell: Yeah. Because it’s an industrial metal, I have to admit that silver perplexes me. They only mine about 800,000 ounces of silver a year. To me, the silver gold ratio is way out of whack. I’ve tried to predict it a couple of times. Every time it starts to look like Silver’s going to go, it does a “U-ey” and that ratio goes back.
It’s traded as high as 130 ounces of silver to buy one ounce of gold historically. I don’t even recall a time when it’s traded that high, maybe a long, long time ago. But I believe silver is a precious metal, and ultimately I believe that it will follow the price of gold, sort of as a quote, poor man’s metal”.
But that said, I’m especially bullish on gold as a monetary metal. And you can see that with central banks around the world buying gold. Really in the last 10, 12 years, they’ve been adding to their gold stockpile. So, I think we’re going to need a lot of gold, and companies like Newmont or Barrack, that mines, you know, just say roughly 6 million ounces of gold a year, they have to replace that, so that the job of junior exploration companies is to find that gold to replace the ever depleting asset of the majors because they have not been doing a lot of exploration. So therein lies the tremendous opportunity for junior exploration companies.
Lara Smith: And what’s the strategy of Golden Sky Minerals? Is it to remain an exploration company and then to just get other assets to develop and and then sell those off to larger companies or, do you hope to take one project through.
John Newell: Well, no, we just don’t have the financial wherewithal to take a project to production. So we’d have to get some help. We would like to advance a project to a point that a partnership makes a lot of sense for all parties. We want to work with First Nations, our shareholders and you know, the government regulations to advance the project.
I’ll tell you, I’m going to jump out on a ledge, but I want to find a five to 10 million ounce deposit in Canada in the next six years or less. And I think it’s possible. And I think there’s a real opportunity there to do it. This is a very under explored country just because of the way the price of gold has been very cyclical, and now we really have the wind at our backs, and the opportunity is really right now.
Lara Smith: Yeah. And you guys are funded until the end of the year, right? Or beyond that?
John Newell: Oh, yeah. We’ve got a low burn rate. We’re trying to keep our costs down and we’re trying to get through this rough patch, but we’ve applied for some work permits and we’re prepared to get back at it as soon as we’re able. And we are definitely talking to other companies about doing joint ventures or taking over some projects, but they have to meet a very strict criteria, a lot of it’s jurisdiction. We don’t know Mexico or South America or West Africa as well as we know Canada. So we’re going to stick to the geographical location that we know the best.
Lara Smith: Yeah, good strategy. So right now you’re kind of waiting for covid to be over, as most of us are, and then you’ll be able to drill further. And in the meantime, you’ve basically been applying for permits?
John Newell: Yeah, we’ve applied for permit and grants and just keeping the lights on and hoping this thing goes away. And then we can get back at our task of finding money.
Lara Smith: Okay. Well, best of luck with that. If you have any other comments before we go?
John Newell: No, thank you very much for having me and it was a pleasure to talk to you today.
Lara Smith: It was a pleasure to speak to you. Thank you so much for your insights and best of luck with Golden Sky Minerals.
John Newell:All right. Thank you.
Lara Smith: Thank you. Take care. Be safe.
John Newell: Alright, bye.
