Goldcorp's Greenstone Gateway To Gold

Dec. 23, 2011 1:00 PM ETNEM, LON, GOLD, AU, WMITF, AMLZF9 Comments
Thomas Brigandi profile picture
Thomas Brigandi

Goldcorp Incorporated (NYSE:GG) - TSX:G, is one of the fastest growing and lowest cost producers of gold in the world. As of Q3 ’11, gold cash costs for the company, on a co-product basis were $551/oz and on a net of by-product basis were $258/oz. Goldcorp, headed by the venerable Ian Telfer has, through M&A and internal exploration and development, secured a premium gold portfolio positioned to profit from today’s gold prices.

Some of Goldcorp’s most lucrative mines are found in Archaean greenstone belts that can contain large, high grade gold deposits. Goldcorp currently controls 4 reserves that can be mined within the Canadian Archean greenstone belts of Abitibi, Red Lake and Flin Flon. In addition Goldcorp mines for copper and other minerals and exploits two other sources of gold, epithermal and porphyry deposits.

Goldcorp’s Archean Greenstone Reserves Chart

Goldcorp’s Archean Greenstone Reserves (from Goldcorp 2010 Annual Report)

Greenstone Belts Tonnage Grade Contained OZ
Eleonore - Abitibi greenstone belt 12.48 7.56 3.03
Musselwhite – Flin Flon greenstone belt 10.54 6.24 2.12
Porcupine – Abitibi greenstone belt 76.59 1.33 3.29
Red Lake – Red Lake greenstone belt 9.93 12.89 4.12

Well explored greenstone belts are found in Canada, Australia, South Africa, and South America. Sub-Saharan Africa contains two major developing greenstone belts. The Birimian belt runs through West Africa including Ghana, Burkina Faso, Liberia and the Ivory Coast. Although this region has a challenging history, great progress has been made in the last 20 years. By pioneering these regions, Randgold Resources Ltd. (Nasdaq:GOLD) and Golden Star Resources Inc. (AMEX:GSS) have become sizable growth companies in the region. More recently in Tanzania, the Lake Victoria greenstone belt has also experienced successful development. Tanzania is actively explored by majors such as Randgold and African Barrick - LON: ABG.

Other less explored belts exist in the Democratic Republic of the Congo (DRC) as well as in the Zimbabwe Craton. These belts have been less explored due to the political climate, which looks to be in a cycle of improvement. The geologic potential of these Archaean greenstone belts could rival some of their better known counterparts. The extreme age of these formationss, as well as the chemical and structural controls within the rock, indicate prime conditions for gold deposits.

In addition to the majors, two relatively unknown stocks that investors should be following within the unexplored greenstone belts of Sub-Saharan Africa are Loncor Resources (AMEX:LON) - TSX-V:LN and Whetstone Minerals (OTC:WMITF) - TSX-V:WMI.

Loncor Resources

Loncor is currently developing the Ngayu greenstone belt in the Orientale Province of the Democratic Republic of the Congo. Loncor controls 4,550 sq km of the belt, which appears to be an extension of the Lake Victoria greenstone belt. Over 57 million oz of gold have been discovered to date in the Lake Victoria belt and exploration continues. It is important to note that the 20 million oz Geita deposit was discovered by Peter Cowley when he was heading up Ashanti Exploration in the Lake Victoria belt. Mr. Cowley now heads Loncor Resources. Newmont is a 17.8% shareholder and technical partner, and together have mapped out a development plan to identify and delineate increasing gold resources. To date, Loncor has drilled less than 40 drill holes with encouraging intercepts.

Whetstone Minerals

Whetstone is a microcap gold exploration company with advanced stage projects, including several past producers, which are located in the central west region of one of Zimbabwe’s largest greenstone belts. The country’s well developed infrastructure, dearth of modern exploration for the past 30 years, and large number of historic producing mines make it both highly prospective and a rich hunting ground for consolidation.

Whetstone was launched in the second quarter of 2011 by Allan Dolan, founder and significant shareholder of African Minerals Ltd. (OTCPK:AMLZF), the US $2.0+ billion iron ore producer operating in Sierra Leone. With a market cap of only $15 million, Whetstone presents the opportunity of joining Mr. Dolan's list of successful ventures as he hopes to replicate his successes at Whetstone. The plan is to develop Whetstone’s prime gold projects and consolidate additional major properties, all located in a single emerging gold camp, into a rapidly growing mid-size gold producer.

Whetstone is actively dealing with the Zimbabwean indigenisation issue that requires companies to produce a plan to sell up to a 51% interest in their companies at fair market value over a 5-year period (in the form of shares, an income stream, socially responsible community investment and/or joint participation in mineral rights) to Zimbabwe citizens. As consolidation represents a key strategy for Whetstone, there is ample opportunity for the company to consolidate locally owned companies, thereby achieving the desired shareholding structure and acquiring additional premium assets for development at attractive discounts. With Whetstone’s access to capital through Clarity Enterprises, Mr. Dolan’s family office, and board members such as Julian Treger, (principal at Audley Capital, which manages over $1 billion and specializes in mining stocks), strong technical team, and history of success, Whetstone is well positioned to create value for its shareholders.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

This article was written by

Thomas Brigandi profile picture
All opinions expressed by Thomas Brigandi, CFA on this website are solely Brigandi’s opinions and do not reflect the opinions of any of his affiliations (Last Article: Feb. 27, 2012). Thomas Brigandi, CFA, is a vice president in the global investor management team at a credit rating agency (CRA), where he is responsible for building and maintaining a network of senior level institutional investor relationships. Prior to this role, Brigandi served for nearly a decade in the global project and infrastructure finance group at a CRA, where he was a lead analyst responsible for a portfolio of 34 power, toll-road, airport, port, water, wastewater, natural gas pipeline, and project finance credits that collectively had over $15 billion of debt outstanding. Brigandi also served on a CRA's public pension steering committee, ESG Americas working group, and veteran recruiting sub-committee. Brigandi previously worked at the ~$200bn NYC Pension Fund, where he focused on energy and natural resources and reported directly to the chief investment officer. Brigandi is vice chair of the board of directors of CFA Society New York (CFANY), the largest CFA Institute Society globally. Brigandi, the CFA Institute Inaugural Global Outstanding Young Leader and CFA Institute 2021 Americas Volunteer of the Year, has organized over 90 CFA society conferences globally that were attended in-person by over 16,000 investment professionals, in addition to over 35 virtual conferences that reached many thousands of participants. These events featured over 350 senior asset owner and investment consultant speakers who represent organizations that collectively oversee or advise on more than $75 trillion in fiduciary assets, in addition to over 200 senior asset manager speakers who represent firms that collectively manage in excess of $30 trillion in assets. Brigandi, the founder of CFANY’s Asset Owner Series, Global Policymakers Series, Emerging and Frontier Market Series, Putting Beneficiaries First Series, and Global Infrastructure Conference Series, leads a team of over 500 investment professional volunteers globally. While serving as the director of global volunteers of the American Foundation for African Children’s Education, Brigandi organized the NASDAQ Closing Bell Ceremony on 23 September 2011, hosted for the president of Sierra Leone. Brigandi maintains over 14,000 connections ‎on LinkedIn and holds a bachelor's of science in finance, accounting, and Economics from the Macaulay Honors College (MHC) at the City University of New York. Brigandi received the college’s inaugural Alumni Pioneer Award and serves on the MHC Foundation board of directors as treasurer. Finally, Brigandi serves as an advisory board member of the Singapore Economic Forum.

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