(I apologize in advance for how the pictures display in the article. You may need to open in a separate window to see the full picture.)
About a week ago (late-August '22), I had the opportunity to visit HighGold’s ($HIGH) Johnson Tract Project in Alaska as one of the companies that I do work for happens to be one of HighGold’s technology vendors. I was able to pull some strings and finagle my way onto the team that was being sent the site to repair and upgrade a mountain-top microwave tower to improve the internet access to HighGold’s camp. After having spent a full day traveling all over the project site as part of our work as well as interacting with several members of the HighGold team in the process, I wanted to put together this write-up for others on CEO.CA who are invested or interested in HighGold. This was not a coordinated analyst visit, rather just some things I observed while I happened to be working on the site. HighGold did not know that I was a shareholder or that I regularly publish articles on mining exploration/investing on CEO.CA until after I arrived on-site. After meeting with some of the HighGold team, I obtained permission from HighGold to put together and publish this material. Please see the disclosures at the end of the article for further explanation and details.
Background on HighGold and the Johnson Tract Project (“JT Tract”)
Being an Alaskan, I have a heightened interest in all the ongoing Alaskan mineral exploration projects, so HighGold got on my radar not long after they optioned the property in 2018. At first, I saw an interesting prospect with a very large land package (20,942 acres) located about 200 kilometers southeast of Anchorage and across Cook Inlet from the Kenai Peninsula. The project had some potential with quite a bit of historical work done on it from the late 1970’s until about 1997. During that period, three different exploration groups drilled a total of about 27,500m meters and developed an initial mineral resource (about 500k oz on the JT Deposit). After the departure of the last operator (Westmin) in 1997, no additional work was performed on the property until HighGold commenced its operations in 2018. With the historical work having been done so long ago, there is always the possibility of newer geological theories being able to really unlock the full potential of what was discovered before.
The entire property that HighGold is exploring is owned by Cook Inlet Region Inc. (“CIRI”), one of Alaska’s 13 regional native corporations (CIRI owns the surface/mineral rights to the southern half, and mineral rights to the northern half). CIRI has leased the property to HighGold under a 10-year lease that started in 2019 with an additional 5-year development extension. If HighGold decides to move forward with a mine, the lease will extend indefinitely while production is ongoing.
HighGold is actually a spin out of Constantine Metal Resources Ltd. and while JT Tract is their flagship project, HighGold also has multiple exploration properties in the Timmins region. As the JT Tract is currently accessible only during the summer season (June-October), HighGold focuses on exploration on their Timmins project when they are unable to do exploration work on the JT Tract.
HighGold’s early work on the JT Tract in 2018-19 focused primarily on getting the camp set up and operational (which is still pretty spartan and has its own challenges) as well as confirming the the results of the historical work performed on the property (which was all pre-43-101).
HighGold started attracting some increased attention in September 2020 when they released drill results from the JT Deposit zone of 72m of 17.9g/t of gold. While that is a top-notch drill result, because they were drilling in an area with substantial historical work (appears that they were twinning some historical drill holes) and the estimated true width was only about 50% of that length, I still had some reservations on JT Tract’s exploration potential. What really caught my attention were drill results from the Difficult Creek Prospect (“DC”) that were released in October ‘21. The first set results released from the DC prospect included 6.4m at 578g/t Au and 2,203g/t Ag. This turned out to be the third best reported drill result in the world (measured by g-m AuEq) in 2021, with only the results at Osisko’s Windfall and Pretivm’s (now Newcrest) Brucejack coming in higher.
In the aftermath of the blowout results at DC, HighGold immediately cashed up their operation with an $18.8M bought-deal PP. HighGold released the remainder of the drill results for 2021 drill season in Dec ‘21 and Jan ‘22. They also followed up the drill program with an updated resource estimate for the JT Deposit in June of this year that included about 1M oz of Au at an average grade of 9.39g/t AuEq. HighGold also announced the commencement of a $9M drill program for 2022 that included the commissioning of on-site core sample preparation facility (crushing and pulverizing).
First results coming out of the 2022 drill program should start being released soon.
Description of the Property and Travel to the Property
While JT Tract is only about 200km away from Anchorage (Alaska’s largest city), make no mistake about it, it is a very remote site. Currently the site is only accessible by airplane or helicopter, although developing a road from the camp down to a future shipping port for barges along the navigable Cook Inlet doesn’t appear to be too difficult of a project to construct. Flying to JT Tract is arranged through local regional airlines (the ones that fly to Bush communities and fly out fishers and hunters to remote locations). Due to the shifting Alaska weather, the availability of flights can be hit or miss. My group had trips scheduled on a Thursday and Friday that were scrapped due to weather before we were finally able to fly to the site on the next Monday. The flight from Anchorage takes a little more than an hour but due to the nature of the approach into JT Tract and the short gravel runway the planes able to fly to the site are relatively small bush planes.
While I am fairly accustomed to flying on bush planes in Alaska, I have to admit that the approach into JT Tract is a memorable one. I definitely wouldn’t recommend it to someone who has a fear of flying. In order to enter into the valley where the JT Tract camp is located, the plane travels over a fairly narrow saddle. While I am sure there was adequate clearance as the plane passes through the saddle, it feels like you are no more than 10 feet off the ground as you clear the gap.
(Our plane approaching the saddle - as you can see, it feels like you are going to fly right into the hillside)
After entering the valley where the camp is located, the plane loop through a valley around one mountain before coming back into the main valley and landing on the gravel runway outside of camp.
(After passing over the saddle - you can see the valley with HighGold’s camp in the upper left with the gravel runway below that)
(Turned around and approaching the runway - welcome to the Alaskan Bush!)
When you arrive, you definitely feel like you have wandered far away from civilization.
(The scenery that awaits you when you step off the plane - The JT Deposit location is up the valley that you can see under the wing.)
The project has a decent size camp that includes an office building, kitchen/lounge facility, core shack, core preparation facility, as well as several other smaller huts for employee to sleep in and so on. The site is definitely in the Alaskan Bush, in fact we encountered a brown bear while driving in a side-by-side from the runway into camp.
While working on the site, HighGold's helicopter took us to the locations where we needed to go.
(Helicopter coming in to pick us up from camp to take us up the mountain to the microwave tower)
(Taking off in the helicopter out of camp - the valley straight ahead leads to the Kona prospect. Over the mountain at the end of the valley is where the DC and Easy Creek prospects are located. The face of the mountain at the end of the valley is where the Milkbone prospect is located and the Kona prospect is moving across that face to the left. The JT Deposit is in the next valley on the other side of the near mountain on the left)
(Farther up the valley - the Kona prospect is along the right and if you follow the valley around to the left, it leads back around to the JT Deposit)
It is while traveling by helicopter to our installation site (and to other parts of the property to pick up some HighGold employees who were assisting us) that the actual size of this project begins to hit you. We just throw around numbers like 20,000 acres, but actually seeing it first-hand changes your perspective entirely. In fact, the immensity of the size and scope of the project was probably my biggest takeaway from visiting the site.
Meeting with Darwin Green, HighGold CEO
Luckily, HighGold’s CEO, Darwin Green, and Chief Exploration Geologist, Nathan Steeves, happened to be in camp the same time I was there and I had the opportunity to discuss the exploration of the JT Tract with them while I was there.
This was my first time meeting Darwin. I had watched several interviews with him online and while he comes across as a very competent and intelligent guy, he is also not someone who just naturally conveys a lot of passion and excitement during his interviews. What was nice about being able to visit with Darwin on the JT Tract site is that I felt like I got to interact with him in his natural environment. He looked like he hadn’t shaved in a few days and he was dressed in such a way that I wouldn’t have guessed he was the CEO if I hadn’t recognized him from previous interviews. As I said earlier, he didn’t know that I was coming until after we were introduced in the camp. What was clear to me right away is that Darwin is at his core an exploration geologist. In my time interacting with a number of CEO’s of junior exploration companies in various contexts, I can generally tell when I am dealing with a C-Suite type and when I am dealing with a dirt-dog exploration type. Darwin definitely comes across as the latter. After some initial greetings and introductions, I started asking several specific questions about the project. As it became clear to him that I was someone who was quite familiar with HighGold's project and with mining exploration in general, he lit up with excitement. He spent well over an hour talking with me (I was waiting for the rest of my team to arrive on site in a separate plane), pointing out various parts of the geological structure that can be seen from camp, as well as the locations of the various prospects that HighGold is exploring. We walked over to some old boxes of core from 2019 and he just kept opening box after box pointing out various structures and mineralization that are regularly seen in the drill core from the project. It was very apparent to me that this is a guy that really gets excited telling the HighGold story and explaining the mineralogy and geological structure of the JT Tract. If there was one criticism that I have it is that I have never really seen Darwin explain HighGold with the same sort of excitement (which is a contagious excitement) in the interviews or promotional videos I have come across. I am not sure how HighGold could effectively capture that on video, but it is definitely something I think they should be trying to accomplish.
Another reason I could tell that Darwin was in his element was the way that the other employees interacted with him as they would walk by. There was a lot of joking and kidding around, which tells me that he is very comfortable being one of the guys in a work camp. Personally, I think it is important to have someone like that if you are going to try to explore and develop a property in the Alaska Bush like JT Tract. Working in this type of location is not for the faint at heart. Due to the remoteness and inherent challenges of just being in Alaska, it is important to have leadership that is comfortable being among their troops out deep in the boonies.
While it was probably not the best move on my part catching Darwin off-guard and unannounced like this, being able to interact with him this way on-site was enlightening for me and definitely assisted in being able to get a better feel for what the future holds for this project in a way that is difficult to convey through other formats. I probably owe Darwin an apology for my surprise visit though.
Major Takeaways from Site Visit
Necessity of Looking at JT & DC as Completely Separate Projects
The JT Deposit and DC Prospect (as well as some of the other prospects) need to be looked at as completely separate projects. I have to admit that prior to my visit, I had been a little critical about HighGold’s release of an updated technical and resource in June of this year. Although 1M oz of Au at 10 g/t is nothing to laugh at, putting out that number a few weeks into the current drilling season and after the third largest drill result in the world the prior year seemed rather anti-climatic at first blush. At least for me, the timing felt wrong for this type of release. After all the buzz coming out of last year, seeing an updated resource of only 1M oz caused a little bit of a “That’s it?” response. What I learned (that I probably should have figured out earlier on my own with more careful research…) is that while the JT Deposit and the DC Prospect are parts of the same structural trend, they are very distinct projects.
(Looking towards the valley where JT Deposit is located. DC is 90º to the right and several km away up a valley and over a mountain ridge. This site is very large!)
I am not even sure that the pictures really show how far removed the DC Prospect is from the JT Tract, but they are not even in the same zip code! The updated resources that HighGold put out this year covers only the JT Deposit and doesn’t include any of that super high grade material that was found at DC last year. I am not even sure how long it will be until DC is adequately drilled to that extent that it could be included in an updated resource, but I wouldn’t be surprised if it wasn’t for at least a few more years.
Drilling Challenges
We would normally expect that when an explorer comes across a hit like HighGold had at DC last year that it would jump right back at it with a program of step-outs and in-fill drilling to quickly define the scope of the deposit. As we were taken around the site in HighGold’s helicopter to do our work, it became clear why that type standardized drilling program is not realistic in a place like the JT Tract. Most of the locations that HighGold is drilling from are on hillsides, some of which are quite steep. HighGold has to build wood structures into the hillside for each drill location as well as a separate location for the helicopter to take drill operators in and out of the drill sites.