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Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

April 3 2021, 17:41 GMT+01:00

Canstar Resources

  • TSX-V: ROX
  • Shares Outstanding: 72.66M
  • Share price C$0.25 (30.03.2021)
  • Market Cap: C$17M

Canstar Resources is a mining company focused on the discovery and extraction of mineral deposits in Newfoundland, Canada. The company acquired an option of 62,275 hectares claims package as part of their Golden Baie Project in the southern part of Newfoundland.

We spoke with Rob Bruggeman, who joined us from Toronto, Canada. Rob has a background in corporate development, equity research and investment. His work history consists of working as an equity research analyst focused on small-cap stocks in Canada. He has used his investment knowledge of capital preservation, risk management.

Rob has been in the mining sector for a decade. He has worked as a consultant at AbraSilver, based out of Argentina, which later merged with Aethon Minerals. Currently, he's a significant investor and the chairman of the board.

Company Overview

Canstar Resources is a Canadian exploration company mainly focused in Newfoundland, Canada. Newfoundland is the hottest property for Gold exploration as it has promising potential for high-grade orogenic-style Gold Mineralization. Canstar Resources picked up the biggest Gold exploration land packages on the island spread across 620km2 (62,275ha).Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

The majority of the Gold exploration was done in the 1980s, discovering 20 high-grade Gold reserves on the surface spanning around 30km. The company is looking to explore Gold reserves underneath the surface.Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

A Team of Mining Experts

Canstar Resources has a team of 3 people that possess a Ph.D. in Geology. First is Lawrence Winter from Altius Minerals, based in Newfoundland. The second member is Dr. David Palmer from Probe Miner, which was sold to Goldcorp. He's now running Probe Metals. He's had extensive experience when it comes to Gold exploration in Ontario and Quebec. David Palmer also serves as a director of the company.

Dave and Lawrence have also invested their own capital into the project. Dr. Laurie Curtis possesses a 40+ year background as a Geologist. He has a geological background and experience in the capital markets.

All 3 of them are being remunerated with options, rather than cash, and collectively are 11% shareholders of the company.

Current Challenges

The biggest challenge is that although the company has high-grade Gold on the surface, with one of the grab samples being more than 4,485g/t. The challenge is to find economically feasible quantities of Gold mineralization. As all good investors know, it's about the volume of contained metal in the ground, and not just headline grabbing high-grades.

In the 1980s and in 2009-2011, gold mineralization was found across fairly narrow widths. They have a 620km claim package with a potential strike length of 95km. They have the experts on board, but they need a larger team to break down the property within a reasonable timeframe. 

They plan to employ multiple tools and techniques that include soil sampling, and geophysics along with processing the existing information available from 100 years of exploration and analysis.Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

How Canstar Resources Plans to Employ Existing Capital

Canstar Resources has currently allocated $1.5M in exploration. They are planning to rely on conventional tools such as soil sampling, which is significantly economic as compared to drilling. They have drilled varied amounts across the land, on the shallow end of the spectrum.

They are aiming at 10 holes initially to located good and high-grade deposits before looking to raise additional funds. Bruggeman suggests this is a better approach, as once people can see the potential of the land, they can bring confidence to future investors.

Canstar Resources is focusing on an exploration through trenching rather than drilling. Bruggeman believes that because it's Newfoundland, it's highly likely they will find high-grade Gold close to the surface. They plan on trenching first, figure out the outcrop, and then focus on the orientation drill underneath it. Their plan is to explore 10m - 50m through the trench, and then go deeper to see if it continues, and then focus on exploring the lateral width. Although this is an old-school process of soil sampling and mag, it can be incredibly cost-effective.

The company has placed its priority on exploration over marketing. Due to a limited budget, they are focusing on putting money in the ground rather than an advertising budget. Instead, they are focusing on the merits of the property. This is because pricing the stock based simply on discovery is a short-term strategy with strong uncertainty in store from the company and the investors.

They are focused on bringing in long-term investors as opposed to traders. They could have initially raised more capital, but the first round of funding for this property was capped at $2M to preserve the capital structure.

Canstar Resources says it is looking to play a long game where they intend to underpromise and over-deliver. This strategy is a departure from the usual story we hear as it's focused on long-term growth through tangible results instead of banking on the probability of success. In December 2020, Canstar Resources was able to raise an additional $1.29 million.

Canstar Resources aspires to initially locate a Gold deposit that's 1Moz. They are less focused on short-term economics and are looking for sustainable extraction.Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

Strategizing the Exploration Process

Canstar Resources is mainly focused on 2 main goals. They want to build a company that serves as a platform. The Golden Baie project has a high prospective with a high likelihood of discovery.

They have another target called the Blow Out target. They performed a soil grid assessment which was 1.25km long and 400m wide. This one featured plenty of high-quality grab samples. There's an existing +1km drill target with samples indicated a minimum of 10g/t Gold and even 30g/t in some cases. Some boulders in this area also have some Silver deposits along with base metals.Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

Another area where a ground magnetic survey is scheduled to be performed in additional areas where they plan to drill 100m-150m deep. This could be carried out in $1M and give good returns.

Their deal closed in late-September. They've had just 2 months in the field before it snowed. They visited a small piece of the property where the high-grade discovery was made. They carried out 5 tenches, in which 2 offered strong results. One of the trenches had 3m of 10g/t Gold. This trench can be further explored now that the snow season has finally ended.

Currently, the company is planning to spend $30,000 on a ground magnetic survey, this will help them finalized their drilling targets. These targets will then be expanded into trenches.Canstar Resources (ROX) - x10 Bagger Creator Seeking High-Grade Gold

A Unique Approach Towards Raising Capital

They want to raise capital with a good investor, but Canstar Resources is working towards this strategically to avoid diluting the company's capital structure. If they brought in capital strategically based on the merits of the property, he'll get $2M-$2.5M for 10% of the company. But he's more focused on bringing good results with the existing capital, taking a risk, and aiming for a $25M investment down the road. They are looking to build a platform while maintaining the capital structure of the company.

Rob has strong confidence in the Canstar Resources' technical team and sites. With his decade-long experience in the mining industry plus his past expertise as an investor, he is hoping this long-game strategy delivers handsome returns.

To learn more, visit the Canstar Resources website


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