Why this gold explorer has the pedigree and partners to multiply its market cap
Japan Gold's executive team touring Japanese mining operations.
By: Peter Krauth
If you’re thinking, “There’s gold in Japan?” rest assured, you’re not alone.
Unlike Nevada, Australia, or Canada, Japan is certainly not top-of-mind for gold investors. But, that’s all about to change.
Japan is part of the “Ring of Fire,” a path along the Pacific Ocean where tectonic plates meet, hosting 75 per cent of the planet’s volcanoes and 90 per cent of its earthquakes.
This overabundance of seismic activity has led to a rich supply of valuable metal deposits, making Japan well-endowed and relatively under the radar.
Despite being one of the most politically stable, corruption-free first-world jurisdictions, Japan has had little gold exploration since 1943. That’s when the government placed a moratorium on gold mining, focusing resources on the war effort instead.
But in 2012, in the aftermath of the global financial crisis and a devastating earthquake and tsunami, Japan decided to open up its mining industry to foreign companies. With a history of mining metals dating back over 2,000 years, Japan’s exploration potential is incredibly vast.
Establishing and maintaining great relationships is vital in the Japanese market.
And the timing could hardly be better. Governments and central banks around the world have responded to the COVID-19 pandemic with massive economic stimulus programs, which has involved printing more currency. Additionally, the U.S. unemployment rate has reached its highest levels since the 1930s.
As a result, immense, coordinated currency printing has boosted gold by 17 per cent since its March lows to over $1,700 per ounce, a price last seen almost eight years ago.
This confluence of factors combines to make one outstanding junior gold explorer dramatically stand out amongst its peers.
An alliance built for success
Japan Gold Corp. (TSXV: JG | OTCQB: JGLDF) is a Canadian mineral exploration company focused solely on Japan, specifically across its three largest islands. The company is a virtual “diamond in the rough,” that is now in the process of emerging.
Apart from a pedigree to be envied by most exploration companies, Japan Gold already boasts some major accomplishments. Perhaps the most noteworthy of these is its strategic alliance with Barrick Gold Corp.
"Japan Gold is delighted to welcome Barrick Gold to Japan. As Barrick is one of the pre-eminent gold producers in the world, we look forward to a very positive partnership.” — John Proust, Chairman and CEO, Japan Gold Corp.
Together, Japan Gold and Barrick will explore, develop, and mine certain gold mineral properties and mining projects in Japan. The agreement is a country-wide alliance and includes 28 of 30 projects currently held by Japan Gold.
When news of the alliance was released, Barrick’s CEO, Mark Bristow, commented,"We are pleased to partner with Japan Gold, a company that has assembled an impressive portfolio of exploration tenements within the renowned epithermal gold provinces of Japan. We look forward to advancing our partnership by combining Barrick's technical and financial resources with Japan Gold's first-mover advantage to deliver new world-class gold discoveries."
Japan Gold's Chairman and CEO, John Proust, also commented,"Japan Gold is delighted to welcome Barrick Gold to Japan. As Barrick is one of the pre-eminent gold producers in the world we look forward to a very positive partnership.”
He added, “Every great new frontier starts with geology. Japan is an ideal, underexplored setting to make new large low sulphidation epithermal gold discoveries, building on the great success of Sumitomo Metal Mining Co. Ltd.'s Hishikari Gold Mine.”
“Barrick's global experience of operating 15 mines on four continents combined with Japan Gold's in-country knowledge and operational expertise makes for an ideal partnership to advance the gold mining industry in Japan."
A regional exploration program will help the alliance evaluate the overall project portfolio. From there, both companies will determine which areas have anomalous gold showings and potentially fertile large structures.
An Initial Evaluation Phase will see Barrick solely fund each project for two years, with Japan Gold acting as the manager, subject to Barrick’s right to become manager at any time. A Second Evaluation Phase will see Barrick solely-fund the next three years of projects which meet its criteria. At any time during the Initial or Second Evaluation Phase, Barrick can identify a project as a Designated Project, electing to solely fund to complete a pre-feasibility study (PFS).
Once Barrick completes the PFS it will earn a 51 per cent interest and may elect to solely fund a Designated Project to a bankable feasibility study (BFS). Barrick’s completion of a BFS will fully carry Japan Gold and earn Barrick a 75 per cent interest in the Designated Project after which Japan Gold will retain a 25% interest.
Projects near some of the richest gold mines
Japan Gold has recently expanded its portfolio to reach a total of 30 projects. These cover more than 40 historic gold mines over an area of approximately 1,900 square km, spread across Japan’s three largest islands: Hokkaido, Honshu and Kyushu.
The company’s southernmost projects are found on Kyushu Island, where it has 16 gold projects in the area of the Hishikari Mine. Significantly, Hishikari has been producing since 1985, generating a spectacular 7.9 million oz so far at average grades of 30-40 g/t making it one of the highest-grade deposits under active mining globally.
The Kyushu Epithermal Gold Province, where over 11 million oz of gold have been produced. Sourced from the company’s corporate presentation.
Just one of Japan Gold’s gems is its Ohra-Takamine Project, which is outside of the strategic alliance with Barrick Gold. It’s located roughly 7.5 km southwest of the historic Yamagano Mine, which produced 910,000 gold oz at a 17.4 g/t grade between 1640 to 1953.
The most recent addition, in May this year, was the expansion of the Sanru Project located on Hokkaido Island in the country’s north which covered five known mine workings. New prospecting rights were accepted by the Japanese Ministry of Economy, Trade and Industry. What’s more, the Sanru Project is adjacent to the Sanru Mine, the second largest historical gold producer in North Hokkaido, having produced 225,000 gold oz at an average 7.4 g/t and 1.4 million silver oz.
Proust notes, “This new acquisition continues our ongoing evaluation of the prospective geology in Japan. The decision to further extend the Sanru Project was based upon the favourable structural controls on mineralization, host rock geology, and the proximity of the Omui mine close by to the north.”
Hokkaido portfolio, Kitami Metallogenic Gold Province.
The other project excluded from the Barrick Gold strategic alliance is the Ikutahara Project, located southeast of Sanru. Ikutahara is Japan Gold’s most advanced project, comprising of 60 accepted prospecting rights applications, 38 of which have so far been converted to Prospecting Rights, allowing for more advanced exploration, including drilling.
Applications to drill the Ryuo and Kitano-o prospects within the Ikutahara project are underway. The most significant historical production on Ikutahara came from the Kitano-o mine which, between 1924 and 1943 reportedly produced 96,450 oz at a gold grade of 5.9 g/t.
Just 20 km northwest of Ikutahara lies Japan’s third-largest gold mine, Konomai, along the same geological trend. It operated between 1917-1974, producing 2.3 million gold oz averaging 6.4 g/t.
Advancing a highly prospective gold frontier
Not only is Japan Gold’s strategic alliance with Barrick impressive, 13 per cent of the company’s shares are owned by Newmont.
This investment came via a strategic financing by Goldcorp before it was acquired by Newmont. Under its terms, Goldcorp (now Newmont) was granted a joint venture right of first refusal on two projects, the Ohra-Takamine Project and the Ikutahara Project.
To help support these projects, Newmont has facilitated the formation and participation of a technical committee, introduced third-party contractors, and helps to interpret and analyze Japan Gold’s data on the Ikutahara and Ohra-Takamine projects.
Heading into the second half of 2020, Japan Gold continues to advance its systematic exploration of Ohra-Takamine through mapping, geophysical surveys, extensive soil and rock chip sampling, Bouguer gravity surveys, drill target generation/confirmation, and a drill program. At Ikutahara, Japan Gold will also complete drill permitting and commence drilling on Ryuo and advance drill permitting on the Kitano Prospect.
Crystalline quartz sealed vein in altered rhyolite volcaniclastic sediment from east Kitano mine dump at the Ikutahara project.
Proust summarises the company’s investment proposition best, saying, "Japan Gold has attracted the attention of the two largest public gold producers, validating the prospective potential of all of Japan Gold’s projects, which include more than 40 formerly producing gold mines.”
“What’s more, the company boasts significant industry and institutional shareholders, as well as a management team with a proven track record of identifying mineral deposits and advancing them to production, including a proven ability to finance, build, and operate resource companies.”
Remember, gold is in a firm uptrend, underpinned by money-printing unlike anything seen before.
View of Ohra-Takamine.
Japan Gold has assembled all the right elements, at the most opportune moment, to become a
standout gold explorer. Investors should be excited about what’s to come.
Learn more about the company by visiting their website here.
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