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Gold Mountain Mining: A 2021 Retrospective

The year of 2021 proved to be an excellent year for Vancouver-based Gold Mountain Mining Corp (TSXV: GMTN). The company
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The year of 2021 proved to be an excellent year for Vancouver-based Gold Mountain Mining Corp (TSXV: GMTN). The company is in the process of bringing its flagship Elk Gold Property in British Columbia into production.

The 21,187 hectare Elk Gold property is host to the past-producing high-grade Elk Mine, which is located 35 minutes southeast of Merrit and 45 minutes west of Kelowna, and is easily accessible by road and can be operated year-round. While it is unusual for exploration companies to be producers, Gold Mountain is still very actively continuing exploration on the Elk Property. 

Lets take a look back at what the firm accomplished within its first calendar year of trading, having become a public company just on December 31, 2020. Gold Mountain met a series of  significant milestones in 2021.

  • In June, the company completed a $12 million bought-deal unit financing at $2.10 per share, consisting of 4,255,190 units at a price of $2.10 per unit and 1,326,450 flow-through units at a price of $2.31 per unit. The financing helped GMTN to aggressively advance the Elk project for open-pit production. 
  • On June 17, 2021, Gold Mountain announced that it had entered into an ore purchase agreement with New Gold to offtake all of Gold Mountain’s production, which will negate the need for GMTN to build a mill onsite at this time. Economics will determine if, as, and when the company would build its own mill in the future.
  • In another significant milestone for Gold Mountain, on July 12, 2021, the company announced that the Ministry of Energy, Mines & Low Carbon Innovation Communications Office (EMLI) had received final comments on the draft mine permit from both the local communities and the mine review Committee. EMLI submitted the final permit to British Columbia’s regulators for approval and on November 2, 2021 GMTN announced EMLI had awarded the company its M-199 Mining Permit.
    According to the company’s preliminary economic assessment (PEA), the open-pit nature of the mine suggests a low capex of $9 million to bring on stream and an operating cost of USD $554/ounce.
  • On November 5, 2021 Gold Mountain announced that it received preliminary approval from the Toronto Stock Exchange (TSX) to list its common shares on the TSX. The firm began trading on the Canadian big board on November 23.
  • On November 25, 2021, Gold Mountain announced additional assay results from its Siwash North portion of the now completed phase II drill program. Drill highlights included 1.10 metres grading 10.05 g/t gold including 0.30m of 46.1 g/t gold, and 1.30 metres grading 12.00 g/t gold including 0.30m of 44.7 g/t gold.
  • On December 1, 2021, the Company announced that it hit one of the widest intercepts ever at the Elk Gold project during its phase II, Siwash North drill program, 150 metres south of the open pits: 2.4 metres grading 20.2 g/t gold.

The Elk Property has eight previously identified gold mineralization zones within a consistent geological structure throughout most of the property. In addition to preparing for production, GMTN had continued with its phase two drilling program, conducting step-out exploration on it’s Siwash North Zone on the property. The program was designed to further delineate the size and scope of the mineralized zone to define additional resources to surpass the company’s overall 1 million ounce gold resource estimate target.

The 13,900 metre phase two diamond drilling program was a major success with all 47 holes hitting mineralization and enabled Gold Mountain to increase its resource estimate at the Elk Gold Project by 24% to 806,000 oz of measured and indicated resources at 5.8 g/t gold equivalent, and 262,000 oz of inferred resource at 5.4 g/t gold equivalent, a 65% increase. The 37 new holes served to connect the Siwash North Zone with the Gold Creek Zone, and the 10 holes that were completed in the Lake and South Zones enabled GMTN to also establish an initial mineral resource estimate for these two satellite deposits.  

Lastly, as a major milestone for the year and for the company as a whole, on November 9, 2021 the firm announced that it had mined its first significant mineralized material from its 1100 vein system in Siwash North. It will process the ore and assay the material before delivering it to New Gold as per the ore purchase agreement. This now makes Gold Mountain a producer and the company expects that its high-grade material can generate annual after-tax profits in excess of $10 million. The revenue from production de-risks the company and enables it to conduct its production and exploration activities from cash flow, therefore eliminating the need to access capital markets for dilutive financings. 

What to Expect in 2022

Gold Mountain will continue to ramp up its mining operations in 2022 by targeting the Elk Property’s high-grade 1100 and 1300 vein systems. The company will truck its processed material to New Gold’s New Afton Mine in Kamloops. GMTN and New Gold are both working with the local Indigenous Nations and local regulators to amend its mining permit which will allow the New Afton mine to receive the Elk Project’s high-grade mineralized material.

The companies have indicated they will conform to each Nation’s independent review process and neither company is expecting any interruptions to Gold Mountain’s mining operations, and the company should be able to meet its revenue targets. The PEA contemplates annual production of 65,000 ounces of gold by year 4.

Gold Mountain is making preparations to begin its 10,000 metre phase three drill program that will further define the size and scope of the Siwash Zone and to continue drilling to be able to expand its resources at the Siwash North, Gold Creek and Bullion Zones. The company believes the deposits could contain gold reserves in excess of 1 million ounces.

GMTN will also continue drilling to further define the size and scope of the satellite deposits at the Lake and South Zones. The Elk Property has eight previously identified gold mineralization zones within a consistent geological structure throughout most of the property and future drilling programs will better determine if the various mineralized zones are part of a much larger overall deposit, which would have a significant impact on the value of the project. Unexpectedly, the company discovered a zone on the southwest portion of the property that indicates significant porphyry copper potential that will require further drilling. The underlying geology is different from the rest of the property and could be highly prospective for copper and gold.

For shareholders, Gold Mountain has significantly de-risked the project by initiating production to generate cash flow from its initial 19,000 ounce target. The firm has stated it will continue to develop the 1100 and 1300 vein systems at Siwash North to achieve its year 4 production target of 65,000 oz per annum. The company’s strong cash position, strong economics of the project, and imminent cash flow should ensure that they will not need to do dilutive financings to fund operations.

With 69.82 million shares outstanding and a market capitalization of $87.5 million, Gold Mountain appears to potentially be somewhat undervalued, especially when considering that the shares are currently trading at a discount of almost 50% from the $12 million bought-deal financing at $2.10 per share in late June 2021.

As its production and corresponding profitability increases, Gold Mountain Mining could become an attractive takeover candidate for a mid or large tier company seeking an acquisition to bolster their asset portfolio. With seven other mineralized zones on the Elk Mine Property, there will be continuing exploration activity to complement the production, and shareholders could expect a steady stream of news as Gold Mountain continues to advance the Elk Mine Project.


FULL DISCLOSURE: Gold Mountain Mining is a client of Canacom Group, the parent company of The Deep Dive. The author has been compensated to cover Gold Mountain Mining on The Deep Dive, with The Deep Dive having full editorial control. Not a recommendation to buy or sell. We may buy or sell securities in the company at any time. Always do additional research and consult a professional before purchasing a security.

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