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Ethos Gold Corp. (ECC-TSX.V, ETHOF-OTCQX)
One Year Chart:
Share Info:
52 wk High/Low:($0.33-1.33)
I/O:42,947,911
F/D: 53,557,040
Cash: $13,000,000
Contact Info:
Gary Freeman President and CEO
Fred Leigh Investor Relations
Phone: (604) 682-4750
Email: info@ethosgold.com
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Ethos Gold Corp. Delivers Discovery Hole on Betty Project, White Gold District, Yukon
Incredible Pedigree
In February of 2012 legendary Yukon prospector Shawn Ryan made a bold statement. During an interview with my colleague Mark Cullivan from Resource Stock Digest (www.rsdigest.com) the man responsible for staking two major recent discoveries in the White Gold district, Kinross’s Golden Saddle project and Kaminak’s Coffee project said the prospects of the upcoming drill program by Ethos Gold Corp (ECC – TSX.V, ETHOF – OTCQX) were as close to a “slam dunk” as one can get in the junior exploration market (To listen to the interview CLICK HERE). This was not just his intuition talking either. Mr. Ryan was impressed by the methodical exploration program that had been undertaken by Ethos COO Peter Tallman, P. Geo. The soil sampling and shallow channel trenching program conducted by Ethos closely mimicked the exploration programs that led to both the Golden Saddle and Coffee discoveries. The best channel sample they hit was on the Mascot Creek target and assayed out to 7.3 g/t Au over 50 meters. It is also worth mentioning that Mr. Ryan staked this property for Ethos and remains one of their major shareholders. Needless to say when the first phase of drilling commenced May 23, 2012 expectations were running high at Ethos Gold Corp.
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Significant Discovery
On June 26, 2012 Ethos released the first 22 drill assays from the Mascot Creek target. The first ever drill program on the Betty property produced some amazing results. The discovery hole BETR 12-022 hit an intercept of 13.7m of 7.1 g/t Au and 209 g/t Ag, one of the best initial results from any of the recent discoveries in the Yukon. Market reaction to the news was somewhat disappointing as some investors used the liquidity event to exit their position in these uncertain market conditions. However, an opportunity for savvy investors has been created by this as there are several keys facts to focus on that make the prospects for Ethos very solid going forward.
What investors need to look at is the history of discovery in the White Gold District. If you go back to the discovery hole at the Golden Saddle project when it was being operated by Underworld Resources they hit 18m of 4.5 g/t Au. In this context, the grade reported by Ethos in their discovery hole at Mascot Creek is substantially better than at Golden Saddle over a similar interval. Furthermore, it seems to me that the market has largely ignored the significant silver grade of this intercept as well. 209g/t Ag over 13.7m is a very impressive kicker on a high grade gold intercept.
In the two weeks since the results were released, Ethos’ share price has recovered from the initial sell-off and is trading around pre-release prices. While it is nice to see the price recover, it is frustrating to see a quality discovery receive so little positive attention. There is no doubt that Ethos is a victim of overall market weakness. However, Ethos’ unfortunate timing presents an opportunity for investors. Consider the following points.
Looking Forward for the Company
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With fundraising dollars virtually non-existent in the junior sector right now a key factor in determining the merit of any exploration company is the health of its treasury. Ethos Gold Corp. currently has $13 million in the bank, which really sets it apart from the majority of its contemporaries on the TSX Venture Exchange. Because the company does not have an immediate need to raise money, investors can look not only to the short term prospects of the company, but also to medium and long term ones as well.
In the short term, investors can look for the summer to produce very steady news flow from Ethos. First phase drilling is just wrapping up on the Betty project and there are still 20-22 holes outstanding from this program. They will be reported as they become available from the assay lab. In the field after first phase drilling is completed, the company’s geological team will do a macro assessment of the project thus far and map out the second phase of drilling that is scheduled to commence this month.
This second phase of drilling will be a much larger undertaking and will provide steady news flow for Ethos in the medium term. In total, the company plans to complete around 16,000m of drilling this year. This will include adding a diamond drill to the property for the second phase in order to expand the mineralized zones discovered in the initial reverse circulation drilling. As many junior companies go into hibernation to preserve cash in these difficult times it is important for investors who are looking to stay active to seek out companies who are also remaining active. Instead of scrambling to reactivate exploration when the overall markets turn around (something that tends to happen every fall) Ethos will be poised with new drill results that will follow up on the discovery at the Betty project.
Of course the long term success of Ethos is paramount to management. President and CEO Gary Freeman builds winners. He was the President and CEO of Pediment Gold Corp. when it was acquired by Argonaut Gold in January 2011. According to my research on the website canadianinsider.com, Mr. Freeman has continued to add to his equity position in the company in recent months. Knowing that the President and CEO has the confidence to continually invest in his own company is a good test of its strength.
While the merits of Ethos Gold alone warrant a very serious look from investors, you also have to consider the long term merits of the White Gold District when analyzing this company. This area has been earmarked by industry professionals as one of the next big mining districts in North America. A discovery here lacks the geopolitical risks that plague Latin America and Africa. In addition, infrastructure is increasing exponentially in the area as more and more projects come online.
Now is the Opportunity
What makes Ethos Gold so attractive at these prices is that investors can gain leveraged exposure to the White Gold area compared to other more advanced companies like Kinross and Kaminak. The risks with Ethos are also reduced as management has the track record of making discoveries and the property was vended to the company by Shawn Ryan, the man responsible for fuelling the modern day gold rush in the Yukon. Add to this the recent discovery of significant gold and silver mineralization on the project in the form of the 13.7m of 7.1g/t Au and 209g/t Ag at the Mascot Creek anomaly and you have to wonder how long it will stay trading at current prices. While I understand why people are very reluctant to invest their risk capital right now, one must start to map out a plan for when the market does turn again. By doing your research now and deciding which juniors you believe in long term there is the opportunity to make some significant gains. With Ethos Gold Corp. you also have the possibility to realize some short term ones as well.
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