New mine plan, new drill results, new Thesis
Thesis Gold as at a turning point, with an aggressive drill campaign fuelling optimism for improved economics of an already strong project.
tl;dr:
Thesis Gold’s (TAU.V) merger with Benchmark Metals is now complete. The newly-amalgamated company followed that news up with very strong drill results which suggest TAU’s new UG start mine idea (in hopes of improved IRR and payback) is a good one.
Thesis Gold has had a very positive past few weeks since I last wrote about it. To begin with, well, Thesis Gold is no longer Thesis Gold. It now is Thesis Gold. (Har har...) More plainly, the announced merger with Benchmark Metals is officially complete, with Benchmark changing their name to Thesis as of Aug. 23, 2023. The ticker remains TAU.V.
As my previous article states, (check up on article #1 here and article #2 here) I think this merger makes a lot of sense for a lot of reasons. Consider what Thesis has going for it:
a large, high potential resource with strong grade
proven existing (though now incomplete) economics
powerful new drill results, and
an improved mining plan beginning to be publicised
great jurisdiction and existing infrastructure
active potential M&A partners in the region
a rare chance to actually expect material economic upgrades from an updated economic study
Now, this apparently isn’t the popular take right now in the market. Initial response to the announced merger was tepid, with both TAU and BNCH sagging, and since TAU went trading live again there has been a lot of contradictory price discovery action taking place, though it seems like things are settling in a positive direction finally. But frankly, I believe such market swings are irrelevant, and I find the downside worry to be unconvincing here compared to the potential. Rather, if you ask me, the pieces are in place for Thesis to gain a lot of positive northward momentum in the coming weeks and months. Let me discuss a few points:
The New Underground Mine
Recent Drill Results and Their Importance
Outlining The Potential of this Year’s Drill Campaign
#1: The New Underground Mine
The key to Thesis’ future success is confirming through the drill they have the resource needed to support their new conceptual UG mine plan. The goal is to pull high-grade ounces forward into production before the lower-grade open pit begins, thus driving up the boiler plate economics of the whole project. Which sounds great in theory. And I will discuss drill results next, but for now let’s chat UG mine.
Frankly, I think that the UG mine idea is strong. It is simple and effective (and simple and effective to explain, which is important for any company story) and seems likely to have a materially positive impact on economics. Interestingly, though, the critical detail that makes the whole deal work isn’t some masterful stroke of engineering by Thesis, but rather a stroke of good luck from mother nature.
I have shared an image below from Thesis’ recent news release representing a simple conceptualization of the newly-proposed underground mine to show what I mean. Take a look at the proposed decline to access Dukes Ridge and Cliff Cree. Notice where it starts?
Rather than having to put sink an expensive shaft and maze of declines to access the orebodies, the fact that these deposits are situated on the edge of a mountain with significant vertical sloping means that accessing these deposits is made exponentially more simple and cost-effective. Which is music to any PEA’s ears. Which, if you’re following along, is the whole point of this exercise. I trust you can start to see why this seems like such a positive development for project to me.
#2. Recent Drill Results
I am probably breaking some “mining discussion rulebook” code not starting my article with drill results, but I think understanding the undergrounds mine plan is critical to understanding the current ongoing drill program. This is because what the drill bit pulls up this drill campaign will define the economic potential of this newly-merged company. (Note of course these sort of transformative events are great investment opportunities for investors.)
Luckily for Thesis, then, that the initial results of their 50,000M drill campaign this year are remarkably positive. Granted, 3 holes does not a resource make, but if these first results are any indication, then this new mine plan might work out very well indeed. Take a look below:
Here’s the same graphed results, but condensed to show just the major intersects of the 3 holes (note, again, these aren’t the best 3, but the first 3 holes, with each hitting significant mineralization):
And, finally, one more graph of some grade x width #s, just to exhaust the point that these 3 holes are pretty darn good. I know I would follow up on Thesis if I saw them on Miner Deck's Weekly Gold Drilling Highlights:
Now, to be fair, it isn’t a total revelation that there’s more gold down there - Benchmark had previous intersects nearby - but the deeper nature of the discovery, and its strong grades, are very affirming revelations for Thesis, providing clear supporting evidence that there are more high grade areas waiting to be found at depth to cement the new mine plan.
I find the graphic Thesis shared in their most recent drill results helpful visualizing this. Pictured below, you can see the pit outline, and the new targets they are fleshing out at depth. Again, the heat map suggests a strong indication that mineralization is increasing in grade with depth.
This, to me, is such a great example of how where you’re getting your strong intercepts from within the system can matter as much as the intercepts themselves. These results at depth will give Thesis a lot of very economically powerful optionality for their new PEA. As I said, this drill program is an important one in Thesis Gold’s history.
The Potential of this Year’s Drill Campaign
Luckily for investors, they won’t have to wait long to hear from both halves of this new company. This is because Thesis moved head aggressively this summer with a 4 drill, 50,000 meter program occurring simultaneously on Benchmark’s old Lawyers project and Thesis Gold’s original Ranch project. Now that results have begun to trickle in, you can expect to see a news release every couple of weeks for the next few months - always the fun part of the season for exploreco investors.
I like this campaign for Thesis because it is accomplishing two different tasks simultaneously: Development (Lawyers project) and Exploration (Ranch project), meaning Thesis will have the opportunity to stay in the exciting end of the news cycle while it still moves forward in mine development towards a renewed MRE and PEA next and onward.
Lawyers Project
As I said above, the Lawyers project already provides strong, data-driven, mine economics from their PEA. This year’s Lawyers drilling program is all about proving further value in the upgraded mine plan and getting a firmer grasp on proper mine development and engineering, putting it multiple years already into the development cycle.
The below graphic comes at you courtesy of Thesis’ new slide deck you can click through to here. And it pretty much says it all. 20,000 meters primarily going into exploring beneath the original proposed pits. What does 500,000 ounces of high-grade material pulled into production first do to the economics? This chance for investors to get increased value through re-engineering the mine plan is exciting and rare.
Ranch Project
Meanwhile, the Ranch project promises more pure exploration potential. A whole suite of above ground (soil sampling and magnetic surveys) to identify new targets is happening alongside a 30,000 meter program dedicated solely to finding more ounces in the ground. Some of this will be done more conservatively by infilling between previous targets (Thesis Structural corridor, Bonanza-Ridge Zone), some of it will be done by stepping out on last year’s new discoveries (Steve Zone, JK Zone), some of it will be going to old, historical, targets and testing them with more modern, deeper, drilling (BV Zone), and some will be pure wildcat targets as determined by their team.
The point is that Thesis has a whole lot of cracks at this to add meaningful ounces, and the iterative process of discovery and new target generation looks like it has a few strong drill seasons left in it before the system is fully understood. Check out the graphics from TAU’s slide deck below to get a sense:
Conclusion
Well that is it for now. I hope I have managed to describe why I am excited and bullish for Thesis - both in the short and long term. For all the reasons discussed above - improved economics, very successful early results, a comprehensive and aggressive drill campaign, and more, this one is one of my favourites. It won’t be a 10 bagger - that’s not what this kind of investing is all about - but if you’re looking for an opportunity to invest on the right side of a value creation moment, and with what I take to be a greatly reduced risk profile, Thesis Gold is one heck of a strong opportunity.
As always, thanks for reading.
-JRI
