"This Thing is Wide Open": Fathom Nickel Keeps Building Toward Success
While the market expressed some disappointment in the final assays from 2023, I believe they fill in critical pieces of a high-potential puzzle and point the company toward future exploration success.
tl;dr:
Ian Fraser joined me once more to provide some discussion on Fathom’s final 2023 results. Fathom is getting punished a little bit, but it very much strikes me as “short term pain, long term gain” and does nothing to shake my thesis in what Fathom has.
Find below:
1: The Interview, 2: Companion Article, 3: Link to Full Transcript, 4: Written Summary
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Index
The Interview
Companion Article
Link to Full Transcript
Written Summary
Part 1: The Interview
Part 2: Companion Article
CEO Ian Fraser sat down with me again to discuss the results from Fathom's 2023 drill campaign on its Gochager Lake project. Results were actually not too bad - lots of nickel everywhere, hints of lots more to come - but the super high-grade intercepts that people had come to hope for and expect didn’t materialise. The market responded with disappointment, and this market is swift to punish these days. So the share price has taken a beating, but I believe there remains a lot of positives to be found in this campaign hinting that the best is yet to come with Fathom.
See below for the assay tables from the news release:
And use the image below to cross-reference the individual drill results:
First and most importantly, it doesn't shut the door at all on Gochager's potential, but rather has provided Fathom with more critical data points to finetune their exploration process. As you likely know, mineral exploration is a deeply iterative process, and Ian demonstrates that mindset well in this interview. While the hope is always to come back with a bonanza hole, the data acquired and knowledge gained from each campaign is just as important. This really is a game of delayed gratification. In support of this idea that Fathom is building toward a brighter future, Ian discusses important additions to his dataset garnered from this campaign:
1. They are increasing their understanding of the fault system that intersected the ultra high-grade mineralisation they drilled this past spring. This will allow them to chase that high grade along the footwall during their next Gochager drill campaign if they wish to. See image below for representation of the fault.
2. Ian also discussed that the directional trend of the zone was more straight north than they had anticipated, rather than the more N-NE trend they had assumed. Given the nature of these high-grade lenses: steeply pitched/near vertical, and just a couple hundred meters in size, tagging them from surface can be a challenge and missing by even a few meters means it can look like there’s just nothing there. Honing in and understanding with more clarity their directional trend is obviously critical.
3. BHEM has again been used effectively to identify and fine-tune targets off-hole, giving Fathom confidence that there remains high-grade zones lurking at Gochager waiting to be found. Ian references this multiple times in the news release and in the interview - that BHEM used after drilling has already given them clues about which way to drill in their follow-up campaigns. That in itself is enough to steel your courage if you were concerned about thse results. See below as one example from the news release:
4. Geochem work continues to be cross-referenced with their geophys and BHEM work. This again creates narrower, more specific understandings of what they are looking at - and looking for. This is again a great example of Fathom moving from broad strokes to fine tuning in their exploration model. This of course means that future exploration programs will benefit’s from today’s misses.
And let’s not forget that those ultra high-grade veins intersected could be hinting at something potentially massive lurking down there. Below is a screengrab shared with my by Ian courtesy of Dr. Ian Lightfoot, clearly comparing the mineralised veins of Voisey’s Bay to Fathom’s projects. This is no guarantee, but it is a heck of a thing to even have a chance at discovering.
In my thoughts, the market is punishing Fathom for two things primarily, both unrelated to the actual quality of the drill results:
1. No secret of Fathom needing money before their next campaign.
2. No more news flow until #1 is dealt with.
Add on the merciless nature of this market where anything less than exceptional results gets crushed, people looking for an easy short, and others selling to participate in the upcoming financing and the market response comes into better focus. Luckily, none of these issues have anything whatsoever to do with what is going on in the ground.
And you can bet that these downside pressures will evaporate in a hurry once financings are closed and campaigns announced. That’s just how this sector works. We already know Fathom is in the middle of planning a winter campaign, and something tells me they will have no issues raising money. So while there’s been blood in the streets of Fathom the past couple days, I bet that by the time 2024 rolls around the market will be back to buzzing about its exciting potential.
To conclude, I always try to be cautious with the way I interpret drill results on companies I cover and am invested in. It is easy to let bias guide you into making mistakes. And I take my efforts seriously to be objective in this job, as I never want to be dismissed as a mindless pumper. So it made me reflect on this market response when my own was much less negative. But I do remain just as confident as ever. Ultimately, you have to find the target and figure out what it looks like before you start trying to throw bullseyes. And based on Ian’s methodical, data-driven approach to exploration, let’s just say I am very much excited to see what those bullseyes are.
Part 3: Link to Full Transcript
Link to the Transcript for mein deutsche freunde!
Click here for full (only partly edited for geo/naming issues - watch for typos!) transcripts
Part 4: Written Summary
Timestamps linked to corresponding time in interview
Matthew introduces today’s topic: The final batch of assays from Fathom’s 2023 9 hole drill campaign at Gochager Lake (its first ever at this target). He explains he will be providing images to help provide visual context, namely a set of cross-sections highlighting their target this campaign.
01:30 Ian Discusses How Results Matched his Expectations, including any surprised good, bad, or indifferent.
Matthew begins by asking Ian how these results matched his expectations heading into the program and what surprises – good, bad, or indifferent – there were.
Ian explains what various holes were working to accomplish. 5, 6, 7 were aggressive step outs (nearly 50 meters East and West) on the original high-grade intercept from the spring to try to understand the strike orientation of the high-grade section preciously discovered. Working to understand it both shallow and at depth. They now understand that they stepped out a little too far and have learned there were important differences in the strike orientation than they initially thought. (Runs more northerly than anticipated.)
Hole 9 shows strong conductivity in front of it, raising hopes they are close to their intended target.
Ian also discusses that they are starting to understand the fault system. The hanging wall contained the high-grade mineralisation, now they need to chase it up the foot wall to see if they can find it again and figure out the displacement created by the fault.
05:46 Discussion of how these results still confirm Fathom's working model, with more potential at depth
Matthew explains how the results might seem initially disappointing, but within context are still very encouraging and strongly suggests there is still more down there to find as they continue to gain mastery. The working model continues to be confirmed, though needs more time and meters to execute.
Ian references the historic resource – 4.3mt at sub 0.3% Ni. There’s a lot of disseminated nickel throughout the whole thing that is ultimately being controlled by these high-grade chutes of mineralisation. Every disseminated halo they find has semi-massive sulphides found within it.
Hole 5 looks like it has lots of room underneath it to extend the high grade sections at depth in pursuit of the high-grade 1-3% nickel zones. Even just pinpointing the correct azimuth will be a success on these steep, vertical, zones.
09:51 Discussion of the two extremes - large bands of low-grade mineralisation, and small, ultra-high grade vein intersects, and what that means for their exploration model.
Matthew references the two large, low-grade intersections in hole 10 and wonders if it doesn’t mean they were close to the heart of the system Ian is trying to uncover.
Matthew transitions to discussing the two extremes seen in this campaign – large bands of low-grade mineralisation, but then also a couple very narrow intercepts of ultra-high grade (2.6%, 3.25%). Discuss what each of these zones mean within your larger working model. Matthew suggests that Ian is very close to having called his shot.
Ian emphasises how consistent the mineralisation was in these low-grade sections. He discusses understanding nickel grade in the pyrhhotite and where the cobalt is to be found. He emphasises that preliminary metallurgy is very, very encouraging. Clean, simple, with no deleterious elements (no arsenic, no bismuth, no magnesium in the ore-grade material).
Ian discusses that they are always aiming for a buyout so these things matter to potential JV partners/buyers.
Ian discusses how high the metal tenor is, saying that it compares nicely to the Sudbury Nickel Camp and that the relatively high-grade of cobalt present is also something that will catch buyers’ eyes, as smelters will love clean, simple cobalt.
Ian mentions the need to just continue developing this project. He re-emphasises his belief that based on the geological evidence that what he has found so far must have come from something bigger and better underneath waiting too be discovered. “We need to continue to develop this.”
Hole 9 is the deepest occurrence of 1%+ Ni in the history of the project. It tells Ian that “this thing is wide open.”
He empahsises the large number of high-grade historical intercepts they haven’t even got to yet. Learning from this program will enhance future work.
16:28 The significance of those veins, chasing deeper, winter drill campaign plans
Matthew reaffirms Ian’s ideas. Chasing high-grade veins to depth to see if they can find the “mother”. Matthew, having discussed disseminated and high-grade with Ian, now asks him to discuss the semi-massives discovered. In Nov. 21’s news release, the conversation section references semi-massives found at depth and remain open at depth. Asks Ian to discuss this more.
Ian emphasises how it important it was that they keep adding prospective areas deeper down – 290, 340 meters or more. Keeps extending these zreas of mineralisaiton.
He references his plan this winter to return to a number of holes that appear to have been terminated too early thanks to BHEM and drill them out deeper. And we will see another zone of disseminated sulphides, with the associated semi-massive within it and, hopefully, also the massives as well.
Ian emphasises that there is compelling geological similarities between the high—grade veinins he is discovering and the high-grade veins that branch off from Voise’s Bay.
Also learning how different textures are conducive to hosting nickel mineralisation. Discusses how geochemistry helps them fine-tune their geophysics.
20:24 Importance of BHEM and Fathom's continued, growing master of this land. Further targets have already been identified.
Matthew asks Ian to again discuss the importance of BHEM and highlight a couple of targets it has helped them to identify off the back of this drill campaign. Matthew reads a quote from the Nov. 21 press release :high grade mineralization intersected in GL23010 is contained within two discrete broad zones of disseminated mineralization. The encompassing halos and higher grade mineralized shoots within remain open for expansion to surface and to depth.”
Matthew asserts that there continues to be strong evidence that there is more and more mineralisation deeper.
Ian responds that hole 10 is a prime candidate to go deeper yet based on what hole 8 is telling them. Ian suggests that the bumps he sees in BHEM conductivity is potentially indicative of higher-grade material. Right now, their targeting is more broad, but every time they work the BHEM and drill out and correlate the data they are able to get more and more specific.
Ian emphasises again how important BHEM is, and how large the signatures are. When he shows it to people, they assume it came from Raglan or Sudbury, never Nothern Saskatchewan.
Ian references conductive responses reaching 12,000 siemens and believes that nothing they have found so far could explain that high of a reading. Ian emphasises how important data acquisition continues to be to hone their exploration.
Ian reminds us that among the first modern 9 holes ever drilled into Gochager that one came back with an absolutely world-class intercept, plus other strong intercepts on top of it.
Ian explains that they’re no longer a wildcat operation drilling blind. They have huge amplitudes, big responses, and they are much, much smarter than they were since even this past spring and will be able to get more and more efficient and specific with their work. He is considering drilling a couple of deep (600-700) meter pilot holes on the edges of his targets simply to be able to feed the BHEM into to get a read on the geological layout.
As always, thanks for reading.
-Matthew from JRI
