Q: Has Covid 19 affected the ability of the office to keep running and will it affect the company’s ability to run programs this year?
A: The Canadian Minister of Public Safety and Emergency Preparedness has deemed exploration and mining essential services during the current COVID-19 outbreak. This specifically includes mineral exploration and development. At the same time, explorers, miners and those in related businesses need to be in compliance with local regulations with regard to health and safety practices in order to protect workers and others from the COVID-19 virus.
Both American Creek and its JV Partner Tudor Gold are following these guidelines and fully expect to carry on operations in the office and in the field.
Q: Does American Creek have enough money to carry on operations or will it have to raise money this year?
A: The company raised sufficient money in 2019 to carry on operations through 2020. This currently includes an exploration / drill program on the Dunwell Mine property and may include work on Gold Hill and other properties as well. Depending on market conditions, American Creek could receive up to $2.3 million dollars in 2020 through the exercise of existing warrants.
While the company will be expending money to advance it’s 100% owned projects, there are no expenditure requirements for the advancement of the JV Treaty Creek property.
Q: Does American Creeks JV partner Tudor Gold have the ability to run a program on Treaty Creek this year?
A: On March 24, 2020 Tudor Gold announced that the company has sufficient funds to execute a significantly larger drilling and exploration program, than the 2019 program, on the Goldstorm Zone at Treaty Creek project this year.
Tudor Gold's Vice President of Project Development, Ken Konkin, P.Geo., states: "The Goldstorm system is currently open at depth and along the northeast axis of the mineralized body. The drill program is designed to extend and to explore the limits of Goldstorm system to the southeast as well as to the northeast and to depth. We anticipate drilling approximately18,000 to 20,000 metres of HQ and NQ diameter core from 7-10 drill platforms with four diamond drill rigs. Compared to the drill program last year (14 diamond drill holes over 9,781.8 meters), the planned 2020 drill program will be much larger."
The Treaty Creek Project is a Joint Venture with Tudor Gold owning 3/5th and acting as operator. American Creek and Teuton Resources each have a 1/5th interest in the project creating a 1:3 ownership ratio between American Creek and Tudor. Given American Creek has no costs or dilution associated with Treaty Creek, which is the principle asset for both companies, we feel that American Creek is an exceptional buy if our market cap is 1/3 of Tudors and even more so when valued less than this ratio.
American Creek and Teuton are both fully carried until such time as a Production Notice is issued, at which time they are required to contribute their respective 20% share of development costs. Until such time, Tudor is required to fund all exploration and development costs while both American Creek and Teuton have "free rides".
Q: What are your plans for advancing the Dunwell Mine this year?
A: Nothing official has been announced yet but we were very pleased with the results from our initial drill program and the geophysical survey that we did on the property. There appears to be a good correlation between the two which makes for a promising program in a few short months. Earlier this year we extended the Dunwell to the south along the geologically significant Portland Canal Fissure Zone. We now cover 5km of this richly mineralized 6km zone providing greater potential for the project.
Q: How will Covid 19 and the resulting drop in the stock market and economy affect the precious metals industry?
A: As the stock market and the economy drop there are institutions, brokerage houses, and individuals who will sell everything right across the board to cover themselves. Precious metals or stocks in precious metal companies are no exception. We’ve already seen this taking place. However, gold served its purpose in retaining value as its drop was very minimal compared to the stock markets.
It’s governments reactions to the falling stock markets and economy that will have a profound effect on Gold. We are reading that more money has been created out of thin air in the last few weeks than in any time in history. All the gold in the world is worth approximately $9.5 trillion dollars and just the United States alone is creating $2 trillion, plus $4 trillion from the Fed, plus another $2 trillion plus in infrastructure spending (and that’s not counting the $2.5 trillion put into the repo markets). The rest of the world is acting similarly. Inflation (an increase of the monetary supply) does have a direct effect on gold (especially once money velocity increases). We are already seeing the very early stages of this upward pressure as gold futures spiked to a 7.5-year high of $1,742.60 an ounce last week (April 7, 2020) and is in the same neighbourhood again. Even though gold will continue to be volatile, the more governments try to help the economy the more gold will have upward pressure.
Q: What are your thoughts on the gold market and how it may affect American Creek?
While this pandemic, and our governments responses to it, will do irreparable damage to the economy, we are extremely optimistic about precious metals, the precious metals production and exploration industry, and specifically American Creek Resources.
Rick Rule, CEO of Sprott US Global, was recently quoted saying:
Get ready for a “rip your face off” gold market.
Based on what else he said we’re assuming that “rip your face off” is a very, very good thing and that investors should be positioning themselves within the gold market before the rocket ignites!
Industry experts have already pointed out that:
“The drop in oil will lower the costs for producers at the same time that gold is going up. As gold goes higher and producers start producing tremendous amounts of cash…they are going to want to deploy it back in their own sector…there will be a competing FEEDING FRENZY amongst the producers to go buy the best assets and eventually the worst assets of the gold sector”
We believe that the Goldstorm deposit at Treaty Creek is quickly becoming one of most significant assets in the gold industry and will be highly sought after. It has potential to be world class in size with better logistics than the adjoining KSM project (Seabridge Gold). Initial drill results on the Dunwell mine are showing a continuation of high-grade polymetallic veins and the company has many other highly prospective projects in the wings.
Q: Why should people invest in American Creek when there are so many gold plays out there?
A: While there are a number of excellent projects out there, even within the Golden Triangle, I’m not aware of one with as much potential poised to be realized over the next two years. Since he’s the expert I’ll refer to Eric Sprott’s comments concerning the Goldstorm on Treaty Creek:
“They have a good shot at having 20 million ounces of gold.”
“So that’s the sort of play that I like where man, if the price of gold goes to $1,700 or $2,000 these plays will look so economically viable and the stock will go up so much, and the analogy I use is Seabridge back in 2000. I remember buying it at a dollar…and Seabridge went from $1 to $35 dollars! That is what we are looking for – a dollar to $35 dollars, set you up for life!”
American Creek investors benefit through the development of Goldstorm while having no associated costs and while retaining a 1:3 ownership ratio with Tudor Gold. The timing couldn’t be better for a project of this scale and quality. Add to that the development of the Dunwell Mine along with the possibility of programs on our other high potential projects and we feel that we offer people the best possible investment.
American Creek is in a position of strength as it has the ability to continue developing core assets and bring value to its shareholders amidst a world of economic uncertainty. We will continue to do all we can to help our shareholders prosper.
This company update contains forward-looking statements. These statements are based on current expectations and assumptions that are subject to risks and uncertainties. Readers should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Actual results could differ materially because of factors discussed in the Company’s management discussion and analysis filed with applicable Canadian securities regulators, which can be found under the Company’s profile on www.sedar.com. The Company does not assume any obligation to update any forward-looking statements.