Enhanced Gold Project Agreement to Fuel Continued Exploration

Source: Streetwise Reports 10/31/2024

Stillwater Critical Minerals Corp. (PGE:TSX.V; PGEZF:OTCQB; J0G:FSE) has announced an amendment to the terms of its option agreement with Heritage Mining Ltd. regarding the Drayton-Black Lake gold project in Ontario. Read more to learn about the extended deadlines, added incentives, and how these changes could impact future exploration.

Stillwater Critical Minerals Corp. (PGE:TSX.V; PGEZF:OTCQB; J0G:FSE) has announced an amendment to the terms of its option agreement with Heritage Mining Ltd. regarding the Drayton-Black Lake gold project in Ontario. Originally signed on November 25, 2021 and amended on December 29, 2023, the agreement has been updated to extend key financial and operational deadlines and include additional consideration.

The revised terms of the option agreement include an extension of the deadline for Heritage to incur the final CA$1 million in exploration expenditures, necessary for earning a 51% interest in the project, to January 25, 2025, from November 25, 2024. Additionally, Heritage’s deadline for completing CA$5 million in aggregate qualifying expenditures, required to earn a 90% interest, has been moved to the fifth anniversary of the agreement from the fourth anniversary. As part of the amendment, Heritage will issue three million units to Stillwater, each unit consisting of one common share and one share purchase warrant. The warrants are exercisable at CA$0.10 per share for a period of 36 months, with issuance set for no later than January 25, 2025.

Michael Rowley, President and CEO of Stillwater, emphasized the importance of Heritage’s work on the project, stating in the news release, “Heritage continues to do excellent work advancing the Drayton-Black Lake gold project, and we are pleased to continue to work with them by providing greater flexibility. Their efforts on this district-scale asset in a top-tier jurisdiction provide Stillwater with excellent exposure to the gold space at a time when capital markets are beginning to recognize real value in mining stocks.”

The original option agreement terms remain largely unchanged, including a discovery payment of CA$1 per ounce of gold or gold equivalent on resource estimates, capped at CA$10 million. Heritage must maintain annual exploration expenditures of CA$500,000 until completing a positive feasibility study to retain operator status. Stillwater also retains certain back-in rights should Heritage not meet minimum expenditure requirements.

The Gold Market

On October 17, Barchart emphasized gold’s impressive rally. They noted the nearby December COMEX gold futures trading at US$2,533.40 and later reaching a new record high of nearly US$2,700 per ounce. The analysis underscored how inflation and global uncertainties have fueled this bull market. “Gold has made higher lows and higher highs throughout this century,” Barchart noted, pointing out the potential for even greater gains if inflation remains a significant factor. The piece also highlighted gold’s unique status as both a currency and a commodity, stating, “Gold’s position as a unique asset has tempered its volatility, but the price continues to rise to new and higher highs.”

Reuters, on October 18, reported gold’s historic surge past US$2,700 per ounce, driven by rising geopolitical tensions and anticipation of looser monetary policies. Alexander Zumpfe, a precious metals trader, remarked, “Investors are flocking to gold, a traditional safe-haven asset,” as fears around the Middle East conflict and U.S. election uncertainties persisted. The report added that expectations of interest rate cuts by central banks have made gold even more attractive, contributing to its best annual growth since 1979.

Stockhead, on October 28, analyzed technical signals. The report noting that while gold has breached US$2,700, mixed indicators presented a complex outlook. Despite an overbought Relative Strength Index (RSI), which traditionally suggested caution, gold’s moving averages remained bullish. The report mentioned, “Supporting this bullish trend, a recent poll from the London Bullion Market Association suggests prices could reach US$2,940 per ounce within the next year,” adding to the optimism surrounding gold’s upward trajectory.

Chinese traders were expected to significantly influence the upward momentum in gold prices, potentially pushing it past the US$3,000 per ounce mark. According to Jesse Colombo’s analysis for Kitco Media on October 29, the Shanghai Futures Exchange (SHFE) gold futures acted as a pivotal catalyst in a previous rally that saw gold rise by 23% in just six weeks. Colombo pointed out that the SHFE gold futures’ recent breakout from a five-month trading range marked the beginning of what he called “the most thrilling, explosive phase,” driven by renewed interest from Chinese speculators.

Colombo further explained that technical indicators projected a measured move in gold prices, estimating a target of US$3,000. He noted that this target was reasonable, as major psychological price levels like US$3,000 often act as magnets for market prices. The analysis emphasized that despite physical consumer demand in China being dampened by rising gold prices, a potential fear-of-missing-out (FOMO) effect could trigger aggressive buying if consumers realized that prices might not retreat.

Stillwater’s Catalysts

The amended option agreement with Heritage Mining Ltd. provides several strategic benefits for Stillwater Critical Minerals. As detailed in the company’s October 2024 investor presentation, the Drayton-Black Lake gold project represents a significant opportunity for growth. By granting Heritage an extended timeline, Stillwater positions itself to benefit from continued and more comprehensive exploration efforts, potentially enhancing the project’s overall value.

Additional catalysts include the potential for discovery payments tied to future resource estimates and Heritage’s commitment to sustained exploration and development expenditures. Stillwater’s retained 10% free carried interest through the feasibility study stage and the structured joint venture model further emphasize the company’s long-term investment potential in a high-value gold jurisdiction.

What Analysts Are Saying…

Ownership and Share Structure

Management and insiders own approximately 20% of Stillwater, according to the company.

Executive Chairman and Director Gregory Shawn Johnson owns 2.86%, President and CEO Michael Victor Rowley owns 2.56%, Independent Director Gregor John Hamilton owns 1.65%, Independent Director Gordon L. Toll owns 0.44%, and Vice President of Exploration Daniel F. Grobler owns 0.23%, according to Reuters.

Institutions own approximately 25% of the company, high net-worth investors own about 37%, and Glencore Canada Corp. owns 15.4%. About 18% of the company’s shares are in retail, Stillwater said.

There are about 227 million shares outstanding with 174.5 million free float traded shares, while the company has a market cap of CA$36.33 million and trades in a 52-week range of CA0.1000 – CA0.2200.

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Important Disclosures:

1. Stillwater Critical Minerals is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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( Companies Mentioned: PGE:TSX.V; PGEZF:OTCQB; J0G:FSE, )

Source: https://www.streetwisereports.com/article/2024/10/31/enhanced-gold-project-agreement-to-fuel-continued-exploration.html