- Phenom Resources (TSXV:PHNM, OTC:PHNMF) has begun drilling its Dobbin Gold Project in Nevada, testing a large gold-in-soil anomaly for the first time.
- SSR Mining invested C$5.4 million in Phenom before drilling began, initially taking a 9.9 per cent stake, with further investment contemplated under the companies’ agreement.
- Phenom expects initial drill results before the end of September, with drilling potentially continuing into early November.
- The company is also considering spinning out its vanadium assets into a separate company, allowing Phenom to focus primarily on gold exploration.
What does it say about an exploration target when a major gold producer invests millions before the first drill hole is completed?
That is the position Phenom Resources (TSXV:PHNM, OTC:PHNMF) finds itself in at the Dobbin Gold Project in central Nevada. The company is targeting a potential Carlin-type gold system and has now begun the project’s first drill campaign.
This article is being disseminated on behalf of Phenom Resources Corp., a third-party issuer, and is intended for informational purposes only.
In the latest episode of The Capital Compass, Phenom President and CEO Paul Cowley joins Stockhouse’s Ricki Lee to discuss what makes Dobbin compelling, SSR Mining’s C$5.4 million strategic investment and the company’s plans for its separate vanadium portfolio.
Putting the Dobbin thesis to the test
Phenom has spent roughly three years advancing Dobbin from an undrilled prospect into a defined exploration target.
Cowley says exploration has identified a gold-in-soil anomaly approximately 1.3 miles long and 700 feet wide within rock units associated with major gold deposits elsewhere in Nevada. Sampling has returned soil values of up to approximately three grams per tonne gold and rock samples above 10 grams per tonne.
The company’s geological team brings extensive experience in Nevada. Cowley says current and former members of the Phenom team collectively have been involved in 10 gold deposit discoveries, while geological partner Dave Mathewson has extensive experience along the Carlin Gold Trend.
Drilling is now testing whether those surface indicators translate into a mineralized system at depth.
Four holes had been completed at the time of the interview, with Cowley saying initial results are expected before the end of September. Phenom plans to continue drilling into late October or potentially early November, depending on weather, before returning for further work next summer.
SSR Mining backs the opportunity
The project has already attracted SSR Mining, which invested C$5.4 million in Phenom before the first hole was drilled at Dobbin.
Cowley views the investment as both financial support for the exploration program and an endorsement of the project’s geological potential. He also expects Phenom to benefit from SSR Mining’s Nevada exploration and operating expertise as work progresses.
Phenom has accelerated the acquisition of a 100 per cent interest in Dobbin and says its objective for the current campaign extends beyond identifying a potential discovery hole. Management hopes drilling can begin demonstrating the continuity and scale of the system ahead of further exploration.
What happens to Phenom’s vanadium assets?
Despite gold becoming Phenom’s immediate priority, the company retains a portfolio of vanadium assets that management believes could support a standalone business.
That includes what Phenom describes as North America’s largest and highest-grade primary vanadium resource, alongside a five per cent carried interest in a solid-state vanadium battery technology being advanced by a Japanese group.
Cowley says commercialization of the battery technology expected this fall has helped prompt Phenom to consider separating the vanadium portfolio.
The company intends to begin exploring a potential spin-out this fall, with the aim of creating a separate company and distributing shares to existing Phenom shareholders.
For now, however, the immediate catalyst is underground: Phenom’s first Dobbin assays are expected to provide the earliest indication of whether its geological thesis is translating into a potential gold discovery.
Watch the full interview above for Paul Cowley’s discussion of Dobbin, SSR Mining’s involvement and Phenom’s plans for its vanadium portfolio.
Transcript
This transcript has been lightly edited for clarity and readability.
Ricki: In exploration, a promising gold target is one thing. Having a major gold producer invest before you’ve even drilled the first hole is quite another.
Hello, I’m Ricki Lee, and this is The Capital Compass. Today we’re looking at Phenom Resources, a Nevada-focused explorer with exposure to both gold and vanadium — but right now, much of the attention is firmly on gold.
Its Dobbin Project is targeting a potential Carlin-type gold system in central Nevada, backed by a management and geological team with an extensive history of gold discoveries. And that potential has already attracted SSR Mining, which invested C$5.4 million into Phenom before drilling at Dobbin had even begun.
Now, drilling is underway and Phenom has accelerated its acquisition of a 100 per cent interest in the property.
Joining me to discuss what they’re looking for, what SSR’s involvement means and where the company’s vanadium assets fit into the strategy is Phenom Resources President and CEO Paul Cowley. Paul, great to have you with us.
Paul: Great to be here, Ricki. Thanks very much for having me. And I have to tell you that I’m having a blast as a hands-on geologist and CEO. The feeling that I’m getting right now is the moons and the stars are aligning for Phenom Resources.
You see, I’ve been involved with a number of gold deposit discoveries before, and that same feeling is really what I’m getting right now. We have a lot to offer with Phenom. We have quality and timing. We have a quality team. And now, being recognized by the third-largest gold producer in America, SSR Mining, that’s amazing.
With the money that we have right now, we’re unlocking the value of a high-calibre Dobbin Project. This is really significant and real for us.
Ricki: Well, Paul, before we get into Dobbin, please give us a quick introduction to Phenom. You have both gold and vanadium assets, but you’ve also assembled a geological team with a pretty significant history of gold discovery. How has that experience shaped the opportunities that you’re pursuing in Nevada?
Paul: Well, to say that it’s pretty significant is really an understatement, Ricki. I don’t know if people realize that most geologists go through their whole career without making a single gold deposit discovery.
In Phenom, I’ve never seen a junior explorer that has, past and present for that matter, 10 gold deposit discoveries in their careers. So that’s a rarity, and it’s very significant because it gives us very significant judgment and, obviously, roots to discovery.
Dave Mathewson, who’s my geological partner, his successes have all been in the Carlin Gold Trend. It’s a world-famous place where hundreds of millions of ounces have been mined. Dave was involved with many of those discoveries, and his experience led us, both from a regional standpoint as well as a local standpoint, to pick up Dobbin.
He said, “Yeah, we’ve got to get this one, guys. We’ve got to get this one.” So we did, three years ago, and now we’re opening up the value of Dobbin.
Ricki: Okay, so let’s turn to Dobbin then. You’ve identified a large gold-in-soil anomaly within what you believe has the ingredients of a Carlin-type system. What makes the geology and location so compelling, and why has Dobbin become such an important focus for Phenom?
Paul: Well, to be honest, over three years we’ve worked really, really hard and brought a raw prospect that had never had a single drill hole in it to having a 1.3-mile-long by 700-foot-wide gold soil anomaly.
What’s key is it’s in the type of rocks, or the rock units, that are known to actually have produced millions of ounces of gold. That’s pretty key.
This anomaly is not only large, as I’ve just described it, it’s also very, very strong. We have soil values up to 0.1 ounces per ton — that’s three grams — and rock samples up to 0.3 ounces per ton — that’s over 10 grams.
We’ve got not only soil sampling, but we’ve also got hand trenching that has indicated that we’re into something very, very significant.
What I would point out to people is that Dave Mathewson, who’s obviously a guru in this sector, in the last 50 years of his experience, he’s only seen a soil anomaly like this in one other place. And that was over the Carlin Gold Mine, which we now know is mined out and produced two million ounces of gold.
So this is a very, very obvious target. We have many very well-respected geologists who see this and see the opportunity here. This is an exceptional exploration play in one of the best jurisdictions in the world.
Those geologists have actually participated in our private placements before because they see the value there.
Ricki: And Paul, SSR Mining made a C$5.4 million strategic investment in Phenom before you had even drilled a single hole at Dobbin, taking an initial 9.9 per cent stake.
Paul: Yeah, it’s crazy.
Ricki: There’s also a framework for SSR to fund the project further and potentially take a direct interest. For investors, how significant is that endorsement? And what do you think SSR saw in Dobbin and your team that gave them the confidence to invest at this stage?
Paul: As I mentioned at the very beginning, SSR is the third-largest gold producer in America, so they know what they’re doing. They actually have a mine in Nevada that they’re currently mining, and they’ve got three other operations around the world.
SSR saw our anomaly and saw the setting, the geological setting, and they were so impressed with it that they not only made this C$5.4 million investment, but they’re looking to double that investment this month, in September.
So it’s not only significant for the treasury that we now have — we have the money to do a very, very good campaign of drilling — but it also shows that unusual eagerness for a producer to come in at this stage of a project. It’s basically unheard of for that to happen.
And, of course, with them coming in, we’ve got a great exploration team, but we will also benefit from their expertise because they’re miners, they’re producers and they’re good explorers in Nevada.
They see this big picture at Dobbin. We’re part of that picture. They see a regional play. They see this Carlin-type opportunity, which is extremely valuable.
Usually, they are multi-million-ounce deposits. They’re big. And they’re a type of deposit that has put Nevada on the map. Those types of deposits have produced over 200 million ounces of gold out of Nevada. So these are really, really important deposits.
Ricki: And continuing with Dobbin, drilling is now underway. So we’re moving from the geological thesis to actually testing it.
What are you looking to establish with this first drill program, how is it progressing, and when should investors expect the first assays?
Paul: The drilling is going really well. We’re very excited at this point in time. Dave and my thesis is to make another gold deposit discovery in our careers. We’re living and dreaming that kind of task, and we think we’ve got something very good here.
We’ve got four holes already into the Dobbin zone. We really like the features that we’re seeing. There’s going to be a lot of things that are revealed here in the coming months of this year.
Early results will be coming out before the end of September, but we’ll be continuing to drill because this is obviously a big target, so it’s going to require lots of drilling.
We’ll be drilling until the end of October, maybe early November. It depends on the snow. Then we’re planning on coming back in May or June next summer as well.
So lots of activities, lots of money being spent smartly by our group and with SSR’s guidance as well.
Our vision is not only to make a discovery hole, but we see the opportunity here, with this drill program, to actually start to quantify the system. Not necessarily to have a resource, but to show that there is continuity and size as we grow this through this fall and into next summer.
So we’re super excited about where we’re at. As I say, the moons and stars are seeming to align for us, and it’s a great feeling.
Ricki: And finally, Paul, with gold now taking centre stage, you still own what the company describes as North America’s largest, highest-grade primary vanadium resource.
You’ve previously discussed separating the assets into standalone companies. So what’s the plan for the vanadium business, and how could a spin-out ultimately unlock value for Phenom shareholders?
Paul: Sure. So the most important message I want to get to people is we are laser-focused on our gold project, particularly Dobbin. Anything beyond that is going to be a distraction.
However, there is extra value in our critical-metals vanadium portfolio. It’s been set aside for a while. We think now that there are a number of things developing that are showing more and more value for that.
It’s sort of an organic growth. In particular, what’s prompting this time to separate the two out is the vanadium portfolio. There are three components to that portfolio. Each of them collectively has to be strong enough that it’s a standalone business. We think that it is now, and the timing is right.
What’s prompting it is we have a five per cent carried interest in a very unique battery, a solid-state vanadium battery with a Japanese group.
They are now going to manufacturing and commercializing this fall. From that, they’ve got enormous orders from Europe and the Middle East going forward.
So, in a passive way, this is going to add more and more value to us because of the five per cent carried interest.
That is something that we would look to spin out into a separate company and dividend to the shareholders of Phenom, so that they’re going to benefit as an additional benefit over our gold project.
We’re looking to start that process this fall.
Ricki: Well, Paul, thank you for joining us today and giving us a closer look at what’s happening at Dobbin and the wider Phenom Resources story.
Paul: My pleasure.
Ricki: For more information, you can visit phenomresources.com. I’m Ricki Lee, and this has been The Capital Compass. Thank you for watching, and I’ll see you again next time.
