Junior exploration companies go through distinct stages of development. When they are founded there is a need for financial and promotional expertise to “sell” an as yet untested geological theory to a sceptical market. Once the geology begins to be proven up, the focus shifts to extending and confirming that geology.
For Tocvan Ventures (TOC:CNX), the first three years were under the guidance of Derek Wood, a market professional who was able to raise the money required to acquire the Pilar property in Mexico and to undertake the geophysical and geological work required. The expansion potential of the Pilar gold deposit is still an open question and the company has shifted to a heavy exploration stance. With geology taking center stage, Wood took a step back from his position as CEO and VP Exploration, Brodie Sutherland stepped up.
Sutherland had been with Tocvan from the beginning. He has over fifteen years experience as a geologist. Most of those years have been spent in grass roots exploration – taking a geological idea through the mapping, geophysics, trenching and drilling required to bring a project to the pre-feasibility stage.
In the press release announcing the change Tocvan made it very clear that Wood was remaining as a director and adviser to the company. While the company’s focus will be on developing its two gold assets in Mexico, it knows that having an experienced finance and market executive on tap is a huge advantage.
“Derek and I founded this company,” said Sutherland in a phone interview. “Our views on the path forward at Pilar are aligned and we agree on how to make Pilar successful without diluting the shares. We want to deliver real value to our shareholders.”
As the company shifts from what might be called “conceptual testing” to development, Sutherland has the advantage of several seasons of geological work and successful drilling (94.6 meters at 1.6 g/t Au, including 9.8 meters at 10.8 g/t Au and 38 g/t Ag). For example, on January 18, the company put out a press release with the results of trenching which took place in 2021 in the Main Zone and in a developing area, Four Trench.
All four trenches intersected mineralization with two trenches yielding consistent mineralization across the entire length of the trench. Sutherland commented in that release “The results from our trench program are very encouraging, especially in regard to defining key material for advanced metallurgical studies and showcasing the surface continuity of gold values. Material from these trenches will be utilized for advanced column leach studies to build off our encouraging bottle roll results from 2021 that yielded over 90% recovery of gold. Trench T-21-2 has yielded promising results in our developing 4-T Trend which we will follow up with systematic drill targeting.”
The great thing about trenching is that it is quick and relatively cheap. It also gives a company bulk material which it can use in metallurgical work which, as the Pilar project moves forward, is increasingly important. If the 2021 90% recovery rate scales up, the value of the deposit significantly increases.
Meanwhile, as outlined in a December 21 news release, drills are turning on the Pilar property. The first phase will see 3500 meters of step out and exploration drilling in Q1, 2022 with an additional 4500 meters planned later in the year. Sutherland commented in this release, “With trenching already completed and now with drilling underway, we expect 2022 to be a very active year at Pilar. Drilling will pause momentarily over the holiday season and will recommence in the New Year. We expect results from trenching by the middle of January followed by our first drill results shortly after.”
“We have been focussed on what we call the Main Zone,” said Sutherland. “That’s where the oxide mineralization is exposed at surface. Now we want to expand out exploration to what we think are similar structures parallel to the Main Zone. We’re working towards a 43-101, but we want it to cover the whole deposit.”
All of this activity is taking place against a backdrop of a choppy market for junior exploration companies. Tocvan is trading off its 2021 high of $1.60 but a solid news flow should reverse the trend. Critically, there is cash in the bank to pay for this year’s drilling season and only 31 million shares outstanding.
COVID set the industry back at the beginning of 2021. however, in Mexico, the worst seems to be over and things are returning to normal. Travel, which when your project is in Mexico and you are in Canada, is important, is possible with assorted restrictions. Over the COVID pandemic, Tocvan along with many other junior explorers, has done a lot of its work remotely. However, Sutherland is looking forward to being able to go to the Mexican projects personally.
Even though they may be several years away from production, junior exploration company’s share prices are sensitive to the price of gold. A price which many experts see firming over the next year. Sutherland, himself, is bullish on gold. “When you look at everything going on it is critical for many investors to have a store of value. Inflation, market uncertainty, investors want to have a back-up.”
Overall, Sutherland has a lot of work to do but also has a lot to work with. Bringing the Pilar project into sharper focus and gaining more geological insight will produce a steady stream of news for the next year. Good drilling results and strong metallurgy will set the stage for further share price advance. It will be an interesting and, we hope, rewarding year.