JV Video: Japan Gold drills under cover as Barrick exits

Key Concepts

Japan Gold: A company focused on restarting the gold mining industry in Japan.
Maya Act (2012): Legislation change in Japan allowing foreign companies to engage in gold mining.
Project Generator: A company that identifies and advances mineral projects, often partnering with larger companies.
Joint Venture with Barrick: A significant partnership where Barrick funds exploration and earns an interest in Japan Gold's projects.
Tier One/Tier Two Ore Body: Refers to a large, economically viable mineral deposit.
Geochemistry and Geophysics: Scientific methods used to identify mineralized areas.
Diamond Core Rigs: Specialized drilling equipment used for mineral exploration.
Epithermal System: A type of hydrothermal deposit often associated with gold and silver.
Royalty Sale: Selling a portion of future production revenue to a royalty company.
Osisko B Royalties: A royalty company that has provided financing to Japan Gold.
Geopolitical Safety: A key consideration for mining operations, referring to political stability and regulatory certainty.
Permitting Process: The regulatory steps required to obtain approval for mining activities.
Share Structure: The ownership breakdown of a company.
Institutional Investors: Large financial organizations that invest in companies.
Catalysts: Events or developments that are expected to drive a company's stock price or value.
Vice President of Exploration: A senior executive responsible for a company's exploration activities.

Company Overview and Portfolio

Japan Gold was established following a significant legislative change in Japan in 2012, the Maya Act, which permitted foreign entities to participate in the country's gold mining sector for the first time. The company has secured approximately 2,500 square kilometers of mineral rights across Japan, encompassing 47 historical mine sites. Japan Gold operates as a project generator and also serves as the operator for its projects.

Partnership with Barrick Gold

Japan Gold's portfolio attracted interest from major international mining companies, including Newmont, Barrick, and Tresoro. In 2020, Japan Gold selected Barrick Gold as its partner. Barrick conducted an extensive evaluation of Japan Gold's project portfolio, investing approximately $24 million to identify potential tier one or tier two ore bodies. Barrick has prioritized three projects from Japan Gold's portfolio.

Under the joint venture agreement with Barrick:

Barrick fully funds all exploration activities on the prioritized projects.
Barrick earns a 51% interest upon completion of a pre-feasibility study.
Barrick earns a 75% interest upon full funding of a bankable feasibility study.
Japan Gold is carried through to bankable feasibility.

Exploration Activities and Drilling Results

Japan Gold has been actively drilling with Barrick. The company possesses its own diamond core drilling division with four diamond core rigs.

Ti Project:

Initial scout holes were drilled into a large mineralized system, estimated to be approximately 70 km between two historic bodies.
The system was found to be mineralized throughout.
Two holes were drilled to confirm the deeper extent of the system.

Konomai Mine Area (Hokkaido):

Located south of the historic Konomai mine, which produced approximately 2.5 million ounces of gold.
Japan Gold believes this area could be an extension of the Konomai mine.
Three scout holes were drilled on the northern edge of a 5-kilometer long anomaly.
Significant mineralization was identified, with the best intersection being 0.5 meters at 24 grams per tonne (g/t).
Drones were utilized for magnetic surveys and other sampling.

Kyushu Island Project:

Located directly north of the Hishikari gold mine.
The region is covered by a thin veneer of volcanic ash, making exploration challenging and requiring the use of subtle geochemical signatures.
Japan Gold believes they have identified analogs to the Hishakari mine.
Two targets have been tested, with results anticipated shortly.

Other Projects and Financing

Japan Gold's portfolio comprises 26 projects in total. The three projects partnered with Barrick are fully funded by them.

For projects outside the Barrick alliance, Japan Gold self-funds. They have secured non-dilutive financing through a royalty sale to Osisko B Royalties.

Osisko B Royalties provided an initial $5 million USD for drilling and advancing drill targets.
A follow-on financing of $3 million USD is available upon success.

Mizobe Project:

This project is being drilled using Osisko funding.
Previously, Barrick drilled seven perimeter holes to assess size and scale. The mineralization style was not what Barrick sought, leading them to release the project.
Japan Gold now owns 100% of the Mizobe project.
Evidence suggests an epithermal system at a high level.
Four new drill holes are being drilled under the initial seven holes.
All seven previous holes showed mineralization, with five containing gold.

Operating in Japan vs. North America

John Crust highlighted several advantages of operating in Japan:

Geopolitical Safety: Japan is considered a safe jurisdiction.
Streamlined Permitting: Japan Gold has worked to create a process that is "very seamless" and "explorer-centric," incorporating best practices from Canada and other international jurisdictions.
Low Carrying Costs: The annual cost to hold the 2,500 sq km portfolio is approximately $100,000 USD, significantly lower than in other jurisdictions like Finland (estimated at $10 million USD for a similar portfolio).
Collaborative Regulators: Direct access to regional government officials and the Ministry of Economy, Trade and Industry (METI) facilitates a collaborative and receptive environment for new ideas.
Faster Timelines: Japan Gold has been able to shorten permitting timelines compared to North America through stakeholder engagement.

Share Structure and Major Backers

Japan Gold has a unique share structure:

63% of shares are held by 12 major global institutions, including BlackRock, RCF, and Rothschild.
Equinox Partners is the largest shareholder, holding just over 30%.
Newmont owns 8% of the company, providing technical insight.
Management owns approximately 3%.

This structure is seen as a de-risking factor, indicating confidence from numerous sophisticated investors and industry players.

Key Catalysts and Team

Upcoming catalysts for Japan Gold include:

Drilling results from the most recent Barrick drill program.
Progress on the current drill program at the Mizobe project, funded by Osisko.
New Vice President of Exploration, Jason Leto, who joined from Vale with 21 years of experience and a track record of six discoveries in precious and base metals.
Senior Technical Advisor, Fraser McCreale, former head of global exploration for Newcrest, who is familiar with Japan's geology.
Director Takashi Kuryama, former head of global exploration for Sumitomo Metal Mining and former general manager/chief geologist at the Hishakari gold mine, who has been instrumental in building the portfolio.

Conclusion

Japan Gold is strategically positioned to capitalize on the opportunity to restart gold mining in Japan, leveraging a favorable regulatory environment, a vast portfolio of prospective ground, and strong partnerships with major players like Barrick Gold and significant institutional backing. The company's focus on efficient exploration, supported by a highly experienced technical team, positions it for potential discoveries and future mine development. The low carrying costs and collaborative regulatory approach in Japan offer a distinct advantage.