Scorpio Gold Corp: High-Grade Gold in a Newly Consolidated Nevada District with CEO Zayn Kalyan

Scorpio Gold Corp: Investment Value Proposition & Manhattan Project – Detailed Summary

Key Concepts:

• Manhattan Project (Nevada): Scorpio Gold’s primary asset, encompassing the Manhattan and Gold Wedge mines, consolidated to 8.5 km of strike length.
• Epiothermal Vein Deposit: Low-sulfidation gold deposit amenable to cyanide leaching, with high metallurgical recovery.
• Resource Expansion: Focus on increasing the current 740,000 oz resource through drilling and incorporating historical resources.
• Depth Potential: Significant exploration potential below the current 200m depth of the core resource.
• MJDS Listing: Potential for a US listing via the Multi-Jurisdictional Disclosure System, potentially unlocking access to US capital markets.
• Strike Length: The continuous length of the mineralized zone, currently 8.5km, indicating significant exploration potential.
• Grade: The concentration of gold in the ore, Scorpio’s Manhattan project boasts a high average grade of 1.26 g/ton.

1. Company Overview & Leadership Transition

Scorpio Gold Corp (TSXV: SGN, OTCQB: SRCRF) is a company with a history dating back to 2009, having previously produced nearly 300,000 ounces of gold between 2011 and 2020. The company underwent a significant restructuring in 2023-2024 under the leadership of Zayn Call, who took over as CEO. Call, a former software engineer, entered the mining sector as an investor and identified a substantial opportunity with the Mineral Ridge mine adjacent to an exploration project he had optioned. Recognizing Scorpio’s financial difficulties, he structured a private financing and acquisition to gain control of the company, subsequently selling off Mineral Ridge to focus entirely on the Manhattan project. The current core shareholder base of 30 individuals remains consistent from the 2024 takeover, demonstrating strong commitment to the company’s vision.

2. The Manhattan Project: A Consolidated Opportunity

The Manhattan project is located in Nevada, approximately 10-15 km south of Kinross Gold’s Round Mountain mine (16 million ounces produced). Scorpio Gold has consolidated approximately 85% of the Manhattan district, combining the past-producing Manhattan mine (acquired from Kinross in 2021) and the Gold Wedge mine (acquired from Waterton in 2011). This consolidation was crucial, as both properties were needed to fully realize the resource potential. The current defined resource stands at 740,000 ounces of gold in a pit-constrained model, averaging 1.26 grams per ton (g/t). This grade is over double the average open-pit grade in Nevada, a key differentiator for the project.

3. Metallurgical Characteristics & Production History

The Manhattan deposit is a low-sulfidation epithermal vein deposit, meaning it is readily amenable to cyanide leaching. Historical metallurgical testing, including work done by Kappus Cassidy in 2012, demonstrates high recovery rates: 92% from a full mill circuit, high 70s from cyanide leaching alone, and lower 70s from gravity concentration. Four historical periods of production across the land package provide confidence in the metallurgical characteristics of the ore.

4. Exploration Strategy & Resource Expansion

Scorpio Gold is currently executing a 50,000-meter drilling program, approximately 10,000 meters completed as of February 11th, 2024. The program focuses on three primary objectives:

• Core Resource Expansion: Increasing the existing 740,000 oz resource within the central 1.8 km of the 8.5 km structure, targeting 400,000 ounces of unclassified blocks.
• Historical Resource Evaluation: Assessing the potential of two historical resources located at the northern and southern ends of the 8.5 km structure, collectively containing an estimated 300,000 ounces at a higher grade of 7.9 g/t (historical, requiring updated compliance).
• Peripheral Target Testing: Exploring promising targets like Black Mammoth, Hooligan, Keystone Jumbo, and April Fools, which lie outside the core resource area.

Recent drilling at Black Mammoth, adjacent to the highest-grade portion of the resource, has yielded encouraging results, with the February 11th, 2024, release reporting 36.82 meters grading 5.22 g/t gold from 127 meters along the Reliance trend.

5. Depth Potential & Long-Term Growth

A significant aspect of the Manhattan project is the potential for expansion at depth. While the current resource extends to 200 meters, the 8.5 km structure continues deeper. Historic exploration holes and recent drilling have intersected mineralization below 200 meters, indicating substantial upside potential.

6. Financial Position & Funding

Scorpio Gold is currently fully funded through the end of 2024. The company has approximately $12 million Canadian in the treasury and is nearing completion of the exercise of approximately 8 million warrants at a price of $0.20 CAD, which will add further capital. An $8 million financing led by Ross Beaty and Eric Sprott was completed in recent months. The company is open to further financing if market conditions allow, but only at a significantly higher valuation.

7. US Listing Strategy (MJDS)

Scorpio Gold is actively pursuing a listing on a US exchange via the Multi-Jurisdictional Disclosure System (MJDS). The company believes a US listing will provide increased visibility, access to a broader investor base, and potentially a higher valuation, particularly given the limited number of US-focused junior gold mining companies available to US investors. The company is evaluating both a direct listing and a depository receipt (DR) approach, with a preference for avoiding a capital raise concurrent with the listing.

8. Key Arguments & Perspectives

Zayn Call emphasizes that Scorpio Gold presents a unique investment opportunity due to:

• Consolidated Land Package: Control of 85% of the Manhattan district.
• High-Grade Resource: 1.26 g/t average grade, significantly higher than the Nevada average.
• Metallurgical Confidence: Proven recovery rates and historical production.
• Exploration Potential: Significant upside through resource expansion, depth exploration, and evaluation of historical resources.
• Strong Shareholder Base: Committed core shareholders from the 2024 takeover.

Notable Quotes:

• Zayn Call: “That 1.26 g per ton average grade is really it's really important for us. It's something that we we really try to emphasize when we talk about the project and kind of highlight the key differences and how this asset stands out.”
• Zayn Call: “We’re working toward towards 2 million ounces at the end of this year. That's our target. But beyond that 2 million ounces, there's more than enough targets to work on.”
• Bill Powers: “I’ve seen companies that I thought should only be valued at a couple hundred million dollars actually receive billion dollar valuations just because they made it to New York.”

9. Data & Statistics:

• Current Resource: 740,000 ounces gold at 1.26 g/t.
• Historical Resources: 300,000 ounces at 7.9 g/t (requires updated compliance).
• Strike Length: 8.5 km.
• Drilling Program: 50,000 meters (10,000 meters completed as of Feb 11, 2024).
• Treasury: ~$12 million CAD.
• Warrants: ~8 million warrants remaining at $0.20 CAD.
• Metallurgical Recovery: Up to 92% (full mill circuit).

Conclusion:

Scorpio Gold Corp. presents a compelling investment proposition centered around the Manhattan project in Nevada. The company’s strategic consolidation of the district, high-grade resource, favorable metallurgy, and significant exploration potential position it for substantial growth. The ongoing drilling program, coupled with the potential for a US listing, are key catalysts that could unlock significant value for shareholders. The company’s focus on delivering consistent drill results and expanding the resource base underscores its commitment to creating a substantial gold asset.