In today’s Issue:
- Why Canadians have big ears
- What lies beneath the world’s undermined mines?
- The Swanzo is just the beginning
Mining investment legend Rick Rule once told me where the next great mining boom would occur. Once geologists realise what’s on offer, “They’ll be digging to Hades,” he said. Today, I’ll pass the secret on to you…eventually.
But first, you need to appreciate why the immense opportunity has presented itself in the first place. Why the momentous find on offer wasn’t found before. Otherwise, you won’t believe it’s still there, waiting to be found…
The story goes a little something like this: miners are too lazy to dig deep.
That’s pretty much it, actually. Miners just haven’t had to dig deep to get at valuable resources.
If you go to the Perth Mint in Australia, you’ll hear the story of a gold nugget the shape and size of a dead eagle being picked up off the surface of the earth itself…
A huge copper mine in Arizona is called the Bagdad mine because the man who mined it used to ask his dad for a bag each time he’d filled up the last one with ore.
Mining used to be that easy.
To be fair, limited technology might’ve had something to do with miners’ reluctance to pull their socks up and dig deep. Back when global gold rushes began, depth was limited by all sorts of economic and technological problems that have been solved since.
This means that in many regions of the world, we’ve badly neglected searching for deposits at depth.
Of course, you won’t find valuable deposits just anywhere. Which was Rick Rule’s real point. Thanks to miners being lazy, we’ve neglected to look below former surface or near-surface mines. With some exceptions, of course. Exceptions that prove the point I’m trying to make.
As Rick Rule told me with a cheeky smile, “It took Canadians to find the Swanzo.” He was referring to the Swan Zone. Just one of the exceptions that proves the point…
What lies beneath a mine…sometimes
The Fosterville Mine is an Aussie legend. And so, of course, it’s now foreign owned. But it got the nickname “jewellery box” for a reason. And it’s a top gold producer even today. But its story starts way back in 1894.
Yet underground mining only began in 2005. Even that was for near-surface deposits, though.
In 2016, things got more interesting. Canadian mining firm Kirland Lake Resources acquired the owner of the Fosterville Mine. New management decided to drill a little deeper, below the existing Fosterville Mine. Kirkland Lake’s backers had a hunch based on what they’d seen back home in Canada…
And they soon found a pair of ore bodies which completely changed the fortunes of the company (and it’s owners). The more famous of the two zones was called the Swan Zone.
Kirkland’s share price went from below C$2.5 to over C$50 in four years as it became the lowest cost gold producer in the world, by some estimates.
Who’s sitting on the next Swanzo?
That is a story I expect to repeat itself several times in the future. The question is who is willing to drill below depleted mines to find out if there’s more Swanzos out there.
Plenty are looking. Miners say they’re giving a “second life” to former mines. So they’re raiding the Kingdom of Hades in more ways than one…
You could say they’re undermining the world’s undermined underground mines.
Rick Rule suspects these examples were just the beginning of a trend too. And he told me he’s focusing on Australian miners for a particular reason. Australia’s geography has certain similarities to Canada’s. It’s to do with Archean belts – formed before life on earth.
Geology for Investors makes the point blatantly obvious: “Archean age rocks are found at the earth’s surface today in Western Australia, eastern Canada, southern Africa”. Take a peek at gold producing regions and this list matches up rather nicely…
So, the presence of similar geology implies ore bodies are likely to be found in similar forms as in Canada. A mining behemoth where deep underground mining is well developed and successful. That’s why the Canadians are so good at finding ore at depth in Australia too…
They look for former mines which were abandoned once the ore body at the surface was dug up. And explore for more by digging deeper.
A better way?
Looking for similar geology to Canada’s deeper mines is one way to identify where hidden deposits may lie.
But thanks to rapid advances in technology, there’s a better way. You listen for them.
You see, it costs a lot of money to conduct exploration drilling inside an underground mine. But thanks to some rather impressive advances in technology, exploration analysis using sound can now identify ore bodies of interest before you move a rock.
Former Pentagon advisor Jim Rickards explains more:
This is military-grade equipment used by the Pentagon for detecting underground nuclear facilities.
It’s almost like if you combined the capabilities of an MRI machine, and the Hubble Space Telescope.
Thanks to the environmentalist movement, using this technology to establish what’s worth digging up at all has become mandatory inside the US.
According to Rickards, three companies leading the charge to listen for deposits are set to soar in coming months.
If Rick and Jim are right, the gold is there to be found, and it’ll be found using geophones first.
Until next time,
Nick Hubble
Editor at Large
P.S. If Rick Rule’s right and the next Swanzo is sitting beneath old mines, the real fortunes will go to those who spot it before the drills start turning. Jim Rickards will reveal the three companies positioned for this boom in his upcoming event. We’ll share more details early next week. Stay tuned.
