Gold in Japan, a Nation Unexplored for Many Years
Even though Japan, being on the Ring of Fire, has a long history of high-grade gold mines, the industry has been mostly quiet since the middle of World War II when gold mining in the country stopped.
The highest-grade operating gold mine in the world today is located in Japan with a head grade of over 40 g/t gold. That’s the Hishikari Gold Mine located in Kagoshima.
I recently traveled to northern Japan to visit some gold projects owned by Irving Resources (IRV-C). Akiko Levinson runs the company; Quinton Hennigh is a director and technical advisor. Toshi Takaoka, former VP of Sumitomo Metal Mining is the advisor.
Akiko Levinson and Quinton Hennigh first got together at Gold Canyon Resources which Akiko had been running for many years after the death of her husband who was the president and founder. Until Quinton Hennigh stepped in to advise Gold Canyon, the company didn’t make much progress.
Quinton and his team spent eighteen months going over the technical data and rethinking the geological model. In the end the Levinson and Hennigh team took the Springpole gold deposit to about five million ounces of gold. In late 2015 First Mining Finance took over Gold Canyon with the shares eventually reaching a high of $1.31 apiece.
When First Mining took over Gold Canyon they let Akiko spin off the non-core properties into a new company named Irving Resources. This is where it gets interesting and where the opportunity lies. For each 100 shares an investor held in Gold Canyon, they received 3.33 shares in Irving. As a result, there were thousands of shareholders holding tiny positions. Now they were all held at a profit, after all, they were given the shares.
Over the past fifteen months, those tiny share positions have been sold into the market. After all, the investors got the shares for free and could either sell them or buy more shares. This has created an incredible opportunity for patient investors. Seven months ago, in mid-December of 2016 Irving posted a press release saying they had taken grab samples that assayed as high as 480 g/t Au and 9660 g/t Ag. For those who can’t do math in their head, that rock is worth over $24,000 a ton.
Fourteen of the samples graded over 10-g/t gold and thirteen samples graded over 200-g/t silver. If those were significant intervals of drill core, the stock would have doubled over night. The stock didn’t do anything, proving that no one reads press releases. I did an interview in late December and that finally moved the shares off top dead center. They did double overnight.
Since January of this year, the share price has drifted lower and people who put in stink bids, such as me, have been able to make a decent position in an incredibly illiquid company. 88% of the shares are closely held by the strongest of strong shareholders in a dozen hands.
On the tour we went to where the original samples were taken. From the press release I was given the impression that Irving had taken over a couple of the old gold mines in Hokkaido and there would be a lot of exploration required.
On the Omui project, Irving did a deal on an existing 2.98 square km mining license with the long-term license holder. They also filed thirty-nine prospecting applications covering about 132 square km. We traveled to see the small mining license where the owner had dug a small trench to show us the high-grade veins. That pretty much blew me away. I had gotten the impression Irvine needed a lot of time and money spent on preliminary ground exploration.
Wrong. The high-grade vein was covered with six inches of dirt. The material was identical to pictures Quinton sent me when he put out the press release in December of the $24,000 rock. And fifteen feet away, there was another identical high-grade vein. Apparently when the mine was in production they had so much material to mine, they just didn’t bother with a lot of the veins.
It’s going to take time and patience to put together all the permits for Japan. After all, there is no infrastructure in place; it’s been seventy-four years since serious gold mining took place in the country notwithstanding Hishikari. The bureaucrats to sign the approvals for exploration and mining literally have to be trained.
But once the permits are in place, Irving is prepared to go right to mining. Japanese are very sensitive about the use of cyanide and it probably would be impossible to get a permit for the use of cyanide. Irving plans on doing exactly what Hishikari does, they will ship the silica rich ore directly to a smelter. They can get $80 a ton for the flux and would be paid 95% of spot on the gold and silver. That doesn’t sound like much but when ore is used as flux there is essentially a 100% recovery. No matter how good the ore or how good the mill design, 95% recovery is always exceptional.
While we were at the Omui projects Irving management learned that the owner had brought in an excavator years before and done a serious trench across hundreds of meters of the forest service road. The Forest Service had a fit and demanded he fill it back in at once. He did but he took pictures and made up a map of the multiple veins he found. Later in the evening we looked over the documents and it was pretty obvious that if you could learn how to fall off a bike, you could spot drill holes at Omui. The property has multiple high-grade veins that come near surface and are close together.
When the permits arrive, Irving will drill and the results will be spectacular. However with a mining license already in hand, they will be shipping ore right away. If you can bring in a D-11 or big excavator and immediately start producing revenue, you don’t need to wait for a 43-101, you can get right to it.
The company is more than well cashed up with $6.5 million Canadian in the bank and about 14 million warrants, all in the money. That would bring in another $5.6 million. If they can’t get into production and develop a resource for $12 million, they are in the wrong business.
This company is the perfect team. In Japan they have the foremost geologist in the country working for them. The president of the company, Akiko Levinson, is Japanese. Their lead advisor, Quinton Hennigh is, in my mind, the best geologist in the world. He has a history of creating wealth for shareholders working with Akiko. They have money; they have a mining license on a known high-grade gold and silver property.
And according to Quinton, on one of their other nearby projects, they have a sinter that shows gold, covering something interesting. He’s dying to start punching some holes in that sinter. In Nevada some of the highest-grade gold mines are epithermal vein systems covered by a sinter.
One day soon the weak hands selling their shares cheap are going to dry up and over night with no news, the stock is going to double. When their permits come in and they start shipping flux, it’s going to double again.
Irving is not an advertiser. I do own shares so I am biased as I can be. I don’t share in your profits so I can’t share in your losses. Only you can be responsible for your own investment decisions.