The chart below of gold production from Australia’s Victoria state tells a powerful story.
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Victoria played host to one of the world’s great alluvial gold rushes in the mid 19th century, before production switched to the relatively shallow mining of the ancient reefs thought responsible for that alluvial gold.
What followed for much of the 20th century was a fallow period as prospectors left to chase the gold of Western Australia, followed by two World Wars, the Great Depression and a long era of minimal production.
Then a mini-boom started in the 1980s, eventually resulting in the reopening of long-shuttered mines in the region, including Fosterville.
Note, however, the near-parabolic uptick in gold production in the last two years.
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That spike is directly related to the discovery of Fosterville’s Swan zone, home to an uber-rich gold deposit below the mine’s historic workings.
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Swan’s discovery set off a frantic new land rush in the region, on the belief that its style of mineralization repeats below historic workings all over this area.
And in the ensuing scrum, Outback Goldfields (OZ.V) has leveraged an existing partnership with a company called Petratherm to take a premier, four-property stake in the Fosterville area.
Through the deal, Outback acquired a first-mover advantage in the area…giving investors an inexpensive ticket on what could be the biggest gold story of the 2020s.
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A Deposit In A Class By Itself
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If all that sounds like hyperbole, just take a look at the numbers for Fosterville and its Swan zone.
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Note the spike in the mine’s average production grade from 2016 to 2019.
It started with a doubling of that grade in 2016 with the discovery of Fosterville’s high-grade Eagle zone.
Then owner Kirkland Lake tagged into Swan, one of the richest gold discoveries of any cycle for gold.
This large deposit of extremely high-grade, free gold sent Fosterville’s average grade from 9.8 g/t at the end of 2016 to and astonishing 31.0 g/t at the end of 2019.
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In the process, Swan brought Fosterville’s reserves from just 500,000 ounces at the end of 2016 to 2.7 million ounces at the end of 2019.
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Kirkland Lake's production guidance for Fosterville from 2019 is jaw-dropping.
Thanks to Swan, the company forecasted the mine to produce between 570,000 to 610,000 ounces of gold grading 30.0 g/t that year with average cash costs between just US$130 and US$150 an ounce.
It’s like a license to print money — and with all signs suggesting this region hosts more Swans, the land rush in the area has been intense.
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Outback’s Key Projects About To See Drilling
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Outback Goldfields has “gotten its own” in this feeding frenzy thanks to that four-property package in the area that the company recently acquired.
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Highlighted in orange above are those four properties: Yuengroon, Glenfine, Ballarat West and Silver Spoon.
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As with all other players in this region, Outback is going to test these projects at depth to see if they host more Swans.
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Management has ranked and prioritized those targets and will begin with Phase 1 drill campaigns on Glenfine and Yuengroon to test a variety of areas. Some of these haven’t seen drilling in more than 100 years!
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Led By A Mining Entrepreneur With The Midas Touch
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In pulling the deal together for its Victoria assets, Outback benefited from the “Midas Touch” of its company chairman, Craig Parry.
As Chairman of Vizsla Resources and Skeena Resources, and CEO of IsoEnergy, Parry is leading three of the biggest winners in recent memory.
His team at Skeena has breathed new life into British Columbia’s storied Eskay Creek mine, sending Skeena multiplying well over five times last year.
He also leads the team at Vizsla, where bonanza-grade results on its Panuco project combined with a white-hot silver market to send VZLA’s shares parabolic.
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From a March 2020 trough of C$0.25 to a summer peak of C$2.61, VZLA produced a more than 10-fold increase for investors.
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And then there’s the uranium story Parry has led at IsoEnergy. In a moribund uranium market, ISO has managed to outline the only new uranium discovery in recent years.
In the process, it saw its share price spike from a low of C$0.25 to a high of C$2.05 last year, an eight-fold gain.
Now Parry is swinging for the fences again with Outback.
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In truth, there’s so much buzz around the Fosterville-inspired land rush in Victoria that investors have a number of ways to win with Outback.
The most obvious is if the drills that will start turning soon on its Glenfine and Yuengroon projects hit another Swan. (All bets are off in that case.)
Then there’s the area play involved — the team at Outback estimates that the other players in the region will spend a collective $150 million this year on exploration.
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If any one of those programs hits Swan-style epizonal gold, the incoming tide of investor interest will lift all boats in the region.
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Finally, the return of gold prices above $2,000, which the unending flow of fiscal and monetary stimulus would seem to make inevitable, could — all by itself — result in a leveraged move for the company’s share price.
Here’s the deal: Outback has only been trading under this name and with these high-potential properties since mid-December.
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It’s a new and relatively unknown story, but that won’t last once the drills start turning.
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Outback Goldfields is a smart-money speculation on what could be the gold story of this decade…but the time to get in early is right now.
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