Thinking differently sets Secova Metals apart

An outcropping skarn, running approximately 1.5 kilometres through the centre of the Duvay Project, near Amos, Quebec. — Photo courtesy Secova Metals Corp.

In a climate where many investors are steering clear of commodity and resource plays, Secova Metals Corp. CEO Brad Kitchen isn’t afraid to stand up on a soapbox and urge people to jump back in. Despite current market conditions, the head of the Vancouver-based junior gold miner believes the best time to invest in Canadian gold mining companies is right now.

“In the short term, gold is going to stay around current levels,” he said, “but over the next 18 months, it will go back to historic highs. Gold is a different commodity in that it’s a safe haven; people move to it when there’s uncertainty in the market.”

Brad Kitchen, CEO and Chairman, Secova Metals Corp. — Photo courtesy Secova Metals Corp.

With stock markets kicking off 2016 with a major correction, that uncertainty has already fuelled a 20 per cent rise in gold prices since January, so perhaps Kitchen is onto something, but he isn’t waiting around to find out.

Instead, he’s working to position Secova to benefit when gold prices really begin to rebound. “Markets can change very fast, which is why we are doing things right now that other juniors aren’t,” Kitchen said. “We don’t pretend to be a bank. We don’t take our investors’ money and sit on it. We use it to create value in our underlying assets.”

Central to Kitchen’s value-creation strategy is Secova’s recent purchase of a 90 per cent stake in the Duvay gold exploration property near Amos, Quebec. The project is situated in the Abitibi gold belt, one of Quebec’s most prolific gold mining regions, with several other large mines located near by. “Our Duvay project has had a lot of interest over the years,” Kitchen said. “In fact, there’s been people on the property for over a century, but for whatever reason, no one looked into the entire structure of the property, and no one was able to come up with a good model of the gold that’s there.”

Kitchen is looking to change that by undertaking a systematic drilling and three-dimensional (3-D) induced polarization survey this spring. Combined with a compilation of historic data from the site, Kitchen plans to create a 3-D model of the entire structure so they can get a better sense of how much gold is underground and how best to mine it, using either an underground or open pit operation.

“The way we look at projects is to solve the puzzle, which is what gold is there,” Kitchen said. “We’ve done a lot of work to recover past data. Now we’re adding that historic information to the model we’re creating with new information. But we also take a slightly different look. We look at the project as if we would have to develop it. So the type of exploration we do is different from other junior resource projects in that we look at modelling and minerology instead of just coming up with some drilling results that we can announce so we can raise more money. It’s not a kneejerk reaction to how the market is. It’s more long-term. How do we best develop this asset?”

Kitchen’s approach appears to be well-timed. With drilling costs down by one-third and oil prices at record lows, exploration costs are lower than ever. Kitchen believes his confidence in the Duvay property and the gold market as a whole has been validated by some of the investors he has been able to attract to the project, including Frontier Merchant Capital Group and Delbrook Capital, which has purchased a 20 per cent stake in the company. All told, Secova has managed to raise approximately $1.2 million, $500,000 of which is going into the current exploration project.

“Some of what the other juniors will do is drill and prove out and then turn around and sell to one of the bigger mining companies,” Kitchen said. “That will probably be the case for Secova, but we don’t count on it. Yes, we’re in exploration mode, and we will be for the next two years, but our intention is to develop the property. Are we the best people to do it? Maybe, maybe not, but we’re working to cover our bases now when it’s cheaper and easier to do so rather than waiting for things to turn around.”