''there is a difference between the Australian & Canadian approach to releasing a JORC''

There certainly is although the story does sound familiar

Short-seller blasts New Found Gold for lack of resource after oodles of drilling

Colin McClelland - The Northern Miner | September 20, 2024 | 11:55 am Exploration Markets News Canada Gold

Visible gold in core from hole NFGC-24-2112 in the Keats South Deep zone at the Queensway project. Credit: New Found Gold.

Shares in New Found Gold (TSXV: NFG, NYSE: NFGC) closed 5% weaker on Thursday after short-selling analyst Iceberg Research accused the explorer of misleading investors about its Queensway gold project in Newfoundland.

The Vancouver-based junior’s stock gained C$0.02 on Friday morning in Toronto to C$3.52 apiece, valuing the company at C$707.9 million. It’s traded in a 52-week range of C$3.21 to C$6.30. The stock initially fell 8% after the report came out.

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Iceberg Research, which doesn’t state where it’s based or who runs it beyond a founder’s pseudonym of Arnaud Vagner, noted New Found Gold has drilled the extraordinarily large amount of 563,000 metres since acquiring the project in 2016. But it has yet to release an initial resource.

That’s because the company is trying to hide the project’s lack of consistent gold mineralization and publishes difficult-to-read drilling program cross-sections to obscure the fact, Iceberg alleges. The researcher criticized CEO and chairman Collin Kettell as a stock promoter with a history of poor mining investments. It also noted the British Columbia Securities Commission has twice determined New Found Gold issued misrepresentative statements.

“Management has been actively re-marketing this old deposit, but we believe the same issues that plagued previous operators — above all a lack of continuity — remain unresolved,” Iceberg concludes in its report. “This has led to endless drilling with little real progress.”

New Found Gold’s Collin Kettell didn’t immediately respond to an email on Friday seeking comment. In the past, the company has said it’s making progress in showing mineralization continuity. Analysts at BMO and Canaccord Genuity cover New Found Gold, but hadn’t issued new notes on Friday.

Newfoundland hotspot

Queensway, on a 1,662-sq.-km area accessible via the Trans-Canada Highway 15 km west of Gander, burst onto the exploration scene in 2019 with its first drill hole. NFGC-19-01 cut 19 metres at 92.86 grams gold per tonne. That and a series of high-grade drill results brought renewed interest to the region including investments by Labrador Gold (TSXV: LAB) and Exploits Discovery (TSXV: NFLD) among others.

This year, Calibre Mining (TSX: CXB) acquired Marathon Gold’s Valentine project in the region, though it is some 200 km west.

Gold bug Eric Sprott invested C$260 million into New Found Gold. However, Iceberg criticized the serial gold project investor for indiscriminate funding and several failed projects.

The property where the Queensway project is located has had several owners over the past 40 years. They also drilled high-grade intercepts but couldn’t assemble a consistent deposit that made economic sense to mine, Iceberg said.

“Any attempts to bring Queensway into production are likely to face major obstacles, and relegate the deposit to the ranks of other nuggety projects that didn’t live up to investors’ expectations,” the researcher said.

Patchy gold

Iceberg said it’s shorting the company stock, betting it will fall, as investors digest its report. It redrew New Found’s drilling cross sections to “uncover a patchy gold presence,” it said.

The BC regulator in 2022 ruled New Found had engaged in smearing – averaging high-grade narrow intercepts over broader intervals with low or no grade. The aim was to portray gold distribution as more consistent than it actually is.

The regulator also made the company retract statements last year, which suggested it was moving into development from exploration, because it hadn’t prepared a resource or an economic study.

Disclaimer: The Northern Miner Group, which holds Mining.com, The Northern Miner and Canadian Mining Journal, is owned by EarthLabs, whose chairman and CEO, Denis Laviolette, is president of New Found Gold.