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Gold Explorer Holds 'Best Efforts' Placement To Grow Nevada Resource

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Western Exploration Inc. wants to grow its Aura gold and silver project in Nevada from a more than 1-million-ounce (Moz) Au and 10-Moz Ag resource.

Western Exploration Inc. (WEX:TSX.V;WEXPF:OTC) is holding a "best efforts" private placement for up to CA$5.65 million to help fund exploration and development at its Aura gold and silver project in Nevada.

The company is looking to complete a preliminary economic assessment (PEA) for Aura's Gravel Creek resource area, where previous drilling found grades up to 40.05 grams per tonne gold (g/t Au) and 1,951 g/t silver (Ag).

It wants to grow Aura — made up of the Doby George, Wood Gulch, and Gravel Creek deposits — from a more than 1-million-ounce (Moz) Au and 10-Moz Ag resource.

Initiating coverage on WEX earlier this year, Fundamental Research Corp. analyst Sid Rajeev wrote that "the Aura gold-silver project in Nevada (is) one of the most attractive mining jurisdictions in the world."

Initiating coverage on WEX earlier this year, Fundamental Research Corp. analyst Sid Rajeev wrote that "the Aura gold-silver project in Nevada (is) one of the most attractive mining jurisdictions in the world."

Mining heavyweight Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) also owns 18% of the company.

"We believe WEX's primary strengths are its high-grade Doby George project with near-term production potential, a strong management/board, and Agnico Eagle's backing," wrote Rajeev, who rated the stock a Buy and gave it a fair value of CA$3.48, about double Tuesday's price of CA$1.70 per share. "Upcoming catalysts include drilling and positive sentiment towards gold juniors."

Gravel Creek and Wood Gulch account for 60% of the project's resources, Rajeev noted. Doby George accounts for the rest.

"Geological models have identified a large footprint of prospective mineralized area (1 km x 3.5 km), which is more than three times the size of the current resource areas," Rajeev wrote.

Details of Placement

The placement is for up to 3,646,000 units at a price of CA$1.55 per unit for gross proceeds of as much as CA$5.65 million, Western Exploration said.

Each unit will consist of one variable voting share of the company and one-half of one variable voting share purchase warrant. Each whole variable voting share purchase warrant will entitle the holder to purchase one variable voting share of the company at a price of CA$2.15 per warrant share up to 36 months after the closing date of the offering.

A syndicate of agents co-led by Echelon Wealth Partners Inc. and Canaccord Genuity Corp., and including Velocity Trade Capital, will complete the offering and act as joint bookrunners for a commission.

The offering is scheduled to close on or around June 1.

The Catalyst: Creating a 'Much Larger Footprint'

More than 1,200 drill holes have been completed on the Aura project totaling more than 200,000 meters.

New drilling "is planned to verify structural trends and continuity of mineralization, with the ultimate goal of adding the known mineralization into the project resource base," Chief Executive Officer Darcy Marud said. "The data also (give) us further encouragement to continue to evaluate the Gravel Creek resource area for new areas of mineralization."

Western hopes to connect the Gravel Creek and Wood Gulch deposits, creating a "much larger footprint" with the potential for 2 to 5 Moz Au. The company also said a 3D geological model of Gravel Creek and Wood Gulch updated in 2022 significantly expanded the areas of prospective mineralization.

One core hole from 2020 tested for the presence of northeast-trending vein zones within the Jarbidge rhyolite. Hole WG450, drilled 190 meters northeast of the Gravel Creek resource, intersected three high-grade vein zones of 1.52 meters at 4.07 g/t Au and 363 g/t Ag, 1.83 meters at 7.22 g/t Au and 334.3 g/t Ag, and 0.3 meters at 37.1 g/t Au and 1,951 g/t Ag.

None of this data has been included in previous resource totals, the company said.

Area Underexplored, Management Has 'Extensive Experience'

Precious metals mineralization at Aura was initially discovered at Doby George in the 1960s, but it wasn't until the 1980s that Homestake Mining Co. discovered the Wood Gulch deposit. The project is 100% owned by Western and is about 32 kilometers north of the Jerritt Canyon Mine, which has been in operation since 1981.

"WEX's management and board have extensive experience in resource exploration and capital markets," Rajeev wrote. "Prior to joining WEX in 2018, CEO Darcy Marud had held executive positions in exploration and development at Yamana Gold Inc. (YRI:TSX; AUY:NYSE; YAU:LSE) and Meridian Gold (MNG:TSX.V)."

Streetwise Ownership Overview*

Western Exploration Inc. (WEX:TSX.V;WEXPF:OTC)

*Share Structure as of 3/7/2023

Aura is in an under-explored area of Nevada, the largest gold producer in the United States, accounting for 74% of the country's output in 2021, Rajeev pointed out. 

Nevada said mining helped establish it as a state 150 years and is still its largest export industry.

Ownership and Share Structure

About 84% of the company is owned by strategic investors, including Golkonda LLC, a syndicate of dozens of high-net-worth investors, which owns about 66% of the company, and Agnico, which owns 18%.

Management and directors own about 3%, and other institutions own about 6%, the company said.

The rest is retail.

Western Exploration has a market cap of CA$53.52 million and has about 31.5 million shares outstanding, 4.8 million of them free floating. It trades in a 52-week range of CA$2.40 and CA$0.96.

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Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Western Exploration Inc. and Agnico Eagle Mines Ltd., companies mentioned in this article.
  2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee. 
  3. The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Western Exploration Inc. Click here for important disclosures about sponsor fees. 
  4. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports' terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
  5. From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the decision to publish an article until three business days after the publication of the article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

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