High-Grade Step-Outs Grow Kenorland's 4% Gold Royalty in Quebec

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1. As of the date of this article, officers, contractors, shareholders, and/or employees of Streetwise Reports LLC (including members of their household) own securities of Kenorland Minerals Ltd.
2. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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1. Ownership and Share Structure Information

The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.

Kenorland Minerals Ltd. (KLD:TSX.V; KLDCF:OTCQX; 3WQ0:FSE) reported high-grade drill results from the Frotet project in Quebec, including several step-outs beyond the deposit's maiden resource, according to a September 29 release. Kenorland holds a 4% net smelter return (NSR) royalty over the entire project. Sumitomo Metal Mining Canada Ltd., a private subsidiary of Sumitomo Metal Mining Co. Ltd. (STMNF:OTCPK), owns and operates Frotet.

The results cover 20 holes totaling 14,980 meters from the fall 2025 and winter 2026 programs at the Regnault gold deposit. They are the first holes completed since the cut-off date for Regnault's maiden inferred resource of 14.5 million tonnes grading 5.47 grams per tonne (g/t) gold, for 2.55 million ounces, announced in December 2025.

Six intercepts topped 100 gram-meters, a measure that multiplies grade by length. Four of those six were step-outs outside the current resource. The best results included:

• 71.89 g/t gold over 2.35 meters, including 252 g/t over 0.65 meters, in hole 25RDD269, a 105-meter step-out on the R11 trend
• 2.24 g/t over 73.42 meters, including 8.73 g/t over 3.42 meters, in hole 26RDD273 on R11
• 9.72 g/t over 14.25 meters, including 55.24 g/t over 2 meters, in hole 26RDD287 on the R6 trend

Drilling Pushes Regnault Past Its Resource

The programs combined step-outs along known mineralized structures with infill drilling at the 50- to 100-meter spacing used for inferred classification. Besides the six intercepts above 100 gram-meters, another six returned 50 to 100 gram-meters, and four of those were also step-outs beyond the resource.

The deeper southern part of Regnault produced some of the strongest results:

• Hole 26RDD273's R11 intercept was a 60-meter step-out east of an earlier hole that returned 2.56 g/t over 41.85 meters.
• The same hole also cut the R10 trend, returning 49.43 g/t over 1.62 meters, including 135 g/t over 0.57 meters, in an 85-meter step-out.

The R10 and R11 trends were left out of the maiden resource because their drill spacing didn't meet the criteria for inferred classification.

Drilling also extended the R6 trend:

• Hole 26RDD287 added a second interval of 17.34 g/t over 4.85 meters.
• Hole 25RDD270A returned 8.19 g/t over 15.4 meters, including 26.43 g/t over 4.4 meters, in a 65-meter step-out east.
• Infill hole 26RDD284 cut 14.79 g/t over 7.45 meters, including 45.17 g/t over 2.3 meters, confirming continuity 20 meters from earlier drilling.

On the R4 trend, hole 26RDD275 returned 175 g/t over 0.65 meters within the 100-meter crown pillar used in the resource model. An 18.26 g/t intercept over 3.9 meters came from a step-out on the R9 trend.

Assay intervals are core lengths, and true widths have not been determined.

Kenorland's Stake in Frotet, Without the Drilling Bill

Kenorland agreed in January 2024 to convert its 20% joint-venture interest in Frotet into the 4% NSR royalty, and the deal closed in February. Sumitomo took full ownership, and Kenorland stayed on as operator for at least a year before Sumitomo took over.

The 39,365-hectare property sits next to the past-producing Troilus Mining Corp. (TLG:TSX; CHXMF:OTCQX ; CM5R:FSE) gold-copper mine, about 100 kilometers north of Chibougamau, according to the company. About 143,823 meters have been drilled in 314 holes in the deposit area. In July 2024, engineering and baseline studies began ahead of a possible permit application for an underground exploration decline. Whether Sumitomo proceeds depends on those studies, permitting, and resource results.

Sumitomo can reduce the royalty. It may buy back 0.25 percentage points of the NSR for CA$3 million within five years of the royalty's grant.

It may buy back a further 0.5 percentage points for CA$10 million within 10 years, provided it has exercised the first buyback option. If Sumitomo exercises both options, Kenorland would retain an uncapped 3.25% NSR royalty across the project.

Because Sumitomo funds and runs the work, Kenorland doesn't pay for the drilling at Frotet, and its royalty covers any resource growth. Both Sumitomo and Centerra Gold Inc. (CG:TSX; CGAU:NYSE) are also Kenorland shareholders.

On September 18, Sumitomo and Centerra reported their intention to exercise top-up rights to buy 45,794 shares at CA$2.498 each, keeping their stakes at 10.1% and 9.9%, subject to TSXV approval. 

Gold Bounces Back, With US$5,400 in Sight

Spot gold rose 0.6% to US$4,183.22 an ounce early on October 1. Softer-than-expected U.S. inflation data reduced the odds of a Federal Reserve rate hike in October to 37% from 45%, Reuters reported via Kitco News. U.S. gold futures for December delivery gained 0.6% to US$4,212.80. The rebound followed a September decline of more than 6%, and the metal still faces headwinds. Ten-year Treasury yields are near their highest in more than 20 years, a stronger dollar is weighing on demand, and traders still see an 89% chance of a December rate increase.

Even so, WisdomTree commodities strategist Nitesh Shah said, "This bond market volatility does seem to point to gold being possibly a better anti-fragile hedge."

Atrium Research Corp. analysts Ben Pirie and Nicholas Cortellucci kept their Buy rating and CA$4.00 target price on Kenorland. 

That leaves gold about 25% below its record of US$5,589.38, set on January 28, CBS News reported.

UBS still expects the metal to recover much of that ground. In August, the bank kept its target of US$4,600 an ounce for the end of 2026 and set a new target of US$5,400 by the end of September 2027, Investing.com reported.

That target is about 29% above current levels. UBS's strategists expect disinflation in 2027 to support a less restrictive Fed. They also see a weaker dollar as real interest rates fall, along with continued central bank buying and inflows into gold-backed exchange-traded funds (ETFs). The bank noted that China's central bank added 20 tonnes in July, its largest monthly purchase since October 2023. UBS also warned that a Fed rate hike could push gold down to US$3,850.

Analysts See Room to Grow Beyond the Resource

In a September 29 note, Atrium Research Corp. analysts Ben Pirie and Nicholas Cortellucci kept their Buy rating and CA$4.00 target price on Kenorland. The target implies an 86% return from the CA$2.15 share price at the time. They called Regnault's December 2025 maiden resource "one of the best inaugural resources of the last decade in Canada."

They said the new results show "substantial room to grow beyond this high-grade initial resource." The analysts also stressed that Sumitomo pays for the drilling. "KLD carries no cost for this work, and its 4% NSR covers the entire project, so each successful step-out grows the royalty base," they wrote.

Ownership and Share Structure¹

About 24% of the company is held by insiders and management, about 17% by institutions, and about 20% by strategic investors. The rest is retail.

Its market cap is CA$187.29 million with 80.47 million shares outstanding. It trades in a 52-week range of CA$1.75 and CA$3.59.

Key Investor Takeaways

• Kenorland reported results from 20 holes totaling 14,980 meters at the Frotet project in Quebec. Kenorland holds a 4% NSR royalty over the entire project, which Sumitomo Metal Mining Canada Ltd. owns and operates.
• Six intercepts topped 100 gram-meters, and four of those were step-outs outside Regnault's maiden inferred resource of 2.55 million ounces at 5.47 g/t gold. Highlights included 71.89 g/t gold over 2.35 meters and 2.24 g/t over 73.42 meters on the R11 trend.
• The R10 and R11 trends, which produced some of the strongest results, were left out of the maiden resource because drill spacing didn't meet the inferred criteria.
• Sumitomo funds the work, so Kenorland pays nothing for the drilling, and its royalty covers any resource growth. Sumitomo can reduce the royalty to an uncapped 3.25% through two buyback options.
• Atrium Research kept its Buy rating and CA$4.00 target price in a September 29 note, saying the results show "substantial room to grow beyond this high-grade initial resource."
• Spot gold rose to about US$4,183 an ounce on October 1 after a September decline of more than 6%, and UBS targets US$5,400 by the end of September 2027.

Common Questions from Investors

What did the latest Frotet drilling show? The 20 holes were the first completed since the cut-off date for Regnault's maiden resource. Six intercepts topped 100 gram-meters, and four were step-outs beyond the resource. Another six returned 50 to 100 gram-meters, four of them also step-outs. Assay intervals are core lengths, and true widths have not been determined.

What does that mean for Kenorland's royalty? Kenorland's 4% NSR royalty covers the entire 39,365-hectare project, so resource growth anywhere on the property adds to the royalty base. Atrium's analysts wrote that "each successful step-out grows the royalty base."

Who owns and operates Frotet? Sumitomo has owned Frotet since February 2024, when Kenorland converted its 20% joint-venture interest into the royalty, and now operates it. Engineering and baseline studies for a possible underground exploration decline began in July 2024. Whether Sumitomo proceeds depends on those studies, permitting, and resource results.

Can the royalty be reduced? Yes. Sumitomo may buy back 0.25 percentage points of the NSR for CA$3 million within five years of the royalty's grant and a further 0.5 percentage points for CA$10 million within 10 years, provided it has exercised the first option. If it exercises both options, Kenorland would retain an uncapped 3.25% NSR royalty.

What are analysts saying? Atrium Research analysts Ben Pirie and Nicholas Cortellucci kept a Buy rating and CA$4.00 target price on September 29. They called the maiden resource "one of the best inaugural resources of the last decade in Canada."