Headwater Gold Delivers Major Gold Hit at Jake Creek

0:17Trevor Hall: All right, everybody, we're going to get an update here from Headwater Gold. They do trade on the CSE with the symbol HWG and on the OTCQX with HWAUF. We reported the news earlier this week. One of the more outstanding drill results coming out of this company in quite some time, might have, I don't know, as long as I've been following headwater, maybe the best drill result, actually coming out of Jake Creek, and that's a project under partnership with Oceana Gold. The result, 46.3 meters of 1.34 grams per ton gold. For his comments on this and other news, CEO Mr. Caleb Strew. Caleb, congratulations.

0:55Well, thank you.

0:56Trevor Hall: Was that like the best hole you've ever drilled as headwater? No. It's pretty up there. Some of the earlier Spring Peak drilling in the Walker Lane in partnership with Newmont, we've had some pretty big holes come out of that. That has been in a bit of a permitting cycle over the last 18 months. So we haven't seen those sorts of holes come out just simply by virtue of the fact we've been focusing on expanding the permit footprint. incidentally we're expecting that within a couple of months here to to kick off a big 2027 at spring peak again but this is a great result out of the the first core hole ever drilled at at jay creek and our first drilling uh out there uh 46 meters of 1.34 grams in a in an epithermal system within the northern nevada rift uh incidentally again it's about five kilometers away from 50 million ounces of gold at Turquoise Ridge.

1:50So it's in a tremendous part of Nevada and rocks that we know host significant epithermal gold deposits nearby over at Midas and Hollister and several other projects in northern Nevada that are in basically the same setting as Jake Creek, just has not seen much exploration at all. There's a little bit of historic drilling that did identify gold mineralization in that volcanic package that we were targeting but we felt like we put together a lot of the geologic picture over the last 12 to 18 months and this is great validation of that story.

2:28Trevor Hall: What did you do differently or how did you de-risk this drill that these this drill target here that gave you a great hit? Yeah so we knew that there was gold sniffs around in there there was a a historic RC hole that hit a meter and a half of 11 grams per ton. And that was included in a broader interval. It carried a broader interval of about a gram per ton. But the setting was not clear to us when we first got the project and began working on it. So the big game-changing things were simple, systematic geologic mapping to understand the architecture and the structure of this part of the northern Nevada rift, make some assumptions about what we thought was feeding the system, what sort of structures were the mineralized structures, and then drilling core through it to be able to have a look at it and understand it.

3:24And that was guided by surface geochemistry and some geophysics. Some CSAMT was pretty important in validating some of our geologic understanding. but a lot of it is basic surface geologic mapping and building cross sections and understanding the geology and then testing it with a drill hole.

3:45Trevor Hall: Well, you have completed this initial round of drilling here at Jay Creek, just over 3 ,500 meters. Obviously, you have a solid result. There was a number of holes there, but maybe all encompassing, what are you and Oceania kind of taking away from this as follow-up? Yeah, so there's still some assays pending, outstanding on this. So these are very fresh results that are just coming in. And I'm expecting within the next two weeks the final results to come in from any remaining outstanding assays. So at that point, we'll be able to put together the whole picture. Because we've drilled into it. We've tested a number of different targets on this property area and hit alteration.

4:25and it looks like trace element signatures across a very broad part of the segment of this rift. We'll need a little bit of time in all the results to really see how it hangs together and what the opportunity is. But what we can say just early on right now is that we hit a significant gold intercept and it's part of a significant alteration cell that extends over a multi-kilometer scale. So, you know, where we go from here, it'll take another little bit of crunching the final results once they come in and determining the next steps. But this is exactly what we're looking for.

5:03Trevor Hall: Very good. Well, we'll continue to see follow-up assay results and maybe what a phase two type of drill program or exploration strategy looks like at Jay Creek. You guys have been so thorough with news lately. This is just one of many news items in the last couple weeks. In fact, you just published new stuff today. but let's do talk about that whiskey drill program as well because you're excited about this. Yeah. So before we get quite to that, just let me step back a little bit. I think what you're seeing in the news flow is the scaling of our overall business model. Now we have five projects in partnership with three different majors across a big portfolio in the western U.S.

5:45And over the last year, we've pretty much been able to keep a drill turning somewhere in the portfolio. Almost mostly funded by the majors, a little bit ourselves. But at any given time, we have a drill turning or we are mobilizing the drill out to a project. And so the next one in the sequence, as we said, we just completed Jake Creek, just completed Crane Creek as well in Idaho, funded by Sentaro. You don't cross borders, Caleb.

6:13Trevor Hall: You just stick with Nevada. What are you doing in Idaho? Western U.S. is our playing field. Okay, okay. Idaho, Nevada, you know, we'd be interested in Utah and Arizona. Everything has to stack up against Nevada geology, though. So Nevada is our focus. But jurisdictionally, I'm not opposed to the surrounding states as long as the geologic opportunity is on par with what we can put together in Nevada. Fair enough. So this project in western Idaho is an excellent project that we see a ton of potential in. And Centera just drilled about 3 ,000 meters up there in partnership with us. Assays are pending there.

6:52And so the next one in the queue now is Whiskey, which is actually a 100 % headwater-owned project that we put together 18 months ago, I think. We've done some baseline work on the ground, surface work, a little bit of geophysics. And it's now at the stage where we've made the decision to kick off a small self-funded scout drill program into it. There's enough interesting attributes and a little bit of historic drilling that has some sort of incomplete historical records that I don't fully hang my hat on. But they showed some gold mineralization there that looks somewhat interesting. in a couple of different targets.

7:33We found a brand new target area that we've sampled up to 20 grams per ton gold in. And so it's a perfect candidate for us to go out with three to five scout our sea holes and learn something significant that could potentially be a game changer for advancing that project ahead of bringing in a partner if we elect to in the future. That's a big part of our model is to put our money where our mouth is from time to time and certain opportunities and give our shareholders a chance at 100 % self-funded exploration upside. And, you know, depending on the outcome there, perhaps, you know, we hit a home run and we drive forward on that as one of the lead projects moving forward.

8:14Perhaps we fail altogether and then we devote our efforts elsewhere. That's fine, too. That's part of the game.

8:19Trevor Hall: It is exploration. That's part of the game. How do you decide or do you have kind of a checklist of how to decide what projects you partner up with and which ones you keep 100 % within the headwater portfolio? So it all comes down to capital allocation, your cost of capital relative to the opportunity and what it's going to cost to test. What's the size of the prize? What's the cost of the test? And there's no easy formula for, you know, you punch in numbers on this side and you get the answer on the outside. There's a little bit of a gut feel involved. But in general, the way we look at it is, An opportunity like whiskey is an excellent example of one end member.

9:02For a couple hundred thousand dollars in a scout program, we can learn something meaningful. And there's a subset of projects that are like that. And we take that shot ourselves and make the decision, the next decision, based on the information that comes out of that program. There's some cases like our Jupiter project is a good example of the other side, where it's a massive alteration footprint in Nevada's Walker Lane, about 5 kilometers by 8 kilometers. We recognized pretty early as the story kept growing and the spatial footprint of that target kept growing, it's going to take a lot of capital, a lot of drilling to test this thing.

9:43That's an example of a project that gets fast-tracked into the partnership side of the portfolio. And within a couple of months, We were able to put together a partnership with Newmont on that. And so we're teeing up that project right now for Newmont-funded drilling in early 2027. So it's a dual-pronged approach there. And whiskey could turn into one that looks like it'd be very attractive to a partner.

10:09Trevor Hall: But you've got to understand more about it. But we've got to know what we're dealing with first. Yeah, that makes absolute sense. Well, part of the business strategy is also continuing to add projects into that funnel to make decisions on what happens. And you actually were recording this here Thursday morning. And actually, you did announce a new project, the OLLI. Is it OLLI? OLLI, yeah. OLLI, yeah. Epithermal Gold Project. You staked that. So what have you seen at OLLI that got interested? Yeah, so it's a good example of the fact that there's still opportunities for real, true generative work and claim staking in Nevada in jurisdictions with a lot of gold in them.

10:44You know, districts that have proven potential. So this is one of the bigger alteration cells in the heart of the Walker Lane, really. And there's a couple of billion ounces of gold endowment here. The LaHontan Gold Santa Fe project and Fortitude's Isabella Pearl project are sort of on the one side of this big alteration cell. And the scale of that footprint of the alteration system got our attention. And we started looking around and at OLLI found some open ground with a big area of alteration that has exactly the right character that we want to see that could be above a concealed blind gold system.

11:28With the right sort of clay alteration mineralogy, we see high, I don't want to get too into the weeds, but, you know.

11:36Trevor Hall: Well, some people do want you to even do weeds. So in this case, there's high-crystallinity kaolinite with dicite and allunite, and that comes with highly anomalous gold, multiple hundreds of PPB, parts per billion gold, which isn't ore grade necessarily, but shows there's gold in the system associated with that right kind of alteration. And then big trace element numbers, big pathfinder numbers in the form of mercury, arsenic, and anemone that are all associated with the same thing. and we've reconstructed the geological architecture of that segment of the alteration cell, and we think the target host rocks project right underneath where this alteration is exposed.

12:20And so if you use a little bit of geologic creativity and put together the structural framework, you could envision this alteration cell as being significant, like potentially on the scale of what, you know, the same as Anglo gold Silicon Merlin discovery down there, which was a discovery that was made with sort of a similar methodology. There's a big district with a lot of gold endowment scattered around and, you know, isolated resources. Most of the exploration history had been adjacent or, you know, right near those areas of known gold mineralization. and it took someone taking a big swing out in a barren, altered system in the volcanic pile to make what's possibly the discovery of the century in Nevada.

13:13Trevor Hall: Yeah, well, that story also took a village, right? It wasn't just one company. There was probably, what, half a dozen companies that continued financing, putting holes into the ground, and finally there was enough there for Anglo to come in and put it all together and really start that consolidation process, right? And so it's not easy. It takes a lot of time. But what does that mean for a company like Headwater, your very unique approach to business, right? You fill a niche of green brownfields exploration, an extension of these majors, right, that have depleted their exploration budgets for years, if not decades.

13:53Trevor Hall: But that doesn't mean they obviously they're still going out and funding exploration through third parties such as Hedward and the like. Do you see your business having even more potential upside as far as money spent through partner driven programs? Because we're looking at historical context like exploration budgets still are very small. So we had we talked to Ryan Hanley a couple of weeks ago for major drilling. and he was saying how we're not even towards the height of major exploration drill spending yet. So that will be a tell where we're at in the market. But what is that niche, that headwater kind of fills for that while the majors have continued to fund exploration as needed?

14:38So this was fairly explicit in the decision that we made to structure the business model the way that we did. The basic premise is that we feel as if there's not enough money going into early stage exploration. Not nearly enough as is required to ensure a pipeline of big, high quality new projects coming into a pipeline for the major mining companies into the future. Most of the activity in the majors and mid-tiers in the last 10 years has been focused on, you know, rebranding or dusting off known projects and working on those. But that doesn't add much to the long-term pipeline. And in the future, there's going to have to be investment on the earlier stage side of things to make the new discoveries that are going to drive these companies' portfolios in the long run.

15:34And now what we're seeing is cash flow and profitability in the developers and miners that can support that exploration on the front end. And we're also seeing a lack of a global inventory of new M &A targets and a highly competitive environment that makes that sort of growth through consolidation more difficult. and more and more people are looking down towards organic growth within their exploration pipeline. The problem is a lot of these big companies have not invested in internal exploration themselves. And as a result, their exploration divisions have been sort of hollowed out over the last 15 years.

16:21And so our model presents a really compelling opportunity for companies like that with cash flow and a desire to grow through exploration to go to a place like Nevada, partner with a group that has a big portfolio of high-quality projects, a history of operating projects for major mining companies, and really present them with a turnkey opportunity to scale their internal exploration by simply investing in their capital directly into the ground, funding us to go drill targets. We operate them. We can basically do everything. It's a turnkey opportunity to capitalize on the potential of Nevada.

17:04Trevor Hall: Perfect. Caleb, good to connect with you once again. Good to see you in New Orleans. We'll see you again here, maybe running around this fall. But congratulations, that hit out of Jake was huge. I was real happy to hear that from you guys. Congratulations on that. And we'll see how the follow-up comes in. So thanks so much. All right. Thank you. All right. That's your update from Headwater Gold, everybody, coming from the New Orleans Investment Conference. We have more coming your way, so stay tuned. The information presented should not be considered investment advice. Mining Stock Daily Yen's affiliates are not responsible for any loss arising from any investment decision in connection with the material presented herein.

17:42Trevor Hall: Please do your own research or speak with a licensed financial representative before making any investment decisions.