Issue link: http://resourceworld.uberflip.com/i/198816
bro k er 's p i c k s Alf S te w a rt Kermode Resources – a sleeping bear awakens Kermode Resources Ltd. [KLM-TSXV], headed by experienced mining entrepreneurs Don Moore and Neil Briggs, has a portfolio of interesting mining properties in favourable, safe and proven jurisdictions. My interest in the company stems from its acquisition of the Eastgate Gold Project – a high-grade, low sulfidation, epithermal gold system located near Reno, Nevada. Following the acquisition of the property, Kermode moved quickly to secure funding from a strong and experienced partner, Demerara Gold Corp. Kermode has entered into an agreement with Demerara Gold for a total investment of up to $2.45 million. The financing will consist of 1) a series of staggered financings, set at a significant premium to current market value, as follows: $350,000 at $0.05 per share, $1,000,000 at $0.125 per share, and two tranches of $225,000 at $0.30 per share totaling $450,000; and 2) a cash payment of $650,000. This will provide sufficient funding to carry out a $1 million exploration program at Eastgate, cover property payments due to Blue Ridge Gold LLC, pursuant to the Underlying Agreement between Kermode and Blue, and supply working capital for Kermode. The end result will see Demerara become a major shareholder of Kermode and a partner going forward on Eastgate. The May 15, 2013 property payment due to Blue Ridge, of $200,000 cash and 500,000 shares has been met, and the initial exploration program at Eastgate is now underway. The Eastgate Project has high surface gold values with a large area of intense alteration surrounding multiple veins thought to be of Miocene age. This vein system has important geologic similarities to multi-million ounce, high-grade gold deposits of the northwestern Great Basin that contain bonanza-grade veins, notably Midas (Ken Snyder Mine; approx. 3.7 million mineable oz at 1.3 ounces per ton (44.57 gpt) gold. There has been no significant work at Eastgate since 1990, and historic drilling was limited in scope. Eastgate exposes the upper parts of a volcanic-hosted low sulphidation epithermal vein system. Eastgate offers the potential for discovery of high-grade vein mineralization similar to Midas. The key attraction of the property is that promising results within the context of epithermal gold deposits have been encountered, but have not been properly followed up. Specifically, a section of the Main Eastgate vein has been drilled and encountered gold assays from 2.5 to 11.66 grams/tonne over thicknesses of 1.5 to 4.57 metres. However, much exploration has been broadly spaced drilling in an attempt to find a low-grade bulk tonnage deposit. I am keen to see a thorough evaluation of the potential for a high-grade vein or veins, and to follow up on earlier drilling results. Apparently, Demerara Gold also sees potential in the Eastgate property. It is a private gold exploration company whose key shareholder is Dale Wallster, a Vancouver-based geologist. I know that Dale was the founder and driving force behind Roughrider Uranium, a company that acquired the Roughrider uranium discovery, which was ultimately sold to Rio Tinto for about $600 million. Combining Dale Wallster's proven mine finding skills, a good gold property and the market experience of the Moore/Briggs team within the context of a severely depressed market for junior exploration companies makes Kermode Resources my Broker's Pick.n This article expresses the opinions of author, and not necessarily those of Raymond James Ltd. Statistics and factual data and other information are from sources RJL believes to be reliable but their accuracy cannot be guaranteed. AS Kermode Resources is not suitable for all investors, a recommendation would only be made after a personal review of an individual's financial objectives. Raymond James Ltd., member – Canadian Investor Protection Fund 26 www.resourceworld.com november 2013