Palisade Research - Wed, Apr 12, 2017

Two Global Mining Icons Team Up To Give You The Best Of Gold, Silver & Copper

picture of Eric Sprott and Sheldon Inwentash

Northern Sphere Mining Corp (NSM:CNX; AGTMF:OTCMKTS)

Current Price: C$0.405
Shares Outstanding: 25.9 million
Market Capitalization: C$10.5 million
52-Week Range: C$0.17-C$0.85
Cash: ~C$2.3 million
Total Liabilities: ~C$2.4 million

If you ask any successful mining investor what he looks for in a company, 99% of the time he will begin with management. Identifying serially successful financiers and geologists is hard work - and that is why we pride ourselves on successful due diligence.

Catching the next best story is difficult. It involves diving deep into the chasms of the most junior of junior deals and working the phones. After all, the old adage "in the room, in the deal," holds especially true for an old-school industry like mining. Nevertheless, we enjoy searching for that special blend of strong fundamentals and an even stronger management team. A harmonious combination makes for a great company, but more importantly, a great story.

This week we present Northern Sphere Mining. Exactly the sort of diamond-in-the-rough, rags-to-riches potential that will make us all happy campers.

This company was hammered together, plank by painstaking plank by an A-list management team, board of directors, and shareholders. This story attracted the likes of:

Sheldon Inwentash - Executive Chairman, Significant Investor - A prolific name in the resource space, best known for his tenure at Pinetree Capital, where from 2002-2007, he generated a 120-fold increase in share price, reaching over a $1 billion market cap. Sheldon has some enormous wins under his belt; too many to name for this one report, but some succesful names he seeded and incubated include: Queenston Mining (acquired by Osisko Mining Corp. for $550 million), Aurelian Resources (acquired by Kinross for $1.2 billion), and Gold Eagle Mines (acquired by Goldcorp for $1.5 billion).

Eric Sprott & Sprott Mining - Significant Investor - Billionaire Eric Sprott is another household name in the mining sector, and is known for investing and building too many celebrated mining companies to count. Recently stepping down from his role as Chairman of Sprott Inc. to focus on his personal investments, Eric wasted no time deploying capital into what he thinks are the best juniors. Northern Sphere is now one of them. Sheldon personally walked Eric through NSM's asset and strategy, and now has his full support. In fact, Eric believes in NSM's potential so much he will be providing technical assistance through his private mining company, Sprott Mining.

John Carter - CEO & Director - Mr. Carter brings over 35 years of experience in the metals and mining industries. He sits on the boards of Mag Copper, Shoreline Resource Management, Great Lakes Graphite, and is also an adviser to DNI Metals. In addition to mining, Mr. Carter also specializes in the engineering, design, and manufacturing of mineral processing equipment. He has been involved in the design and manufacture of over 200 mineral processing plants in 40 countries.

Steve Gray - VP Exploration - Recently appointed, bringing over 24 years of experience within the resource management sector. Steve has worked as a mine geologist for Placer Dome, as senior geologist for Hudson Bay Mining & Smelting, and as chief geologist for Kirkland Lake Gold, Richmont Mines, and Primero Mining Corp.

Denis Laviolette - Director - The President of Palisade Resources and our very own VP of Investments. Denis is an exploration geologist and mining professional and has worked in in some of Canada's most prolific mining camps. He also owned and operated a mine in Ghana, before moving to the capital markets side, joining Sheldon as a mining analyst with Pinetree Capital.

Northern Sphere has a stacked team of geologists and financiers, and at a $10M market cap, its cheap! This is how it came together ...

The Past - The Typical Venture Zombie ...

Northern Sphere Mining began as the typical TSX Venture dog in Argentium Resources - a dormant shell, lacking in assets and people. Yet, under interim management, the company was able to acquire two very significant, district-scale projects in some of North America's most favorable mining jurisdictions.

The first is the Scadding Project in Sudbury Ontario, and the second, the Black Diamond Project in Arizona. Both projects witnessed significant past production. Tremendous "blue sky" exploration potential remains.

As current CEO, John Carter, will tell you, NSM at the time was held together with 90-mile an hour tape and chewing gum! But thanks to the collaboration of Sheldon Inwentash and Denis Laviolette, and with a cash infusion, Northern Sphere Mining was born.

The Northern Sphere story now has three high catalyst elements, including: near-term production at the Black Diamond, high-grade drilling at Scadding, and blue sky exploration at both projects. The torque on these assets are incredible, and now that NSM has the cash and the right people involved we expect a steady stream of news on the horizon that would pique the interest of institutional and retail investors alike.

The Present - Formidable Assets ...
The Scadding Project - Sudbury, Ontario

satellite image map showing areas of gold mineralization in Sudbury Ontario
(Source: Palisade Global Investments)

Nestled in a mining hotbed lies the the Scadding project, a past producing mine that Noront last operated in the 1980s. The mine reportedly produced over 32,000 ounces of gold from 150,000 tonnes of ore grading 7.2 g/t Au. It is ramp accessible and comprised of a series of surficial pits with underground production grades averaging 7-10 g/t.

Since the initial discovery in 1973, five zones of gold mineralization have been identified: the North, Central, South, East-West and the New Zone. There are shallow open pits in the North, East-West and South Zones while the Central Zone was exploited to ~110 meters below surface.

The property was last drilled under Trueclaim Exploration in 2011 and yielded some impressive numbers, including 13.0m at 1.9 g/t in the North Zone; 9.44m at 2.5g/t in the South Zone; and 1.5m at 94.5 g/t and 1m at 21.5 g/t in the New Zone.

drawn gold zones area map
(Source: Corporate Website)

Although an updated NI 43-101 compliant resource needs to be established, its safe to say that there is a lot of jam left in the jar.

Surrounding the Scadding there are so many old shafts, adits, and showings that we lost count. This project is massive and the potential is enormous.

Black Diamond & The Buckeye - Arizona

NSM's second flagship is The Black Diamond in Gila County, Arizona. Black Diamond is just a few miles north east of the city of Globe and a stone's throw from the mammoth Miami copper mine operated by Freeport McMorran, a mine that has been in operation since 1915. Other major mines in the vicinity include: Capstone's Pinto Valley; KGHM's Carlota Mine; and Grupo Mexico's Ray Pit.

satellite image map of Black Diamond property showing nearby producers and annual production
(Source: Corporate Website)

Allegedly, at Black Diamond, the Indians used to pick native silver off the ground to pack into muskets to shoot the cowboys.

The Black Diamond project hosts three past producing high-grade silver mines with grades ranging from 200 ounces per tonne to over 1,000 ounces per tonne silver. Black Diamond was first discovered in the late 1800s and prospected with limited production by small operators between 1900 and 1980, but no formal drill program has ever been taken.

Furthermore, no shafts were sunk beyond the 700 foot level, nor were there any efforts to create a comprehensive picture of the potential resource.

Its safe to say this project checks the exploration upside box: there is high-grade veining spanning a five-mile footprint (for now), plus a large copper anomaly to the south with surface grabs north of 7% Cu, AND a large oxide anomalous gold zone ...

If all that is not enough to get you excited, nested within the project sits a series of patented claims that houses the Buckeye Mine. This mine was the smallest on the property, but has the highest-grade silver mine, with a single vein spanning 1-6 feet wide and grading anywhere from 20 opt to 700 opt. The best part is that the ramp has been rehabbed down to 300 feet and is crosscutting the vein. This work was completed in 2016 and on the cheap. With blasting permits in hand and necessary infrastructure construction underway. NSM is planning something very unique on the Buckeye.

Before we continue, the negative of all of this is that the Buckeye has absolutely no exploration on it, and zero quantifiable resource. This presents a couple of ways to move forward:

  1. Roll the dice and build a small mill, or
  2. Drill and prove it up on paper.

Most people would say drill, however, NSM is already underground and ramp accessible to the vein. Thus, NSM's strategy is a hybrid. It will extend the decline 60 feet to the next sublevel, and start blasting out the vein and stockpile, all while assessing the grade thoroughly. At the same time, NSM will be putting a small underground drill in place to begin to delineate the vein and make some news. The best of both worlds and we like the sounds of that.

The Future - All Aboard the Sheldon Engine

With the closing of a recent financing, the company is in good shape to deliver on some serious milestones for 2017. Drilling will commence at Scadding to brush up and expand a resource. NSM plans on drilling 5,000 meters, which will target the down plunge from existing open-pits and high-grade intercepts. The campaign will also include expansion drilling on recently defined mineralized zones.

The lion's share of the cash will be allocated to the Buckeye mine, where drilling on the Buckeye to get a mine grade established. NSM plans on building a 20,000-ton stockpile for Q4 2017, and will also begin a pilot mining/ exploration bulk sampling project at Black Diamond on what is looking like bonanza grade silver. We anticipate plenty of news on the horizon to generate significant liquidity.

From a management perspective things are looking great. Steve Gray (ex-Chief Geo for Kirkland Lake Gold and Richmont Mines), VP Exploration is taking the reins on operations; Sprott Mining joining as a technical advisor; Sheldon Inwentash is at the helm as Chairman.

When we say all aboard, we literally mean it. As NSM progresses be assured that more of Sheldon's elite network will be participating in future financings. Sheldon knows how to vet a deal, and his involvement in NSM means he's about ready to make his official return to mining.

The creation of a great mining company begins with a group of the right people with the right asset. Northern Sphere has two top-tier assets and will be a market sweetheart for years to come.

picture of silver bars
(Bullets from the Buckeye, source: corporate website)

Palisade Global Investments Limited holds shares of Northern Sphere Mining. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence. publishes interesting contributor articles in addition to its own content. We have not verified any of the above details.

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