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BMR Exclusive Report – 7:00 p.m. Pacific

Prosper Gold Corp. (PGX, TSX-V)

Garibaldi Resources Corp. (GGI, TSX-V)

Key Points

• The Right People (proven business/geological expertise, motivated leaders)
• The Right Area (incredible untapped geological potential, an early “model”)
• The Right Opportunity (all the ingredients necessary for a market “home run”)

First 6 Holes at PGX’s Sheslay Cu-Au Porphyry Project Hit Mineralization From Top to Bottom – Assays Pending

The “SV” is one of British Columbia’s best-kept geological secrets.  Though it’s right on trend with major systems to the southeast, few investors are aware of this mineral-rich area of northwest B.C. and the potential it holds to host a world class Copper-Gold porphyry deposit (or series of deposits).  This is an immediate and rapidly evolving story that features some of the brightest, most successful individuals in the junior exploration sector.

“SV” stands for “Sheslay Valley”, unquestionably one of the most intriguing geological situations we’ve ever come across.  And it’s like pouring gasoline on a fire when you have the very rare and powerful combination of exceptional geologists, money available to spend, savvy business and market people who are motivated to succeed and know how to execute, and attractive company share structures.  When you find an opportunity with all of those ingredients, you truly have a potential home run on your hands.  This kind of situation defines the secret to investor success in the current junior exploration market:   The key to significantly reducing risk and making money is to focus on the very small percentage of Venture companies who have the working capital, the expertise, the properties and the drive to succeed both on the ground and in the market.

BMR first alerted its readers to this opportunity many weeks ago after extensive due diligence including an area visit.  Right now, we’re going to quickly review what’s developing both on the ground and in the market with these two very interesting companies – Prosper Gold Corp. (PGX, TSX-V) and Garibaldi Resources Corp. (GGI, TSX-V).   Drill results are pending from Prosper Gold’s property (Sheslay Cu-Au Porphyry Project) while exploration has commenced on Garibaldi’s adjoining land package (Grizzly Property).  Investor interest in both companies could ramp up dramatically in the coming days and weeks through news flow and increased overall awareness of the “SV”.

The Location:

Approximately 60 miles WSW of Dease Lake and 30 Miles NW of Telegraph Creek at the Top of B.C.’s Prolific “Golden Triangle”

These strategic properties are situated within an under-exploited part of the Stikine Arch, a highly mineralized, prospective belt of rocks. The Sheslay and the Grizzly are on trend with massive deposits to the southeast.  Teck Resources Ltd. (TCK, TSX) staked a large land package right up to the southern boundary of the Grizzly, while recent staking has also been occurring in the general area as certain juniors try to strategically position themselves.

The Properties:

The two major properties at the centre of this unfolding drama are the advanced 68 sq. km Sheslay Cu-Au Porphyry Project (Prosper Gold) where drilling started in late August, and the 175 sq. km Grizzly Property (Garibaldi Resources) contiguous to the western and southern borders of the Sheslay.

The Sheslay

Prosper Gold was drilling its sixth hole at the Sheslay as of September 18, its most recent news release.  Each hole completed to that point intersected Copper-Gold mineralization from surface to the bottom of the hole. The host rocks are the same as those found at Red Chris, Galore Creek and Schaft Creek, three large Copper-Gold porphyry deposits in the Stikine Arch.  The Red Chris didn’t blossom into the deposit it is until Imperial Metals Corp. (III, TSX) took over the property and decided to drill aggressively at depth, below 400 metres.  That’s what Prosper Gold is now doing at the Sheslay.  The average length of Firesteel Resources Inc.’s (FTR, TSX-V) two dozen holes at the Star target was a paltry 174 metres (only two holes went below 300 metres – 330 m and 337 m) despite the fact that 80% of their holes ended in strong Cu-Au mineralization, including CC2004-05 which intersected 0.44% Cu and 0.32 g/t Au from surface to 242.3 metres.

A total of 22 Sheslay core photos were released recently on the PGX web site.  The core shows all the characteristics of a strong Cu-Au porphyry system.  Below are 3 photos we chose to highlight.  They provide ample evidence of a robust hydrothermal system (multi-directional veins, multi-generations of veins, etc.).  This is exactly what one looks for in a classic Cu-Au porphyry deposit.  Grade and tonnage of course, will determine if a potential mine here can be economic.  But if there’s anyone who can put all the pieces of that puzzle together, it’s Dr. Dirk Tempelman-Kluit, Prosper Gold’s highly respected geologist and director who’s aiming for his second consecutive major discovery.  He’s guiding an impressive assault on the Sheslay, from both the air and the ground, with every tool at his disposal.  He’s a master at data compilation and interpretation.

Tempelman-Kluit On Selecting The Sheslay

BMR had the pleasure of interviewing Tempelman-Kluit earlier this week.  He is a brilliant geologist, in a league of his own.  Below is an excerpt of Jon’s discussion with Tempelman-Kluit who sees something very special in the Sheslay (click on the forward arrow to listen to this 2-and-a-half-minute excerpt – requires Adobe Flash Player, version 9 or above):

[audio:https://e8d59e.a2cdn1.secureserver.net/wp-content/uploads/2013/09/Dirk-PGX-Clip-11.mp3|titles=Dirk PGX Clip 1]

The Grizzly

Garibaldi, meanwhile, is pushing ahead with fresh exploration at the Grizzly.  Results are due shortly from a just-completed heli-borne aeromagnetic and radiometric survey over “Grizzly West”, a priority target area within the northwest portion of this property, as announced by the company following today’s close.  The geophysics survey could provide highly valuable and important new information, and will also help guide GGI on the ground in the coming weeks.  Grizzly West is just one of multiple target areas stretching 15 kilometres across this land package as reported by Garibaldi (tremendous potential scale).  Incredibly, no modern drilling has ever occurred at the Grizzly – historically, just three backpack drill holes.

Important Highlights – Sheslay & Grizzly Properties

• The Sheslay features 5 permitted and drill-ready Copper-Gold-bearing porphyry bodies – the Star (most advanced), North Star, East Star, Copper Creek, and Pyrrhotite Creek.  The first 4 are clustered within a 12 sq. km area while the Pyrrhotite Creek porphyry is located in what appears to be a 2nd distinct multiple target area 4.5 km to the southwest.  Mineralization is open everywhere, laterally in all directions and at depth. Only the Star target has been drilled to date – all 5 targets will be drilled in 2014;
• Historical data for the Sheslay, including about two dozen holes at the Star, are highly encouraging, and the property exhibits great potential in terms of both grade and size.  As Bernier told BMR, “This thing has a lot of legs and a lot of room to get bigger”;
• Infrastructure at the Sheslay (airstrip, road and trail access, permanent camp) suggests that exploration costs and ultimately the capital costs to develop a mine in this area could be significantly less than at other remote properties in northern B.C. – an important part of Bernier’s calculation in selecting the Sheslay;
• The Kaketsa Pluton, a key geological feature interpreted by some as a “heat engine” for the entire area, originates in the northwest corner of Garibaldi’s Grizzly Property;
• While considerably less advanced from an exploration standpoint than the Sheslay, the Grizzly is 2.5 times the size and features similar geological, geophysical and geochemical signatures as the Sheslay (same rock units and structures) over very wide areas; geologically, these 2 properties appear to be connected and mineralization at the Sheslay trends generally north-south, demonstrating the importance of the Grizzly;
• The Grizzly covers the western and southern contacts of the Kaketsa intrusion with the surrounding Stuhini Group volcanics, and shows many of the characteristics of alkalic porphyry Copper-Gold mineralization.  The possibility of a high-grade Gold system somewhere on this property also can’t be ruled out, according to technical reports and some geologists we’ve spoken to.  Keep in mind, the past producing high-grade Golden Bear Mine is just 20 miles west of the Grizzly;
• The fact Bernier and Tempelman-Kluit chose the Sheslay after reviewing so many other possible properties confirms Garibaldi’s wise decision years ago to acquire its large land position.  They smartly held on to every square inch of it, even through challenging market conditions, and carried out intermittent exploration which has defined highly prospective areas of interest.

The Two Key Companies – Quick Facts:

Prosper Gold (PGX, TSX-V) and Garibaldi Resources (GGI, TSX-V)

Prosper Gold

Pete Bernier’s Prosper Gold is up 20% since it resumed trading Tuesday, September 3, following a halt since early May for approval of the company’s qualifying transaction (the deal with Firesteel).    PGX has just 25 million shares outstanding after raising $3.6 million, mostly in “hard” dollars, so huge upside potential exists – especially in the event of a “glory hole” at a time when there’s so much restricted stock (escrow and PP).  Bernier and award-winning geologist Tempelman-Kluit examined at least 150 properties before selecting the Sheslay following their huge win with Richfield Ventures a couple of years ago when it was bought out by New Gold Inc. (NGD, TSX) for half a billion dollars.  That should tell you something about the quality of the Sheslay and the overall attractiveness of this area.

Garibaldi Resources

At only 10.5 cents, Garibaldi’s market cap ($6 million) is just moderately above its working capital.  The company is now exploring the Grizzly while also continuing to develop its valuable assets in Mexico where it’s efficiently advancing three district-scale projects covering some of the best Gold, Silver and Copper producing areas in the country (drill results are pending from one target, and more drilling on GGI’s Mexican properties is planned for Q4).  In addition, the company is actually generating royalty income from a pilot coal program in Sonora state with ongoing production.  The coal seams being exploited there also have graphite potential, and the company is awaiting results of graphite surface samples sent to a lab.  This part of Mexico has a history of coal and graphite production.  That’s a surprising and important new development regarding Garibaldi, along of course with the Grizzly.

Garibaldi has a highly capable President and CEO in Steve Regoci who’s 100% focused on GGI and has formed a very strong team both at the board level and on the ground.  Regoci has smartly added the highly respected Charlie Greig to the Grizzly geological team through C.J. Greig and Associates Ltd., Charlie’s consulting firm (he’s also working on Pretium’s huge Gold deposit to the southeast).

In Mexico, Garibaldi has already demonstrated its ability to make a discovery and create value for shareholders (Temoris sale to NYSE-listed Paramount Gold & Silver).  Because of its success there in recent years (with much more to come we believe), GGI has NOT had to do a financing since 2009 and has no warrants outstanding.  It’s one of the few companies on the Venture that has been successful in maintaining the integrity of its share structure during the difficult last couple of years in the market. The runway for the share price, so to speak, is clear for take-off.

The “Power Teams” Involved:

If there’s any group in the junior exploration sector that can nail down a major new discovery in this part of B.C., and provide a much-needed spark for the Venture Exchange, it’s most certainly Prosper Gold.  The Sheslay has always had all the geological ingredients to potentially become one of the hottest Copper-Gold exploration plays in the world.  It just needed the right people to unlock its value.  It’s already at a more advanced stage and has greater upside, we believe, than Colorado Resources’ (CXO, TSX-V) North ROK discovery 60 miles to the east-southeast.  Many exceedingly good properties have gone through multiple owners over decades before the right group finally comes along and finds a major deposit that develops into a mine.  The right group has arrived at the Sheslay, just like it did at Blackwater a few years ago.

Bernier has great respect and a large following in the market due to his success with Richfield.  He’s a straight-up guy, and it’s unfortunate he can’t be cloned.  The Venture Exchange could use many more Pete Bernier’s.  He knows how to execute and makes things happen.  He’s “street smart” and a go-getter with a great sense of timing.  Many Venture companies are run by geologists who have no business savvy or any understanding of the capital markets, and these companies’ share prices often suffer as a result.  With Bernier, investors can have a high level of confidence that Prosper Gold will deliver on its brand –  exploration, discovery and wealth. At Bernier’s side of course is Tempelman-Kluit, the geological genius who figured out Blackwater.  Together, the 2 create a very special dynamic that’s rarely seen in this business.  Other members of Bernier’s Richfield team have followed him into Prosper Gold and he has recruited a couple of other stars as well.

Garibaldi, meanwhile, has an impressive team of its own.  Regoci was a successful broker for many years.  He, too, understands the capital markets and what a junior exploration company needs to do in order to survive and thrive.  He has been at the helm of Garibaldi for nearly a decade and has put the company in a serious game-changing position with a series of smart strategic moves in both Mexico and British Columbia.  Like Bernier, he’s a straight shooter and has surrounded himself with a strong group of individuals with proven track records, including the likes of Dr. Craig Gibson and Dr. Peter McGaw.   Regoci is not flamboyant but speaks with authority when telling his company’s story.  He has Garibaldi’s feet moving all the time, no matter what the market conditions are, and that’s important.  He is driven to build shareholder value.

Conclusion:

Both Prosper Gold and Garibaldi could be on the verge of creating a whole new chapter in the incredible story of exploration success in British Columbia.  Investor sentiment toward this sector in B.C. has improved dramatically in recent months after the surprising re-election of the pro-mining Liberal Party.

We firmly believe there are historic opportunities in the junior resource space at the moment.  While there are never any guarantees in this always risky junior market, you can greatly reduce your risk and dramatically increase your odds of success by focusing on the very small percentage of companies on the Venture (probably less than 10%) who have the working capital, the expertise, the properties and the drive to execute effectively both on the ground and in the market, and make discoveries that majors want to buy.  Prosper Gold and Garibaldi both fall into that category.

Good luck, and as always – perform your own due diligence.  Note:  the writer holds a position in both PGX and GGI.

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