NFGC - Gold Rush 2.0: New Found Gold Corp. Set For A Solid 2023

Summary

• New Found Gold Corp. is a junior gold exploration company operating in Newfoundland, Canada, which is considered a top-rated mining jurisdiction.
• In 2022, the company made multiple high-grade discoveries at its Queensway Project, including Keats West and Lotto North, and drilled a record-breaking 184,911 meters.
• New Found Gold Corp. has plans to expand its exploration efforts in 2023, with a focus on its Queensway South property and the Appleton and JBP faults.

This is an update on New Found Gold Corp. ( NFGC ), a company that is a major part of my portfolio. I've been an investor in this company for a few years now, starting with my initial coverage on September 24, 2020, entitled “How to Invest in the Newfoundland Gold Rush."

Despite a rough year, I believe that 2023 will be the year that New Found Gold really takes off and that the company's stock will perform better than other exploration companies.

In this article, I'll cover the highlights of New Found Gold's accomplishments in 2022, recent news (including their latest capital raise), and what investors can expect in 2023.

New Found Gold Corp. Overview

New Found Gold is a junior gold explorer with multiple high-grade discoveries on a district-scale property in Newfoundland, a top-rated mining jurisdiction according to the Fraser Institute. The Queensway Project is easily accessible, located on the trans-Canada highway with nearby high-tension power lines and just 15 minutes from Gander International Airport.

The company is currently conducting a 400,000-meter drill program at Queensway, targeting prospective zones along the Appleton Fault Corridor.

New Found is listed on both the NYSE American and TSX Venture exchanges, making it a rare accessible and liquid junior gold explorer in the market. Since drilling its first hole in August 2019 and intercepting 19 meters of 92.9 g/t Au, the company has made multiple high-grade discoveries along a 3km corridor including Keats, Lotto, Golden Joint, and recently announced Keats West and Lotto North.

Exploration is ongoing on both the Queensway North and South properties, with a focus on large gold-in-till anomalies coincident with the Appleton and JBP faults.

New Found Gold’s 2022 Achievements: A Breakdown

While New Found Gold’s stock price will finish the year down approximately 40%, underperforming the VanEck Vectors Junior Gold Miners ETF ( GDXJ ), it was a successful year in many regards.

New Found Gold had a productive year in 2022, with a record-breaking 184,911 meters drilled and the completion of its inaugural drill program at Queensway South. The company entered the year with significant funds and a plan to expand on previous discoveries made along a 2.7km stretch of the Appleton Fault Zone ((AFZ)). The AFZ runs over 100km+ through the Queensway Project, offering a large area of unexplored potential for gold discovery.

In 2022, New Found found multiple new zones along the AFZ, including Keats North, the Keats South Extension, Lotto North, and Keats West.

One standout discovery in 2022 was the intercept of 42.6 g/t gold over 32 meters at Keats West, which confirms the west side of the highly prospective AFZ as a location for high-grade epizonal-style gold mineralization, opening up a vastly unexplored area.

Other notable results from Queensway in 2022 include:

• 117 g/t gold over 2 meters at Keats North ;

• 18.6 g/t gold over 16 meters at Keats West;

• 85.7 g/t gold over 5.65 meters at Keats Main;

• 152.1 g/t gold over 3.85 meters at Lotto Main Vein;

• 89.5 g/t gold over 2 meters at the "Tuesday" Lotto Zone;

• 275 g/t gold over 2.15 meters at North Keats;

• 69.15 g/t gold over 14.15 meters at Golden Joint.

All of these drill holes returned an excellent GxM (gram x meter) reading of over 100.

Here’s a graphic from its corporate presentation showing the company’s drilling highlights since its founding:

In addition to these discoveries, New Found Gold also implemented the Chrysos PhotonAssayTM method for gold determination, which is expected to improve the accuracy and speed of its drill results.

The company also expanded its exploration team and appointed Ron Hampton as Chief Development Officer. New Found Gold completed the construction of a "Giga-Shack" core processing facility and acquired the option for an additional 13,755ha of land at Queensway North.

Finally, the company also entered into an agreement to acquire a 100% interest in five mineral licenses at its Queensway North project, increasing its landholdings to 165,575 hectares and adding approximately 6.1km of strike along the highly prospective AFZ.

New Found Gold’s plans for 2023

As New Found Gold moves into 2023, its main focus will be on identifying more gold through intensive drilling and exploration. So far, it has drilled approximately 319,000 meters of the 400,000-meter program at Queensway, with about 60,000 meters of core still awaiting assay results, so I expect plenty of news flow.

New Found will likely finish this drill program in the first or second quarter of 2023, after which I think it’ll announce a new drill program and potentially a timeline for an initial resource estimate at Queensway.

The company’s 2023 plans will be to explore and expand its discoveries at Keats, Lotto, and Golden Joint, but I also think it needs to assess the full potential of its 20km+ of prospective ground at Queensway. That requires a lot more exploration work, and potentially more funding.

It's possible New Found Gold will need to raise additional capital in 2023 (Q3-Q4 likely) to further increase its exploration efforts, especially if it plans to target other areas at Queensway other than Keats, Lotto, and Golden Joint.

I think it may also potentially pursue M&A with other Canadian gold explorers, developers, or producers to accelerate the exploration and development of Queensway, but that’s just an educated guess or speculation at this point in time.

New Found Gold’s current financial position

New Found Gold recently closed a C$50 million financing deal with a price of C$8.00 per share, representing a 42% premium over the current stock price of C$5.22. According to the company, this deal resulted in minimal dilution of just 3.6%. The financing included the issuance of 6.25 million new units at C$8.00 each, without any attached warrants.

Prominent investor Eric Sprott , known for holding a significant portion of his net worth in gold, silver, and related securities, decided to keep his 19.9% stake in New Found Gold and participated in the financing.

As a result of this deal, New Found Gold will begin 2023 with over C$90 million in cash and marketable securities, which should be sufficient to complete the remaining 81,000 meters of drilling in the current program and potentially launch an additional 50,000 meters of drilling in a new program.

I'm pleased that New Found Gold was able to secure funding at attractive prices and terms, even in a challenging market for junior gold stocks. The strong demand from investors and support from shareholders like Sprott demonstrates the quality and potential of the Queensway project.

Navigating the Risks and Uncertainties of Investing in New Found Gold

Investors should be aware of the risks of investing in New Found Gold (or any other gold exploration company, for that matter). I’m going to try to do a better job of highlighting these key risks, to help you conduct your own due diligence and make a more informed investment decision.

I carefully analyzed New Found Gold’s key risks and uncertainties published in its recent financial statement . Here’s a summary of what I feel are the key risks to investing in New Found Gold.

• New Found Gold has not yet begun extracting or processing any minerals and therefore does not generate any revenue or cash flow from its operations. It is focused on searching for potential mineral deposits but has not yet identified any that are economically feasible to extract.

• The process of exploring for and developing mineral resources is risky and can result in unsuccessful efforts due to the lack of discovery or the discovery of deposits that are not of sufficient quantity or quality to be profitable.

• The marketability of any minerals that the company may find or acquire is impacted by a range of external factors such as market fluctuations, government regulations, and environmental concerns, which could affect the company's ability to recoup its investment.

• The long-term profitability of the company will depend on the success and cost of its exploration programs, as well as the feasibility of extracting and processing any minerals that are discovered. However, there is no guarantee that the company will discover minerals in sufficient quantities or grades to justify commercial operations or that it will be able to secure the necessary funding for development in a timely manner.

• There are also various other potential risks and uncertainties that could impact the company's operations, including regulatory requirements, technical challenges, and unexpected geological formations.

Again, please read up on this text and consider researching the financial statements for further analysis of the risks of investing in New Found Gold.

Why New Found Gold is a Smart Bet Entering 2023

Despite its stock price falling 40% this year, New Found Gold Corp. made significant progress in 2022, with the discovery of multiple high-grade gold deposits at its Queensway project. It is likely that more high-grade gold will be found in 2023. The company's stock may have also been affected by recent tax-loss selling where stocks are sold to offset capital gains liability, presenting a buying opportunity for long-term investors.

While gold exploration carries various risks, New Found Gold Corp. is a top-tier gold explorer with strong insider support and a smart strategy. The current lower stock price may present a buying opportunity as we enter 2023. I may look to add to my position in the coming weeks.

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