K2 Gold (TSX-V: KTO) CEO Stephen Swatton on the Discovery of New Targets at the Wels Gold Property

Gerardo Del Real: Gerardo Del Real with Resource Stock Digest. Joining me today is the President and CEO of K2 Gold (TSX-V: KTO)(OTC: KTGDF), Mr. Stephen Swatton. Stephen, how are you today?

Stephen Swatton: Good. Thanks very much, Gerardo. Fighting off a little bit of flu, but everything else good, and happy to talk to you today.

Gerardo Del Real: Well, thank you for taking the time. It's been a few months. I know that behind the scenes you've been busy on the exploration front. K2 Gold is part of the Discovery Group of Companies, of course, the group headed by John Robins. There's been some great recent successes out of that group. The most notable, I believe, is Great Bear. You are quietly but surely doing a lot of the same type of work behind the scenes, exploration work. You're maintaining your cash position and you're also maintaining a great share structure.

You had some good news this morning and I want to talk about some of the work that's been done over the past couple of months and what shareholders can look forward to in 2019. Let's start with this morning's news from the exploration program at Wels.

Stephen Swatton: Yeah, thanks very much, Gerardo. What we are concentrating on this year was preserving capital, but also doing a requisite amount of work that would be significant to further the deposit. So we sent a team of prospecting geologists onto site and we asked them to look at some of the soil anomalies which hadn't been explored in the past, just to see if we were maybe concentrating on areas up until now that were not entirely representative of the whole footprint.

So we went to the north and this new area, Pekoe, we've known about for a while, but it didn't have a huge gold footprint before. It had a lot of other elements. Well, lo and behold, when we scratched around at the surface, it's got 4 grams as well, which is really significant because it now increases the size of our footprint about 4 kilometers by 2 kilometers. And just for reference, and I referenced that in the news release, the whole Kaminak main zone is 5 by 3 [kilometers]. I'm not for one moment drawing the direct analogy between the two, but the geology, the mineralization, is very similar. The structure is very similar. There's a lot of similarities, but obviously we haven't got enough into the nuts and bolts and the guts of this system to really understand if it is a direct comparison. What I'm seeing right now, I'm liking. The mineralization is occurring in every single different rock type we see on the property.

Now, just so that your listeners are aware, we took a strategic decision at the beginning of this year to preserve capital simply because the Discovery Group are the number one exploration group right now in Canada, if not North America. And with the success of Great Bear and with Northern Empire, one of our backers expressed an interest in actually funding us with a larger type of program in maybe a different jurisdiction.

So I spent the summer reviewing many properties. As you can imagine with a group like ours, when you have such success, we have a lot of deal flow. I've been looking particularly in the United States, and I'm shortly going to be going down to Chile as well to look at something down there. I've been also told to not jump at the first opportunity that comes along. The Discovery Group have got such a good track record that when you find the right one, you'll have the right backers, but bear in mind everything that I've seen on the exploration end is no better than what we have at Wels.

So what we have at Wels, for me, is the best exploration project. We are spending $50,000 next week and we will own the assets, 90% as per the agreement. It's a fantastic opportunity for us to hold a great exploration play, but be in the very comfortable position of being able to raise capital for something that's more advanced. So the long answer to your very short question is yes, we have been very busy behind the scenes, but also taking advantage of the Discovery name.

Gerardo Del Real: Fantastic. What can we expect in 2019? It's tax-loss selling season. We know the pressure that puts on company shares, especially company shares that have pulled back a bit during the year. But again, the market has rewarded significant discoveries. I expect a lot out of K2 in 2019 because of the work that you've done this summer and the work that you're doing now. Can we expect to see a drill turning in 2019, Stephen?

Stephen Swatton: Yes. I'm hoping that at Wels we will have a drill turning and I hope in 2019 I will be able to announce that we've acquired another asset in another jurisdiction, whether it's the United States or Chile or somewhere. The company will grow on the strength of exploration and a more development project.

Gerardo Del Real: Well, I gotta say as a shareholder, you're doing it the right way. It's tough. You know, I deal with subscribers and listeners and I try to explain to them that this is the time to initiate or double down on positions. This is the buy time, not the sell time. And as Rick Rule likes to say, if you're going to buy low and sell high, you have to buy low. It starts there, and I think that's where we're at in the cycle. Would you agree, Stephen?

Stephen Swatton: I would absolutely agree. If you look at the insider reports, you'll see a very familiar name on those insider buying blue sheets, which will be me.

Gerardo Del Real: Well, I always like management to have skin in the game. It's been a tough 2018 share price wise, but there's been a lot of quality work and again, you've seen this before. It always pays off when the market turns. Thank you so much for the update today, Stephen.

Stephen Swatton: Thank you very much, Gerardo.