K2 Gold (TSX-V: KTO) CEO Stephen Swatton on Preliminary Exploration Results, Discovery of New Zone & Four-Pronged Exploration Plan Moving Forward at the Mojave Property in California

Gerardo Del Real: This is 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. Steve, how are you today? How are you and your family doing?

Stephen Swatton: Very good, thank you, under the circumstances. Thanks, Gerardo. It's one of those situations where we make the best of everything. But as you can see, I've been busy compiling a bunch of numbers here for K2 and they are looking pretty good.

Gerardo Del Real: Well, let's talk about it. You had some news this morning, preliminary exploration results. It's early. I'll caution everybody on that front. But as a shareholder and somebody that covers the company, I have to say one, I'm biased, and two, I'm excited. 

Let me read a couple of the headline numbers. Trenching in the East Zone delivered 3.78 grams per tonne gold over 43 meters. The Newmont Zone trench, 2.46 grams per tonne gold over 34 meters. Additionally, you've discovered a new zone. 

Can you provide some context on these early, but very, very encouraging results?

Stephen Swatton: Yeah. These are all adjacent zones. There are some areas between which we still need to do more sampling, but it certainly looks like between the new Newmont East Zone and now the new zone to the south called Broken Hill there seems to be a structural related with sediment hosted gold epithermal type situation, which we're beginning to understand a lot more. But the nice thing about it, Gerardo, is that they have been looked at in the past, but we're finding not only as good sample results as before, but additional zones to either side of previous sampling. 

So it's a fairly large area. We're talking here from east to west it's about a kilometer, and from north to south about a kilometer and a half. So it's a fairly large area and it was – particularly in the Newmont Zone – subject to some resource calculations by both BHP and Newmont. I'm not at liberty to give the results because they're non-43-101 compliant, but we wouldn't be working there if they weren't significant. That's all I can say.

Gerardo Del Real: You mentioned the new zone, the Broken Hill Zone. That's a new discovery. Can we speak to what you're seeing there and what future news may look like? Because I know that you did quite a bit of sampling. 

I believe it's something over 1,300 soil samples, and I believe it was over 600 rock samples. I have to believe that you didn't just sample in or around the previous zones that were known, but I got to believe that you went outside and stepped out to see what was around. Right?

Stephen Swatton: Oh, we did an extremely extensive soil sampling program over the entire district. To be quite frank, this Broken Hill Zone is just one of a couple of them that we've discovered now. But the one to the south here, Broken Hill, it doesn't look like anything. When you look at the rocks, the rocks don't look altered particularly. We went back there just four weeks ago before everything got shut down here and had a look for ourselves to see what the soil area looked like.

It is pretty nondescript looking rocks, similar to what we see at East Zone and Newmont. When you have ranges up to 1,000 ppb in the soils, you know you're sitting on top of something, and that was over seven continuous samples. It's a significant new zone. We haven't even taken one rock sample yet because it just didn't really look an area that would come up with anything. But yeah, it's extremely exciting. It just shows that this project here continues to deliver interesting results from sometimes pretty innocuous looking rocks.

Gerardo Del Real: John Robins called this the best early-stage gold camp he'd ever seen, which says a lot coming from John Robins. Right? 

Let's shoot straight. This is in California. We are going through what I believe is a paradigm shift in everything imaginable. Right? Every sector, and that's going to include the mining industry, the economy in California. Can we speak a bit to the work with the local and state agencies and what that's going to look like moving forward? 

I've got to believe that there may be an opportunity to really work hand in hand, to do things transparently and responsibly, but also for the city and then the state and the region to possibly be a bit more cooperative on the permitting side, because frankly the economies around the world are taking a devastating hit with this COVID-19 pandemic.

Stephen Swatton: Yes. In that aspect we obviously have a close relationship with the local community, the local community leaders. And what we are hearing is is that this COVID situation will be quite devastating to the local economy because the local economy largely relies on tourism. Tourism is going to take a while to recover. I would imagine that a drilling program of the size that we would like to put in there would probably be a welcome addition to local hotels, local restaurants, and just in general all of the support services that we will require as we go forward with this program. So I would, I would hope that the opposition to such a project as ours would see the benefits that we could actually bring to the local community.

Gerardo Del Real: Is there ongoing dialogue with with the local regulatory agency, Steve?

Stephen Swatton: Yes, absolutely. We have a continual and also we understand the issues that the environmentalists may have with what we're trying to do, but also the local community, the BLM staff are very cognizant of what we're trying to do. We have, I would say, a very good and cordial relationship with everybody involved in this project, and everybody who will be involved going forward.

Gerardo Del Real: You have different types of alteration and mineralization at this Mojave Property. You mentioned in the release that it's typically oxide, sediment hosted, and structurally controlled by the steeply dipping faults and lithologic contacts. I'm just reading from the release here. But you also mentioned that you have both Carlin and epithermal type gold systems. You also mentioned that there's a potential for porphyry and intrusion related mineralization. 

We know from experience, Steve, and you more than I, that the best systems, the best deposits, or the best camps tend to have this intense alteration and multiple systems within that camp. Can you speak to the intensity of the alteration and the multiple systems and this potential for porphyry and intrusion related mineralization?

Stephen Swatton: Yeah. Well, what's happened on this, it was discovered in 1984 in the northwest corner of the property. As subsequent companies worked on it, they basically looked at the gold first. It was known that there was a few old time workings to the western side, and we're talking here about 4 kilometers difference between the east and the west. 

On the western side, BHP decided in the mid '90s that they would probably not explore for gold any further and this was their last ever project. However, they sent a porphyry geologist in. The porphyry crew, this porphyry copper outlined an area which has some potential. So we've gone ahead and staked it.

Now the significance of this is possibly a porphyry on the western side. There's some base metals very close to that, which the old timers at the turn of the last century mined, and then distal to that is the gold, which is a typical zonation around a porphyry copper. 

We're drawing the lines between these and there could well be potential of a large system, but it's early days. We don't really know. What we know most about is the gold at this stage, but there could well be a mineral district there, yes.

Gerardo Del Real: What's next, Steve? I know we have results that are still pending. And what's the followup to that? What does that look like? I mean your stock is up over 30% on these results. And despite that you still have a market cap sub-$10 million Canadian, right? 

So obviously the upside is there. Gold's trading at $1,660. It looks primed to go much higher. How do you follow this up? What can we expect in terms of news flow over the next several weeks and months?

Stephen Swatton: Yeah, Gerardo, what we're going to be doing is we're going to think about similar type releases to the one that you've seen now with other zones on the property. But also we do have, and it's little known, we do have the right to drill the property as a result of some SSR documentation that they forwarded to the BLM, and it was approved for a 7-hole program. We are not sure if we're going to go ahead with that because we'd like to actually to do a much larger program. 

So what you're going to see coming through is results of not only our sampling, we've also got a magnetic survey which we did on the ground, and also we've done a spectral survey with WorldView-3, which will look at additional types of target on the property, which we may well follow up at a future date.

So what we're doing is almost like a four-pronged approach. We've taken samples, we've got the WorldView, we have a drilling type scenario, and also we're going to be, if you like, prospecting and looking at other areas for potentially the base metal side of it.

Gerardo Del Real: You picked a heck of a time to have a lot of fieldwork results pending and upcoming. I want to thank you for your time today, Steve. I'm looking forward to having you back on if the results are anything like the results that we got today. I'm looking forward to a day where this camp, as John Robins describes it, gets a proper testing, a modern day proper testing.

Stephen Swatton: I appreciate your call and thanks very much for being so patient. I'd like to thank all of our shareholders for being patient, because working in this part of the world, it's not sometimes you're given the gratitude that maybe you think you deserve, but we're certainly going to deliver some results going forward. Thank you very much.

Gerardo Del Real: Appreciate it, Steve. Thanks again. We'll chat soon.

Stephen Swatton: Thank you. Bye bye.