The Goldspot Story
March 1, 2017
It was a frigid, ten-below in Kirkland Lake, Ontario. Another standard planning session was underway in the faintly lit office on Prospect Avenue - geological headquarters for Palisade Resources. Denis Laviolette and his old boss Ken Rattee sat sifting through piles of maps, working to identify the next acquisition target for the up and coming exploration company. Ken, head geologist, cross checked maps against a list of claim numbers and expiration dates. Meanwhile, Denis, President of Palisade Resources, sat at his desk, laptop in hand, paging through assessment reports and ancient scans of typewritten records. Where was it? The 'hidden monster.' The project that got away. The next big gold deposit that history had missed and was just waiting to be re¬discovered, re-staked, re-explored. This is the way that exploration geology begins, and has begun for the past hundred years. Lithological maps are used to identify geological settings, overlain by geophysical maps, then geochemical anomalies, drill holes, rock samples, among many additional layers of information. If they all line up the in the mind of a geo, it's time to stake some ground and explore.
After 12 hours of cigarettes, microwave tea, and Bob Dylan's Greatest on repeat, Denis and Ken said their goodbyes. Denis loaded his bag in the car and headed back down on the six-hour excursion to Toronto. That fruitless day of mine-finding in the office and the long drive back home, in the end, would prove to be the sprouting seed of a mineral business.
Denis Laviolette, 33, was interested in rocks by his fifth birthday. That led to a stint at Brock University and a geology degree that brought him to Norway, then Ghana, where he owned an alluvial gold mine, and made an new gold discovery. Denis then held positions working in Timmins, Kirkland Lake, and Red Lake gold camps as a senior mine and exploration geologist. In 2012, Denis joined the dark side of capital markets, accepting a position as lead investment analyst for the billion-dollar mining investment firm Pinetree Capital. Thirty-three is young in the mineral business, but Denis has seen a lot, which is why he jumped at the opportunity to launch an exploration land bank in 2015 when approached by a similarly aged group in Palisade Global Investments. Palisade Global, led by Collin Kettell and Sean Zubick, is a merchant bank primarily focused on the resource sector. Collin hails from a family of mining financiers; his father Ralph discovered the Long Canyon deposit in Nevada in 2002, later purchased by Newmont for $2.3B. Sean emerged from Bay Street at a young age as an angel investor and financier; he is responsible for building and financing over 30 private and public businesses. Averaging just 28 years old, Sean and Collin have invested over $25M in the resource sector and had their eyes set on acquiring their very own mining projects. In November 2015, Collin and Sean shook hands with Denis to form Palisade Resources Corp. The goal was simple - purchase depressed assets in bad markets and sell them in better days. Ever since, these trips between Toronto and Kirkland Lake had become routine.
On the drive back to Toronto and in deep road reflection, the lightbulb went on. Just two weeks prior, Denis attended the Integra Gold competition in Toronto, where brilliant teams presented their ideas on how to bring mining exploration into the 21st century. A young group of scientists stood ready to present how they utilized machine learning to analyse "big data" and generate 3D drill ready targets. Reflecting on this and the task at hand, Denis thought that perhaps Palisade could apply machine learning to a 2D framework, analysing data on a provincial or district scale to find the next claim to stake. After all, the data was accessible. Quebec and Ontario possess tremendous amounts of untapped data, compiled and collected by the government and corporations. The data was all there, the problem has always been, what to do with it?
The following day, Denis phoned Cejay Kim, Palisade Global's CIO, with an idea. Why not develop a tool capable of analysing district scale data? A tool capable of spitting out highly prospective gold targets. He imagined the possibilities... Thanks to advances in processing power, computers are now capable of handling tremendous amounts of data and analyzing them in ways that leave our human brain in the dust. This is called machine learning and its being utilized by some of the largest companies in the world. These computers are not just capable of handling large amounts of data; they actually learn from their experience. Despite advances in oil & gas and tech, mineral exploration was still seemingly left in the dark.
If successful, the opportunities were endless. A computer spitting out target areas with the potential to house the mines of tomorrow. The team was convinced the idea deserved a serious look. But how to forge ahead? Enter The Data Miners, runner up team in the Integra Gold Challenge. These five students managed to impress a billionaire panel of judges with their machine learning know-how, but what were they up to now? A meeting was organized and the plan was hatched. What if the Palisade Team launched a secret project with the Data
Miners to explore the efficacy of geological targeting on a regional scale? And that is how Project Goldspot, or G-Spot for short, was born. The Data Miners team set out over the course of 5 months to complete this extremely complex work, developing a machine-learning algorithm capable of analysing the Abitibi Greenstone belt. The Abitibi region is known for its prolific gold production and hence, heaps of information are readily available. With abundant data, computing power, and the human touch, the team set out to highlight trends and locate Goldspots.
Fast-forward to August. Denis, Collin, and Cejay arrived in Quebec City for the first presentation of The Goldspot Algorithm. Initial findings had been pouring in for months, but today was the real test, a blind test! The Abitibi Region is filled with gold mines. Those gold mines and surrounding gold deposits are used to train The Goldspot Algorithm to learn how to find new targets. But what happens when you remove some of the data and don't tell the computer where all the gold mines are? Will the computer find the mines on its own? If it does, then the system works. Vincent Dube Bourgeois, leader of the Data Miner Team, gave the presentation. "And when we processed the data after removing the inputs, the algorithm was able to identify 93% of deposits, 76% of prospects, and 82% of gold occurrences in the area of interest." Project G-Spot had hit. The initial results were in and they were promising. Next step - the boardroom.
In Toronto, at the intersection of King and Yonge sits global headquarters of Palisade Resources Corp. It's also the office for ThreeD Capital, a public company led by Sheldon Inwentash, a name ubiquitous in the mining business. From 2001 to 2007, with Sheldon at its helm, Pinetree Capital's share price appreciated 150-fold, reaching over a billion-dollar market cap. During that time, Sheldon funded several projects through to discovery. Simply put, he is no stranger to the ways of the exploration business. Further, ThreeD boasts a 28% ownership in Palisade Resources Corp. Sheldon's stamp of approval was key to the ongoing funding of Goldspot. In late September, the Data Miners showed up to Palisade's boardroom for a presentation. In attendance: Collin Kettell, Denis Laviolette, Cejay Kim, and Sheldon Inwentash. The blind test was shown again. An hour long discussion ensued. The decision was made - a separate vehicle would be set up; the technology would receive proper funding to the tune of a million dollars.
With the average team member averaging just above 28 years old, the individuals fatefully converged, representing the new guards of mining. To date, the team's work culminated in The Goldspot Algorithm; a disruptive tool capable of identifying highly prospective regional targets. Team Goldspot is reinventing the decision-making process of the mining industry; we decrease risk. We increase efficiency. Necessarily, the rate of success must increase. The team has been working to apply the algorithm towards a ranking system for public companies with acreage in Quebec. Our team's current project: it is a known adage that successful resource speculation relies on a plethora of inputs: proper management, timing, structure, among others. Goldspot will change everything. Goldspot is a revolution in how investment decision will be made, how exploration dollars will be spent, and where attention will be directed.
Just in the past couple months, Goldspot has deployed capital, staking open acreage that has lit up on the Goldspot map. The team has A-listed the best acreage and is deciding which companies and projects merit investment dollar. The possibilities are endless: options, joint ventures, a premier royalty company in the making. Royalty companies have emerged as the darlings of mining business, capable of capitalizing during bear market conditions. At the moment, the largest royalty companies are forced to wait until deposits are delineated before making a purchase, meaning a premium is paid. Goldspot management believes that proper targeting could allow a royalty company to buy in at a much earlier stage. That translates into less certainty of a mine being found on an individual basis; however, each royalty comes at a fraction of the cost. The benefits are irrefutable. Additionally, in the second week of January, Denis and Sheldon finalized a deal with a publicly listed African exploration company-the deal will see holes drilled based on the localized targeting of the algorithm, and at no cost to Goldspot! Results are expected by summer of 2017.
The future is bright; the future of Goldspot, even brighter. Palisade's two major shareholders are committed to substantial ongoing funding. Onboard technical expertise - second to none. Management is convinced. The way that the largest investment funds in the business allocate capital will be disrupted for good. The reason? Goldspot. Team Goldspot is working at furious pace, analyzing other data-rich provinces in Canada and globally. Sentiment among team members is... well... ecstatic to say the least. The world is changing. Expect big moves in 2017.