Best Drill Interceptions In The Metals Mining Sector For The Week Ended 13 January 2019

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Includes: GTGDF, OBNNF, SKREF, SVCMF
by: Gold Panda
Summary

Osisko hits over 2,000g/t Au at Windfall.

GT Gold delivers great drill result at Tatogga as expected.

SilverCrest with the best drill interception to date at Las Chispas.

Source: Exploration Insights

Introduction

Welcome to Gold Panda's weekly series of articles covering the best drill interceptions in the metals mining sector.

If you're into investing in the mining sector, you should know the above chart very well. Exploration and discovery can add a lot of value for a mining company across all stages of its life cycle, although the greatest increases in the share price usually happen when a small company makes a major discovery and the hype arrives. However, great exploration results can also improve the economics of large projects of established global mining companies.

I'm planning on writing a weekly series of articles in which I will analyze the three projects with the most significant drill interceptions over the past week as well as the prospects of the companies which own these projects. I will use data from the weekly bulletin of RSC Mining and Mineral Exploration, which can be found on its website. Note that the drill interceptions are converted into grades of gold equivalence using the following formula:

Source: RSC Mining and Mineral Exploration

RSC Mining and Mineral Exploration has chosen gold as the metal equivalent for all conversions as it considers it the most widely used and best understood benchmark to determine or appreciate the grade tenor of a drilling intercept.

Source: RSC Mining and Mineral Exploration

1) Windfall Lake gold project in Canada

On 7 January, Osisko Mining (OTCPK:OBNNF) announced that it intersected 2m @ 2,223g/t Au from 65m in hole WST-18-0025 at its Windfall Lake gold project, which is equal to 4,446(AuEq.)m. This hole formed part of the company's 800,000-meter drill definition and expansion program which started in late 2015. Other notable results from the news release included 2.7m @ 69.9g/t Au, 2.1m @ 64.2g/t Au and 10.7m @ 12.3g/t Au:

Source: Osisko Mining

Windfall Lake is located between the Val-d'Or and Chibougamau projects in Québec and is one of the highest grade gold projects in Canada:

Source: Osisko Mining

In November 2018, Osisko released a new the resource estimate for the Lynx zone of Windfall Lake which boosted the project's resource to 754,000 ounces of gold averaging 8.17 g/t in the indicated category and 2,366,000 ounces of gold averaging 7.11 g/t in the inferred category.

I continue to think that the recent exploration success of the company will improve the already compelling economics of Windfall which was outlined in a Preliminary Economic Assessment in the middle of July 2018: Source: Osisko Mining

Windfall remains open at depth, and Osisko Mining is moving up to 15 drills in January. A resource update and a feasibility study of the project are in the cards for 2019.

2) Tatogga gold project in Canada

On 9 January, GT Gold (OTC:GTGDF) announced that it intercepted 1,149.7m @ 0.62 g/t Au, 0.36% Cu and 1.17 g/t Ag from 11.33m in hole TTD109 at its Tatogga gold project, which is equal to 1,321m (AuEq.).

Source: GT Gold

Tatogga is located in BC's Golden Triangle and is adjacent to Skeena's (OTCQX:SKREF) Eskay Creek project which I have already covered in my Marketplace service:

Source: GT Gold

Hole TTD109 returned the strongest intercept from Tatogga, and it confirmed the existence of a large high-grade system with grades increasing to depth. The deeper holes have revealed a high-grade core, which is several hundred meters thick.

That said, I have to point out that the first 373 meters are unimpressive:

Source: GT Gold

The success of hole TTD109 was already predicted by the Angry Geologist on 18 December, and it's above his estimate:

I'm certain that hole TTD109 will get something great (probably 400m @ >0.75 g/t Au and 0.5% Cu starting from 700m depth), but so what. All it will be doing is confirming what was hit in hole TTD093, it won't tell us anything new, we already know that they have some moderate mineralization at depth. To be special and make this project, hole 109 need to get something special.

3) Las Chispas silver-gold project in Mexico

On 9 January, SilverCrest Metals (OTCQX:SVCMF) reported the results from 20 in-fill holes which form part of its current drill program and hole BA18-122 were stunning. It returned 12.3m @ 39.66g/t Au and 3,361g/t Ag from 194.3m, which is equal to 1,064m (AuEq.). This is 6,336g/t Ag equivalent and is the best drill interception from the project so far:

Source: SilverCrest Metals

The in-fill program's objective is to upgrade the current inferred resource at Las Chispas by improving the drill density to around 25 meter centers for confirmation of continuity, grade and thickness of the vein.

The project is in the state of Sonora, close to the Santa Elena and Mercedes mines:

Source: SilverCrest Metals

In September, SilverCrest released an updated mineral resource estimate for Las Chispas which showed 511,800 ounces of gold and 48.3 million ounces silver in the inferred category:

Source: SilverCrest Metals

I think that the project has a decent exploration potential considering that the current inferred resource is based on just eight out of 30 known veins.

Conclusion

Osisko Mining has been releasing very impressive drill results for Windfall Lake, and I continue to stand by my earlier opinion that the company is undervalued. There will be several catalysts in 2019 such as results, bulk sample results, a resource update for the whole project, as well as a feasibility study. The company also has a very strong balance sheet with around $150 million in cash and equities.

GT Gold released an amazing drill interception last week, but the result was already expected. Nevertheless, it's above the estimate of the Angry Geologist which I think should provide a boost for the company. I still think that it's likely that Tatogga could have over a million ounces of gold equivalent resources, and I like the project's good access to infrastructure, including roads and power.

Regarding SilverCrest, the silver grades from hole BA18-122 are mind-blowing, and an updated resource estimate for Las Chispas should be released in the first quarter of 2019. However, I continue to have concerns that the company could be overvalued. As the Angry Geologist pointed out in a December 2016 blog post, the veins at Las Chispas are very narrow, which means that dilution will be an issue. He was also concerned that high-grade zones were found as very small, discrete shoots and that it could be impossible or at least very expensive to remove residual blocks.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I am not a financial adviser. All articles are my opinion - they are not suggestions to buy or sell any securities. Perform your own due diligence and consult a financial professional before trading.