Best Drill Interceptions In The Metals Mining Sector For The Week Ended 27 January 2019
- Global Atomic with much higher grades than previously estimated.
- RNC hits over 1,000 g/t of gold at Beta Hunt.
- Adriatic with the thickest and highest-grade intercept at Rupice to date.
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Source: Exploration Insights
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) Dasa uranium project in Niger
On 23 January, Global Atomic (OTCPK:SYIFD) announced assay results from four holes drilled in 2018 at its Dasa uranium project and the best interception was 98m @ 1.71% U3O8 from 163.2m in hole ASDH563. This was 135% higher than the previous probe-only estimate of 7,277 ppm eU3O8 and is equal to 2,576(AuEq.)m.
Global Atomic president and CEO Stephen Roman said that the recent assay results indicate the probe underestimated previously released drill results. He added that the company plans to calculate an updated mineral resource estimate as soon as all assays are received from the 2018 drill program.
In October 2018, Global Atomic released the results of the Preliminary Economic Assessment (PEA) of the project and the numbers looked good:
Global Atomic has an ore sales and strategic development deal with French energy group Orano under which it can ship ore for processing at the latter’s plant in Arlit, some 80 km north of Dasa. The contract is for a minimum of 100,000 tonnes per year at a minimum grade of 1,000 ppm eU3O8. Global Atomic can thus skip building a mill for now which would significantly reduce pre-development costs and CAPEX requirements:
Source: Global Atomic
2) Beta Hunt gold mine in Australia
On 22 January, RNC Minerals (OTCQX:RNKLF) announced that it has intersected 2m @ 1,017.3g/t Au from 44.82m in hole WFN-029 at its Beta Hunt gold mine, which is equal to 2,035(AuEq.)m. The pictures from this drill hole looked pretty amazing:
Beta Hunt is a marginal mine which RNC had been trying to sell since April but then in September a miracle happened – the company extracted 9,250 ounces of gold from a 130-tonne cut of rock about 500 meters underground at the mine. The find included a single 95-kilogram chunk that contained 2,400 ounces of gold and a second 62-kilogram rock which contained 1,620 ounces.
Now following the historic Father's Day Vein discovery, RNC is fully-funded and has embarked on a 40,000-meter drill program at Beta Hunt which aims to test a theory that the newly identified property-wide sedimentary layer carries the potential for further high grade discoveries in the four main shear zones.
RNC was recently covered by geologist and SA contributor Darp Research here. I also have an interview with him, which is available in my Marketplace Service.
3) Rupice poly-metallic project in Bosnia and Herzegovina
On 21 January, Adriatic Metals announced assay results from several holes from the current drill program at its Rupice project. The best interception was 72m @ 18.3% Zn, 10.7% Pb, 211g/t Ag, 2.5g/t Au, 2.5% Cu, and 25% BaSO4 from 206m in hole BR-36-18, which is equal to 1,822(AuEq.)m. This is the thickest and highest-grade intercept at the project to date.
Adriatic Metals owns a historic open cut zinc/lead/barite and silver mine at Veovaca and Rupice, which are 15km apart:
Veovaca was mined between 1983 and 1987 and produced a zinc, lead and barite concentrate. The company has already defined a JORC compliant mineral resource of 4.4 million tonnes grading 2.0% zinc, 1.1% lead, 36g/t silver with significant gold and barite credits:
Source: Adriatic Metals
Currently, only around 35% of the historic drilling at Rupice has been analyzed for precious metals and the high correlation between high-grade base metals and precious metals values noted from the deposit could provide a significant opportunity.
Adriatic plans to release a maiden mineral resource estimate at Rupice in the first half of 2019.
I think that Adriatic is well funded after completing a A$10.8 million share placement in November.
The latest drill results from Global Atomic surpassed expectations and will help improve the economics of Dasa. I like the alternative option for developing the project as it has a much lower initial capex and I don’t see how the company can fund development in the standalone scenario. I also like Global Atomic’s recycling business which produces zinc and could be valued at over $150 million alone. However, the zinc plant will be undergoing an upgrade in 2019 which means that there will be several months of downtime, which could create funding issues for Global Atomic in the short term. I prefer to wait until the plant enters production again before considering investing in Global Atomic.
RNC Minerals is starting to release impressive drill interceptions and entering news again following the amazing gold find in September. However, I think that the company is currently overvalued as there are intermediate gold producers with lower market capitalizations. Yet, I could be wrong as I'm not a geologist. Darp Research is, and he thinks RNC could be a multi-bagger. I will continue to follow the company closely.
As I mentioned in previous entries of the series, I think that Rupice could be a diamond in the rough as the recent drill interceptions show very high grades of gold and silver. Fellow SA contributor The Critical Investor recently covered Adriatic into much detail and calculated some scenarios for resources and economics at Rupice and Veovaca. Adriatic’s shares are currently not listed in the U.S. so if you want to gain some exposure, you’ll have to go to the ASX. The company was listed in 2018 and it has a cornerstone investment and strategic relationship with Australian copper producer Sandfire Resources ( OTC:SFRRF).
Editor's Note: This article covers one or more microcap stocks. Please be aware of the risks associated with these stocks.
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