Best Drill Interceptions In The Metals Mining Sector For The Week Ended February 10, 2019

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Includes: ARNGF, CHKKF, CNRIF, SPVEF, UEXCF
by: Gold Panda
Summary

Atlantic Gold with good grades at Cochrane Hill.

Chakana continues to drill high-grade gold at Soledad.

UEX Corp. with high-grade cobalt and nickel drill interceptions at West Bear.

(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) Cochrane Hill gold project in Canada

It was a slow week, and the best drill result was 11m @ 43.65g/t Au from 227m in hole CH-18-317 at the Cochrane Hill project of Atlantic Gold (OTCPK:SPVEF). This is equal to 480(AuEq.)m.

Cochrane Hill is situated around 80 kilometers northeast of Atlantic Gold’s central processing facility at the Moose River consolidated gold mine.

(Source: Atlantic Gold)

Cochrane Hill’s current measured and indicated mineral resources stand at 10.66 million tonnes @ 1.16g/t Au for 398,000 ounces at a cut-off grade of 0.35g/t. Mineralization at the property remains open to depth on all sections drilled.

Cochrane Hill is crucial for Atlantic in its bid to boost the production of Moose River to over 200,000 ounces of gold per year by 2022:

(Source: Atlantic Gold)

The company’s development plans are based on a central processing facility concept with staged integration of satellite deposits into the production schedule.

2) Soledad copper-gold-silver project in Peru

On February 7, Chakana Copper (OTCQB:CHKKF) announced that it intersected 59.3m @ 1.28g/t Au, 0.53% Cu and 497.2g/t Ag from 28m in hole SDH18-102. This is equal to 478(AuEq.)m.

Within this interval, there was a 22.8m zone @ 2.93g/t Au, 1.37% Cu and 1,283.2g/t Ag:

(Source: Chakana Copper)

Hole SDH18-102 formed part of a group of eight holes that represented the initial drill results from Breccia Pipe 6 at Soledad.

The project is located in central Peru, around 35 kilometers south of Barrick Gold’s (NYSE:GOLD) Pierina gold-silver mine. Chakana has so far identified 17 mineralized breccia pipes at surface within an area of 3,085 hectares:

(Source: Chakana Copper)

Pipes are vertical bodies with cylindrical to oval shapes, which means that they have to be drilled from all angles to accurately define the geometry and grade variation. Most copper majors are not interested in them because they usually have relatively small tonnages. However, pipes can have a very high grade, and tourmaline pipes often have vertical extents of over a kilometer. One notable deposit of this type is Los Sulfatos in Chile, which has an inferred resource of 1.2 billion tonnes grading 1.46% copper and 0.02% molybdenum.

What is unique about Soledad is the exceptional gold content of the pipes, as tourmaline breccia pipes are usually barren.

3) West Bear cobalt-nickel deposit in Canada

On February 7, UEX Corp. (OTCPK:UEXCF) announced that it had intersected 50m @ 0.72 Co and 1.06% Ni from 24m in hole WBC 044 at its West Bear deposit in the Athabasca Basin. This is equal to 478(AuEq.)m and was the second widest mineralized interval encountered at the deposit.

(Source: UEX Corp.)

The cobalt grades of the recently released drill holes are pretty good, and they are located close to surface. It’s also very rare to find a project in which cobalt is the primary metal.

The West Bear cobalt-nickel deposit forms part of the West Bear property, which also includes the West Bear uranium deposit:

(Source: UEX Corp.)

The West Bear cobalt-nickel deposit was discovered in 2003, and it currently has 390,000 tonnes grading 0.37% cobalt and 0.22% nickel in the inferred category. This is equal to 3,172,000 pounds of cobalt and 1,928,000 pounds of nickel.

The deposit has a strike length of over 400 meters and a dip length of more than 100 meters, and remains open for expansion in all directions. On January 9, UEX announced a 17,000-meter 110-160 drill hole program at West Bear with the objective of expanding the size of the deposit and extending cobalt mineralization along strike to the west.

Conclusion

Atlantic Gold is a junior gold producer which aims to boost its production to more than 250,000 ounces of gold by 2023, and the Cochrane Hill deposit plays an important role in that strategy. The recent drill results at the deposit look good, and I’m really impressed by the low all-in sustaining costs at Moose River, which are estimated at below $600 per ounce over the life of mine. With a market capitalization of $254 million, Argonaut Gold (OTCPK:ARNGF) looks expensive, but the company could create a lot of value for its shareholders over the next few years if it continues to deliver on its ambitious plans.

Chakana is led by renowned geologist Douglas Kirwin, and I really like the Soledad project, as the exceptional gold content makes it unique. The recent drill results have been very good, and I think that the company could develop a very high-grade mine with low operating costs if it manages to delineate a large enough resource. Chakana plans to release an initial resource estimate on several pipes in 2019, and I plan to wait for that before making an investment decision. Another way to gain exposure to Soledad is through project generator Condor Resources (OTC:CNRIF), which has a 2% net smelter return royalty on the project.

UEX Corp. has managed to find high-grade and shallow cobalt mineralization in an area famous for its uranium projects. There’s excellent infrastructure around West Bear, as the deposit is located within 10 kilometers of an all-weather road and power lines that service the nearby Cigar Lake and Rabbit Lake uranium project. However, I think that the deposit is too small to justify a market capitalization of over $40 million, and I think that UEX Corp.’s uranium projects aren’t worth much either. I plan to avoid this company unless it manages to grow the cobalt and nickel resource significantly.

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.