(Source: Exploration Insights)
If you're into investing in the mining sector, you should know the above chart very well. This series covers 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 equivalents 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) Cascabel copper-gold project in Ecuador
The best drill intercept last week was 1,918m @ 0.41% Cu and 0.19g/t Au from 320m in hole 75 at the Cascabel copper-gold project of SolGold (OTCPK:SLGGF). This is equal to 1,578m(AuEq.) and a total of 288 meters of the intersection lies outside the existing inferred resource area. This means that the Alpala North target remains open to the north.
Cascabel is located on the northern section of the Andean Copper belt:
SolGold is targeting a mineral resource of 10 million tonnes of copper and 25 Moz gold and on November 20, it presented an updated mineral resource estimate which more than doubled the project's resource to 15.4 Mt CuEq:
SolGold has so far completed almost 190,000 meters of diamond drilling on the project with 6,654m of recent drilling with assay results pending.
2) Hope Bay gold project in Canada
On April 7, TMAC Resources (OTC:TMMFF) released the initial results from its 2019 exploration program at its Hope Bay project and the best interception was 1.38m @ 682.88g/t Au from 48.29m in hole TMDBE19-50031. This is equal to 942m(AuEq.) and the hole was drilled at the BTD Extension zone of the Doris deposit. The drilling confirmed that this zone remains open to the north.
Hope Bay is a high-grade remote gold mine located in Nunavut:
As of the end of 2018, the project had proven and probable reserves of 3.5 million ounces of gold at an average grade of 6.8g/t:
The mine is currently ramping up and is expected to produce between 160,000 and 180,000 ounces at all-in sustaining costs of $900-$1,000 per ounce in 2019.
I expect reserves and resources to grow fast as TMAC is focusing a lot of funds on exploration with C25 million budgeted in 2019.
As of February, the company owed $117 million under a debt facility, but I think that the interest rate on that is pretty good for a mining company – it stands at 6.5% plus three-month LIBOR.
3) Cangrejos gold-copper project in Ecuador
On April 11, Lumina Gold (LMGDF) announced that hole C19-105 at the Gran Bestia deposit of Cangrejos project intersected 626m @ 0.62g/t Au and 0.11% Cu from the surface. This is equal to 942m(AuEq.) and is the longest continuous interval of mineralization ever cut at the project. The hole ended in mineralization and leaves the Gran Bestia Deposit open to the north.
The project is located in southwestern Ecuador in a former mining district near the coast:
It contains 8.5 Moz Au, 1,033 Mlbs Cu, 7.8 Moz Ag, and 22.5 Mlbs Mo, and the Cangrejos deposit remains open to the north, south, west, and at depth:
Source: Lumina Gold
The Gran Bestia deposit is located just one kilometer away from the Cangrejos deposit and there's been very limited drilling on it so far. I think it could become a satellite deposit which can be used as an initial starter pit.
In June 2018, Lumina Gold released the results of a preliminary economic assessment which established Cangrejos as one of the top 15 undeveloped gold projects in the world based on its average annual production potential:
I’ve already covered Lumina Gold on SA here.
The impressive drill results from Cascabel just keep coming and I think that the strategic investment by both BHP (BHP) and Newcrest (OTCPK:NCMGF) in SolGold highlights how major miners are stepping up efforts to partner with smaller sector players to restock production pipelines. I think that Cascabel has an amazing potential and I wouldn't be surprised if SolGold becomes an acquisition target soon.
TMAC is stepping up exploration efforts at Hope Bay and the results are very nice. Also, the company is ramping up production and repaying its debt. The project is located in a remote location, but the infrastructure is pretty good. Still, I think that a market cap of over $300 million is too much at the moment and that there are better positioned gold producers at that price.
Lumina Gold's Cangrejos gold project is one of the top 15 undeveloped gold projects in the world. It has 8.5 million ounces of resources and it could be producing 400,000 or 500,000 ounces a year for 20 years. The all-in sustaining costs are also very low and the Gran Bestia deposit could boost the project's low IRR. It has been known for a while that the company is looking to monetize Cangrejos and I think that this project is worth a lot more than the current market cap of Lumina Gold.
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