Best Drill Interceptions In The Metals Mining Sector For The Week Ended June 9, 2019

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Includes: MCRZF, PVG, RTPPF
by: Gold Panda
Summary

Mincor hits bonanza gold at a nickel deposit.

Rio Tinto’s best drill result from Winu gets downgraded.

Pretium with over 100 meters 5.56g/t Au at Brucejack.

(Source: Exploration Insights)

Introduction

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 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) Cassini nickel deposit in Australia

On June 7, Mincor Resources (OTCPK:MCRZF) announced that it intersected 1.45m @ 1,045g/t Au from 416m in hole MDD317W3 at its Cassini nickel deposit. This is equal to 1,515(AuEq.)m and included an interval of 0.21m @ 7,610g/t t Au. And yes, there is no mistake, this is a nickel project. The hole intersected a gold bearing quartz vein while progressing towards the nickel target zone, which is around 200 meters down:

(Source: Mincor Resources)

Cassini is located in the prolific Kambalda nickel and gold mining district, in which Mincor owns several nickel deposits:

(Source: Mincor Resources)

Cassini currently has mineral resource at 550kt @ 3.4% Ni for 19kt of nickel.

Mincor’s mines in Kambalda have been shut since the nickel price dived in 2015. The company recently announced a deal to process nickel from its mines at BHP’s (BHP) partially closed Kambalda concentrator. Also, a few weeks ago, Mincor announced the purchase of Independence Group’s (OTCPK:IPGDF) historic Long nickel mine in an A$9.5 million deal. The company plans to restart its Kambalda operations next year.

I think that the irony of finding gold at Cassini is that Mincor just announced that it plans to shutter and sell its Widgiemooltha gold project and focus on nickel.

2) Winu polymetallic project in Australia

On June 6, global mining giant Rio Tinto (RTPPF) announced drill results from its Winu project in Western Australia and the best interception was 681m @ 0.45% Cu, 0.33g/t Auand 3.17g/t Ag from 60m in hole WINU0006. This is equal to 708(AuEq.)m but this drill result is not new.

Back in February, Rio Tinto said that it intersected 741m @ 0.45% Cu, 0.52g/t Au and 2.94g/t Ag from 68m in hole WINU0006 for 921(AuEq.)m.

(Source: Rio Tinto)

The company said that some changes were made to the assays due to ongoing quality control and assurance procedures, and changes in analytical techniques. The mineralization is open at depth and to the east, north, and south.

Winu is located around 130 km north of the Telfer copper and gold mine and 350 km southeast of Port Hedland:

(Source: Rio Tinto)

At the moment, there are eight diamond rigs, three RC rigs as a waterbore rig drilling at Winu and results from the next phase of reverse circulation and diamond drilling will be reported in the third quarter of 2019.

3) Brucejack gold mine in Australia

On June 5, Pretium Resources (PVG) announced that it intersected 107.45m @ 5.56g/t Au from 198.5m in hole VU-1787 at its Brucejack mine. This is equal to 597(AuEq.)m and there was visible gold. The mineralization lies around 240 meters to the east and below the eastern limit of the existing Valley of the Kings mineral resource.

(Source: Pretium Resources)

Brucejack is located in British Columbia and is one of the largest gold mines to open in the past few years:

(Source: Pretium Resources)

Commercial production began in July 2017, but key figures have been disappointing so far. In 2018, Brucejack produced 376,012 ounces of gold at all-in sustaining costs of $764 per ounce of gold sold.

The mine is currently increasing throughput by 40% to 3,800 tonnes per day and with mineral reserves of 6.4 million ounces of gold, it has a 14-year mine life and a net present value of $2.6 billion at a gold price of $1,300 per ounce.

Conclusion

Ironically, Mincor Resources has hit gold just as it plans to sell its gold business and focus on nickel. I think that the company has put together a package of good nickel deposits in Kambalda and it has a clear plan on how to put them back into production. The gold mineralization found at Cassini has the potential to significantly strengthen the bull case for the company.

Back in February, Rio Tinto announced an amazing discovery at Winu but some of the drill results look less impressive now. It’s still an important discovery and the company has embarked on an extensive drilling campaign. Since Rio Tinto is a mining giant, results from Winu are unlikely to affect its share price anytime soon. I think that the beneficiaries in the near term could be companies with exploration projects near Winu such as Encounter Resources, Red Metal, Antipa Minerals, Sipa Resources, Metalicity and Carawine as they would benefit from nearology speculation. All of these are listed on the ASX.

Pretium announced some good drill results from Brucejack and the new mine plan for the project looks amazing with a net present value of $2.6 billion. However, I’m concerned that there’s been a significant difference between mine grade and reserve grade so I prefer to steer clear from this company. The Angry Geologist has been bashing Pretium over this difference frequently, most recently in this post.

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.