Best Drill Interceptions In The Metals Mining Sector For The Week Ended September 8, 2019

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Includes: EGO, GTGDF, NEM, RGLSF, SKREF
by: Gold Panda
Summary

Eldorado’s Lamaque project looks ripe for expansion after the latest drill results.

GT Gold expands mineralization at Tatogga.

Regulus finds gold and copper with less arsenic to the north of AntaKori.

(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 Opaxe, which can be found on their website. Note that the drill interceptions are converted into grades of gold equivalents using the following formula:

(Source: Opaxe)

Opaxe has chosen gold as the metal equivalent for all conversions, as it considers gold to be the most widely used and best-understood benchmark to determine or appreciate the grade tenor of a drilling intercept.

(Source: Opaxe)

1) Lamaque gold mine in Canada

On September 5, Eldorado Gold (NYSE:EGO) released an exploration update for its Lamaque mine, and the best drill interception was 85.8m @ 21.79g/t Au from 1700.7m in hole TM-15-020W03M01. This is equal to 1,870(AuEq.)m.

(Source: Eldorado Gold)

Drilling has revealed high-grade mineralization beyond the 2018 resource model in the lower portion of the deposit, as well as more ore clusters. This means that the company is likely to significantly boost mineral resources in 2020.

Lamaque is an underground gold mine located in the Val d’Or mining camp at the eastern end of the prolific Southern Abitibi Greenstone Belt.

(Source: Eldorado Gold)

The new drilling was focused on better defining the resource potential in the less-explored lower part of the newly discovered Triangle gold deposit, and there appears to be continuity of mineralization to similar depths as the nearby historic Sigma mine.

Lamaque entered commercial production at the end of March 2019 and is expected to produce 100,000-110,000 ounces of gold at cash operating costs of $550-600 per ounce of gold sold this year.

Based on the current reserve of 953koz of gold, the mine life stands at seven years and average annual production is expected to be 117,000 ounces.

(Source: Eldorado Gold)

However, there’s ample room for growth and expansion of this project.

On September 9, Eldorado said that it’s considering expanding Lamaque to produce 170koz per year by boosting throughput to an average of 2,500 mt/day from 1,800 mt/day. The PEA for the expansion will be based on a 10-year mine life with target production of 1.5Moz of gold.

2) Tatogga copper-gold project in Canada

On September 4, GT Gold (OTC:GTGDF) announced results from another 11 holes from the 10,000-meter Phase 1 exploration program at the Saddle North copper-gold porphyry discovery at its Tatogga project. The best drill interception was 1,206m @ 0.57g/t Au, 0.96g/t Ag and 0.26% Cu from 18m in hole TTD126, which is equal to 1,054(AuEq.)m.

The new drill results support the expansion of the known higher-grade mineralization by around 100 meters along strike to the southeast at depth and by some 200 meters along strike to the northwest near surface.

Phase 1 is now complete, and Phase 2 will include around 15,000 meters of drilling.

Tatogga is located in BC's Golden Triangle and is adjacent to Skeena's (OTCQX:SKREF) Eskay Creek Project:

(Source: GT Gold)

There’s pretty good infrastructure around Tatogga - the project is accessible through a paved highway, the provincial power grid is near and there's a deep water port close by.

Overall, the project could have almost 15 million ounces of gold equivalent:

(Source: GT Gold)

GT Gold also has the backing of gold major Newmont Goldcorp (NEM), which invested C$17.6 million in the company in May and currently holds a 9.9% stake:

(Source: GT Gold)

3) AntaKori copper-gold project in Peru

On September 5, Regulus Resources (OTC:RGLSF) announced results from two more holes from the 25,000-meter Phase 2 drill program at its AntaKori project, which aims to expand and infill resources. The best interception was 819.9m @ 0.24 g/t Au, o.53% Cu and 7.83 g/t Ag from 165.25m in hole AK-19-034. This is equal to 763(AuEq.)m:

(Source: Regulus Resources)

The main problem of the project is the arsenic content, and the results from AK-19-034 support Regulus’ theory that the bulk of mineralized material to the north contains low arsenic skarn and porphyry-hosted mineralization, locally cut by narrow high-sulphidation structures.

AntaKori is located around 4,000 meters above sea level in the Yanacocha-Hualgayoc mining district of northern Peru and is adjacent to the Tantahuatay and Cerro Corona mines:

(Source: Regulus Resources)

After a massive resource update in March 2019, AntaKori currently holds eight billion pounds of copper equivalent or 17 million ounces of gold equivalent:

(Source: Regulus Resources)

A new resources estimate should be out in the middle of 2020, which will be followed by a PEA study around 2021.

Conclusion

Eldorado acquired Lamaque’s owner, Integra, at a valuation of C$590 million in 2017, which seemed high for a project with less than a million ounces of gold in reserves. Now, the company is starting to prove Lamaque’s amazing expansion potential. The PEA for the planned upgrade will be based on a 10-year mine life with target production of 1.5Moz of gold. However, I think that Eldorado is overvalued with a market capitalization of over $1.3 billion. Also, the company will need to raise a lot of funds to finance the development of the Skouries gold project, so dilution might be on the horizon.

GT Gold has a large gold-copper project with good access to infrastructure, including roads and power. It’s also backed by Newmont Goldcorp and mining legend Ross Beaty, and is well-funded for its 2019 drill campaign. With a valuation of just $85 million, I think the company is undervalued.

Regulus is led by a solid management team that successfully managed to monetize the Haquira project in 2010. AntaKori is a very large copper-gold project near two significant mines, and its main problem is the arsenic content. However, the northern part of the project seems to have lower quantities. Regulus is an explorer, and the strategy is to monetize AntaKori at some point, maybe after the release of the PEA in 2021. I think that a lot of synergies could be realized through the combination of AntaKori with Tantahuatay or Cerro Corona, but the project could also attract attention from other major mining companies. Overall, the company looks cheap at the moment. I’ve recently written an SA article on Regulus here.

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/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.