Best Drill Interceptions In The Metals Mining Sector For The Week Ended March 15, 2020

Summary

• Osisko Mining with bonanza gold grades at Windfall Lake.
• Imperial and Newcrest confirm the presence of a high-grade gold-copper zone at Red Chris.
• Newcrest and Greatland with good gold-copper interceptions at Havieron.

(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 its 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) Windfall Lake gold project in Canada

On January 9, Osisko Mining (OTCPK:OBNNF) released another batch of drill results from the ongoing definition and expansion drill program at its Windfall Lake project, and the best interception was 2.4m @ 948g/t Au from 55.7m in hole OSK-19-2226. This is equal to 2,275(AuEq.)m.

(Source: Osisko Mining)

At the moment, the company has a total of 19 drills active at the Lynx and Triple Lynx deposits.

Windfall Lake is located near the Val-d'Or and Chibougamau projects in Québec and is among the highest grade gold projects in Canada:

(Source: Osisko Mining)

In February 2020, Osisko released an updated mineral resource estimate for the project, which added 452,000 ounces of gold in the indicated category and another 1.57 million ounces of gold in the inferred category. Another two million ounces across all categories for a year of drilling is great.

(Source: Osisko Mining)

The new resource estimate will significantly improve the key financial figures from the Preliminary Economic Assessment for Windfall, which was prepared in 2018.

(Source: Osisko Mining)

Osisko plans to release the results of a feasibility study for the project in 2020.

2) Red Chris copper-gold mine in Canada

On March 10, Imperial Metals (OTCPK:IPMLF) announced that hole RC611 at the Red Chris mine has intercepted 276m @ 3.3g/t Au and 1.7% Cu from 684m. This is equal to 1,397(AuEq.)m, and the hole has confirmed the presence of a discrete high-grade zone averaging more than 5g/t Au.

(Source: Imperial Metals)

Imperial owns 30% of Red Chris, and the remainder is held by Newcrest (OTCPK:NCMGF). It's a copper-gold porphyry with an operating open-pit mine in the red-hot Golden Triangle in British Columbia:

(Source: Newcrest)

In 2019, Red Chris produced 71.9 million pounds of copper, 36,471 ounces of gold, and 133,879 ounces of silver. It has a mineral resource of 14 million ounces of gold and 4.1 million tonnes of copper. The mine life of the project currently extends to 2043.

In February 2020, the JV between Newcrest and Imperial also inked an agreement to acquire the nearby GJ copper-gold property for $7.5 million. The latter has a pre-tax 8% net present value of C$$546 million and a 27% internal rate of return based on a preliminary economic assessment from 2017.

Newcrest and Imperial want to unlock the value of Red Chris through block caving, which is a mining method developed almost two decades ago in collaboration between Newcrest, Rio Tinto (RIO), Freeport-McMoRan (FCX) and Chilean state-owned copper major Codelco. The main idea of the method lies in undermining an ore body which allows it to collapse under its own weight. The broken-up ore is then moved via tunnels.

Block mining is very useful in some copper-gold mineral systems due to rock structure, and it can open access to deep and uneconomic deposits. Some engineers estimate that the cost of mining with block caving is around 10% of conventional underground mining.

I think that Red Chris exhibits porphyry geology that looks similar to the one at Newcrest's Cadia mine, with significant similarities in intrusions, mineralization zonation, alteration, intrusive petrology, and preservation.

3) Havieron gold-copper project in Australia

On March 11, Newcrest released an exploration update on its projects, and among the best interceptions was 124m @ 3.9g/t Au and 0.21% Cu from 734m in hole HAD042 at the Havieron project. This is equal to 511(AuEq.)m. The interception included an interval of 17.3m @ 19g/t Au and 0.62% Cu from 790.7m.

Havieron is located in the Paterson region of Western Australia, and Newcrest operates it through a farm-in agreement with Greatland Gold. The former can get up to 70% of the project by spending up to $65 million in exploration.

(Source: Greatland Gold)

The project is situated around 45km east of Newcrest's Telfer gold-copper mine, which has an annual output of around 450,000 ounces of gold.

(Source: Newcrest)

Newcrest plans to drill 20,000-30,000 meters in the first half of 2020 with the aim of delivering a maiden resource by the end of the year.

Drilling so far has demonstrated continuity of mineralization over 450m of strike, up to 150m wide and more than 600m in vertical extent. Mineralization remains open along strike and at depth.

Conclusion

Once again, results from Osisko Mining's drill campaign at Windfall were great, and it's worth noting how fast this project is developing into a Tier 1 asset. I think that Windfall is an amazing project and that Osisko Mining is undervalued.

I think Red Chris also has the potential to become a Tier 1 asset, thanks to Newcrest's expertise in block caving, and Imperial provides direct exposure to the mine as its 30% in it is its main asset. There are many similarities between Red Chris and Newcrest's Cadia mine Australia, which is the poster child for block caving.

Havieron is an early-stage project, but is showing a lot of promise. There will be a significant drill campaign in 2020, and I look forward to reviewing the maiden resource estimate once it comes out. I think Havieron can become a good satellite deposit for Telfer as ore can be toll processed there. Telfer has an annual ore processing capacity of more than 20Mt. I think Greatland Gold provides better exposure to Havieron than Newcrest, as this is its main asset. Greatland is listed on the LSE.

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.