Best Drill Interceptions In The Metals Mining Sector For The Week Ended May 3, 2020

Summary

• The Red Chris project of Imperial and Newcrest is looking similar to Cadia.
• Balmoral announces bonanza gold grades at Fenelon.
• Roxgold's Seguela gold project in the Ivory Coast continues to grow.

(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.

1) Red Chris copper-gold mine in Canada

On April 29, Imperial Metals (OTCPK:IPMLF) released the Q1 2020 production and exploration update for the Red Chris mine and the best drill result for the period was 628m @ 1.7g/t Au and 0.91% Cu from 542m in hole RC611. This is equal to 1,606(AuEq.)m and the hole has confirmed the presence of a discrete high-grade zone averaging more than 5g/t Au.

(Source: Imperial Metals)

Partial results for this hole were reported on March 10 with 276m @ 3.3g/t Au and 1.7% Cu from 684m.

Imperial Metals owns 30% of Red Chris and the other 70% is held by Newcrest (OTCPK:NCMGF). Red Chris a copper-gold porphyry with an operating open-pit mine in the red-hot Golden Triangle in British Columbia:

(Source: Newcrest)

In Q1 2020, the mine produced 22.5 million pounds copper and 17,427 ounces gold. Red Chris's mine life runs out in 2043, and the project, currently, has a mineral resource of 14 million ounces of gold and 4.1 million tonnes of copper.

In February 2020, the JV company between Newcrest and Imperial agreed 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.

The plan of Newcrest is to unlock the value of Red Chris through block caving, which is a mining method developed almost two decades ago in collaboration with Rio Tinto (RIO), Freeport-McMoRan (FCX), and Chilean state-owned copper major Codelco.

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

2) Fenelon gold project in Canada

On April 30, Balmoral Resources (OTCQX:BALMF) announced that it has made a high-grade gold discovery at its Fenelon project in Quebec and the best interception was 2.97m @ 307.89g/t Au from 100.9m in hole A52-20-18. This is equal to 914(AuEq.)m and the discovery was named Reaper.

(Source: Balmoral Resources)

Balmoral is in the process of being acquired by Wallbridge Mining (OTCQX:WLBMF). Their combined Fenelon properties are located on the Detour Gold Trend in the Abitibi Greenstone Belt and cover an area of 85.6 square kilometers.

(Source: Balmoral Resources)

The two companies are, currently, in the middle of a 100,000-120,000m program focused on surface, underground, and grassroots drilling. Some 90% of the drilling program is focused on expanding the Fenelon gold system.

A resource for Fenelon is expected to be released in the first quarter of 2021. The long-term objective for the project is to become a gold producer with an output of over 100,000 ounces per year.

3) Seguela gold project in Ivory Coast

On April 29, Roxgold (OTCQX:ROGFF) released a new batch of drill results from its Seguela project and the best interception was 10m @ 59.4g/t Au from 207m in hole SGRD705. This is equal to 594(AuEq.)m and included an interval of 2m @ 175g/t Au.

(Source: Roxgold)

The hole was drilled at the Ancien target and it's remarkable how fast the latter has been growing over the past six months.

(Source: Roxgold)

Seguela is located in western Ivory Coast and was acquired by Roxgold in April 2019 as part of a portfolio of 11 regional exploration permits.

(Source: Roxgold)

At the moment, Seguela has a mineral resource of just over a million ounces of gold.

(Source: Roxgold)

According to a preliminary economic assessment released in April 2020, the net present value attributable to Roxgold's 90% interest in the project is $268 million and the internal rate of return stands at 66%.

(Source: Roxgold)

Seguela is advancing towards a feasibility study in early 2021 and a construction decision is set to be taken in the first half of 2021.

Conclusion

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. I think it can become a Tier 1 asset, thanks to Newcrest's expertise in block caving. Imperial provides direct exposure to the mine as its 30% in it is its main asset.

Fenelon has been growing fast and Wallbridge has previously said it aims to define a resource of over a million ounces of gold for its part of the project. However, with a targeted annual output of 100,000 ounces of gold, I think this one doesn't have enough scale to succeed.

Roxgold has significantly developed Seguela since it bought it as a part of a $20 million deal in 2019. The project now has over a million ounces of resources and its attributable net present value stands at $268 million. However, I think Roxgold looks somewhat expensive at the moment as its market cap has almost doubled since March 2020.

Analyst’s 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.

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.

Comments

[Chancer]

@ Gold Panda;

Thanks for article.

I own BALMF. Good for entry into Wallbridge.
New BALMF drill results may mean that WLBMF did not overpay.

[Diottica]

"Roxgold looks somewhat expensive at the moment as its market cap has almost doubled since March 2020"

A bit unfair. It's Mkt cap is still below what it was in Autumn/fall of 2019 and there's not many miners whose share price has not doubled since the March lows. On an EV/production ozs basis it's valuation is amongst the lowest:

twitter.com/...

[kritische geest 1]

Hi Gold Panda,
I always look forward to your weekly update of the best drill intercepts. It is great oversight! And a possibility to look for promissing compagnies!

I noticed that Monarch Gold is on the list for this week. Though it dit nog make it to the best three of the bunch. I regret this. I'm following this company for a while. For now, I'm not invested in it.
The intercept looks very promessing though.
Fayolle is not their flaggship project. It is rather a small deposit. Nevertheless the PEA does point to profittability.
What is your idea about the intercept? Do you concinder Monarch as a potential good investment?
Keep up the good work!
Egards,
B.

[The_truth_unc0vered]

Glad I own Wallbridge Mining. I hope mgt knows what they are doing because the price they were willing to pay for Balmoral was quite high compared to other take-overs