Today, Aurvista Gold Corp. announced a new resource estimate for its Douay Gold Project in the prolific Abitibi Belt of northern Québec, Canada. In January, the company started its phase-2 drilling program with more than 70 holes totalling 30,000 m in 3 sub-phases.
In 2012, Aurvista filed a resource estimate (now considered historic) of around 62 million t @ 1.06 g/t gold for 2.1 million ounces of contained gold ("inferred"; cut-off grade @ 0.5 g/t gold). Today, Aurvista filed an updated resource estimate (NI-43-101 compliant) of around 130 million t @ 1.06 g/t gold for 4.4 million ounces of contained gold ("inferred"; cut-off grade @ 0.5 g/t). The new estimate benefitted from the new interpretation based on the re-logging, re-description and assaying of previously un-assayed mineralized intervals of drill core. Once the ongoing 30,000 m drill program is complete, an updated resource estimate is expected to be published, potentially overshooting 5 million ounces of contained gold. Jean Lafleur, President and CEO of Aurvista, commented today:
"The significant increase in mineral resources generated at cut-off grades consistent with other projects in the region are indicative of what we consider to be the outstanding potential for an economic bulk tonnage deposit at Douay, should a PEA or mining study establish the economic viability and technical feasibility of the project, with the potential to add additional ounces and higher grades within this substantial mineralized system. Our improved understanding of mineralizing controls together with an appreciation of the internal gaps in the drilling will allow us to develop an effective and efficient drill campaign to expand and upgrade this significant resource."
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With its current resource of 4.4 million ounces of gold (at a 0.5 g/t cut-off), Aurvista is the least expensive company in terms of $-valuation/ounce when compared with selected peers (see below table). In the gold space, recent M&A transactions with no PEAs displayed valuations averaging $49/oz (Aurvista is currently valued at $11/ounce).
An updated PEA ("Preliminary Economic Assessment") is planned to commence upon completion of the ongoing 30,000 m drill program and upon filing of an updated resource estimate. The goal of the drill program is to identify additional gold and VMS targets, to significantly expand the resources and upgrading some of the inferred resource into measured and indicated.
When Osisko acquired the historic Malartic Gold Mine in 2004 and developed it into a mine until 2011, a strong bull market in gold took place. The 2008 feasibility study calculated 6.3 million ounces of gold (183 million t @ 1.07 g/t @ 0.36 g/t cut-off) along with $789 million in CAPEX ($146/oz) and $319/oz OPEX (29% IRR). Three years later, in 2011, the reserve estimate used a lower cut-off grade (0.30-0.32 g/t) delineating 10.7 million oz gold (344 million t @ 0.97 g/t). At a comparable cut-off grade of 0.3 g/t gold, Aurvista today announced 5.7 million ounces of gold (231 million t @ 1.06 g/t gold), but prefers to highlight a 0.5 g/t cut-off (130 million t @ 1.06 g/t gold for 4.4 million ounces of gold).
Osisko had to overcome major challenges in putting Malartic into production as there was a town located on top of the open-pit operation (Osisko relocated/reconstructed 20% of the town at cost of $300 million). As no such challenges exist at Douay, the projected CAPEX to put Douay into production are expected to be much less. Douay West and Adams are available to go into production already now as having resources for >10 years at 35,000 oz/year (PEA stated 45,000 oz/year). The December 2014 PEA has focussed on underground mining showing total CAPEX of $57 million.
The New Mineral Resource Estimates (as announced today) are in line with a bulk gold scenario from surface to an average -250 m in vertical depth, extending 7,000 m in surface length and remaining open in all directions (refer to below Figure 1), which includes higher and lower gold grades that have never been mined. Below table summarizes the New Estimates for Douay with a Base-Case cut-off grade of 0.5 g/t gold and a Sensitivity Analysis cut-off grade of 0.7 g/t gold.
The current 2017 Micon Estimates and historical 2012 Riverbend estimates used similar statistical criteria to build the resource block model. However, the 2017 Micon model benefitted from the new interpretation based on the re-logging, re-description and assaying of previously un-assayed mineralized intervals of drill core from Douay. This work showed a greater lateral and vertical continuity of rock units, structural trends and gold mineralization, which were non-existent in the historical 2012 Riverbend model (see Figure 1); hence, the greater volume/tonnage of mineralization in the current 2017 Micon model: 130 million tonnes of Inferred resources in the Base-Case 0.5 g/t cut-off grade versus the historical 2012 Riverbend study at 61.5 million tonnes, both at the same grade of 1.06 g/t gold.
Below table details the New Mineral Resources Estimates for each of the 8 gold zones covering the Douay West, Porphyry, 531, 10, 20, Main, North-West and Central zones, by cut-off grade ranging from 0.3 to 5.0 g/t gold; the criteria used to determine the New Estimates and the resources statement for the Inferred category.
Micon developed a 3D block model of Douay based, in part, on Aurvista's 2016 interpretation of the geology and structural controls on gold mineralization over the 7,000 meters trend. Micon is currently completing the National Instrument 43-101 Technical Report supporting the Estimates which will be filed within 45 days of this news release on SEDAR.
1. The global resource model follows a bulk gold scenario and are not constrained by a pit shell.
2. The mineralized envelopes were modelled using Leapfrog Geo.
3. The Estimates include all drilling completed to the end of 2016 comprising 705 holes of which 399 holes were used in the estimate containing 14,334 samples or 11,101 1.5 m composites. The remaining drill holes cover other areas or potential zones within Douay.
4. Resources are contained in eight separate Zones (10, 20, 531, Central, Douay West, North-West, Porphyry and Main) and the zones may consist of a number of sub-parallel or parallel lenses.
5. Varying densities were used depending on the mineralized zone, Douay West = 2.88, Porphyry = 2.81, MZ10 = 2.94, MZ20 = 2.67, North-West Zone 2.78, Main Zone = 2.77, with the Central Zone and Waste using the global average of 2.82 as no specific gravity test work was conducted for these areas and the overburden was assigned a density of 1.5.
6. Only the mineral resources for the Douay West, Porphyry and 531 zones were estimated using Ordinary Kriging with the remaining zones estimated using Inversed Distance Cubed, due to the amount of data points for each zone.
7. The Base Case reported cut-off grade of 0.5 g/t is based upon consideration of other gold deposits that show similarity in volume and grade to Douay.
8. A block size of 10 x 2 x 5 meters was used for the initial interpretation.
9. The mineralized material was classified into the Inferred mineral resource category on the basis of a combination of the following factors: (NYSE:A) confidence in the geological and mineralization continuity, (NYSE:B) position of blocks in relation to the range of influence as defined by the variographic analysis and (NYSE:C) and the search ellipse ranges. In some instances, a portion of the resources may have been able to be classified in a higher category but for the purposes of the report all resources were classified lower due to the use of open pit mining method rather than the traditional underground methods used in this area of Quebec.
10. The search ellipses ranged from 50 m to 300 m and used three passes to fill the blocks within the model. The search ellipses varied per zone, and sometimes for each of the mineralized lenses within the zones.
11. The figures have been rounded following National Instrument 43-101 practices to reflect that they are estimates and therefore, they may not total.
12. The effective date of the current 2017 Micon Estimates is February 15, 2017.
* Mineral Resources Estimates which are not mineral reserves do not have demonstrated economic viability. The Mineral Resources Estimates may also be materially affected by other relevant factors or issues. The Mineral Resources Estimates have been prepared without reference to surface rights or the presence of overlying public infrastructure. There has been insufficient exploration to define these Inferred Mineral Resources as Indicated or Measured Mineral Resources, and it is uncertain if further exploration will result in upgrading them to Indicated or Measured Mineral Resources.
On December 19, 2016, Aurvista announced the start of a ground UTEM-5 geophysical survey, which was said to be completed "over the next month" on the most significant bedrock conductors at Douay (Anomalies E, F and G), with results expected by mid-Q1-2017.
As previously reported by Aurvista in August, the company had completed a 1,421 line-km airborne helicopter magnetic, time-domain electromagnetic ("TDEM") and radiometric survey. The TDEM survey outlined 7 strong near surface conductive bedrock anomalies ("A" to "G"), all associated to the strongest EM-INPUT™ anomalies, 4 in proximity to the Casa Berardi Deformation Zone ("A" to "D"), northwest of the Adam Creek Gold Deposit (the "Deposit"), and 3 in proximity to, and surrounding the 'South Porphyry" ("E" to "G"), south of the Deposit. Characteristics of Anomalies "E", "F" and "G" are summarized in the table.
Anomaly "E" is the most significant since it is located in proximity to the gold bearing "Main Porphyry", the "South Porphyry" and the "Adam-Porphyry". There are chlorite-sulphide bearing "feeder pipes" nearby as observed in drill holes DO-92-24 and DO-11-34, typically found in association with massive sulphide mineralization, yet to be found at Douay. The historical drill holes DY-99-04, 05 and 06, 46878-0, 46899-9 and 0, 64487-0, 468880-0 and D-92-32 skimmed the anomaly by drilling above or holes were too short, but explained the conductive source as graphite. There is no graphite in the re-logged drill core.
Anomalies "F" and "G" are larger in size but are believed, based on nearby re-logged drill core from the phase-1 program, to be related to sulphide mineralization. However, laminar graphite was observed in centimeter-wide shear zones in core from the Anomaly "F" area.
Aurvista Gold Corp.
Suite 612 - 390 Bay Street
Toronto, Ontario M5H 2Y2 Canada
Phone: +1 416 682 2674
Shares Issued & Outstanding: 131,912,407
Canadian Symbol (TSX.V): AVA
Current Price: $0.37 CAD (02/27/2017)
Market Capitalization: $49 million CAD
German Symbol / WKN (Frankfurt): AV2 / A1JL1Z
Current Price: €0.256 EUR (02/28/2017)
Market Capitalization: €34 million EUR
Report #3: "En Route to 5 Million Ounces of Gold "(January 10, 2016)
Report #2: "The Last Elephant-Sized Gold Deposit in Quebec?" (July 13, 2016)
Report #1: "An Intact Jewel Box for Gold's New Bull Market: The Tide has Turned for One of Québec's Largest Undeveloped Gold Deposits" (May 18, 2016)
Disclaimer: Please read the full disclaimer within the full research report as a PDF (here) as fundamental risks and conflicts of interest exist.
Disclosure: I am/we are long ARVSF.