Via SeekingAlpha.com

Inserting image...

(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:

Inserting image...

(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) Cue gold-copper project in Australia

On June 3, Musgrave Minerals (OTCPK:MGVMF) released results from the first 12 reverse circulation drill holes from the current program at the new Starlight gold discovery at its Cue project. The best drill interception was 12m @ 112.9g/t Au from 36m in hole 20MORC033, which is equal to 1,355(AuEq.)m.

(Source: Musgrave Minerals)

The high-grade Starlight link-lode mineralization is now confirmed over a strike length of over 115m and remains open at depth.

The Cue project is located in the Murchison district in Western Australia and includes the Cue gold and Hollandaire copper area. It’s in a gold belt with over 20 million ounces of historical production and is situated near several large gold mines and mills.

(Source: Musgrave Minerals)

Musgrave has a JV with Evolution Mining (OTCPK:OTCPK:CAHPF), which allows it to earn 75% in Cue by investing A$18 million ($12.5 million) in exploration over five years.

READ ALSO  Coronavirus latest: US seven-day average of new infections hits record high

The most significant deposits include Break of Day, which has a mineral resource of 868kt @ 7.15g/t Au for 199koz Au, and Lena, which holds 2.682Mt @ 1.77g/t Au for 153koz Au.

(Source: Musgrave Minerals)

2) Peak Gold Mines polymetallic project in Australia

On June 3, Aurelia Metals (OTCPK:AUMTF) released an update on exploration activities for the Kairos and Peak North areas at the Peak Gold Mines project and the Federation deposit near its Hera mine. The best drill result was 23m @ 12% Pb, 18% Zn, 28.4g/t Au,70g/t Ag, and 0.4% Cu from 333m in hole UD20PP1615 at Kairos. This is equal to 919(AuEq.)m and as you can see, this lode is located directly beneath the Peak Mine workings.

(Source: Aurelia Metals)

Peak is located in the Cobar region in NSW and it produced 29,594 ounces of gold for the year ended March 2020.

(Source: Aurelia Metals)

At the moment, it has a mine life of just four years, but the mining inventory indicates a potential for a mine life of around a decade.

(Source: Aurelia Metals)

Aurelia recently completed an upgrade of the processing plant which made it able to operate at up to 800,000 tpa on high-grade base metal feed thus unlocking the value of the Chronos lead/zinc resource.

(Source: Aurelia Metals)

3) Deflector gold-copper mine in Australia

On June 5, Silver Lake Resources (OTCPK:SVLKF) announced several high-grade gold and copper assays from resource definition drilling at the Deflector South West deposit near its Deflector mine. A total of 10 of the 27 holes contained visible gold and the best interception was 7.4m @ 98.7g/t Au and 11.1% Cu from 139m in hole DFUG192. This is equal to 811(AuEq.)m and DFU192 is the southernmost hole drilled to date.

(Source: Silver Lake Resources)

READ ALSO  Asian stocks drop after US Covid-19 surge sends Wall Street lower

Deflector is located in the southern Murchison region of Western Australia and is a shallow narrow vein, high-grade gold and copper underground mine.

Mining operations started on 2016 and the mine produced 23,577 ounces of gold and 438 tons of copper at all-in sustaining costs of A$1,232 ($862) per ounce in the first quarter of 2020. In the year ending 30 June 2020, Deflector is expected to produce 95,000-100,000 ounces of gold and 2,500 tonr of copper at AISC pf A$1,140-A$1,190 ($797-$832) per ounce.

(Source: Silver Lake Resources)

At the moment the mine has reserves of 343,000 ounces gold and mineral resources of 828,000 ounces of gold. There are another 304,000 ounces of resources at the Deflector South West deposit.

(Source: Silver Lake Resources)

Recent drilling activities were aimed at upgrading the Deflector South West Mineral Resource estimate from the inferred to indicated category.

Conclusion

Musgrave delivered more great high-grade gold results from the Starlight link-lode at the Break of Day of its Cue project. I think that infrastructure in the region is great and that the company could be eventually snapped up by Westgold (OTC:OTC:WTGRF) as the latter already has a 16% stake in it and also owns the nearby Tuckabianna mill.

Aurelia Metals released another batch of good drill results from Peaks and I think there’s potential to double the life of mine of Peak. The company looks overvalued at the moment as the mine life of its Peaks and Hera operations is just four years, but I think the mine life of Peaks can be doubled in the future.

READ ALSO  SE: BlackRock Is ‘Broadly Constructive’ on Risk Assets: Harrison

Silver Lake announced that a total of 10 of the 27 holes drilled at the Deflector South West deposit at its Deflector mine contained visible gold, which I think is amazing. Deflector is a low-cost gold-copper mine with a limited life and the recent drill results should help Silver Lake to upgrade a significant amount of resources into the indicated category, paving the way to extending the life mine. Overall, I think the company is overvalued at the moment as its market capitalization of over $1 billion versus gold reserves of just 835,000 ounces of gold.

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.

Editor’s Note: This article discusses one or more securities that do not trade on a major U.S. exchange. Please be aware of the risks associated with these stocks.