Assay results released this week show the two largest areas of concentrated gold at Liberty Gold Corp.'s (LGD:TSX; LGDTF:OTCQB) flagship Black Pine project in southern Idaho are linked by a 750-meter zone of mineralization.
The 17 reverse circulation holes drilled in the F Zone confirm that the Discovery and CD zones are connected, and the F Zone is still open for expansion to the east and west.
“We have been impressed by the recent efforts to add shallow ounces across the Black Pine property,” wrote Desjardins Capital Markets analyst Jonathan Egilo. Egilo rated the stock Buy with a target of CA$1.50.
“The results demonstrate that as drilling continues, gold mineralization at Black Pine tends to merge into larger, continuous mineralized zones that have the potential for bulk mining,” PI Financial Corp. analyst Chris Thompson wrote in a Tuesday note.
Thompson reiterated his Buy rating on the stock with a target of CA$1.10.
The drilling was part of the company’s strategy to add near-surface, higher-grade gold mineralization in the F Zone and also in the E, M, and Back Range zones of the site.
“To improve the potential for bulk mining, focus is on linking smaller resource pits into larger zones of continuous oxide gold mineralization,” Thompson wrote.
Highlights from drilling in the F Zone included 0.95 grams per tonne gold (g/t Au) over 18.3 meters, including 1.03 g/t Au over 16.8 meters; 0.74 g/t Au over 38.1 meters, including 0.87 g/t Au over 30.5 meters; and 0.84 g/t Au over 36.6 meters, including 0.97 g/t Au over 30.5 meters.
Catalyst
The results “validate” previously reported mineralization in the area between the two zones, analyst Rabi Nizami of National Bank of Canada wrote on Tuesday. He rated the stock Outperform with a target of CA$1.
“This 750 (meter) distance was not previously thought to be barren, as past drilling had already identified anomalous mineralization,” Nizami stated. “Today's results validate and extend this mineralization, filling in the gaps between earlier resource pits.”
The company will continue drilling through the end of the year, then a Preliminary Economic Assessment (PEA) is expected in the first quarter of 2023.
The PEA “will provide clarity in valuation for Liberty Gold,” wrote Stifel GMP analyst Alex Terentiew on Tuesday. Terentiew has rated Liberty Gold Buy with a CA$1.80 target. “We believe the continued exploration success could make our mineable inventory very conservative, ultimately indicating a larger and more valuable mining operation.”
The company acquired the 5,088-hectare property from Western Pacific Resource Corp. in 2016 for US$800,000 and 300,000 shares of Liberty Gold and a 0.5% NSR reserved to Western Pacific.
Black Pine includes 645 federal lode claims and has had more than 1,800 historic holes drilled, totaling about 192,000 meters. More than 10,000 historic surface soil, rock, and blast hole samples have been taken at the site.
The mine is a Carlin-style gold system, like the prolific deposits on Nevada’s Carlin trend. It operated from 1992 to 1997, producing 435,000 ounces of gold (Au). Liberty released a maiden resource estimate for the project of 2.1 Moz Au last year.
Updating the Resource
Liberty Gold President, Chief Executive Officer, and Director Cal Everett said linking the pits was an important step in updating the resource for Black Pine.
“Our geological team said hold on a second, there may be a structure going through here,” Everett told Streetwise Reports. “So, we drilled 22 holes, and we nailed it.”
Everett said near-surface gold will be easier to get at and should improve cash flow for the first two years of the mining operation. Some analysts agreed with the strategy.
“We have been impressed by the recent efforts to add shallow ounces (within ~50 meters from surface) across the Black Pine property,” wrote analyst Jonathan Egilo on Tuesday for Desjardins Capital Markets. Egilo rated the stock Buy with a target of CA$1.50. “These ounces all have the potential to be highly beneficial when it comes to boosting IRR (internal rate of return) and lowering Black Pine’s payback period.”
Up to four reverse circulation drills are being used for drilling a target of 70,000 meters by the end of 2022 in preparation for an update to the mineral resource estimate. That update will include about 500 holes drilled since March 2021.
Twenty-two holes total were drilled in the F Zone; results for five more are still pending.
Haywood Capital Markets’ Geordie Mark was “encouraged” by the company’s exploration at Black Pine and continued to rate Liberty Gold a Buy with a CA$2.30 target.
The project is “capable of eventually supporting a multi-million-ounce low-cost heap leach project in a tier-one jurisdiction, particularly given the results of subsequent drilling,” Mark wrote on Wednesday.
Share Structure
Everett says Liberty has CA$16 million in cash after it received the final US$6 million for the sale of the Halilağa copper-gold deposit in Turkey.
Nearly half of the company is held by institutions, including Van Eck Associates Corp., which owns 11.9%; Franklin Advisors Inc., which owns 8.2%; and Merk Investments LLC, which owns 3.9%, according to Reuters. Insider shareholders include CEO Everett, who owns 2.9%, and Chairman of the Board of Directors Mark O'Dea, who owns 1.8%. Newmont Mining Corp. owns 4.4%.
Liberty has a market cap of CA$139.44 million with 316.9 million shares outstanding, including 293.5 million floating. It trades in a 52-week range of CA$1.30 and CA$0.42.
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1) Steve Sobek compiled this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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