Canagold: Sweet surprise thanks to a high-quality, low-cost gold deposit | 2021-09-22 | Invest News
A million ounce gold deposit owned by Canagold Resources (TSX: CCM) (OTCBB: CRCUF) (Frankfurt: CANA), New Polaris may be on its way to becoming a larger high-grade gold deposit than previously imagined.
By way of explanation, recent drilling has uncovered rich concentrations of gold in a parallel vein system – known as C10 – which is only now beginning to reveal its considerable untapped potential.
A former producer, New Polaris is located in mining-friendly northwestern British Columbia (BC) about 100 kilometers south of the town of Atlin.
Of particular importance, the drill intersections encountered in this under-explored high-grade vein appear to be as richly mineralized as the high-grade C West Main (CWM) vein that forms most of the New Polaris deposit. This opens up the possibility of New Polaris becoming a larger, high-grade deposit.
This is extraordinary news for Canagold, as it promises to significantly enhance the overall depth and extent of a shallow, high-grade gold deposit that lends itself to some of the lowest production costs in the world. . (More on this in a moment).
Add to that compelling dynamic that New Polaris is located in such a politically stable and mining-friendly jurisdiction as British Columbia, then the overall appeal of the deposit becomes more and more brilliant.
Canagold is currently conducting a full-scale 24,000 meter drilling program involving no less than 47 drill holes. This ambitious drilling program should contribute greatly to the upgrading of resources (for a feasibility study) in the known deposit via extensive infill drilling.
This upgrade represents a key dynamic of risk reduction, while increasing the overall value of the deposit. At the same time, the extension component of the current drilling is being conducted to probe the potential of proximal vein systems, including the high grade discovery zone in the C10 vein.
Obviously, this exploratory drilling is giving very encouraging results so far, representing the sizzle of the steak. These results include the following highlights: hole 21-1890E1 intersected 17.1 g / t Au over 8.4 m from 343 meters in the C10 vein and hole 21-1890E2 intersected 7.25 g / t Au over 4.3 m from 368 meters in the same vein.
Canagold’Scott CEO Eldridge summed up the significance of the new high grade C10 discovery zone in a press release yesterday with the words: “Intercept high grade gold on robust widths in parallel C10 vein in the CWM vein was a bonus. â
He added, âThe C10 vein has returned high grade gold results in the past, but we have not yet estimated resources for it. With these new and additional drilling results, there is an opportunity for the C10 vein to add additional resources to New Polaris. â
It is also important to note in the latest round of drill results that infill drilling continues to provide the high grades and mineralized widths that support the current resource model.
As a result, it should be noted that investors can often profit greatly by identifying junior mining companies that are ripe for picking by the world’s big gold miners, eager to supply.
Drilling in a rich gold vein at the Canagold’s New Polaris deposit in northwestern British Columbia
Mining’s new mantra ‘Why quality takes precedence over quantity
Nowadays, multinational mining companies systematically choose the quality of the asset over the size of the stock of metals in the ground. This makes high-grade deposits which are relatively inexpensive to mine at a modest capital cost particularly attractive as acquisitions. New Polaris is a compelling example of such a potential future takeover target.
The rationale for this new focus on commercializing smaller gold assets is that it puts the world’s leading gold miners in control of their capital spending and operating costs.
Remember, most of them learned hard lessons by deploying during the last mining boom with massive, capital-intensive gold projects that turned albatrosses during the last particularly severe recession of the mining industry.
Hence the appeal of a high-grade deposit like New Polaris that could be prospectively marketed at a fraction of the cost of the huge elephant-sized deposits that have been the mainstay of the world’s major gold producers. world in recent decades.
In addition, high-grade underground mines are the lowest quartile of the cost curve, which softens their appeal.
As a result, cashed gold producers are starting to aggressively target buyout candidates with rich underdeveloped finds. Especially those located in politically stable mining jurisdictions. A number of junior gold miners have been wrested from big deals over the past two years, particularly those with Canadian gold deposits.
Aerial view of Canagold’s New Polaris project near Atlin, British Columbia
The magic of metrics
What makes New Polaris a standout candidate for a future takeover (such as when a feasibility study is complete) is the magic of its mining metrics.
In other words, an improved and independently assessed 2020 preliminary economic assessment (PEA) for New Polaris calculates eit can be mined at a rate of 80,000 ounces per year for the very low expected cash cost of US $ 530 per ounce of gold. By comparison, most of the world’s major miners pay over US $ 1,000 an ounce to mine gold.
With operating costs this low, the prospect of bringing this mine into production represents a low risk and highly profitable opportunity for investors and pretending companies.
In total, New Polaris’s AEP attests to a high grade underground resource of 586,000 indicated ounces (1.7 million tonnes of 10.8 g / t) and 485,000 inferred ounces (1.5 million tonnes of 10.2 g / t). The current infill drilling will help prove the inferred resources of the project in the indicated category.
The PEA also offers the prospect of a robust project economy to New Polaris. Based on a gold price of US $ 1,500 and a head grade of 10.3 gpt (including a 20% mining dilution), these measures result in an after-tax IRR of 56 %, a net present value (NPV) of US $ 333 million and an after-tax refund of 1.9 years.
Capital costs are estimated at a modest US $ 111 million to build a mine that would produce 80,000 ounces of gold per year, which would be turned into gold bars on site (another major cost-cutting element).
By the way, the New Polaris is no stranger to production. It was successfully mined underground periodically between 1937 and 1951, producing 232,000 ounces of gold out of 691,000 tonnes, grading 11.9 g / t. These numbers bode well for the deposit’s attractiveness as an emerging, high-grade gold asset, conveniently located close enough to the surface to afford cheap mining costs, especially with the advantage of mining technology. modern.
Keep this in mind that the global average gold grade for surface mining is just below 1 g / t and the average for underground operations is around 5 g / t at 6 g. / t. Therefore, the main takeaway here is that high-quality, low-risk underground projects like New Polaris are particularly rare.
Summary of investment
All in all, New Polaris represents a rich vein of opportunity for supply-hungry gold producers, whether bullion prices continue to rise or not.
What matters most is that this still emerging deposit offers a particularly attractive production profile – one that promises production of 80,000 ounces of gold per year at one of the lowest costs of any mine. gold in the world. The goal of today’s program is to add more ounces and adjust production slightly to 100,000 ounces per year for a 10-year lifespan, a number that is attracting the attention of investors and intermediate level miners looking for acquisition targets. . This is why Canagold is shaping up to be a ripe plum to choose for potential future suitors.
Technically, Canagold Resources has a relatively tight share structure with approximately 71 million shares outstanding (approximately 89 million fully diluted). This reality, coupled with a positive flow of information, generally acts as a catalyst for an upward stock price.
On that note, this company is worth watching. His ascending fortunes promise to make Canagold an outstanding artist among the golden juniors.
ABOUT THE AUTHOR: Marc Davis has extensive experience in the capital markets for 30 years, having primarily worked as a stock analyst and commentator. He is also a long-time financial journalist. Over the years, his articles have appeared in dozens of digital publications around the world. They include USA Today, CBS Money Watch, The Times (UK), Investors’ Business Daily, Financial Post, Reuters, National Post, Google News, Barron’s, China Daily, Huffington Post, AOL, City AM (London), Bloomberg, WallStreetOnline.de (Germany) and The Independent (UK). He has also appeared in business interviews on the BBC, CBC and SKY TV.
Marc is also an enthusiastic investor in Canagold Resources and his commentary is not intended to be a solicitation for other investors to buy this stock. Investors are always advised to consult an investment adviser before making any investment decisions.
FULL DISCLOSURE: Canagold Resources is a client of Stockhouse Publishing.