Junior mining research and analysis firm Caesars Report released a report for NevGold Corp (TSXV: NAU) (OTCQX:NAUFF) (Frankfurt:5E50) analyzing its strong 2022 drilling campaign at both the Limousine Butte property in Nevada and Nutmeg Mountain in Idaho.
Released on Wednesday, the report indicated that NevGold gained a much stronger understanding of the mineralization around Limousine Butte during its 2022 drill campaign.
It released drill results in November, 2022 at Resurrection Ridge, which is part of the Limousine Butte project in Nevada.
The two holes are the first assay results from Resurrection disclosed by the company since February 2022.
Hole LB21-005 and RR22-001 were drilled towards the northeast of the past producing pit and known mineralization. Both brought back intersects of oxide-hosted gold mineralization. Hole 21-005 was relatively weak with 83 meters of 0.32 g/t gold, there was a high grade interval of 20.2 meters containing 0.35 g/t gold starting at 64.5 meters downhole.
A grade of 0.35 g/t is enough to meet the cutoff grade and even the 0.21 g/t zone, despite its lower grade, would be enough to qualify for leaching as traditional cutoff for oxide-hosted gold in Nevada is 0.14 to 0.17 g/t.
Limousine Butte showed strong mineralization in 2022 drill campaign
According to the report, hole RR22-001 was much better, pulling in 0.53 g/t gold at 74.7 meters including a higher grade interval of 19.9 meters of 0.811 g/t starting at 91.4 meters downhole.
The width of both holes is expected to be 70 per cent to 90 per cent of the reported width. That makes the true width of the 0.53 meter interval to be over 50 meters.
Lower grade hole LB21-004 expanded the mineralized footprint by 100 meters from previously reported hole LB21-004, which had 61.6 meters of 2.19 g/t gold. Hold 22-001 confirms the step out potential from the current known mineralization. This also validates the potential expansion of the mineralization by another kilometer to the northeast of the presently drilled area.
Resurrection Ridge could host a million ounces alone
At present, the mineralized footprint extends over 700 meters along strike and approximately 350 meters laterally. Applying an average thickness of the mineralization of 60 meters results in almost 40 million tonnes of rock. Applying an average grade of 0.50 g/t yields 600,000 ounces of gold.
The report states that it could and should be higher given the previous disclosures of intervals at every hole but LB21-005 showed a grade over 0.5 g/t gold. A grade of 0.7 g/t could theoretically add another quarter of a million ounces.
“Needless to say the Resurrection Ridge target is now shaping up like it could host a million ounces by itself and this could push the greater Limousine Butte project closer to becoming a 2 million ounce deposit once you add in Cadillac Valley and the low-hanging fruit there,” according to the report.
More drilling will be required at Limousine Butte, but the report notes that one million ounces appears to be a conservative estimate.
The assays at Resurrection Ridge came a few weeks after NevGold released the results from CV22-007 from the Cadillac Valley. The Cadillac Valley is the new area at Limousine Butte.
The company encountered over 73 meters of 0.51 g/t gold.
Hole CV22-007 also intersected 36.6 meters containing 0.44 g/t gold starting at 146 meters down-hole. This matches the same vertical depth where the company discovered mineralization in hole CV22-006.
The direction of the new hole confirmed the presence of gold-bearing oxide mineralization towards the west-northwest from the previously interpreted mineralized zone.
Geophysical surveys to identify conductive zones
Although the drilling encountered the northeast striking fault, it confirms the fault as an important conduit for the gold-bearing fluids.
“The CSAMT geophysical surveys can identify the conductive zones associated with the faults and the resistive zones associated with the mineralization,” said Derick Unger, VP of exploration.
Recently, Nevgold submitted an Exploration Plan of Operations to the Bureau of Land Management for Limousine Butte.
Once approved, Nevgold will have the option to increase the disturbance area to up to 200 acres from 15 acres.
Some of the high priority drill targets are not accessible under the current exploration notice permits. However, the increased flexibility will help the company optimize its drill programs and position it to complete infill and expansion drill programs.
The company anticipates approval for the revamped exploration notice by the end of Q3, 2023.
NevGold has also increased its activity on both sides of its asset. Meanwhile, Centerra Gold (TSX: CG) (NYSE: CGAU) is still working on Cherry Creek and Freeport McMoRan (NYSE: FCX) is looking for copper southwest of the project.
Nutmeg Mountain is falling into place in Idaho
Nevgold received the approval from the Bureau of Land Management for its exploration notice permit for its Nutmeg Mountain gold project in Idaho. At present, 85 per cent of the resource (1.07 ounces in total of which 910,000 ounces are indicated and 160,000 are inferred) is on patented mining claims, there are still some high-priority targets on the unpatented land. The permit will let NevGold complete work on those unpatented claims which few drills have touched historically.
The company started a maiden core drilling program at Nutmeg prior to approval to attempt to accomplish three things.
First, it wanted to increase the resource to the north and south with near-surface drilling. Second, it wanted to drill-test for high-grade feeder structures at depth. Last, NevGold wanted to identify parallel structures hosting addtional mineralization to the east and west of the 202 resource calculation.
The report suggests reports should be in later in March.
“And just as a reminder why Nutmeg could potentially be very interesting for NevGold. This project is located in Idaho and already contains a NI43-101 compliant resource estimate with 910,000 ounces of gold in the indicated resource category and an additional 160,000 ounces in the inferred resource category (based on in excess of 900 holes drilled). The average grade is respectively 0.65 g/t and 0.56 g/t,” according to the report.
“That sounds low but just like the Limousine Butte project, the gold is amenable to be recovered by using the heap leach or vat leach processing option. An additional bonus is the fact the mineralization starts right at surface and the strip ratio may even be less than 1.”
Key issues may be with metallurgy
Approximately 72 per cent of the contained gold was recoverable by direct cyanidation while 21 per cent was associated with silica encapsulation, according to an earlier technical report completed for GoldMining (TSX: GOLD).
The report states that one of the issues Nevgold is going to have to deal with will be metallurgy. That will be key if the company wants to develop a 0.65 g/t gold deposit, especially considering a 5 per cent net smelter return (NSR) royalty on most of the resource. According to the report, a 5 per cent NSR is enough to kill a project or at least make it substantially less appealing. NevGold is presently starting to talk to the royalty owners regarding reducing the royalty rate.
The report indicates that the overall advantage for Nutmeg Mountain is in its permitting. It’s an open-pit, heap-leach resource primarily on privately owned patented land.
The recent capital raise took advantage of new regulations
Nevgold took advantage of a recent regulatory change to raise $3 million in a brokered financing using the new Listed Issuer Financing Exemption (LIFE). LIFE provided reporting issues on a Canadian stock exchange with efficient access to capital markets. The main benefit was the elimination of the four month hold period.
The high demand for this financing facilitated $4.1 million in total over two placements.
The lead order came from GoldMining with $1.25 million. It now owns 12.6 million shares and 1.5 million in warrants.
NevGold currently has just under 71.5M shares outstanding. It’s also closed at $0.355 with a $25 million market valuation.
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