Equitas Resources (EQT.V) has released the first few results of the drill program on the Baldo zone of the company’s Cajueiro project. The first few drill holes were aimed at testing the potential mineralization to the northwest of where the current inferred resource at Baldo is located. Equitas did find some decent gold values with for instance almost 6 meters of 1.2 g/t gold and 10 meters at 1.21 g/t gold.
First of all, it’s great to see Equitas has found more gold and validated the potential of the Baldo zone, but unlike other market commenters we aren’t extremely excited about gold grades of 1-1.5 g/t in the saprolite oxide zones. Sure, encountering in excess of one gram per tonne is positive (the average weighed grade in the drill holes is approximately 1.41 g/t), but it does come in light when you’re comparing it with an average grade of approximately 3 g/t, so we aren’t extremely excited about these gold grades, because even keeping the CIL plant in mind which will reduce the needed gold grade to break even, the grade isn’t too impressive. However, the company’s previously reported trenching results are much better as the higher grade zones identified during the trenching program are much more encouraging considering Equitas has found grades of up to 24 g/t. As the company has no intention to immediately mine the deeper zones, the company will very likely increasingly focus on trenching rather than drilling in the near future.
That being said, keep in mind this zone wasn’t one of Equitas’ high-priority zones, and the company’s attention is now focused on the Crente zone where the company drilled two relatively deep holes (totaling 252 meters) below the Crente pit, which has been mined by the artisanal miners. This will be more important to validate our investment thesis as Equitas will be testing the theory behind a structural interpretation which is expecting a mineralized trend that is steeply dipping. We hope to see some higher grade results at Crente, which could confirm the historical drill holes which encountered 31 meters at 2.37 g/t gold and a shorter but higher grade interval of 9.4 meters at 4.15 g/t gold. These higher grade zones could then be blend with the lower grade mineralization to create a mill feed with an average head grade consistently over 1.5 g/t.