Golden Arrow Resources (GRG.V) has announced their maiden resource estimate at Chinchillas, which surpassed our estimate of 50 million silver-equivalent ounces. The company tabled a resource estimate containing approximately 105Moz AgEq based on a cutoff-grade of 50g/t at an average grade of approximately 115g/t silver-equivalent. The 105Moz AgEq contains approximately 80Moz silver, 360Mlbs zinc and 410Mlbs lead.
If we use a higher cutoff-grade of 60g/t silver-equivalent, the resource decreases only marginally to 97Moz AgEq, but at a higher average grade of 127g/t silver-equivalent.
As we were expecting a resource number of approximately 50 million equivalent-ounces, we are obviously very happy with this maiden resource estimate, which emphasizes the potential size of this project, as the mineralization is still open in all directions.
The average grade is a bit disappointing, and we would have liked to see an individual estimate of the higher-grade component of the current resource estimate. Golden Arrow plans to start a Phase III drill program later this year that aims to expand and upgrade the current resource estimate, which will be the basis for a PEA on the project.
This maiden resource estimate is very encouraging, and if we apply a valuation of just $0.5/silver-equivalent ounce (bear in mind Mirasol Resources (MRZ.V) sold their project in Argentina for a price of $2/ounce of silver), Golden Arrow’s fair value is approximately C$1.4/share. This implies that the company seems to be very undervalued as we are still trading around cash value of C$0.23/share
Disclosure: Golden Arrow Resources Corp. is a sponsoring company. Please see our disclaimer for current positions.