NevGold (NAU.V) is now almost halfway through its maiden drill program on the Limousine Butte gold project in Nevada, the company’s flagship asset. Approximately 4,000 meters of the 10,000 meter drill program have now been completed and the first assay results are now being released. Thanks to the excellent relationship of the company with a local assay lab in Reno, the turnaround times are very short with just about 6 weeks between sending the samples and receiving the assay results.
Although it’s still early days, the assay results from the first few holes exceeded our expectations and NevGold is now well on its way to release a maiden resource including 1 million ounces of gold in oxide mineralization.
It’s still early days, but both Resurrection Ridge and Cadillac Valley are already delivering
The exploration thesis at Limousine Butte is very straightforward: the company is targeting the well-known pilot shale which hosts numerous large gold deposits in the state of Nevada. While it’s remarkable to see this much low-hanging fruit there are two main reasons why previous operators may have missed what now appears to be obvious.
First of all, the historical drill holes were relatively shallow, rarely deeper than 150meters as they were looking for gold mineralization at or very close to surface. This means that back in the day, there was barely any interest in gold zones at less shallow, but still economic depths. And secondly, as you can see on the image below, certain areas of the Resurrection Ridge zone are overlain by dolomites (the OS ‘hill’) on the image below.
While dolomite rocks rarely host anything, previous owners of the project failed to check what rocks are underneath the dolomite zone and in this specific case it looks like the entire dolomite cover is covering the pilot shale which is coming pretty close to surface at that point.
This means there are some areas that were completely missed by previous operators while drilling deeper also yielded very desirable results, especially at Cadillac Valley as we’ll explain later in this report.
All four holes encountered oxide gold mineralization and although the headline result of almost 62 meters containing 2.19 g/t gold (including 11.6 meters containing 8.51 g/t gold indicating the remaining 50 meters still had an average grade of 0.72 g/t gold which definitely exceeds traditional cutoff grades in Nevada for this type of project at 0.15-0.20 g/t), it’s interesting to see all four holes yielded good to excellent results.
All mineralized intervals exceed the cutoff grades typically used in Nevada and with thick layers of mineralization like 44 meters of 1.3 g/t or even 79 meters containing 0.65 g/t gold, NevGold kicks off the Limousine Butte exploration season with a strong start as all four holes contain relatively thick intervals with good to very good gold grades.
This is an excellent start and as NevGold has added a second drill rig to the program we should now see a rather continuous news flow of additional assay results. NevGold promised to release an updated resource estimate after the drill program has been completed and we expect to see a substantial improvement from the historical resource of 241,000 ounces of gold in the measured and indicated resource category and the 51,000 ounces in the inferred category. Not only will the company be able to reduce the cutoff grade compared to the 0.41 g/t gold used in the historical resources, the core holes will increase the confidence in the geological structures while NevGold can easily expand towards the west and the east from the four reported holes as the pilot shale will be drill-tested for additional mineralization.
Earlier this month, the company released the initial results from the first hole the company has drilled on the Cadillac Valley target area, a highly interesting prospect on its greater Limousine Butte gold project in Nevada that is over 2 kilometers away from the Resurrection Ridge area. The first four holes released by the company were drilled at Resurrection Ridge and this new hole, CV22-001 was drilled at the Cadillac Valley area where it successfully intersected the pilot shale.
Hitting the pilot shale is important for this exploration story as that’s where most of the gold appears to be hosted. And with a total of 58.2 meters of 2.13 g/t gold starting at a down-hole depth of 212 meters, the grade is certainly living up to the expectations. The reported 58 meter interval also contains a higher grade intersection of 5.9 meters containing 12.32 g/t gold which means the residual 52.3 meters had an average grade of 0.98 g/t gold. As the entire interval appears to be oxidized mineralization, those grades would for sure exceed the traditional cutoff grade for Nevada-based oxide gold projects.
The lower portion of the hole, from 278 meters all the way down to 404 meters is still in the lab and assays will still have to be reported on that area.
While we agree the start of the mineralization at in excess of 200 meters down-hole is less shallow, one needs to have a look at the cross-section.
You can clearly see hole CV22-001 targeted the deeper area of the pilot shale and there are layers much closer to surface and in an open pit design the ounces closer to the surface would obviously be taken out first. Secondly, the other planned hole on the image has been designed to hit the pilot shale twice and the upper layer of the pilot shale is pretty close to surface there.
And looking at the long section above, it looks like hole CV22-001 will be one of the deepest holes drilled at Resurrection Ridge as the target areas tend to be closer to surface. So while the mineralization in hole 001 started deeper, you need to keep an eye on the bigger picture as the mineralization encountered in the hole will likely be one of the deepest oxide areas it will encounter. As you can see in the image above, the pilot shale and assumed gold mineralization will be much closer to surface on the left hand side of the long section (so towards the south).
And just to put things into perspective, the image below shows the exact location of the cross section and long section shown before.
Another interesting feature at Cadillac Valley, which hasn’t been discussed that often, is the area on the western side of the ridge (highlighted in blue). Initial field work has confirmed the presence of multi-gram gold at surface, and NevGold is very keen on drill-testing that area as well as it could be an indication the gold mineralization may be more continuous than previously expected.
NevGold has more horses in the stable
In a recent update, NevGold confirmed its technical team has now completed a data compilation and interpretation program and this resulted in identifying potential extensions to the known high-grade vein structures that were discovered by historical drill programs at the Ptarmigan project in British Columbia. Those potential extensions now span over 4 kilometers and that’s an attractive enough target for the company to kick off a comprehensive field program in the second quarter of this year, which will likely include a drill program as well.
NevGold has lined up the noteworthy and high-grade intervals from historical drill programs above and as those drill programs only tested a small portion of the land package (less than 1 square kilometer), NevGold thinks there’s plenty of opportunity to expand the mineralized trend. A Notice of Work has been submitted and NevGold plans to kick off an exploration program in the second quarter of this year. The company seems to be very keen on getting a drill rig going at Ptarmigan to follow up on these historical high-grade silver intervals.
NevGold has already been approached by third parties who’d like to kick the tires at Ptarmigan but it sounds like NevGold wants to complete at least one field season before making any strategic decisions for this project as it creates a very interesting, high-grade opportunity in their portfolio.
All three projects will be worked on this year
While most of the attention this year will go to the flagship Limousine Butte project, NevGold’s plan is to work on all three projects this year. This means that not only Limousine Butte and Ptarmigan will be drilled, but Cedar Wash will be subject to a first pass drill program as well.
We haven’t discussed Cedar Wash in this update, but rest assured it remains a top priority for NevGold as the company has committed to a drill program in the third quarter of this year. It’s not unthinkable it will send the Boart Longyear RC drill rig it is currently using now from Limousine Butte to Cedar Wash rather than releasing the rig, but we’ll likely get a better idea of the exploration plans in the next few months. The company has completed a detailed soil sampling program, and it already has scheduled geophysical work. Everything is on track to the drill the project in the third quarter of this year.
The total budget for all exploration programs is C$2.5M and that’s fully funded with the existing cash position as NevGold’s treasury remains relatively healthy with approximately that amount in cash in the treasury while it has already spent a chunk of cash on the almost 4,000 meters of drilling that has already been completed at Limousine Butte.
We have a weak spot for oxide-hosted gold projects in Nevada. Not just because Nevada is a mining-friendly state, also because the heap leach process has been optimized over the course of the past few decades which means that older projects gathering dust on shelves now suddenly are very economically viable. Limousine Butte appears to be one of those rare projects where the combination of ‘new’ processing techniques and a fresh exploration approach with a new set of eyes is paying off.
The first assay results from the Limousine Butte drill program are exceeding our expectations with thick intervals carrying an average grade multiple times higher than the average cutoff grade for these type of oxide deposits in Nevada. NevGold is planning to release a maiden resource calculation in the third quarter and it’s not exactly a secret the company is targeting a million ounces of gold.
Disclosure: The author has a long position in NevGold. NevGold is a sponsor of the website. Please read our disclaimer.