- TSX: GGD
- Shares Outstanding: 224M
- Share price C$1.57 (08.09.2020)
- Market Cap: C$352M
I penned an article regarding GoGold Resources last week. It is shaping up to be a really encouraging gold value proposition.
GoGold is a gold-silver mining story with cash flow from a tailings facility. The company owns 2 projects in Mexico:
This is a 22,000 ha, 35-concession gold-silver exploration project. The numbers for GoGold Resources’ initial mineral resource estimate announced on July 29th at Los Ricos South got the market fairly excited, and GoGold looked like it could fairly comfortably turn Los Ricos into a solid 2.5-3g/t gold eq. bulk tonnage mine. GoGold is targeting a PEA by the end of the year as it looks to leverage the gold bull market whilst it is at its most accretive. However, recent news is even more promising.
Providing the company with a stable base of cash flow from an investment class we really appreciate, the Parral Tailings operation utilises a heap leach processing facility to produce silver from historical tailings at a low cost. This means 600,000z silver eq. at a reasonable AISC of around US$14/oz. Tailings is mining without the risk, and whilst it doesn’t quite have the sex and sizzle of exploration, this is US$2M PQ added to the company’s bottomline after G&A.
Enough about the tailings; let’s talk about what you’re here for. This story of a stable, bulk-tonnage gold silver value proposition reinforced by tailings-induced cash flow has now started to sizzle a little more vigorously.
GoGold has been hard at work on a drill programme targeting high-grade gold-silver ore and resource expansion potential for much of the last 16 months. In total, GoGold has spent US$6M, using up to 6 drill rigs. 4 were operating in Los Ricos South, the source of the maiden resource, but now it appears to be the turn of the north to have its time to shine. The company now has 3 drill rigs operating at Los Ricos North, and the potential is becoming clearer by the day.
Today, the company released the assay results from an additional 6 holes drilled at the La Trini silver-gold deposit, which forms part of Los Ricos North.
One hole, ‘Hole LRGT-20-004,’ was drilled; it intersected a ‘silicified and altered quartz rhyolite unit’ from 7.3-36.7m for 29.4m of 254g/t, yes 254g/t, silver equivalent (consisting of 122 g/t silver and 1.77 g/t gold). Moreover, the intersect included a pleasing 8.8m of 670g/t silver eq., comprised of 286g/t silver and 5.11g/t gold.
These are just a few short holes, but they have already gone some way to confirming the high-grade, at-surface gold-silver mineralisation that precious metals investors crave. The exploration drilling programme will become even more focussed this autumn. Langille and his team will aim to confirm and expand on historical drill data whilst accelerating the company’s advancement towards defining a mineral resource for Los Ricos North with grid drilling. This resource has the potential to create a catalyst moment, sparking share price accretion.
There were some similarly high-grade numbers from several other holes, including 28.4m of 183g/t silver eq., comprised of 103g/t silver and 1.07g/t gold (with 11.4m of 332g/t silver equivalent).
The initial focus for this drill programme at Los Ricos North continues to be on the La Trini, Mololoa and Solomon targets, though this will evolve as the geology of the deposit becomes clearer. I’m reserving judgement until I see results of their deeper drilling but so far it points to the possibility of an even better deposit than Los Ricos South. Then, it is a case of can they join the dots between the two.
So, what is this likely to do for GoGold’s value? In the short-term, I can see this giving confidence to the market. Silver is especially hot right now, and with silver grades as high as they are, it would be little surprise to see investors backing a management team with this pedigree and track-record of making money for shareholders.
In the long-term, if anything, these results simply emphasise the value proposition we already expected was in play. We already knew this was a strong gold-silver project delivered in an accelerated timeframe by a management team with an exemplary track record. Moreover, we knew there was an exploration upside to look out for. It is this exploration upside that has now been shored up, and investors need to actively decide what they want to do with this information. I know where I’m placing my bet. Do you?
Company Website: https://gogoldresources.com/
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