CanaccordCanaccord
Gold Canyon Resources* (GCU : TSX-V : $2.10), Net Change: -0.36, % Change: -14.63%, Volume: 1,480,781
Solid foundation set.
Gold Canyon Resources announced its long-awaited updated NI 43-101 compliant resource estimate for
its 100%-controlled Springpole Gold Project, which is located 110 km northeast of the Red Lake, Ontario.
This new resource estimate is the first since the company's original estimate prepared on November 20, 2006 and includes approximately 39,000 m of drilling completed in 2010 and 2011.
Highlights from the new resource estimate included an Indicated mineral resource of 1.22 million ounces of gold (at 1.26 g/t gold) and 4.82 million ounces of silver (5 g/t silver), and an Inferred mineral resource of
2.45 million ounces of gold (at 1.27 g/t gold) and 11.58 million ounces of silver 6 g/t silver).
The total gold resource of 3.67 million ounces at a grade just over 1.25 g/t gold came in more or less in line with expectations.
Most analysts were looking for 3.5-4.0 million ounces of gold in this initial resource update.
Some retail investors may have had inflated expectations given the delayed release of the resource.
Commenting on the results, Gold Canyon's Technical Advisor and Director, Dr. Quinton
Hennigh, stated, "This resource gives us a solid foundation upon which we believe we can quickly build significant upside through ongoing drilling in near-surface areas proximal to this resource, along the strike of the Portage Zone to the southeast,
and at depth where drilling has recently encountered higher grade mineralization."
Going forward, drilling continues at Springpole where Gold Canyon plans 50,000 m in 2012.
Completion of a preliminary economic assessment is expected by early fourth quarter, 2012, and it will be accompanied by an updated NI 43-101 compliant resource estimate that includes some of the 2012 drilling.
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Dahlman Rose has also affirmed their $6.64 price target.
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CIBC World Markets
Here are a couple of extracts from the report released this morning. They are being pretty conservative in their assessment but still have a target price 65% higher than it is today (ie. $3.50). GLTA
We believe the near 15% drop in the GCU share price post-release was caused by market expectations for total gold ounces greatly exceeding realistic figures, resulting in disappointment.
We expect resource expansion will continue in 2012 and that a revised estimate will be produced in Q3.
Total contained gold is below our initial estimate of 4M oz. but grades are over 15% higher than expected. A significant silver component also helps to reduce estimated costs. The increased gold grade and large silver component offset less gold ounces; our NAV decreases only marginally.
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Fraser Mackenzie
Coming within what we had anticipated at 3.7 million ounces (inferred and indicated), the new resource estimate is very encouraging development for the Springpole gold camp.
It demonstrates that the company is progressing towards our 7.0 to 7.5 million ounce estimate for next year.
The resource significantly derisks the project and the company`s ability to build towards what we believe will be a 7.5 million ounce resource by Q1 2013.
We continue to remain very bullish on the project and maintain our Strong Buy and $5.45 target price per share that is based on 7.1 million potential ounces and applying a $100 per potential ounce of gold in the ground multiple. Also, we have only ascribed minimal upside thus far for strike extensions to the southeast and none for new target zones.
https://www.frasermackenzie.com/newresearch/GOLD_CANYON/QUICK_NOTE_GCU_Starogiannis_270212.pdf
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I made a point of listening to the CC. This resource is an in-pit calculation and holds up to conservative geologic scrutiny unlike other recent reports by TRR and BAT. Comparing TRR with GCU is a joke. Not all NI 43-101 are created equally.
TRR:
https://www.incakolanews.blogspot.com/2012/02/trelawney-trrv-and-letter-to-editor-of.html
BAT:
https://www.incakolanews.blogspot.com/2012/02/batero-batv-nicholas-campbellsoup-over.html
TRR uses a gold price of $ 1500 and a recovery rate of 95 %
GCU uses a gold price of $ 1300 and a recovery rate of 80 %.