Gold Eagle: resource stock updateInteresting article I got forwarded to me. Enjoy.
Gold Eagle TSX:GEA Recent Price C$7.50
Entry Price $4.75 Opinion - strong buy
Gold Eagle released a resource estimate of between 9 and 13 million ounces
of gold. For simple math, lets say 10 million ounces. GEA has about 100
million shares out, so at $7.50 the market is valuing this at $75 per ounce
and $65 per ounce if you subtract GEA's $100 million plus cash on hand.
From what I know, the deposit is too deep to calculate a 43-101 resource,
because the drill hole location cannot be accurate enough, it can wander
too far in this kind of depth. That does not mean the gold resource is not
a deposit or economic, quite the contrary. This deposit is huge, very high
grade and located in a prolific mining belt next to past producing mines
and current mines that are among the lowest cost producers in the world.
The stock should be valued at least twice as high at $150 per ounce, or
more.
GEA will have to do underground exploration to prove this up, that is their
intent and they have the cash. By the time this is complete, within the
next year or so we will be looking at a $20 stock or better.
I would not be surprised to see this at 15 million ounces, valued at over
$200 per ounce for a stock price of $60.
At current prices, it is also a strong technical point on the chart to buy,
see below.
This stock should be in every gold portfolio - it is currently the
best gold discovery since the gold bull market began in 2002
Following is details of the news release last week
Gold Eagle Mines released an exploration target potential for the
Bruce channel which has been prepared by Peter George, PGeo, of Geoex Ltd.
In Mr. George's opinion, the exploration target potential of the Bruce
channel, based on the drilling completed to the end of 2007, is 14.1
million tonnes to 16.5 million tonnes grading between 20 grams gold per
tonne to 25 grams gold per tonne, yielding an in situ potential of between
9.0 million to 13.3 million ounces of gold.
Along the Bruce channel, at approximately 800 metres below surface, lies
the Bruce channel discovery mineralized envelope. This mineralized
envelope, which remains open in all directions, is currently estimated to
extend a minimum of 1,100 metres vertically with a horizontal footprint of
approximately 720 metres northeast-southwest and 450 metres
northwest-southeast.
The author's opinions on the geological potential of the Bruce channel are
based upon a thorough review of drilling completed along the Bruce channel,
which consisted of 165 drill holes and wedges totalling approximately
103,708 metres completed to year-end 2007, and 329 significant composited
assay intervals developed by the Author.
Based on the Author's composite assay database, 100% of the composites
resulted in an average grade of 9.0 grams gold per tonne, indicating
potential for 14.1 million tonnes to 16.5 million tonnes containing between
4.1 million to 4.7 million ounces of gold. Based on the Author's composite
assay database, the upper 50% of the composites resulted in an average
grade of 16.8 grams gold per tonne, indicating potential for 7.4 million
tonnes to 8.5 million tonnes containing between 4.0 million to 4.6 million
ounces of gold.
In the Author's experience, reconciliation of surface exploration drill
holes with underground bulk samples and stope production data generally
indicates that wide-spaced exploration drill holes understate both the
grade and width of mineralized structures by factors of 100% to 200%. The
Author therefore concludes that the composite assay database indicates
geological potential for an average grade in the 18 to 27 grams gold per
tonne range.
The Bruce channel mineralization is considered to be the down-plunge
extension of the past-producing Cochenour Willans ore body, which is
projected to enter the north boundary of the property at a depth of
approximately 700 metres below surface. The Cochenour Willans mine produced
approximately 1.2 million ounces of gold from 2 million tonnes of ore at a
recovered grade of 18.5 grams gold per tonne. Allowing for 15% mine
dilution and 95% mill recovery, this indicates an in situ grade of
approximately 22.9 grams gold per tonne.
Recognizing the limitations of assessing the grade of Archean lode gold
deposits based solely on drill hole data, the Author considers the current
drill exploration program has had a higher than average hit ratio in terms
of "significant intersections". This conclusion is based on Rogers (1982)
who noted that at the Dome mine in Timmins , in areas that were ultimately
mined, 40% to 60% of holes completed through multi-vein gold structures and
50% to 80% of holes completed through single vein structures failed to
return any gold values in excess of 1.7 grams per tonne.
In the Author's opinion, these factors must be taken into consideration
when evaluating the significance of surface drilling results as, "the role
of drilling is paramount in the success or failure of 'making a mine'
however, drill results are often misleading when consideration is given
only to the economic value of the drill core assays themselves." ( Rogers
1982).
Therefore, the Author believes that it is reasonable to determine the in
situ gold target potential of the Bruce channel based upon average grades
in the 20 to 25 grams gold per tonne range that straddles the average grade
of the up-plunge Cochenour Willans ore body.
In conclusion, the Author's opinion is that the exploration target
potential of the Bruce channel, based on the drilling completed to the end
of 2007, is 14.1 million tonnes to 16.5 million tonnes grading between 20
grams gold per tonne to 25 grams gold per tonne, yielding an in situ
potential of between 9.0 million to 13.3 million ounces of gold.
The potential quantity and grade estimates presented herein are conceptual
in nature, there has been insufficient exploration to define a "mineral
Resource" as defined in NI 43-101, and it is uncertain if further
exploration will result in the target being delineated as a mineral
Resource.
Disclosure of the potential quantity and grade of a potential mineral
deposit that is to be the target of further exploration is permitted under
Sections 2.3(2) and 2.3(3) of National Instrument 43-101 ("NI 43-101")
provided that the necessary cautionary language is appended to any
reference to the potential target estimate, and the basis for determining
the potential target is clearly stated.
In the Author's opinion current drilling on the property is too wide-spaced
to enable a NI 43-101 compliant resource estimate. However, visual
inspection of drill sections has given the Author confidence that there is
a strong apparent structural trend that future surface drilling,
underground drilling and underground development will demonstrate to have
continuity.
stock chart
You can see from the chart that it is trading at the 200 day moving
average, that has provided support before and at the bottom of the
bollinger bands. It is also at the bottom of its recent trading range and a
level where it bottomed at in February and April
Tel.:(416) 368-3949
Website -
https://www.goldeaglemines.com
https://www.stockhouse.com/comp_info.asp?symbol=GEA&table=LIST
Tel. 416-203-9181
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