ICI offers realistic 10 bagger potentialBelow the radar of most investors...but not of several astute investment letters.......ICI offers an excellent chance of a 10 bagger from current levels.
Here is why.
Inter-Citic's Dachang Gold Project is a 279 km2 property in the Qinghai Province of Western China and its business license has been extended for an extraordinary 27 years to December 26, 2033.
It is close to roads and all required infrastructure.
The Dachang gold project now has a total inferred ( 43-101 ) mineral resource of approximately 2.9 million oz Au contained (approximately 25 million tonnes with an average grade of 3.63 gpt Au) .
The great majority of this resource estimate occurs from mineralization at surface to depths ofless than 150 metres and is open pittable.
This is comprised of two zones.............the DMZ ( Dachang Main Zone ) and the newly discovered NR-2 Zone.
The Inferred resource on the Dachang Main Zone (DMZ) has approximately 2.66 million oz of contained gold , grading about 3.5 gms/ton , while the NR-2 anomaly has 1.3 million tonnes grading 5.81 gpt Au (approximately 239,000 oz Au contained).
The system of gold mineralization at Dachang is very large and the area has been the site of extensive gold placer working in streams over the past two centuries. The mineralized sediments which host the placer streams are just now being tested by ICI using modern exploration methods.
To date Inter-Citic has identified through soil geochemistry more than 50 major new gold anomalies on the property in addition to the original inferred resource, along with dozens of smaller zones.
ICI had an expanded diamond-drilling program of 50,000 metres in 2008. Approximately 25,000 meters of this program was focussed on the existing inferred resource area with the aim of increasing a large percentage of this
inventory to an indicated level.
Exploration drilling continued , however with the remaining 25,000 meters of drilling focussed on the
eastern extensions of the DMZ, internal areas of the DMZ open to expansion, Placer Valley and new
geochem targets in that order of priority.
While the DMZ mineralization remains open at depth and to the east; the 2008 program was primarilly focussed on shallow potentially bulk-mineable mineralization.
The Company has recently reported all completed drill holes from the 2008 exploration program at
Dachang. Of the 317 drill holes reported from 2008, a total of 299 holes reported gold mineralization
(94.3%), most of which reported multiple mineralized zones between surface and 150 m of vertical
depth. The Company is now reviewing the completed data and preparing an update to its current NI 43-
101 compliant estimated mineral resource inventory.
2008 Drill Highlights:
? Drill hole CJV-666 is a step-out hole off the western end of the Dachang Main Zone (DMZ),
and intersected multiple mineralized zones, including 21.7 metres of mineralization averaging
3.38 GPT contained gold, and another reporting 15.0 metres of mineralization averaging 2.84
GPT contained gold.
? Drill hole CJV-669 is a step-out hole 250 metres off the western end of the DMZ, and
intersected multiple mineralized zones, including 12.0 metres of mineralization averaging 4.31
GPT contained gold.
? Both CJV-666 and CJV-669 increase the strike of the mineralized fault zone described in the
Company’s inferred mineral resource estimate by 250 meters.
The new 43-101 estimate will soon be reporting, and ,given the drilling success rate , a substantial addition to the gold resource can be expected. The extensional drill spatiality indicates that the new 43-101 could be above the 3.5 million oz level, with a substantial portion of this upgraded to the higher Indicated category , which is suitable for a scoping study.
On March 2, ICI also reported first stage metallurgy which demonstrated an overall recovery of 94 % of the gold ,which is quite exceptional and is now working on a final optimal process flow sheets.
What is exceptional about the Dachang discovery , in addition to its potential to contain well over 5 million oz, are the high grades..about 3.5 gms/ton.
Most bulk minable open pit mines have grades below 1.5 gms/ton and those above 1 gm/ton have low cash costs.
Examples are Canplats discovery in Mexico ( 1.25 gms/ton of gold equivalent ) and OSK's Malartic open pit which has 9 million oz at about 1.5 gms/ton.
What is also significant about Dachang is that it is an excellent analogue of Eldorado's Tianjienshan gold mine , which is just a few kms away. That discovery contains 1.4 million oz of gold of which 1 million oz are in the Measured and Indicated Category at an average grade of 3.6 gms/oz.
It is producing 115,000 oz per year for 11 years at an average cash cost of $232 per oz.
The mettalugy is also similar ,and ELD is in a buying mode, as it intends to increase production to 800,000 oz/year by 2013.
Already, Dachang is twice the size of Tianjienshan , and it would likely be about to produce up to 200,000 oz per year , at a cash cost similar to that of Tianjienshan .
Sino Gold also has a nearby gold mine and looking to acquire near-producing deposits.
In other words, once the new 43-101 is released, ICI will be fully in play , with at least several suitors that would want to take the deposit to open pit production , while continueing to expand the resource both at depth and on strike.
Generally, advanced, low cash cost gold in the ground is worth at least $100 per oz ( OSK's is valued at $130 per oz ).
ICI's current market cap values the Dachang resource at just $10 per oz.
This is rediculously cheap, and why ICI will soon be in play.
A buyout would be at least $50 per oz , otherwise I doubt that management would sell.
The new 43-101 will soon be released ,to be followed if not accompanied by, a scoping study showing the economic metrics. These are expected to be quite robust.
That release should trigger a major increase in both volume and price for ICI.
Insiders have been loading up............ a very good sign indeed.