JV jiving at McCoy-Cove This is an analyst report from Canaccord...
We reiterate our BUY rating and C$4.75 target price for Premier Gold Mines who released results from its 2018 drill program for the McCoy-Cove project. The McCoy-Cove JV project is located in the Battle Mountain-Eureka trend in central Nevada and Barrick Gold (ABX-TSX; $14.28 | rated HOLD by Carey MacRury) is earning a 60% interest in the exploration portion of the project by spending US$22.5M by June 30, 2022. The results highlight three areas of the property. The off-trend discovery is highlighted by hole HE18-02 (Figure 1), which intercepted 12.69 g/t Au across 4.6m. The hole intersected Carlin-style mineralization in similar host rocks to those found 320m to the north at Cove. Mineralization occurs 125m west of the Gold Dome fault and 200m south of the NW dike, and represents an intrusion that demarcates the southern margin of the currently-known Helen-Gap mineralized trend. This area is poorly drill tested and proximal to the carve-out boundary, and may trend into the 100%-held Premier ground. Premier plans to follow-up in this area before year end with four rotary holes. The second highlight, the poly-metallic discovery, could represent a new poly-metallic zone 625m to the east of the 2201 poly-metallic zone. Highlights from hole PB18-02 include 5 g/t Au, 410 g/t Ag, 5.7% Zn and 5% Pb over 2.74m (Figure 2). This area is characterized by semi-massive to massive pyrite-sphalerite-galena mineralization, which occurs along the hanging wall of the west-dipping Beacon fault. This fault was previously unmapped due to pediment cover at surface and could be an important fluid conduit as it is similar to the east-dipping Lighthouse fault that is associated with poly-metallic mineralization in and under the Cove pit. These results also demonstrate the potential of the 2201 Zone, remaining open in several directions. The final highlight comes from west of the Cove deposit at Windy Point. Hole PB18-07 intersected Carlin-style alteration on strike, along the Cove anticline. This intercept, 510m west of the Helen Zone deposit, demonstrates that the geologic model being used is successful in identifying and following controls to continue extending areas of known mineralization. Results from the drill program show the early success of the Barrick JV and the potential for continued exploration growth. In addition, the new discoveries have the potential to trend onto the 100%-owned Premier land, which could provide upside for future work at Cove. We expect additional drill results from McCoy-Cove to be released by the end of 2018 or early in 2019. Other upcoming potential catalysts for 2018 include: • Construction of two new mining operations including stripping at the Phase 1 pit and commissioning of the El Nino underground mine at South Arturo; • Drill results from Marianas at Mercedes; • Underground infrastructure development and definition drilling at Cove The Cove property represents approximately 15% of our NAV but has the potential to increase as we currently do not model any of the poly-metallic material found at Cove or the exploration potential of the McCoy-Cove area. Premier Gold currently trades at 0.39x normalized (5%) P/NAV, a discount to covered peers at 0.55x. With one of the strongest exploration portfolios among mid/small cap producers, we expect that as the company ramps up production in 2019 and 2020 it will have the opportunity to re-rate upwards, closing the valuation gap