Sprott UpdateCharts are on the Sprott site www.sprott.com research
Today’s and prior drilling leads us to think that Berry could see +50% lift in MRE towards 1Moz resource / 500-800koz reserves, well over our 325koz modelled inventory.
For reference, the Leprechaun and Marathon pits go to ~290-300m deep, respectively, while the Berry 2021 constraining shell only went to ~200m hence deeper drilling today is key, likening the deposit to Leprechaun with roots.
The location is key, there are two pit shells along the main break, but todays drilling is focused on the saddle between these, where a plunge can be seen in the Figure 2 long-section, and thickening away from the main break on the plan map.
Whilst today’s drilling doesn’t offer a step-change, the demonstrated plunge should at worse pull the central pit down and at best join them all up (a likely end-of-life cut back in our view).
As such, we maintain our BUY rating and 0.9xNAV C$4.10/sh PT based on a fully-diluted 263m shares, net of finance costs on the C$236m debt facility, and net of central G&A. This includes Berry upside at US$100/oz for resources outside SCPe inventory (C$59m), around a third of the DCF value, pointing to continued NPV growth here if the above estimates are hit, and that ahead of next target Victory.
Our enthusiasm picked up with news that not just one, but two rigs are drilling along strike at Victory following the corridor to the NE extension with visible gold reported in untested areas today.
There, the historic drilling was off the main break (a mistake) so we’d expect the main break is proving fruitful. This should come as no surprise, with Figure 1 showing the track record of consistent resource growth, including +640koz @ 1.75g/t most recently at Berry from only 42,000m of drilling in 2020 (+70,000m underway) taking the Valentine global resource to 4.8Moz
@ 1.72g/t.
We will be visiting site next month.
Figure 1. Valentine Lake’s resource growth over time Source: Marathon Gold, SCP Berry infills 11-14m @ 1.3-4.2g/t and bulks out western HW; two rigs drilling on Victory Marathon reported 15 holes from the Berry infill drilling, highlighted by 11m @ 4.2g/t, 13m @ 2.5g/t, and 4m @ 7.6g/t, again targeting the western portion of Berry in HW, but also the deeper ‘saddle’ zone between two MRE-optimized pits (Figure 2). Four rigs are drilling now: one at Berry, two at Victory, and one at Sprite. Ahead of assays, Victory drilling has revealed ‘strong areas of mineralization in previously untested areas adjacent to the…shear zone, with visible gold’.