The Imminence of a Preliminary Economic Assessment ( PEA ) The objectives of the 2024 drilling program and its recent extension remains the de-risking of the Fazenda do Posto discovery and Buti Gold Deposit such that a preliminary economic study defining the general scope of a gold mining project can be prepared..
Generally, the PEA is most relevant if the defined ounces are within the Measured and Indicated 43-101 Resource categories , although in some circumstances the Inferred category has been used.
These categories are defined by the drill density ( sampling rate ) with Inferred more likely to be on 100 m spacing with Measured and Inducated at 50 m or less.
That the miners,ization is continous assists considerably in meeting these higher categories because the coefficient of variance of the mean grade will be much lower than for widely spaced veins.
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At Butia , infill drilling has been invoked to increase the confidence in the Buti resource by converting the Inferred Resource into the Measured & Indicated categories) ..
Extensional drilling has also taken place to potentially increase the gold endowment.
At FDP, the drilling pattern is on 50 meter spacing, so should be able to meet the M &I categories as well.
Hence, subsequent to full analyses of recent drilling results , LGC should be in position to conduct a PEA.
This is remarkably fast but not when you consider that continous mineralization enables gold ounces to be confidently measured with much fewer meters drilled.
SGD for example had just 28,000 meters drilled.
My most recent post which described the valuation outcomes of Gmin's 2 million ounce M&I resource Feasability Study will now come in handy in scoping the probable outcomes of LGC's PEA.
Its quite possible with the addition of 2024 drilling , that FDP combined with Butia could now have already defined 1.5 million ounces in the M &I category.
Gmin's Toz FS at $2300 US POG had an after tax discounted NPV of $1.8 billion CAD or about $900 CAD per ounce for its 2 million ounce M &1 Resources.
Should LGC have defined 1.5 million ounces in the M & I categories ,the PEA after tax discounted NPV would be in the range of about $1.3 billion CAD @ $2300 US POG.
There are two factors that make this a resonable expectation.
First, Gmin's Toz does not have the same extent of continous mineralization as exhibited with Butia- FDP.
This will be in favor of a lower cash cost for LGC.
Secondly, Gmin had virtually no Inferred ounces to back up its exploration prospects .
Its very likely that when the Butia-FDP drilling results are updated , the defined gold resource will still be open at strike and dip to say nothing of another 500,000 ounces at Cerrito and 5 more possible discoveries just north and associated lithologically with Butia and FDP.
So, we are very well positioned for a 4-5 bagger from here , as new drilling results and their resources estimates are published and those then forming the basis of a PEA whose proxy...Gmin FS..
seems more than reasonable as a valuation extrapolate ..
AIMHO
GLTA
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