Signal Gold Inc T.SGNL

Merger DD: Missing Updated FS Study For Goldboro

[DoumDiDoum]

It's unfortunate that we do not have an updated FS, or at least a new Ressource Estimate for Goldboro prior to decide if the merger deal is the best one. I think that there could have been some positive factors for us.

The latest Feasibility Study is dated January 2022, which is almost 3 years old. A lot of drilling has been done since and we can all agree with the results we have will certainly add ounces to the resource estimate (GoldNHill guesstimated north of 4M ounces in a previous post). We could surely speculate about what could be the number, but my point is that we can all agree that the RE is underestimated base on the drilling we have done since. Even Morgan Lekstrom is shouting in interviews that Goldboro is a unique asset and it’s way better than what it is right now.

Cut-off grades fluctuate from one report to the other. In the last three reports for Goldboro, cut-off grades used were the following:

• December 2019: open pit cut-off grade was at 0.5g/t and underground cut-off was 2.0g/t with a gold price of US$1350
• Summer 2021 (PEA): open pit cut-off grade was at 0.44g/t and underground cut-off was 2.6g/t with a gold price of US$1550
• January 2022 (FS): open pit cut-off grade is at 0.45g/t and underground cut-off was 2.4g/t with a gold price of US$1600

Usually, the level of confidence about the cut-off grades increases each time a report is published (from a resource estimate to the Feasibility Study level).

The formula used for calculating the long-term gold price to be used in determining the cut-off grade is not standardize and involves some “future” price trend assumption. Nordmin Engineering was working on the last report during 2021 and pick US$1600 while the gold price was going from a low of US$1525 to a high of US$2040, the bulk of the trading being in the US$1750-US$1850 range during half of 2020 to end of 2021. If a firm was currently working on updating the RE and were following the same kind of thinking, gold had a low of US$1800 in 2023 and a high of US$2700, with the bulk of the trading being well over US$2000 since May 2023 and over US$2100 since March 2024. What gold price could they be using for this update then? Is it fair to say that they can use something nearer US$2000 for layering the economical elements of the next report, including the cut-off grades?

I’m asking the question because if you add $US400 to estimate the economically extractable resource while updating the technical report, could it be logical that the cut-off grade goes lower for the open-pitable resources as well as the underground ones? According to the below excerpt from the latest study, it looks like so (first element in the list):

14.16 Factors That May Affect the Mineral Resources Areas of uncertainty that may materially impact the Mineral Resource Estimate include:
• Changes to long-term metal price assumptions.
• Changes to the input values for mining, processing, and G&A costs to constrain the estimate.
• Changes to local interpretations of mineralization geometry and continuity of mineralized zones.
• Changes to the density values applied to the mineralized zones.
• Changes to metallurgical recovery assumptions.
• Changes in assumptions of marketability of the final product.
• Variations in geotechnical, hydrogeological, and mining assumptions.
• Changes to assumptions with an existing agreement or new agreements.
• Changes to environmental, permitting, and social licence assumptions.
• Logistics of securing and moving adequate services, labour, and supplies could be affected by epidemics, pandemics and other public health crises, including COVID-19, or similar such viruses.

So, using a higher gold price with the current RE (2022) drill results would probably give a higher resource estimate number, setting a higher base for adding the new drill results we got since then.

As we can see as well in the third point, is that the continuity of mineralized zones, which is what was tested during the last two years and what Kevin Bullock/Morgan Lekstrom are all excited about, can also have a positive impact on the resource number.

So, to close my case regarding what could have been positive elements in an updated FS study for Goldboro, my opinion is that we do not have the latest and greatest information about the resource estimate, disadvantaging SGNL shareholders in the deal. What is unfortunate is that I do not think we will get one before the vote happens. But I guess we can take all this excitement on the NEXG side with Morgan Lekstrom being “all-in” since NEXG management has seen the drilling results and has certainly worked on them with their geologists. Seeing them so excited, it might indicate that the raise in the RE could be significative.

P.S.: Shiftyone is on my Ignore list. So if you see him challenging anything in that post, just make sure you verify his information before considering it.

[GrumpyInvestor]

Hi DDD, You said : "It's unfortunate that we do not have an updated FS, or at least a new Ressource Estimate for Goldboro prior to decide if the merger deal is the best one. I think that there could have been some positive factors for us." -------------------------------------------------   Unfortunately, we have no other deal to consider besides the current one. It

[andre171]

I think you've presented the situation very well. Even if Goldboro is not sufficiently valued or is valued less than Goliath, the essential (even vital) question is not there, but exclusively whether or not another solution or agreement can be found to enable the SGNL mine to continue to develop. And a priori, there should be no better choice than the takeover by NEXG, which some professionals

[DoumDiDoum]

I here you guys... but I just think you have thrown the towel too fast here. I'm continuing my DD. I'm not done yet.  Thanks for your comments.