The general cliché in mining is that “grade is king”. It’s all in the numbers. Higher grade ore equals more ounces (or pounds) of metal produced for each tonne of rock extracted from the Earth. All other things being equal, this translates into higher potential margins.
In the current, depressed conditions that span most mining sectors, this is especially true. Generally, only high-grade deposits are able to attract sufficient investor (and market) support. One junior gold mining company that has been diligently developing a very high-grade resource is
Grande Portage Resources Ltd. (
TSX: V.GPG,
OTCQB: GPTRF, FSE: GPB,
Forum).
This is a Company that is already familiar to Stockhouse investors. We first introduced Grande Portage in a full-length
feature article from October 16, 2018.
The Company’s Herbert Gold Project is located north of Juneau, Alaska, in the Alaska Panhandle. Grande Portage holds a 100% interest in the Project, composed of at least six “vein-fault structures” containing quartz-sulfide veins. Grande Portage has been consistently intersecting high-grade gold in the more than 150 diamond drill holes completed on the property to date.
Some of the extremely strong previous drilling intercepts here are sure to attract the attention of any serious mining investor:
- 37.07 g/t Au over 15.7 meters
- 59.91 g/t Au over 8.08 meters
- 30.24 g/t Au over 9.08 meters
- 24.39 g/t Au over 6.37 meters
(Visible gold from high-grade drill core at the Herbert Gold Project)
Grande Portage already had an existing resource estimate for the Herbert Project. In a 2018 NI 43-101 report, the Company announced an Indicated resource of 257,944 ounces Au, with an impressive average grade of 7.25 g/t. Along with this, an Inferred resource was calculated at 82,206 ounces with an average grade of 6.04 g/t Au.
On
May 7, 2019; Grande Portage reported a significant upgrade of this resource estimate, in terms of both the quantity
and quality of the gold resources.
- A new Indicated resource of 606,500 ounces at an average grade of 10.03 g/t
- A new Inferred resource of 251,700 ounces at an average grade of 14.15 g/t
This is a much more robust gold resource estimate in every sense. In this new NI 43-101 report, overall ounces (in all categories) have more than doubled. Specifically, the
Indicated resource has increased by 135% and the
Inferred resource has increased by 206%.
Perhaps even more bullish for investors with this new resource estimate is the
dramatic improvement in overall grades. The already high grade of the Indicated resource has been improved by roughly 40%. The average grade of the Inferred resource has more than doubled.
More ounces and (much) higher grades is obviously very encouraging both for the Company’s current shareholders and potential investors. Ian Klassen, President and CEO of Grand Portage expressed his delight with respect to the numbers of this upgraded resource.
“We are extremely pleased to release the revised independent resource estimate for the Herbert Gold Property, the result of a very diligent effort on the part of the Company's exploration team. We are confident that we will continue to significantly expand the resource as we further identify and drill test the prolific nature of this mesothermal vein deposit. [emphasis mine]
“The Goat vein is a significant emerging part of this story and could be a tremendous cash generator. Check the links, which indicate Goat could be in the top five highest grade mines in the world, with cost per ounce probably not more than $500. Combining indicated and inferred, the Company now has 761,200 tonnes at a grade of 20.34 g/t on the Goat. IF they could get another 400,000 plus tonnes at similar grade, they would have roughly 1.2 million tonnes at a grade of 0.65 oz/t for an in-situ value of about 1 billion dollars (1.2 million X $850 per tonne assuming gold at $1300 per ounce). Assuming $500 per ounce costs on a total production of 780,000 ounces would net about $600M over 8 years or $75M per year. Mining 1.2M tonnes over an 8-year period would be 150,000 tonnes per year or about 430 tonnes per day. If they never found another ounce on the Goat, you could divide these numbers by 2 and still be happy.”
For newer mining investors seeking to put these high grades into context, the “cut-off grade” in calculating this resource estimate (2.5 g/t Au) is higher than the head grades of many operating gold mines. In addition to the 154 drill holes that the resource is based upon, the Company also had data from a total of 3,463 gold samples.
The message here is that while a lot of exploration work has already been completed, there is still considerable opportunity to further upgrade the Herbert Project’s high-grade gold resource. Given the Company’s track record in hitting high-grade mineralization with its drilling and with grades going
up as the size of the resource has increased, many mining investors will be encouraged to look for an entry point here sooner, rather than waiting for even more results to confirm the quality of the Project.
More generally, after a long trough in the gold mining industry and with the current price of gold well below the price level necessary to sustain this industry, the gold sector is well overdue for its Next Rally. With the high grades of the Herbert Gold Project providing a comfort zone for shareholders, Grande Portage Resources provides a very attractive development opportunity for investors positioning themselves in this sector.
FULL DISCLOSURE: This is a paid article of Stockhouse Publishing.