Terraco Gold Corp. (TSX: V.TEN, Stock Forum) has just released the final assays from its 30-hole 2012 Almaden drill program.
(Note to readers: the Almaden (Nutmeg Mountain) project is located in Washington County, Idaho. Trading at 22.5 cents on Friday, Terraco has a market cap of $30 million, based on 133.4 million shares outstanding. The 52-week range is 30.5 cents and 10 cents).
All but a few were drilled from surface to 100 meters (300ft). The purpose was to get a better representation of grade – 500 of the 887 historical holes drilled at Almaden were Reverse Air Circulation (RAB) and most of the rest were Reverse Circulation (RC) holes. It was thought core drilling would provide a better representation of grade.
It seems the plan was successful, recovery was better over longer widths, 20-40% better. With such a substantial improvement in grade, the resource should grow.
The two historical knocks - other than a low gold price - against anyone ever putting Almaden into production were grade and recovery. Well plus one gram per tonne gold with today’s gold price of close to $1700 an ounce would seem to be very doable, if historical recovery of 63-65 percent can be improved upon.
Improved metallurgy – recovery – was the second intent of this year’s overall program at Almaden. In past recovery tests material was combined into one column for leach testing and wasn’t left for the full 90 days. The oxide, the sulphide and the mixed oxide/sulphide material were all lumped together and test results were less than satisfactory.
TEN believes that by separating the three materials, and testing separately, (in a production scenario, all three would be treated separately), recovery would improve. We’re waiting for results.
Two positive notes are the four larger holes (4”) drilled for metallurgical testing had the best grades drilled this year. Also many are describing Almaden as an open pit model, well not quite, it sits on the side of Nutmeg Mountain, you would push material down to end up on a leach pad, there’s no stripping ratio to speak of and there’s already landslide material at the bottom - the inferred resource of 84,000 ozs of gold.
Over in Nevada at TEN’s Moonlight Project things have gotten very very interesting. I’ve already explained what Terraco’s royalty on the Spring Valley project of Barrick Gold Corp.’s (TSX: T.ABX, Stock Forum) (NYSE: ABX, Stock Forum) and Midway Gold Corp. (TSX: V.MDW, Stock Forum) (NYSE: MDW, Stock Forum) is so I won’t get too far into that except to say they currently have a production royalty on 3.45m ozs of gold. That’s $80m dollars or net of $67m.
It’s this author’s opinion that Spring Valley is going to grow in size. Barrick applied for a permit to drill in the northern gap between its deposit and TEN’s southern border, in geological speak it’s a very short distance from some of Barrick’s best holes and Moonlights southern border.
What’s the possibility of Moonlight being in play? It certainly would be if Barrick starts releasing nice assays from their November 2012 northern drill program, combine that with a royalty worth $900-$1200 an oz to a company like a Silver Wheaton Corp. (TSX: T.SLW, Stock Forum) (NYSE: SLW, Stock Forum) and a million ounce plus gold mine at Almaden. All that with what is obviously a very competent management team with loads of skin in the game, and you can see why I’m so high on Terraco.
Terraco is definitely one to have on your radar screen. Is it on yours?
If not maybe it should be.
Legal Notice / Disclaimer: Richard Mills does not own shares of Terraco Gold. The company is a sponsor of Richard’s site aheadoftheherd.com.