NSGold Increases Mooseland Resource to 454,000 Ounces of Gold
In an updated NI 43-101 compliant resource report the total inferred mineral resource estimate for NSGold’s (NSX – $0.09) Mooseland gold property in Nova Scotia, Canada, is increased to 454,000 ounces of gold.
This conservative estimate, prepared by MineTech International, is based on drill core assay results from 135 diamond drill holes, totaling 32,696 metres, completed by Hecla Mining between 1986 and 1988; 6 diamond drill holes, totaling 1,168 metres, completed by Azure Resources Ltd. in 2003 and 42 holes, totaling 11,518 metres completed by NSGold in 2010 and 2011.
|West Zone|| |
|East Zone|| |
Summary of the 2012 Mooseland 43-101 resource estimate based on historic and recent drilling programs totalling 45,382 metres in 183 drill holes and using a cut-off grade of 2.6 grams per tonne. Source: Company Press Release.
The new 2012 resource of 454,000 ounces of gold is solid, especially knowing that MineTech used conservative criteria to reach this number:
- First of all, top cutting of 100 grams per tonne was applied. All assays that showed more than 100 grams per tonne were reported as a value of only 100 grams per tonne. This technique is used to minimize the impact of the nugget effect;
- Many veins at Mooseland are pretty narrow. So only those veins with a minimum width of 1.5 metres were included in this estimate; and
- On top of that, due to increased scrutiny from the Canadian regulators, it appears that Minetech intentionally made its estimates even more conservative. This can perfectly be seen when comparing the April 2011 resource estimate for the East Zone with the new one.
In 2011, a cut-off grade of 3 grams per tonne was used which derived 1.1 million tonnes of mineralized ore. In the new estimate, even though the 2011 drill results were added included and a lower cut-off grade of 2.6 grams per tonne was used, the mineralized ore declined to 1.06 million tonnes.
It’s clear that if Mooseland were mined today, it seems that the 454,000 ounces resource would could easily be exceeded.
NSGold now has a couple of options with Mooseland. First, the Company can decide to dewater the shaft to gain underground access to the veins. Remember that Hecla Mining Co. in the 1980s sank a 124.9 metre deep vertical shaft with associated headframe to explore and bulk sample mineralized veins that had previously been identified by diamond drilling. However, Hecla’s project was suspended before completion and the planned program of lateral development and bulk sampling was not carried out.
Secondly, it could continue drilling from surface. NSGold’s geologists have a good understanding of the underground and as such additional drilling could easily expand the current resource.
In the East Zone, for example, the known resource is situated within a 300 metres strike length and is mostly limited to a maximum depth of 200 metres. More infill drilling of this area could increase the resource. Also, according to management, there is no indication that the resource diminishes with depth and since there are few drill holes below this level, its potential remains completely open. Additionally, there’s potential to increase the resource to the east, along strike.
The current resource of the West Zone’s is located within a 250 metres strike length with very few holes drilled deeper than 250 metres. Similar to the East Zone, management believes that much expansion is possible as gold values have been obtained along the full 1,000 metres strike length. So that leaves a 750 metres underexplored area along strike, with additional potential below 250 metres.
Although the increased resource estimate for Mooseland makes NSGold even more undervalued compared with its peers, it still has plenty of expansion potential. To put it in perspective, today NSGold has a market cap of less than $3.5 million. At the same time, it owns 100% of the Mooseland property which contains 454,000 ounces of gold worth $722 million at today’s gold price!
Moreover, Mooseland still has plenty of expansion potential. More drilling along strike and at deeper levels could potentially take the resource to 600,000 or 750,000 ounces of gold.
On the other hand, the low valuation of commodities stocks makes it an ideal time for a corporate transaction. Which is something that NSGold is actively pursuing according to the Company’s most recent Letter to Shareholders.
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