Algold Resources Ltd. (TSXV: ALG) has announced ~25% of results from its Phase I 10,000 m drilling campaign at its Tijirit Property in Mauritania. Results were highlighted by 9.64 g/t Au over 6 m (T16RC031) and 16.4 g/t Au over 6 m (T16RC027) supporting the company’s belief in a potential high-grade gold deposit. These results support our view that the maiden resource, which appears to have disappointed some investors, from Algold’s Tijirit project in Mauritania, is just the beginning. In our view, ongoing exploration success is likely to result in a larger resource than suggested by the current share price, providing upside potential for investors.
Resource at Tijirit expected to grow.
Algold’s Tijirit Property in Mauritania represents an area of more than 1,000 km2 located 25 km
southeast of Kinross Golds’s Tasiast mine. The drilling campaign was carried out on the Eleonore zone, Sophie I, Sophie II-III and Lily zones. As mentioned
in one of our previous
, Algold released a maiden resource of 270,490
oz Au (M&I+I) at an overall grade of 1.71 g/t, based only on historic work. One of the highest potential targets with significant upside is Eleonore,
which was the focus of the drilling campaign due to a high-grade gold bearing quartz vein target and gold-in-soil anomaly being present. Recent chip
, previous reverse circulation drilling
results and recent drilling results have expanded the Eleonore zone to over 3.1 km in strike, such as 16.4 g/t Au over 6 m (T16RC027), 9.64 g/t au
over 6 m (T16RC031) and 4.23 g/t Au over 6 m (T16RC024) (Figure 1). Other results such as 1.53 g/t Au over 11 m (T16RC020) at the Sophie II zone added
confidence and incentive for Algold to continue exploration at that target. Due to the excellent results from Phase I, Algold is planning on a Phase
II which will comprise of 10,000 m of diamond and RC drilling, focusing primarily on the Eleonore and Sophie II zones and is expected to commence in
early September 2016.
Exploration success has returned the share price to prior to the resource release. Algold’s share price rose 3% today, regaining prices
similar to those before the maiden reserve news was released. Algold still trades at a premium to peers at C$145/oz versus other West African peers
at C$86/oz. This essentially implies the market is expecting the resource to grow by ~1.7 times from the recent update (~460k ounces), which appears
to be conservative, based on the size and quality of the targets being explored. We believe that results from Phase II drilling which are expected
by the end of 2016 coupled with the updated resource at the same time should justify Algold’s valuation and likely provide continued momentum for the
Company Description: Algold Resources Inc (TSXV:ALG) is an early stage West African gold exploration company that controls meaningful land packages to the North and South of Kinross Gold’s (TSX:K, NYSE:KGC) Tasiast mine in Mauritania. The team includes Benoit La Salle (Chairman) a founder and former CEO of SEMAFO and Francois Auclair (President and CEO), who was the General Manager of Tasiast during its early stages of development.
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