GoldQuest Mining Corp. (TSXV:GQC) announced the discovery of new zone, Cachimbo along with additional results from its regional exploration program.
This new VMS zone was intersected on multiple horizons and the results were highlighted by 13.8 g/t Au, 73.7 g/t Ag, 11.8 % Zn and 1.1% Cu over 4.9m
(TIR-16-09) and is located 20.5km to the South of the company’s 2.5M oz AuEq (23Mt at 3.35 g/t AuEq) flagship Romero gold-copper project. These results
from target 3 of 20 in the current regional exploration program highlight that Goldquest’s district-scale land package along the Tireo formation has
the potential to yield multiple discoveries. In our view, GoldQuests current valuation, at 0.36x NAV and $27/oz (peers 0.48x NAV and $39/oz) does not
account for the exploration upside demonstrated today. In our view, this drilling success could be the catalyst that starts to close the valuation
gap to peers.
New VMS zone identified at target C.
The results released today were from four holes drilled at targets B and C on GoldQuest’s Tireo property
(Figure 1). The new Cachimbo VMS zone was identified by drill hole TIR-16-09 which intersected VMS mineralization at a depth of 70m returning 5.3 g/t
Au, 30.6 g/t Ag, 4.2 % Zn and 0.4% Cu over 15.2m, including 13.8 g/t Au, 73.7 g/t Ag, 11.8 % Zn and 1.1% Cu over 4.9m. This new zone remains open in
both directions along strike and is located 20.5km to the south of the company’s development stage Romero project. Importantly, this new discovery
was made on the 3rd target of a regional test campaign designed to test a total of 20 targets and in our view, highlights the exploration potential
of Goldquest’s district-scale land package along the Tireo formation.
Exploration success may be the catalyst that closes the valuation gap to peers.
Even with today’s significant share price increase,
GoldQuest continues to trade at 0.36x NAV and $27/oz versus peers at 0.48x NAV and $39/oz. In our view, the company’s valuation is underpinned by Romero
and does not account for GoldQuest’s exploration potential as highlighted by today’s results. We expect the combination of ongoing de-risking at Romero
(feasibility study in early 2017 & operating permits in late 2017) along with ongoing regional exploration, including follow-up drilling at Cachimbo,
are likely to continue closing the valuation gap to peers.
Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
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