Yesterday, Red Cloud Klondike Strike Inc. (RCKS) hosted the fourth installment of our Drilling Deeper lunch series, this time featuring three Latin
American based gold exploration/development companies. The presenting companies were Golden Reign Resources Ltd. (TSXV:GRR), GoldQuest Mining Corp
(TSXV:GQC) and Unigold Inc. (TSXV:UGD). In our 3 THEMES & 10 COMPANIES FOR A NEW BULL MARKET IN PRECIOUS METALS post published last month, we highlighted that we believe good news is good for stocks (catalysts) and we believe all three presenters have the potential
to add value with planned exploration or project development.
Golden Reign Resources Ltd. (TSXV: GRR)
Golden Reign is advancing its San Albino project in Nicaragua towards production. The company released a robust PEA for the project last year that detailed
a small scale mine (250 tpd or 21.8k ounces AuEq per year) with strong economics (37.5% IRR) because of exceptionally high-grades (8.02 g/t AuEq) for
an open-pit. The project is funded from a US$15M gold stream from Marlin Gold (TSXV:MLN) whose costs are included in the economics mentioned above.
Importantly, the stream only covers ~2% (~3.5km2) of Golden Reign’s land package in Nicaragua and previous exploration efforts suggest significant
exploration upside likely exists. The company should be funded to production with the gold stream and plans to use the initial operating cash flow
to double production and explore the unencumbered portion of the property.
GoldQuest Mining Corp (TSXV: GQC)
GoldQuest is further developing its 3.2 million AuEq ounce resource at the Romero Project, in the Dominican Republic with a pre feasibility study to be
released in Q3 2016. Not only does the company have a development stage resource with robust economics but has exploration upside from its sizeable
land holdings on the Tireo Formation, a developing gold district. Goldquest is commencing a 10,000m drill program in August (results in H2 2016). The
company discovered and defined the Romero deposit providing it the experience and tools to make another discovery. We consider management’s in-country
experience, current de-risking and permitting of Romero (Q3 2016, pre feasibility study and Q1 2017 feasibility study) along with ongoing exploration
efforts of the company to likely benefit Goldquest’s share price.
Further exploration is being done at the Candelones extension at Unigold’s Neita project in the Dominican Republic. Previous exploration identified just
over two million ounces of gold with a drill program using 100x100m drill spacing. A review of the data lead to the identification of three potentially
high-grade mineralized zones which was confirmed with a small drill program late last year. With a planned drill program this summer, Unigold plans
to further define these higher grade zones. It is interesting to note, that Romero (Goldquest) and Candelones are part of the same regional geologic
structure and the Romero deposit would fit within Unigold’s original drill spacing, suggesting these high-grade zones could be significant. The identification
of these higher-grade zones could lead to less capital intense mining operation, or high-grade starter zones for an open-pit operation, both of which
would improve Neita’s viability and should benefit Unigold’s share price.
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