Last week we had the opportunity to visit Radisson Mining Resources’ (TSXV:RDS, C$0.16) O’Brien project. Our key takeaway is that the path forward is key to determining the magnitude of Radisson’s potential. We knew that the property had previously produced a meaningful amount of gold, at high grades (15.25 g/t) and that Radisson has defined a small new resource; however, there is only a limited understanding of the geologic factors that result in economic mineralization. To address that, Radisson is looking to drill another 10,000 m this year and digitize the vast amount of historic data that the company has on site. As has been the case with other past-producing properties in the Abitibi, this combination of desktop exploration and drilling could yield a significant discovery. This is of particular interest since both historic and recent drilling has identified gold in the sediments (Pontiac group) versus the volcanics (Piché group) where the current resource and historic mining occurred. In our view, this next phase of work is critical because if Radisson can determine why gold occurs in the sediments it may lead to a significant discovery.
The path forward, is taking a step back to evaluate all the data. While Radisson has already defined 308k ounces of gold at 6.4 g/t (all
categories), the next step for the company is to look back at the 60+ km already drilled at the property, the historic production records, and other
data available to them. This look back is planned to include the digitization of historic data, re-logging and re-assaying of some historic drill holes,
particularly unassayed core from the sediments. The goal of this work is to increase the company’s understanding of geologic factors that control mineralization.
This may provide an explanation for the significant gold intersections within the sediments. In our view this type of work, which a number of other
companies in the region are doing (e.g. Integra Gold - TSXV:ICG and Falco Resources - TSXV:FPC) could lead to a significant new discovery and at the
very least, will enhance Radisson’s understanding of the deposit.
Sediments could be a game-changer but early days.
In recent drill campaigns Radisson hit significant gold mineralization in the sediments
(Pontiac group), which is unusual as the past production and current resource are hosted in the volcanics (Piché group). An initial review of historic
data identified other significant gold intercepts in the sediments. To date, highlighted intercepts include 23.79 g/t over 0.5 m, 41.14 g/t over 0.75
m, 15.9 g/t over 6.7 m and 10.94 g/t over 0.6 m (Figure 1 and 2). We note that as part of our site visit we walked over the sedimentary rock package
and there was evidence of quartz veining that hosts gold mineralization on the property. While Radisson has assayed the sediments in its recent drill
holes, there remains approximately 15,000 m of historic drilling of unassayed core from the sediments. The company is planning on re-logging and selectively
assaying much of this core, creating a low-cost opportunity for a new discovery.
The look back isn’t holding back continued advancement.
The company is looking to drill an additional 10,000 m this year. The goal
is to fill in gaps in the existing resource, while at the same time generating additional assays from the sediments (Figure 3). Based on historic results,
we would expect this drill program to increase the existing resource.
Valuation reflective of premature PEA, not the opportunity to expand existing resources. Radisson currently trades at C$46/oz versus peers
at C$56/oz. In our view, a company with higher grades in a top-tier jurisdiction like Radisson, should trade at a premium, particular when you take
into account the potential for resource expansion. It is likely that Radisson trades at a discount to peers because of the marginal economics of its
recent PEA. We believe the market is misinterpreting the PEA, as its objective was to determine if more work was warranted, not for a development decision.
In our view, should the company add ounces via the anticipated drill program, economics are likely to substantially improve. As well, the results of
the ongoing historic compilation may shift the focus to exploration. We expect results from the company’s recently completed 3,000 m drill program
to help close the valuation gap when released in the near-term.
Company Description: Radisson Mining Resources (TSXV:RDS) is a Canadian exploration stage company which is focused on exploring and developing its 100% owned O’Brien project located 57 km, along highway 117 from Val d’Or, Quebec. The past producing O’Brien Mine was the highest grade producing mine along the Cadillac fault with historic production of 587,121 oz at 15.25 g/t Au.
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