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Wednesday, February 01, 2017 Derek Macpherson

UGD Appears to Expand Oxide Portion of Nieta


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Unigold Inc. (TSXV:UGD) announced drill results from eight holes drilled at the Candelones Connector deposit at its Nieta project in the Dominican Republic. The goal of this drilling was to expand the footprint of the existing oxide resource with a view to define potential oxide starter pits. Results were highlighted by a 12m intercept that intersected oxide mineralization and returned 1.2 g/t Au over 8.0m within a wider 14.0m intercept that returned 0.7 g/t Au and 1.1 g/t Ag (DCZ 16-50). While follow-up drilling is needed, this appears to have expanded the footprint of the oxide resource area. In our view, 2017 exploration (both oxide and higher grade zones) along with clarity on potential development scenarios should allow Unigold to close the valuation gap to peers.


Drill results suggest expansion of oxide mineralization. The eight holes were drilled to test a 150m long by 100m wide gap between the Candelones Main and Candelones Connector deposits (Figure 1). Intercepts that intersected oxide mineralization were highlighted by 1.2 g/t Au and 1.2 g/t Ag over 8.0m within a wider 14m interval that returned 0.7 g/t Au and 1.1 g/t Ag (DCZ 16-50), and 0.8 g/t Au and 6.8 g/t Ag over 8.6m (DCZ 16-52). The results suggest the existence of two sub-parallel flat zones that contain oxide mineralization that transitions to sulphide mineralization at a depth of 12-18m. The zones remain open and stretch West to East from the Candelones Main deposit through the Candelones Connector deposit. The goal of the drill program is to expand the existing inferred oxide resource of 112k oz Au (3.6M tonnes at 0.98 g/t Au) and this drilling suggests this resource is poised to grow. While likely small, because of high recoveries (96%) and a low strip ratio, this oxide resource may present an opportunity for lower cost starter pits. We note that it is early days and follow-up drilling planned for 2017 is likely to give us a better understanding of the potential economic benefit to the overall project.


Ongoing development likely to close the valuation gap to peers. At C$4/oz, Unigold currently trades at a steep and increasing discount to peers (C$59/oz). The company expects to initiate a follow-up drill program at Nieta this year based on the results from the 2016 program. We anticipate the next drill program likely to be followed by an updated resource and Unigold is likely to complete some additional metallurgical test work in 2017. In our view, this work likely should provide the market with a clearer view of potential development scenarios for Nieta and should help the stock close the valuation gap to peers.


Derek Macpherson | VP Mining Analysis
Sunneva Bernhardsdottir | Associate, Mining Analysis
Victoria Ellis Hayes | Associate
 
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Unigold Inc. - TSXV:UGD -  1,2,4

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