This morning, Roxgold (ROG:TSXV), the gold company developing one of the highest margin deposits in the world, announced the discovery of a new high-grade vein at their Bagassi South satellite zone on their Yaramoko project. Bagassi South is located roughly 1.8km away from the 55 Zone which hosts their mining resource.
Highlights from the QV1 and QV Prime targets included:
- 39.6g/t gold over 4.54 metres, including 1.25 metres of 136g/t gold (hole YRM-14-DD-BGS-056)
- 21.47g/t gold over 4.09 metres, including 1.67 metres of 50.33g/t gold (hole YRM-14-BGS-067)
The exploration team was also successful in discovering a new high-grade vein now known as 'HW1' which was intersected in hole YRM-14-DD-BGS-054 and encountered 9.47g/t gold over 9 metres, including 53.7g/t gold over 1.5 metres.
We spoke with Roxgold's CEO John Dorward and VP Exploration Ben Pullinger by phone this morning and they were pleased with the development of this early-stage target so far.
"We're encouraged by the results at Bagassi South so far. We like that it already looks like it might fit into our mine plan at some point. The grade is there, now we just need to prove up some size, although it doesn't need to be huge," Mr. Dorward says. The reason it doesn't need to be huge is because they already have a economic deposit with ample upside potential at depth. As a result, Bagassi South is just a bonus.
The results this morning expand the QV1 structure strike length to over 350 metres and confirm the presence of high-grade mineralization down plunge to a depth of 300 metres.
Note that the 55 Zone has a known strike length of 800 metres. This structure is still in its infancy and remains open along strike and at depth.
They intend to follow-up with more diamond drilling in the upcoming program which is still yet to be budgeted and finalized.
The QV Prime structure has been delineated to over 100 metres along strike.
"The excellent thing about Bagassi South is that it hosts multiple structures," Mr. Dorward told me. This is key to the Bagassi South zone's ability to be implemented into the Yaramoko mine plan.
Mr. Pullinger told me that the geology they see coming out of the drill core indicate that Bagassi South is very similar to the 55 Zone meaning that the potential to run the material through the Yaramoko plant without issue is very possible.
Metallurgical testwork at the 55 Zone shows gold recoveries of 96.9%.
The company also completed some regional reverse circulation (RC) drilling on targets north of the 55 Zone. They drilled 66 RC holes (5,285 metres) targeting the 109, Haho, Boni Shear, Niakongo and Yaro targets. Haho was the primary focus and drilling there found broad lower grade mineralization along with higher-grade gold in quartz veins.
Again, with the grade and associated margin of Yaramoko Roxgold continues to be one of the best gold names. With a small footprint (only 750tpd) and the ability to expand the mine-life by further drilling early next-year, we believe this story is just getting started.
Roxgold is up 66% YTD versus the GDXJ (Market Vectors Junior Miners Gold ETF) up 20.5% and the GLD (SPDR Gold Trust) up only 4%. With the recent weakness in the gold price, shares have fallen 16% over the past month.
Upcoming catalysts:
- Drill results (Q4/2014)
- Finalize permitting (Q4/2014)
- Debt package (Q4/2014)
- Start underground development (Q4/2014)
- Infill and expansion drilling at 55 Zone (H1/2015)