Why This New Gold Find Interests Me as a Speculator: Steve Todoruk

POSTED ON March 06, 2015 BY Sprott's Thoughts
CATEGORY Mariana Resources,

A little-known gold exploration company in Turkey is attracting the interest of speculators in the junior resource sector.

On February 12, 2015, Mariana Resources Ltd. (MARL-LN) released its findings from a property in Eastern Turkey, called the Hot Maden Prospect.¹

The discovery is jointly-owned by Turkey-based Lidya (full name “Lidya Madencilik Sanayi ve Ticaret”).

Mariana stock trades on the London stock exchange and was up nearly 100% following the news, rising from around 1.15 GBP to nearly 2.15 GBP.² The share price has declined since then, but remains above its pre-discovery price as of March 6, 2015.

Mariana Share Price

Today, new deposits are getting harder to find, so some analysts expect a future shortage of new mines.

Could Mariana’s find turn out to be a significant new discovery? Steve Todoruk, a broker at Sprott Global Resource Investments Ltd., provides his insight on the project:

What’s Under the Surface?

Here’s the question: is there a big deposit in the ground at Hot Maden, or is the explorer just getting lucky and hitting an attractive but isolated gold-bearing rock?

We don’t know yet. The Hot Maden prospect is still in its early days and it could take one or two years and another 30-50 drill holes to find out.

That’s exactly why it interests me as a speculator. We have enough information to make educated guesses on the odds of success and upside potential, but the story is still too early-stage to attract mining funds who might cause the stock to be bid up.

The Mariana/Lidya Discovery at Hot Maden

The drill results from Hot Maden are remarkable in my opinion.

The partnership found 9 grams per ton (g/t) gold and 2.2% copper over 103 meters of length in their first good drill hole (around 330 feet).³

For comparison, the high-profile Cukaru Peki deposit in Serbia (owned by Reservoir Minerals and Freeport McMoran) garnered significant attention with its findings of 5.40 g/t gold and 6.92% copper over 160 meters in late 2012.⁴

Mariana and Lidya followed up with another drill hole 100 meters to the south, in order to see if the mineralized zone extended in that direction. In this second drill hole, they hit 20.4 g/t gold and 1.9% copper with a true width of approximately 60 meters, starting around 150 meters below surface.⁵

In terms of grade, these results are in league with some other well-followed exploration stories. Pretivm Resource Corp. owns the Brucejack deposit, which has an average gold grade of 17.6 g/t gold.⁶ Roxgold’s Yaramoko Gold Project has an average grade is 15.8 g/t gold.⁷

The share price pattern for new discoveries

On the announcement of a new discovery, the share price of the company that owns the project often shoots up dramatically within a very short period.

A few days or weeks then pass and the share price usually pulls back. I discussed this behavior in a video on my bio page.

You’ll notice that Mariana’s share price (shown above) has done exactly the same thing.

We could see the share price continue to climb over the coming months as long as investors believe the deposit will keep getting larger and will become economic to mine.

It’s important to remember, however, that if further exploration proves disappointing the price may drop dramatically.

P.S.: Questions? If you would like discuss junior mining speculation with Steve, please call him at 1.800.477.7853 or e-mail him at stodoruk@sprottglobal.com. He also offers a no-obligation review of your mining stock portfolio.

Want to receive Steve’s next update and other insights from Sprott, straight to your inbox? Click here.

Steve Todoruk worked as a field geologist for major and junior mining exploration companies after he graduated with a B. Sc. in Geology from the University of British Columbia, in 1985. Steve joined Sprott Global Resource Investments Ltd. in 2003 as a Senior Investment Executive.

Companies discussed above are used for examples only and do not constitute an endorsement or recommendation. If you would like more information, please contact a Sprott Global Resource Investments Ltd. broker.

¹ http://marianaresources.com/site/media/150212_Mariana_news.pdf
² Bloomberg
³ http://marianaresources.com/site/media/150212_Mariana_news.pdf
⁴ http://www.reservoirminerals.com/News/News-Release-Details/2012/Reservoir-Minerals-Drills-160-Metres-Grading-1016-Copper-Equivalent-at-Timok-Project1130848/default.aspx
⁵ http://marianaresources.com/site/media/150212_Mariana_news.pdf
⁶ http://www.franco-nevada.com/our-royalties/gold-royalties/operating/brucejack

⁷ http://www.roxgold.com/i/pdf/factsheet/ROG-Fact-Sheet-July-2014.pdf

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