I agree, fair point by FMX so others understand its not as good as a wide orebody at those grades, but; Definately getting bigger and clearly adding to the value.
Extremely high average grades but the average width is quite a bit narrower than average. We would want to find nearby parallel veins (as we have in the jorc resource area) to include this in an open pit of significant depth. For now, I doubt too much of this section will be mined by open pit, but lets see what drilling finds below surface (potential parallel veins) before writing off too much of the open pit potential. The grades are very high grade even at that narrower average width so for now probably best to look at this mainly for its underground potential. U/g mines can easily run at 1m widths (SLR’s Mt Monger), you don’t need to go 1.6ms wide. At 1m wide the diluted head grade would be around 8.4g/t on average. Also some of the surrounding waste contains lower grade gold so won’t necessarily be waste and will increase the average head grade possibly above 9g/t. Yes the 42g/t doesn’t sound as good when you factor in the width if you are thinking open pit, but how many underground mines get to boast average grades like these? If we can avoid mining some of the very narrow sections then the average widths will be significantly higher and therefore the average head grades will be much higher. There are sections at up to 4ms wide. No reason why we can’t be selective with underground mining. Same goes for open pit. If we ignore 50ms of the narrowest vein (treat it mainly as waste) and mine the wider areas, we still are adding very valuable ore. We are going strongly forward here not backwards.
At the end of the day we keep adding ounces and therefore adding cashflow. We keep adding to the value and look likely to continue adding a lot more. Whether it’s through multiple shallow pits or underground.
I think so far, we will see one good sized pit, now likely enlarged to include the eastern vein and down to 100-130ms. That alone could boost our NPV by 20-30% if it’s deepened. Then I think we will see another significant sized pit at Golden Hind especially if the multiple nearby veins are mineralised, as well as probably multiple shallow pits following single veins yet to be announced and including today’s discovery.
After the open pits are exhausted or concurrently I think we will see multiple underground mines. I think any underground mines have the potential to contain much more gold than the total we end up defining in open pits. I say that because even our deepest pit area only is planned down to 100ms (in the scoping study) at this stage but the resource continues down to 250ms and is open. Any future narrow veins like todays will likely extend much deeper than their likely open pit depths. Open pit gold clearly has the potential to grow very significantly still even if its much shallower pits spread over wider distances. We have strong potential of finding gold open pit as well as u/g ore both north and south of the jorc over at least 600-800ms either way as for Golden Hind and the northern extension mentioned in todays announcement. We haven’t heard much about the east/west potential. I think only because no work has been done on it other than very close to the jorc. I will treat u/g as only potential for now until we see some studies on it, but it still does add strongly to the upside potential. We need to keep in mind, if the very recent scoping study is reasonably accurate, then this stock is worth around 8c undiscounted based only on the original jorc at Old Pirate. We have added a lot of value since then and there is nothing included in those numbers for the other deposits.
ABU Price at posting:
4.2¢ Sentiment: Buy Disclosure: Held
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