Hi All
From Argonaut. Very insightful, encouraging and in line with what many of us long term shareholders have already concluded.
Tuesday, 24 July 2018
Stock
SGQ:ASX
Recommendation
SPEC BUY
Current Price
$0.15
Quick Read
St George Mining (SGQ) is steadily increasing the footprint of high grade base metal (Ni, Cu, Co, PGE) mineralisation in the Cathedrals Belt of Western Australia since taking control of the project in early 2016. Argonaut is highly encouraged by the latest drill hole MAD108 at the Investigators Prospect which intercepted 7.6m of sulphide mineralisation, including 1.3m of massive sulphides, down dip of previous holes MAD38 and MAD60 extending the mineralisation ~320m down-plunge. Hand-held XRF reading for the massive component measured 8% Ni and 7% Cu. Exploration along the 4.5km mineralised strike of the Cathedrals Belt is ongoing and we predict the company will be in a position to release a Maiden Resource in late-2018 or early-2019. SGQ is a standout Ni/Cu explorer based on exceptional grades (up to 8% Ni equivalent) and open pittable fresh rock mineralisation.
Event & Impact | Positive
Strong result at Investigators: Hole MAD108 at the Investigators prospect, the first in the latest drill campaigncommencing, intercepted 7.6m of sulphide mineralisation from ~200m downhole, including 1.3m of massive sulphide mineralisation measuring 8% Ni and 7% Cu from handheld XRF (note that handheld XRF has had a strong correlation to assays to date). This intercept targeted an EM conductor, further supporting the near 100% success rate of EM anomalies to sulphide mineralisation in the Cathedrals Belt. MAD108 extends high grade mineralisation from hole MAD60 (5.3m @ 7.7% Ni Eq.) a further 100m down-plunge to ~320m. Argonaut estimates that this section, incorporating the up-dip hole MAD38 (2.7m @ 5.3% Ni Eq.), could hold up to >60kt of contained Ni Eq. metal (using a polygonal calculation with 200m strike, 300m dip, 4m width and 7.5% Ni Eq. grade).
Building an inventory: While the Cathedrals Project is still pre-Resource, we see SGQ amassing a series of deposits with a high probability of economic extractability. We base this assumption on the high tenor of contained Ni/Cu mineralisation, with significant Co and PGE credits, and the presence of fresh sulphides from a shallow depth. Ore grade intercepts start from ~40m below surface at the Cathedrals and Stricklands prospects. While massive sulphide intercepts are generally narrow (<2m thick), very high grades up to 8% Ni Eq. and halos of blebby to disseminated sulphides should generate sufficient metal per vertical metre to support both moderate strip ratio open pit mining and narrow stope underground mining. We estimate that drilling to date could define an initial resource of 2.0-2.5Mt @ 4.1% Ni Eq.
Next steps at Mt Alexander/Cathedrals Belt:SGQ’s current drill program is targeting untested EM conductors and down dip extensions to known mineralisation. At the Stricklands project, drilling will also infill between known intercepts in areas of limited EM response. The Company will also conduct further geophysics including deep penetration ground EM to better define mineralised boundaries and depth extents.
Recommendation
Argonaut maintains a SPEC BUY recommendation.
Cheers SandyC
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