Junior explorer Western Exploration Inc. (WEX:TSX.V;WEXPF:OTC) has released more “amazing” drilling results from its Aura gold project in northern Nevada, handing a big opportunity to investors, one investment manager told Streetwise Reports.
The company’s stock more than doubled between late September and its Nov. 28 close at CA$2.40. With three new holes reporting from the Phase 1 drilling program at the Doby George deposit, including one that intersected 74.22 meters of 1.71 grams per tonne gold (g/t Au), there’s no reason why the stock is “not going to continue to do what it did,” according to Marceau Schlumberger, managing partner of the family investment vehicle Golkonda LLC.
Golkonda is the largest investor in Western Exploration at 66%.
“I don’t think that in the current market, junior and exploration and development companies, precious metals, are fairly valued,” Schlumberger said. “It’s a good time.”
Technical analyst Clive Maund of CliveMaund.com pointed out that the stock “had a nice rally” from CA$1 in September to CA$2.40 last month, but it has since fallen. He said the reaction was likely “overdone and with support not far beneath.” The stock was CA$1.35 on Monday morning.
“I think it’s likely that it will mark out some kind of base here before starting higher again,” Maund told Streetwise Reports.
The company also has the backing of big names like Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), which owns 18% of the company.
That hole at Doby George, DGC791, also intersected 30.78 meters of 2.48 g/t Au. Hole DGC792 intersected 40.39 meters of 2.18 g/t Au, and hole DGC793 intersected 26.98 meters of 2.12 g/t Au and 19.20 meters of 1.46 g/t Au.
“We have now received assays results for five of the nine drill holes completed at Doby George, and all of them demonstrate the remarkable continuity of high grade, near surface, oxide gold mineralization,” said Western Exploration Chief Executive Officer and Director Darcy Marud.
The Catalyst: Doby George
The Phase 1 drill program at Doby George involved nine large-diameter core holes drilled between July and September. A total of 1,138 meters were drilled.
This week’s new results show the continuity of the resource and its location near the surface and point to it being “very profitable,” Schlumberger said.
“It’s very hard to find these types of grades for an oxide in Nevada of those kinds of lengths, those kinds of intervals,” he said. “It’s going to be very economic one day.”
This week’s new results show the continuity of the resource and its location near the surface, and point to it being “very profitable,” Schlumberger said.
More than 1,200 drill holes have been completed on the Aura project totaling more than 200,000 meters. At Doby George, 827 drill holes were completed for a total of 115,217 meters, of which Western completed 74 drill holes for a total of 22,642 meters.
Western Exploration is looking to finish a preliminary feasibility study (PFS) next year on a 5,000 to 7,000 tonnes per day (tpd) open pit heap leach mine there.
It also plans to drill in 2023 on its new Gravel Creek discovery, with a preliminary economic assessment (PEA) to follow in 2024.
The goal is to grow the more than 1-million-ounce (Moz) Au and 10-Moz silver (Ag) resource at Aura, which is made up of the Doby George, Wood Gulch, and Gravel Creek deposits.
It's 100% owned by Western and is about 32 kilometers north of the Jerritt Canyon Mine, which has been in operation since 1981.
Precious metals mineralization at Aura was initially discovered at Doby George in the 1960s, but it wasn’t until the 1980s that Homestake Mining Co. discovered the Wood Gulch deposit. It produced about 646,000 tons at 2.87 g/t Au and 3.1 g/t Ag, with recoveries of 65% Au and 30% Ag.
At Gravel Creek, 458 drill holes were drilled for a total of 89,388 meters, of which Western completed 131 holes for a total of 62,441 meters.
Marud said Gravel Creek was why Agnico invested in Western Exploration. The major also provides technical support to the company and has invested about US$14 million in it since 2017.
Western hopes to connect the Gravel Creek and Wood Gulch deposits, creating a “much larger footprint” with the potential for 2 to 5 Moz Au.
The area is an under-explored area of Nevada, which with 5.58 Moz Au, hosted 84% of U.S. gold production in 2019. The state has historical production of more than 185 Moz Au.
Ownership and Share Structure
Golkonda LLC, a syndicate of dozens of high-net-worth investors, owns about 66% of the company, and Agnico owns 18%. Management and directors own about 2.8%, and other institutions own about 5.6%, the company said.
Western Exploration has a market cap of CA$42.93 million and has about 30.7 million shares outstanding, 10.4 million of them free floating. It trades in a 52-week range of CA$2.55 and CA$0.96.
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1) Steve Sobek wrote this article for Streetwise Reports LLC. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
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