AN ESTABLISHED RESOURCE - 2Moz gold inferred mineral resource provides a value cushion for investors
EXPLORATION UPSIDE - Recent drill intercepts at Candelones have returned high-grade mineralization (>10 g/t) over significant widths suggesting a high probability that the current resource can be increased in terms of size and grade.
STRONG CASH POSITION - recent financing puts UGD’s cash balance over $7 million, enough for completion of PEA on current resource as well as an aggressive drill campaign to expand the deposit
STRATEGIC PATH TO PRODUCTION - The oxide resource can be cheaply extracted and sold with the proceeds being used to finance an underground mining operation for the sulphide resource.
A BRIEF OVERVIEW
Unigold is a gold exploration and development company with operations in the Dominican Republic. While the harsh realities of the junior exploration market have left many companies in the dust over the long run, Unigold has held strong and remained an active explorer in the Dominican for over 17 years. Over C$42 million has been spent to date within it's Neita concession area, including over 123,000 m of diamond drilling.
With the release of positive new drill intercepts at Candelones, as well as the current state of the gold market, this year has presented Unigold with a renewed window of opportunity, and CEO Joseph Hamilton has wasted no time on capitalizing. The company recently announced a $3 million financing, which was quickly oversubscribed and upsized to $6 million.
Often times in the junior market, especially after a large raise, it is not uncommon to see a company’s share price decline as the cries of “dilution” grow louder. However, the exact opposite has occurred with UGD. Since the placement, the stock price has nearly doubled, and with good reason.
Firstly, the proceeds from the financing will add immediately value to the project by allowing the company to further define its current resource (convert resources in the ‘inferred’ category over to the ‘measured and indicated’ categories) via infill drilling and subsequently, an updated desktop study (PEA). In addition, the remainder of the proceeds will allow Unigold to really test the boundaries of the Candelones deposit via an aggressive step-out drilling campaign. Given the recent intercepts that the company has been putting out, it is likely that the high-grade gold mineralization footprint at Candelones can be expanded.
As seen in the image below, the Candalones project actually consists of two distinct, smaller deposit models: an oxide deposit and a sulphide deposit.
The Oxide Deposit (marked in yellow) exhibits lower-grade, near surface mineralization. A desktop study in 2013 estimated 112,000 AuOz with an average grade of 0.98 g/t. Although relatively small, this resource can be cheaply and efficiently mined using traditional open-pit and heap-leach methods. Initial metallurgy points to an 85% recovery rate in just 7 days. The company is targeting to produce 30-50k ounces of gold per year from this resource.
The Sulphide Deposit (marked in red) is a much larger, high-grade mineralization footprint at depth (<200m). Since this mineralization occurs at depth , it cannot be extracted via open-pit methods. Rather, traditional underground mining methods, must be used. A 2013 desktop study defined an inferred resource of roughly 1.9 million ounces of gold. Although significant, this estimate is outdated and does not accurately reflect the blue sky potential of the project as it does not include any of the latest drill intercepts that Unigold has been putting out. A sample of these intercepts…. 18.5 meters averaging 10.18 g/t Au, 4.5 g/t Ag, 0.19% Cu and 1.53% Zn and 10.5 meters averaging 12.94 g/t Au, 15.6 g/t Ag, 0.27% Cu and 3.03% Zn goes to show the likelihood that the high-grade mineralization footprint at the Candalones Extension Zone can be expanded to much larger than 2 million ounces.
A STRATEGIC PATH TO PRODUCTION
The partitioned nature of the Candelones deposit into two separate resource models provides the company with a strategic, non-dilutive option on the path to production. Firstly, Unigold can complete an economic study on a stand-alone oxide project which is expected to product between 30k-50k ounces of gold per year. The cash flow from the stand-alone oxide operation can be used to finance (or secure financing for) the development and construction of an underground mining operation on the much larger, and higher-grade sulphide resource, which is where the bulk of the high-grade mineralization occurs.