Orebodies in the Timmins camp of Ontario often surpass depths of 1,000 metres, so investors in Brigus Gold (TSX: BRD; NYSE-MKT: BRD) cheered when they heard that a downdip test hole drilled from the underground at the company’s Black Fox mine, 75 east of Timmins, extended mineralization to 700 metres from 300 metres, and returned an intercept of 40.71 grams gold per tonne over 26.8 metres, including 103 grams gold over 8.3 metres.
“The headline hole is important, as it confirms that the orebody extends to depth, and should easily go another 300 to 800 metres deeper if it bears similarity to other mines in the Timmins camp,” Kerry Smith of Haywood Securities writes in a research note.
The deposit is open along strike and at depth, and until now, the company has done “very little deep drilling” at Black Fox due to a lack of money and underground development for drill stations, according to Smith.
With reserves standing at 764,368 oz. gold grading 4.6 grams gold per tonne over a vertical depth of 500 metres (982,397 oz. resources in all categories), with 500,000 oz. gold already extracted from Black Fox since 1997, “the potential extension to 1 km could more than double the reserve potential at the mine,” Smith reasons.
The Toronto-based analyst also argues that the company’s management team should make drilling Black Fox a priority over drilling at Grey Fox, a deposit 4 km from the Black Fox property. (Brigus expects to finish its updated resource for Grey Fox next quarter.)
The Black Fox mine is part of an 18 sq. km land package known as the Black Fox complex, where commerical open-pit mining started in May 2009, with underground mining in October 2011. The mill is 31 km west of the mine.
The company’s wholly owned Black Fox land package, 10 km east of the town of Matheson, includes a 6.5 km strike of the 200 km Destor–Porcupine fault zone, a major east- to west-trending fault system in the Precambrian Abitibi greenstone belt.
Brigus was trading at 60¢ per share within a one-year range of 45¢ and $1.06. The junior has 232 million shares outstanding.
Brian Quast of BMO Capital Markets has a 70¢ target price on the stock.
© 1915 - 2013 The Northern Miner. All Rights Reserved.