Newcore drills above-reserve grade at Nyam

Newcore Gold (TSXV: NCAU; US-OTC: NCAUF) has hit above-reserve-grade gold at depth at its Enchi project in Ghana, as it seeks to expand resources beyond the pits in a new mine plan.

The holes form part of an 80,000-metre diamond drill program aimed at adding higher-grade gold to the early years of the mine plan and testing the project’s deeper potential. The company has four rigs turning at Enchi.

Newcore also tested down-dip and lateral extensions of higher-grade mineralization previously found at Nyam. One hole returned 21 metres grading 1.40 grams gold from 317 metres, including 11 metres at 2.08 grams from 319 metres.

Enchi hosts probable reserves of 51.3 million tonnes grading 0.64 gram gold per tonne for 1.05 million oz. contained metal. The reserve sits within indicated resources of 83.6 million tonnes grading 0.56 gram gold for 1.5 million oz. Nyam’s probable reserve stands at 7.2 million tonnes grading 0.76 gram gold for 175,000 ounces.

Shares in Newcore closed at 34¢ apiece Thursday in Toronto, valuing the company at $103.2 million (US$72.6 million). The stock has traded in a 52-week range of 29¢ to 92¢.

Prefeasibility update

Newcore released a prefeasibility study last month that used drilling and technical work from 2024 and last year, but excluded results from this year’s program. The study outlined an open-pit mine with standard milling and carbon-in-leach processing, producing on average 104,000 oz. gold a year over 9.3 years.

The study gave Enchi an after-tax net present value of US$496 million, using a 5% discount rate, and a 37% internal rate of return at a base gold price of US$3,800 per oz. Initial capital costs totalled US$351 million, with payback in 1.6 years.

The study marked a shift from Newcore’s 2024 preliminary economic assessment, which had envisioned a lower-capital, open-pit heap leach operation. The new plan uses milling and carbon-in-leach processing to lift recoveries, but it also raised capital requirements and softened some headline economics compared with the earlier study.

SCP Resource Finance analysts called the prefeasibility study “a good starting point” for the project, especially in the first three years, when Enchi is expected to produce about 130,000 oz. a year at an average grade of 0.8 gram gold by mining the Boin deposit. But they said the study “understated the upside of the project over the life of mine.”

“The reason is the mine plan is effectively the same shallow pits as the prior heap leach PEA but with higher grade Boin ounces brought up front,” SCP said in a note. “The opportunity and rationale for the CIL is to capture the upside for higher ounces at depth, but the drilling to bulk out the mine plan will occur over the next 10 months.”

SCP said more drilling could extend the mine life at a higher head grade and lift production to 130,000 to 140,000 oz. a year.

Haywood Securities analysts also tied Enchi’s upside to grade, saying the latest Nyam assays strengthen the growth case. “We view this batch of assay results positively, which feature numerous intercepts with grades well above Nyam’s existing resource grade deeper in the system,” they said in a note.

Haywood kept its buy rating and $1.50 target price on Newcore after the results. “We expect share price performance to be driven by Newcore’s ability to demonstrate the potential for a larger-scale operation than that envisioned in the PFS,” the analysts said.