Oct 16 Canaccord Morning Coffee
However, given the potential for 4M ozs. in the Amable zone and 2.4M ozs. already estimated elsewhere on the project, this resource could justify a per share speculative valuation of over $4.00, based on an in-situ value of US$25.00/oz. and assuming the market is willing to give ARP the 4M oz. upside noted above.
OVER $4.00 A SHARE Jim and she's trading at $1.59:-)
HEADLINERS
ARGENTINA GOLD (ARP : VSE : $1.86 : Issued 33.1M; $300,000
cash)Argentina Gold has reported spectacular assays on the second
drill hole of this season's exploration program on the Veladero
gold-silver project in Argentina. ARP is operator of the project with
a 60% interest and Barrick holds the remaining 40%. An intersection
of 168 m of 2.7 g/t gold in 1997 prompted a 20,000 m drill program in
1997-1998 on the Filo Frederico target, within the Veladero project.
An independent resource estimate on this target outlined 82.8 M tonnes
grading 0.75 g/t gold (2.4M ozs. Au) and 26.1 g/t silver (75M Ag). At
the Filo Federico target, a 2,000 m diamond drill program will be
carried out to further delineate higher grade zones.
This year's initial drilling has focused on the Amable target in the
area of Hole 76, the final hole of last season's drilling, which
intersected 193 m grading 2.59 g/t gold and 55.09 g/t silver. Hole
79, the first hole of this season, intersected 121 m grading 1.4 g/t
Au and 56.6 g/t Ag. The 1 m assays on this hole were very erratic and
largely sub-economic. However, results reported today on Hole 80 are
a pleasant surprise, and Hole 80 should be classified as a "discovery
hole". The intersection of 212 m grading 3.67 g/t Au and 47.7 g/t Ag
is all the more impressive on review of the 1 m split assays. From 61
m to 187 m in depth, all 1 m sections are greater than 1 g/t, and 24 m
are greater than 10 g/t Au (up to 33.7 g/t Au). Hole 80 is the most
significant hole drilled on this project to date.
The volcanic host in the Amable target is highly fractured and
silicified. Mineralization is contained within a sub-horizontal
tabular zone where meteoric water has mixed with magmatic fluids to
form the right pressure/temperature conditions for gold and silver to
drop out of solution. The Amable target has an 800 m by 300 m
resistivity geophysical anomaly yielding the potential for tonnage
similar to the Filo Frederico target, but with a potential grade 3-4
times higher. The gradational alteration to argillic and then quartz
alunite at depth reflects the potential for a deep, high-grade feeder
zone.
It is much too early to say for certain whether Hole 80 is indicative
of the gold-silver grade within the Amable zone. Hole 80 could be a
tough act to follow and assays for Holes 81 and 82, which are expected
very shortly, could easily disappoint the market. However, given the
potential for 4M ozs. in the Amable zone and 2.4M ozs. already
estimated elsewhere on the project, this resource could justify a per
share speculative valuation of over $4.00, based on an in-situ value
of US$25.00/oz. and assuming the market is willing to give ARP the 4M
oz. upside noted above.
We expect Argentina Gold's share price to be volatile but are moving
this company near the top of our watch list based on a discovery hole
at the start of an active drill season in Argentina. The Company
still has to secure a financing to continue exploration, but this
should not be a problem for the Lundin Group, especially in a
discovery-hungry market. As such, we rate the shares of Argentina
Gold as an ACCUMULATE on any weakness or confirmation of the higher
grade in the Amable zone by further drilling. (A. Muir, Canaccord
Research)
Mr Metals
|
