2018 could be pivotal exploration year for NuLegacy: analyst
By Peter Kennedy
A New York investment firm is flashing buy signals in the direction of NuLegacy Gold Corp. [NUG-TSXV; NULGF-OTCQX], a Vancouver-based junior which is focused on the Red Hill gold project in Nevada.
Scarsdale Equities LLC has set a target of 34 cents for Nu Legacy, which is trading Tuesday April 24 at 18.5 cents in a 52-week range of 29.5 cents and 15 cents.
NuLegacy, an 11%-owned affiliate of Barrick Gold Corp. [ABX-TSX, NYSE] has discovered the Iceberg Carlin-style gold deposits at Redhill, which is located 100 km southeast of Elko. The company has also identified several more highly prospective exploration targets that are being drilled this year.
The Redhill project is immediately adjacent to Barrick’s huge Goldrush gold discovery, which is also located on the Cortez gold trend, an alignment of deposits that ranks among the world’s most productive gold mining belts.
In gold exploration, Goldrush is by far the largest development in Nevada right now. In February 2016, the Toronto-based gold miner said it could spend $2.1 billion through 2020 expanding gold mines in Nevada and Peru, with about $1.4 billion of the investment set for the Silver State (Nevada).
The biggest chunk – $1 billion – was earmarked for building an underground mine at Goldrush, a new deposit located about 4 miles southeast of Barrick’s Cortez operations near Elko. Once it starts production in 2021, Goldrush could yield 440,000 of gold each year. The deposit has an estimated 8.6 million ounces in gold resources.
The 98 km2 Red Hills project includes a number of exploration prospects which are clustering around a conceptual threshold resource target (referred to as the Iceberg deposit) of 90 to 110 million tonnes, grading between 0.7 g/t and 1.1 g/t gold.
These figures are conceptual in nature and derived from a compilation of 149 historic and 111 NuLegacy drill holes. So far, there has been insufficient exploration to define a mineral resource.
In September 2016, NuLegacy said assay results had confirmed that that a target previously known as the Avocado anomaly hosts a Carlin-type deposit. (Carlin-style deposits feature micron sized-gold particles that are not visible to the naked eye).
The company said drilling located 1,750 metres northwest of the Iceberg gold deposit intersected a massive bloom of gold grading 0.26 g/t gold over 199.7 metres, including 24- and 35-metre intervals of 0.5 g/t material, and 10- and 13-metre intervals of better than 1.0 g/t material.
A 2017 summer drilling program added two new gold zone discoveries – the Serena and VIO zones (described by the company as the only new gold discovery in Nevada during 2017) – to the inventory of gold-bearing zones on the Red Hill property, while expanding or adding to the previous discoveries in the North and Central Iceberg deposits.
Heading into 2018, NuLegacy previously said its main aim is to produce a NI 43-101 compliant resource estimate for the Iceberg deposit. This year, the company’s exploration plans include 40,000 feet of reverse circulation and core drilling in 40 holes. The budget for that program is $5 million.
The initial phase of drilling will include reverse circulation and core drill rigs set up to target the gap between the Serena/North Iceberg deposits and the Avocado target.
In his report, Scarsdale analyst Mike Niehuser said the addition of former Barrick Gold geologist Charles Weakly to the NuLegacy geotechnical and exploration team as their district geologist has been “the most consequential development in the maturation of the company.”
“Mr. Weakly’s success with Barrick on Carlin-type gold deposits (CTGDs) in the Goldstrike and Cortez districts provides the potential for a fresh perspective on NuLegacy’s Red Hill property,” said Niehuser.
“Most importantly, Mr. Weakly comes to NuLegacy with a deep familiarity of Barrick’s nearby multi-million ounce Goldrush (CTGD),” he said.
“In our opinion, Mr. Weakly’s insights gained from decades of Barrick’s exploration and mining, and millions of dollars in exploration expense may have taken years off the exploration timeline for the Red Hill property, possibly leading to a major discovery in 2018.”
In summing up, Niehuser said Weakly, with his experience at Barrick’s Goldrush deposit, and a fresh interpretation of the conditions leading to the formation of gold deposits at NuLegacy’s Red Hill property, may lead to its most important season.