Early results from Tectonic Gold validate our Conviction Buy stance

September 11, 2018 | Posted by

Early news from the drilling at Tectonic Gold’s Specimen Hill Project in OZ looks to us to be very encouraging. Already the drilling program has been able to confirm that the targeted mineralised sulphides at Specimen Hill have indeed been found to occur in both the previously tested zone and the step out target.

This news basically confirms the team’s prediction that resuted from its Sub Audio Magnetic SAM surveying program. Following just the drilling of the first four holes out of the 10-hole drilling program Tectonic now know that Specimen Hill is a much larger system than previously recognised. It has to be said that this really demonstrates how the team’s use of advanced geophysics can cost effectively map out IRGS discoveries.

For a bit of background. Tectonic Gold is the old StratMin which traded on AIM from 2004 to 2017 but was de-listed as it was unable to complete the reverse takeover (RTO) of Signature Gold in the required timespan. With the RTO completed while delisted, the company was readmitted to the NEX Exchange following the acquisition of Signature Gold and a placing at 2p per share. Since the NEX admission in late-June 2018, the shares seem to have been given the cold shoulder by the market but now provide a great buying opportunity for smart investors in our opinion.

Tectonic Gold is focused on the huge global opportunity in large-scale high-grade Intrusive Related Gold Systems (IRGS), and which is a hot topic in the mining industry. It is fair to say that IRGS are seen to mark a brand-new frontier for the discovery of significant large gold deposits. Amazingly, up until the 1980s, there was little comprehensive research into the actual genesis of gold deposits.  Developments since then seem to have re-written the rule book with a number of well-known big gold deposits and large gold mines now being reclassified as IRGS deposits.

The company has an extensive exploration portfolio of 850km² of tenements in Queensland. Already ten gold bearing systems have been discovered where Tectonic’s research and exploration work is targeting on there being scope to ultimately define a gold resource in excess of 3 million ounces in each system. Discoveries have been made and now the company is seeking to define JORC compliant resources and embark on feasibility studies in various of these areas.

Specimen Hill is the top priority and this prospect is drill ready for JORC resource definition. In all, a total of 10 holes will be drilled for the current 2,580 metre program, with the drilling being executed under the “drill for equity” deal with investor/partner Titeline Drilling. There has been a successful start to the campaign so far with four holes over 820 metres of core already completed.

Importantly, sulphide mineralisation has been intersected from close to surface in the first three holes, confirming historic testing in the epithermal zone of the gold system. In addition, the first step out hole that is some 250 metres south along the structure has shown similar sulphide mineralisation and strong alteration. It has to be pointed out that the core that has been recovered shows typical IRGS disseminated and veiniform Pyrite, Pyrrhotite, Arsenopyrite, Chalcopyrite and other base metals which serve to confirm the exploration thesis.

The next hole, number five, is another step which is 250 metres along strike away from the initial three holes and will again test the extension of the epithermal structure identified by the SAM survey on the other side from hole four.  The drilling action will then move to the porphyry targets identified by the successful 3D Induced Polarisation (3D IP) survey in March 2018. This initial drilling program is expected to be completed in 30 days with the gold assays on the core samples being dealt with in batches and released once validated. This seems to suggest a healthy news flow over the coming months.

Specimen Hill represents a very interesting exploration and development play as it has been the site of past mining which saw more than 8,000 ounces of gold mined at grades as high as 40g/t, and so the system is known to contain gold. The team was able to draw attention in the latest announcement that recent surface rock samples had assayed as high as +40g/t gold, which serves to confirm high-grade potential from historic records of selective mining. 

Investors have had their cards marked by the board with this latest announcement. We know that there is gold in the system and that early drilling results have found the gold-bearing structure. So, it does look likely that a series of expected announcements generated from this drilling program over the coming weeks could make for some very good reading. We recently initiated coverage on Tectonic with a Conviction Buy stance and a target price of 7.28p (full report HERE) and our view remains unchanged.


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