Tectonic Gold – initial assays point to material gold/silver/copper deposits. Buy

December 21, 2020 | Posted by

Great drilling results have been reported this morning by Tectonic Gold from its Specimen Hill Prospect in Queensland, Australia. In all, 11 holes were drilled and assays back from the first three holes saw gold/copper/silver mineralisation intersected in all holes.

The real excitement here is that a vertically extensive ore body some 10m thick has been defined which is tightly controlled within the fault system. On top of that, gold/copper/silver mineralisation has been mapped over a 3km long strike and tested to 120m at depth. Highly importantly, this mineralisation remains open in all directions.

There’s no doubt that the Tectonic boys are looking at a polymetallic deposit which is assaying more than 1.5% copper. The way that it would seem to play is that there is a high-grade core of +16g/t gold and up to +15g/t silver over 1m surrounded by a medium grade halo of 3.01g/t gold and 2.33 g/t silver over 7m. News is also that the drill samples from the remaining 8 holes when logged showed similar characteristics. So, the big hope now is for continuity of these sorts of impressive grades when the remaining assay results are announced after the festive period.

 These early results are highly impressive as they indicate cracking potential. Basically, quite rapidly, Tectonic has got its hands on the vectors which prove that high grade mineralisation extends from surface to depth of more than 100m, across a system that extends over 3km in length. Sensibly, the team initially targeted mineralisation down to a depth of 100m, and which would be the scope for any future open pit mine.

Below the 100m mark, the ore zone becomes an underground mining target. Excitingly, at Specimen Hill, the company can now begin to really visualise a series of open pits which can brought into production to provide the cash flow to be able to fund a long-life operation here. In this announcement, the team was quick to draw obvious parallels with what Newcrest is up to at its flagship Cadia complex to the south and what they reckon other gold and copper majors such as Rio Tinto are probably seeking.

At the time, Brett Boynton, Tectonic’s MD was quick to point out that “the team couldn’t be happier with results so far. ….COVID forced us into a late start and rains have been a complication but we are benefiting from a disciplined approach over a number of years. With Southern Copper still to be drilled and Mt Cassidy also ready for first testing we have plenty of blue sky ahead of us in 2021.”

The flagship Specimen Hill project seems to be shaping up to have impressive potential. This latest drilling programme here has been designed to result in a JORC resource within 6 months of its completion. Already two principle mineral systems (epithermal and porphyry) consisting of gold/silver and copper/gold from multi-phase hydrothermal events have been identified.

These are exciting times indeed for Tectonic. It should be pointed out that the majors are keeping a watchful eye on what the company is up to with its enviable technology and insight into all things IRGS.  Earlier on in the year, Rio Tinto pegged acreage right next door to Tectonic’s large Biloela Project (which includes Specimen Hill and Last Chance). The company gave up some ground to focus more on the sweet spot they have found at Specimen Hill. However, Rio took 60% of the ground that was released. There is no doubt that the majors are watching Tectonic’s every move.

A healthy news flow looks to be assured for the new year. Firstly, there are assay results for the remaining 8 of the 11-hole drilling programme where we already know that this gold/copper/silver mineralisation has already been logged – it is now just a question of grade. All these assay results will be leading towards a maiden JORC resource, upgraded resource and feasibility studies where the economic value of the gold mining project based on the defined resource will be determined. This all points to a sustained news flow over Q1/Q2 2021 culminating in the real prospect of a corporate deal on Specimen Hill before the end of 2021.

What a great situation to be in. Plus, all this happening against a tremendous backdrop of a buoyant gold price (especially in Aussie dollars) which means that all the good news will be magnified to boost the valuations of all these projects ahead of a joint venture or sale.

We updated our coverage of Tectonic in September 2020 with a Conviction Buy stance and a target price of 5.54p with the shares then standing at 0.35p. With the stock now standing at 1.35p, we see little reason to change our view.


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