By Dr. Michael Green
A drilling update from Tectonic Gold’s Specimen Hill Project made for good reading this morning. The company is in the midst of preparing for a drilling programme at the project in Queensland, Australia, and during preparatory work at the drill sites the team has taken surface samples that have returned assays of more than 3.5g/t gold and over 45g/t silver.
These preliminary costean (shallow pit) sampling results stem from the site preparation for the drilling programme at the Specimen Hill Prospect. The team has been working hard on the ground, cutting drill rig access roads and completing drill pads. These costeans have been cut on drill pads to expose fresh rock at surface mineralisation. Samples were taken from these mineralised features and assayed to provide confirmation on targeting for the drilling.
Gold mineralisation was found in every single one of these samples,, with some excellent results including: 3.23g/t gold & 45.5g/t (sample 30426), 3.88g/t gold and 39.5g/t silver (sample 30427) and more than 2.5% copper (sample 30427). The drilling programme is designed to test grade at depth below this identified and tested surface mineralisation. But these impressive assay results are a powerful sign and according to the geologists at Tectonic, it is all apparently as expected and in-line with previous testing of the Specimen Hill Intrusive Related Gold System (IRGS).
Tectonic has a high-grade focused Australian gold portfolio with multi-million ounce potential projects which are planned to be joint ventured or sold. The company became AQEX listed in 2018 following the reverse takeover of Australian based gold explorer Signature Gold, which brought into the company impressive R&D, big data and exploration methodology which has been developed in Australia on other IRGS regions around the world. Tectonic is focused on the huge global opportunity in large-scale high-grade IRGS projects, which investors are just beginning to wake up to.
It has to be said that Tectonic is well positioned to provide the majors with replacement projects. The company has two large, advanced projects – one of which could be a Mt Morgan (8 million ounces (Moz) gold) lookalike – in a highly prolific gold belt. More than 3Moz is being targeted at each project now that the gold bearing systems have already been identified. Investors benefit from a past £7.5 million spend which has resulted in compelling discoveries and multiple drill ready targets. So, there is no doubt that the company has identified and proven gold bearing systems in a highly prolific area.
The flagship Specimen Hill project seems to be shaping up to have impressive potential. The latest drilling programme at Specimen Hill is planned to total some 3,500m of drilling which is expected 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 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. Recently, Rio Tinto has 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 Tinto has just taken 60% of the ground that was released.
Tectonic is highly leveraged to the gold price but has already been de-risked. The company is a pioneer in the IRGS space in Australia and as such has first mover advantage, which has allowed the team to take the first pick of tenements that have the best potential for 3 million ounce plus gold resources to be defined.
A healthy news flow seems to be assured judging by the current work programme. with management intending to provide the market with regular updates from the Australian projects and about the cash coming in from South Africa. There is nothing better than a drilling programme to stir up a share price and the 3,500 metre drilling at Specimen Hill and Mt Cassidy is expected to kick off soon.
This should give rise to an enviable series of announcements concerning: the start of drilling, ongoing reports, assay results leading towards a maiden JORC resource, upgraded resources 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 Q4 2020 and Q1 2021 culminating in the real prospect of a corporate deal on Specimen Hill before the end of 2021. All the while, these activities could be continuing to bask in high gold prices, 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 0.75p, we maintain our view.
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