RCKS Talk

10-Jan-2019

GT Gold Corp

Saddle North Continues to Impress

Impact: Positive

GT Gold released assay results from hole 109 at their 100% owned Saddle North deposit located in BC, Canada, intersecting an extremely wide 1,150m grading 1.12g/t AuEq from surface. We consequently updated our in-house grade shell model of this deposit. Our preliminary economic estimates suggest that this project is very likely to be an economic mine at some point in the future.

We continue to believe that GT Gold has made an exceptional porphyry gold-copper discovery. Importantly, our view is that very little (if any) value is being ascribed by investors for that discovery in GT’s current share price. Further, we expect continued exploration success at Saddle North.
Highlights:

  • Grade shell model points to sizeable high-grade resource. Using Leapfrog Geo, we have created our own grade shell model of the Saddle North deposit and have defined high-grade (for a porphyry-style deposit) and very high-grade resource estimates of 365Mt grading 1.21g/t AuEq (0.8g/t AuEq cut-off) and 77Mt grading 1.81g/t AuEq (1.5g/t AuEq cut-off), respectively (Figure 1).
  • High-grade core emerging at depth (Figure 1, 3, 4 & 5). Hole 109 confirmed that grades get better at depth, returning 342m @ 2.1 g/t AuEq (starting at 740m). Though still early days, our 3D model reveals the emergence of a high-grade zone 500m below surface with grades above 1.5 g/t AuEq, which extends for 450m along strike, 600m down plunge. We stress that the zone remains open at depth and laterally and grades may improve further still with deeper drilling as the core of the system is approached.
  • Saddle North likely to become a mine. After comparing our estimates for Saddle North to other block cave projects and the nearby Red Chris Mine, our preliminary view is that this project should be economic to mine (Figure 2). Using the high-grade resource, and based on a 30,000tpd operating rate (~400k oz AuEq/year) we roughly estimate the after-tax NPV5% for Saddle North to be C$2.4B, and its IRR would be 19%. See Figure 6-8, for our assumptions and sensitivities.
Valuation: 
Is the market getting it wrong on Saddle North? Our rough numbers point to a project NPV at over C$2B. Even with conservative estimates for further dilution and time to get the construction phase, GT Gold appears to be significantly undervalued at a market capitalization of just C$66.9M. We note that in our view, current drilling at Saddle South alone justifies the current market cap (~750-1Moz AuEq at C$50-75/oz implying C$37.5-75M), suggesting negligible value ascribed to Saddle North. Upcoming catalysts include 1) Saddle South exploration update (Q1/19).

13-Dec-2018

GT Gold Corp

Saddle North Extends to Surface

Impact: Positive

GT Gold has announced additional drill results from Saddle North, extending the mineralized envelope to surface. Results continue to demonstrate the size and grade potential of Saddle North and support our view that the company has made a significant porphyry discovery that is not reflected in the share price.

Highlights: 
  • Potentially open-pitable deposit. Highlight holes include 0.93g/t AuEq over 324m from 4m depth (Hole TTD108 – Figure 3), which suggest that the mineralization extends to surface. Given that these are ore grades near surface with good continuity, we now see some open pit potential to the northeast.
  • Grades improve at depth, looking forward to hole TTD109. While the mineralization at surface has now been demonstrated to be ore grade, drilling to date (9 holes) suggests that the grade of the mineralization at Saddle North also increases at depth, highlighting further underground block cave potential. We await assays from hole TTD109 (expected in January) but the results from the surrounding holes, suggests that good results are likely. We highlight that with so few holes completed to date, additional results at better grades, would positively impact our estimates.
  • Rough estimate points to significant scale potential. Using the data released to date we estimate the total mineralized envelope could be ~1.47Bt at 0.75 g/t AuEq (~35 Moz AuEq - Figure 1) with the higher-grade core at ~290Mt at 1.25 g/t AuEq (~11Moz AuEq – Figure 2). This is approaching the size of Red Chris when it was put into production (1.82Bt @ 0.84g/t AuEq) and is of similar grade/scale of other block cave operations (Figure 3). We highlight that with only 9 holes complete, Saddle North is at a very early stage and our estimates are very preliminary.
Valuation: 
Market is not pricing in this sizeable discovery. Based on the drilling to date, our rough estimate for Saddle South is ~750k-1M oz AuEq, based on C$50-75/oz for peers, this implies a value of C$37.5-75M. This suggests a value of C$0-9.5M for the Saddle North porphyry target. We believe that if future results match what we have seen to date, this implied valuation materially undervalues this targets potential. Upcoming catalysts include 1) Assays from drill hole TTD109 (Q1/19) and 2) Saddle South exploration update (Q1/19).

 

19-Nov-2018

GT Gold Corp.

Saddle North Expands Along Strike at Depth

Impact: Positive

GT Gold has announced results from two step-out holes drilled to the southeast and northeast, which intersected wide zones of Au-Cu mineralization and has expanded the mineralized envelope in both directions and at depth. These results demonstrate the size and grade potential of Saddle North and support our view that the company has made a significant porphyry discovery.

Highlights: 
  • Intercepts highlight higher grades at depth. The company highlighted 0.81g/t AuEq over 685m (hole TTD098) and 0.77g/t AuEq over 357m (hole TTD102). Both holes support the theory that grade increases with depth. Hole TTD098 successfully demonstrated continuity in mineralization over 1km down-dip and extended the higher-grade mineralization by 200m to a depth of 1069m with 133m grading 1.92g/t AuEq (Figure 1 & 2). We expect pending holes 106 and 108 testing up-dip extensions to demonstrate that the mineralization extends closer to surface. 
  • Mineralized envelope grows once again. By testing the mineralized extensions along strike the company has expanded the Saddle North mineralized intrusive complex to ~600m along strike, ~900m vertical depth from surface (1,100m down-dip) and a true width ~700m (Figure 3).
  • Red Chris lookalike? The mineralized footprint and lithology of the intrusive complex at Saddle North continues to approach the nearby Red Chris mine, which was put into production with 13Blb CuEq (1.82Bt grading 0.84g/t AuEq) of mineral resources (2012 FS). We’re awaiting assays for four more holes from this season to have a better understand the potential at Saddle North.
Valuation:
Market starting to price in the porphyry discovery. Based on the drilling to date, our rough estimate for Saddle South is ~750k-1M oz AuEq, based on C$50-75/oz for peers, this implies a value of C$37.5-75M. This suggests a value of C$72-109.5M for the Saddle North porphyry target. We believe that if future results match what we have seen to date, this implied valuation materially undervalues this targets potential.
10-Oct-2018

GT Gold Corp.

Saddle North Growing with Every Hole

Impact: Very Positive

GT Gold has announced two strong drill results from two holes from its Saddle North porphyry target (Au-Cu-Ag). These two step-out holes continue to demonstrate the size and grade potential of Saddle North and support our view that the company has made a significant porphyry discovery.

Highlights: 

  • Growing mineralized footprint. GT Gold announced drill results from its recently discovered Saddle North porphyry discovery with highlights of 904m grading 0.98g/t Au (TTD093 - Figure 1) from 15m depth and 494m grading 0.65g/t AuEq from 31m depth (TTD090 – Figure 2). Results confirm our theory that Saddle North may cover a large mineralized footprint, with a drilled strike length of at least 200m (geophysics suggests >1,000m) and true widths in excess of 700m. Saddle North remains open in all directions.         
  • Results pending on 4 holes. We can expect assays from four more widely-spaced holes (TTD098, 102, 106, and 107) targeting the Saddle North porphyry discovery this season. These pending results should provide a better understanding of the potential scale of this deposit and are likely to be additional catalysts for the stock.
  • Another Red Chris? The mineralized footprint and lithology of the intrusive complex at Saddle North appear to be similar to the nearby Red Chris mine, which was put into production with 13Blb CuEq (1.82Bt grading 0.84g/t AuEq) of mineral resources (2012 FS).

Valuation: 
Market starting to price in the porphyry discovery. After today’s 46% increase in the share price, the company now has a market cap of C$114M (EV C$100M) suggesting to us the market has started to price in the Saddle North porphyry. Based on the drilling to date, our rough estimate for Saddle South is ~750k-1M oz AuEq, based on C$50-75/oz for peers, this implies a value of C$37.5-75M. This suggests a value of C$25-62.5M for the Saddle North porphyry target. We believe that if future results match what we have seen to date, this implied valuation, materially undervalues this targets potential.

08-Aug-2018

GT Gold Corp.

GT Gold Extends Saddle South with 33g/t Over 2.8m

Impact: Positive

 

GT Gold has released assay results from the initial eight holes of the company’s 2018 exploration program which is expected to be at least 18,000m of diamond drilling in ~40 holes.
  • Step out drilling intersected high-grade gold both to the east and west at the Saddle South gold discovery including an intersection of 4.67g/t Au over 40.02m in a new zone (650m vertical depth), 175m south and east of the Saddle South Main Trend
  • The trend of Saddle South has been extended 400m in an east-west manner, bringing the total strike length to over 1km; all step-out holes have intersected mineralization, which remains open in all directions and deep drilling encountered high grades and strong widths in addition to a new trend to the southeast
  • GT will follow up with drilling at Saddle North where reconnaissance holes have shown significant potential for a large copper-gold-silver porphyry system. Drilling success at Saddle North could be a major positive catalyst for the stock
In addition to continued exploration at Saddle South, the company plans to now make Saddle North a focus for exploration in 2018 as well. Using C$50-75/oz (typical for high-grade underground deposits in good jurisdictions), the current enterprise value, implies a resource of 596-894k oz Au. Based on current drilling, we believe this is possible, and that the market appears to be modestly undervaluing the work to date and fully discounting the potential of Saddle North.

 

01-Jan-2018

GT Gold Corp. (TSXV:GTT)

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