Significant drilling will commence again this spring on NuLegacy Gold Corporation's (NUG:TSX.V; NULGF:OTCQB) highly prospective Rift Anticline target on its flagship 108-sq. km Red Hill gold property in Nevada's prolific Cortez gold trend. The drilling of 12, perhaps 13 more holes will commence in April. These will be much deeper holes than have been drilled in the past.
On January 15th, management announced the rapid (five business days) subscription for a 100 million unit private placement, (gross proceeds = $12.5 mllion), expected to formally close any day now. Will 2021 be the year that NuLegacy cracks the code of the Rift Anticline formation on its large property?
Go BIG or go home drill program starts in April….
CEO and co-founder of NuLegacy, Albert Matter commented,
"Completing the financing is critical as it allows NuLegacy to start contracting for the much bigger and more expensive deep drilling rigs, and the superior drill teams needed, that will soon be in short supply…. enabling us to accelerate our expanded Spring/Summer drill program…."
Readers may recall that management is laser-focused on confirming high-grade Carlin-style gold deposits over the roughly 6 sq. km Rift Anticline target on its flagship Red Hill property. This target is on trend and adjacent to Barrick Gold's three multimillion-ounce, Carlin-type deposits (Pipeline, Cortez Hills and Goldrush).
Across the district, the Rift Anticline hosts giant, high-grade deposits such as the 10M+ ounce, 10 g/t gold, advanced-stage Goldrush project, located ~10 km northwest of Red Hill.
Over the years, NuLegacy has enlisted eight former Barrick employees, board members and/or advisers. Including the very well-respected Roger Steininger—who led teams that discovered the South Pipeline and Long Valley gold deposits—this world-class group of nine is credited with discovering >50M ounces of gold in Nevada.
A powerhouse technical team unleashed, no holes barred!
Dating back to the mid-1980s, NuLegacy's team and advisors (while at Barrick and at other companies before joining NuLegacy) have greatly advanced the understanding of Carlin-style gold systems.
Modeling the geochemical, geophysical and drill data of the Rift Anticline in north-central Nevada has evolved to the point that NuLegacy's team is confident the Wenban5 unit hosts mineralization. The question is: how uniform and what grade?
On December 15th, a corporate update was delivered on the first four drill holes. Wide intervals of the Wenban5 stratigraphic unit were confirmed. Holes 1 and 2 were drilled to an average depth 607.5 meters, and holes 3 and 4 to an average depth of 850.5 meters.
These deeper holes are expensive, which is why the company raised additional funds. Assays from the first two holes contained numerous intercepts of anomalous gold values, but no flashy grades to brag about.
However, Ed Cope, Director, Exploration remains enthusiastic,
"I'm very impressed with these results. There are numerous subtle signs in the geology and geochemistry of these results that are difficult to articulate in a brief news release, and might appear inconsequential to the uninitiated, that indicate there's a significant gold deposit 'lurking nearby.'"
The Wenban5 horizon hosts 75% of the gold in Nevada Gold Mines' giant, high-grade Goldrush project. Importantly, the presence of a thick section of Wenban5 underneath basalt cover was predicted by NuLegacy's geologic team to within 10 meters — an impressive feat of interpretative geology!
There's gold on the 6 sq. km Rift Anticline, but how much? What grade?
The presence of a Carlin-type system was intercepted at an average depth of ~332 m with an average thickness of ~173.5 m.
Management notes that it appears none of the Wenban5 horizon has been eroded or faulted off as was the case in prior holes over the years that produced smoke, {11.0 g/t over 12.2 m, 16.9 g/t over 8.7 m, 9.6 g/t over 5.1 m, found well to the east of the Rift Anticline}, but no fire.
The reason why Quinton Hennigh and others are so excited with events unfolding at NuLegacy's portion of the Rift Anticline is that a close analog is none other than Barrick's 10M+ ounce Goldrush deposit.
I mentioned Mr. Hennigh because he's been talking about this for months. {Please click on video clip above}.
In the comparison slide above, select metrics of the Rift Anticline, as expressed on NuLegacy's property, compare favorably to that of the Goldrush project with respect to deposit width, Wenban5 thickness and depth. Grades and continuity of mineralization are critical unknowns that will make or break the NuLegacy Gold story.
Regarding the importance of understanding the structure at Red Hill, Mark Bradley, VP Exploration, commented,
"Our advanced structural modeling of the Rift Anticline is a very powerful exploration tool, permitting us to prioritize our initial drilling efforts within the large, 6 sq. km Rift Anticline surface area, thus optimizing our chances for discovery."
One might look at this Rift Anticline target "up close" slide, and wonder if the Wenban5 horizon at Red Hill is too small.
No! Management and advisors have been explaining that the dimensions of the Wenban5 horizon on NuLegacy's property are sufficiently large to (potentially) host millions of ounces (if the grade is reasonably strong and there's decent continuity).
Twelve, perhaps 13 more (deep) drill holes this spring/summer
Once width, average thickness and grade are reasonably well established, some preliminary estimates of the potential volume of the gold-bearing Wenban5 unit can be made.
The remaining 12 holes of a 16-hole (11,500 m) drill program are fully funded and scheduled for completion in the upcoming spring/summer drill program. However, with the newly raised cash, the holes may be drilled deeper and possibly faster (multiple rigs).
Listening to the podcast embedded above—which walks through the reasoning behind the bullish Rift Anticline thesis—it's clear there's potential (but, no certainties) of a very large gold system.
I have no insights into how much gold the Rift Anticline on NuLegacy's property might contain, but management and advisors believe that the dimensions make millions of ounces a possibility.
Readers should note that due to size, grade, depth and continuity factors, the vast majority of gold-prospective properties around the world have 0% probability of hosting a potentially economic 5M+ ounce deposit.
Even a 2 to 5M ounce resource in Nevada would be quite valuable. In the chart below are seven companies from high-quality jurisdictions in North America.
Multi-million ounce deposits in Nevada are quite valuable
Resource estimates range from 0.67M to 3.7M ounces. Enterprise Value {market cap + debt – cash} ("EV") divided by ounce values range from C$45–$195. The average EV/oz. figure = C$89/oz.
All else equal, if NuLegacy were to delineate 2M ounces, it would be trading at just C$29/oz. While we're not there yet, line of sight beyond the number of ounces contained in a maiden resource will hopefully come into view. There might be a conceptual multi-million ounce resource target to contemplate later this year.
These peers are more advanced than NuLegacy, however readers can imagine what a multi-million ounce resource could potentially be worth if management has drilling successes this year. The average EV of these peers is ~C$191M vs. ~C$58M for NuLegacy.
Conclusion
All eyes are on NuLegacy's drill program this year. It will be a substantial program. While no one knows what the drill bit might find, the company's expert technical team is optimistic about the potential of unlocking new clues in the Rift Anticline.
NuLegacy Gold (TSX-V: NUG; OTCQB: NULGF) has proven that it's not easy to find a needle in a haystack, but 2021 could be the year that it happens. No matter what unfolds, 10 years of exploration on the Red Hill project will never go to waste. This is very valuable data, increasingly so in a gold bull market.
Ideally, NuLegacy can find significant smoke, or fire! that warrants continuing to advance the project. However, if given a chance, a mid-tier or major gold player would very likely pick this project up and run with it.
Peter Epstein is the founder of Epstein Research. His background is in company and financial analysis. He holds an MBA degree in financial analysis from New York University's Stern School of Business.
[NLINSERT]Disclosures: The content of this article is for information only. Readers fully understand and agree that nothing contained herein, written by Peter Epstein of Epstein Research [ER], (together, [ER]) about NuLegacy Gold, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is not to be considered implicit or explicit investment advice. Nothing contained herein is a recommendation or solicitation to buy or sell any security. [ER] is not responsible under any circumstances for investment actions taken by the reader. [ER] has never been, and is not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and does not perform market making activities. [ER] is not directly employed by any company, group, organization, party or person. The shares of NuLegacy Gold are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers that they will consult with their own licensed or registered financial advisors before making any investment decisions.
At the time this article was posted, NuLegacy Gold was an advertiser on [ER] and Peter Epstein owned shares in the Company.
Readers understand and agree that they must conduct their own due diligence above and beyond reading this article. While the author believes he's diligent in screening out companies that, for any reasons whatsoever, are unattractive investment opportunities, he cannot guarantee that his efforts will (or have been) successful. [ER] is not responsible for any perceived, or actual, errors including, but not limited to, commentary, opinions, views, assumptions, reported facts and financial calculations, or for the completeness of this article or future content. [ER] is not expected or required to subsequently follow or cover events and news, or write about any particular company or topic. [ER] is not an expert in any company, industry sector or investment topic.
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