In a Sept. 28 research note, Noble Capital Markets analyst Mark Reichman reported that new drill results show Aurania Resources Ltd. (ARU:TSX.V; AUIAF:OTCQB) is having success in locating the higher grade parts of the mineralized system at its Lost Cities–Cutucu project. The company is exploring four priority targets on this property in Ecuador: Tiria-Shimpia, Tsenken N1, Tatasham, and Latorre C.
Results are in for hole SH-003, and they are high-grade. Aurania drilled this hole in the Tiria-Shimpia silver-zinc target about 2 kilometers to the north of where it placed holes SH-001 and SH-002.
Intercepts from hole SH-003 include 3.5 grams per tonne (3.5 g/t) of silver and 0.6% zinc over 29 meters (29m), including 10.5 g/t of silver and 2.5% zinc over 5m. The hole intersected the top of a brecciated limestone layer at 35m downhole.
To date, Aurania has drilled three holes over 1,018m at Tiria-Shimpia.
As for Tsenken N1, the minerals explorer just completed hole TSN1-007 and began drilling TSN1-008 there.
Regarding the company's overall drill campaign at Lost Cities–Cutucu, Reichman noted, "In the near term, we think Aurania will continue to operate two drill rigs and maintain some flexibility in terms of the drilling sequence."
To fund its continuing exploration and drill work, Aurania is pursuing a nonbrokered private placement for gross proceeds of up to CA$5 million, Reichman indicated. In this financing, which may consist of more than one tranche, up to 2,083,334 units are being sold at CA$2.40 apiece.
Each unit consists of one common share and one half-warrant. In the 24 months after the financing closes, each whole warrant can be converted into one common share for CA$3.
"The shares have traded well above CA$3 per unit, and the warrants may be viewed as a call on successful outcomes resulting from Aurania's exploration and drilling program," Reichman wrote.
Noble has an Outperform rating and a US$3.50 per share target price on Aurania, the stock of which is trading now at about US$1.78 per share.
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