Even while returning its thickest and highest intercepts to date in its drilling campaign at its Santa Ana project in Colombia, Outcrop Silver & Gold Corp. (OCG:TSX.V; OCGSF:OTCQX; MRG1:DB) is keeping an eye firmly on the future.
The junior explorer broke new ground on the 100%-owned site and sampled up to 9,738 and 4,545 grams per tonne silver (g/t Ag) at the surface along the Frias-La Ye trend south and southwest of the drilling. Additional samples from the area show 27.71 g/t gold (Au).
On the strength of the new results, drill results from the main project site, and an estimated resource of 50 Moz silver equivalent (Ag eq), Research Capital Corp. analyst Stuart McDougall on Tuesday issued an updated note on the company.
“We remain impressed by the pace and extent of the vein discoveries at Santa Ana and continue to recommend purchase as a Speculative Buy for risk-tolerant investors,” McDougall wrote. “Our target price of (CA)$0.75/share remains unchanged.”
Although each new target “still needs to be tested beneath their surface exposures, we think their discovery lends considerable support to our baseline resource expectations,” he stated.
Like the rest of Santa Ana, the new trend has a lucrative mining history. The Frias mine produced 7.8 Moz of silver in the last part of the 19th century.
“These are on average unusually high surface sampling assays,” Outcrop Chief Executive Officer Joseph Hebert told Streetwise Reports. “We have never had a plus 9-kilogram assay from a vein at surface.”
Research Capital Corp. analyst Stuart McDougall has given Outcrop’s stock a Speculative Buy rating with a CA$0.75 target price.
So far, the company has sunk 284 core holes and assayed 47,600 meters of drilling at Santa Ana, which is in the northern Tolima Department, about 190 kilometers from the capital of Bogota. It’s comprised of five or more regional scale parallel vein systems across a trend 12 kilometers wide and 30 kilometers long.
Outcrop plans to establish a maiden resource estimate for the project by the end of the year. Thirteen high-grade shoots have been discovered to date; the company expects to reach the milestone of 14 to 16 shoots.
Results ‘Not an Accident’
Earlier this month, Outcrop released more results from Las Maras with its thickest and highest-grade intercept to date: 1,651 grams per tonne silver equivalent (g/t Ag eq) over 8.97 meters at hole DH 274, including 15,941 g/t Ag eq over 0.66 meters.
The weighted average grade of all significant intercepts to date at Las Maras is 1,583 g/t Ag eq over an average width of 3.07 meters. New results have extended Las Maras’ high-grade mineralization to 200 meters strike and 200 meters depth, open to the south and at depth.
The company’s intercept record for Santa Ana has been broken by successive results in June, July, and August. The results keep pointing Outcrop toward better holes.
“It’s not an accident,” Hebert said. “What we’re finding is maybe it’s a truism that drilling provides more than assays. It really provides high quality knowledge. It makes exploration and drilling more efficient.”
Results from three holes in the Los Naranjos vein, released in July, returned the thickest and highest-grade intercepts for the project up to that point.
Hole DH270 returned 6.93 meters of 2,184 g/t Ag eq, including 1.06 meters of 8,787 g/t Ag eq. Los Naranjos shows a weighted average grade of 1,651 g/t Ag eq over an average intercept width of 1.72 meters.
The company is seeing more native gold and silver as it goes south from the traditional Royal Santa Ana mines. “We haven’t puzzled out the exact geologic reason,” Hebert said.
Filling in the spaces between the holes, the company is finding not just single veins, but packages of veins.
“Those veins can be reasonably composited or packaged together to create better thicknesses and better grades,” Hebert said.
Will Leftist President Be a Threat?
Outcrop will use the results to pinpoint new targets for drilling. “We’re going to continue aggressively to get as many ounces or potential ounces silver equivalent ounces as we can in the resource report,” Hebert said.
This summer, Colombia elected its first leftist president, Gustavo Petro, who has promised a halt to new gas and oil development and to stop new permits for strip mining. But Hebert said Outcrop is a has a “small footprint” and its mines will be underground.
The community is also advocating for the project and wants the jobs, Hebert said.
“Petro is also a populist,” Hebert said. “If he has a community that strongly supports an operation, I don’t think he’s going to interfere.”
Outcrop has a market cap of CA$27.2 million with 160.2 million shares outstanding, 109 million free floating. It trades in a 52-week range of CA$0.36 and CA$0.10.
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