Liberty Gold Corp. (LGD:TSX; LGDTF:OTCQB) updated the mineral resource at its Black Pine oxide gold project to 3,100,000 ounces (3.1 Moz) and could expand it more, reported National Bank of Canada analyst Rabi Nizami in a Feb. 10 research note.
"A million new ounces were added to the total resource at slightly improved average grade," Nizami wrote. "The update shows well for further exploration upside at the project."
The National Bank of Canada has an Outperform rating and a CA$1 per share price target on Liberty Gold, currently trading at about CA$0.53 per share, noted Nizami. The difference between these prices represents a sizable return potential for LGD investors.
The Resource at a Glance
The analyst presented the highlights of the updated resource as compared to the original prepared in July 2021.
The Black Pine resource grew to 3.1 Moz from 2.1 Moz, in line with expectations, Nizami wrote. Unexpectedly, he noted, the average grade increased about 4% to 0.5 grams per ton (0.5 g/t) from 0.48 g/t and thus was "a welcome surprise." About 84% of the total resource is in the Indicated category, and the other roughly 16% is in the Inferred group.
The resource increase came solely from deposit expansion through drilling, not from a change in cutoff grade, noted Nizami. In fact, the cutoff grade was 0.2 g/t in both the maiden and updated resource estimates. The Rangefront zone contributed the most ounces to the update and accounts for about 25% of the total current resource. It remains open.
"Continued investment in exploration at Black Pine is worthwhile and should continue to be a focus for Liberty Gold in 2023 while also advancing engineering and permitting work towards a prefeasibility study decision."
Changes in the cutoff grade would have an impact, Nizami pointed out but added it is too early to determine the ideal choice for the mine plan. Lowering the cutoff to, say, 0.1 g/t, would add another 1.2 Moz to the current 3.1 Moz.
On the other hand, raising the cutoff would highlight a resource of just higher-grade zones. For instance, a 0.5 g/t cutoff grade would yield a resource of 1.8 Moz at 1 g/t.
"Our takeaway here is simply a reminder of the widespread nature of gold mineralization throughout the Black Pine system and [that] further extensions should continue to be drilled," added Nizami.
The newly calculated resource takes into account the results of the 528 holes drilled between the previous resource in 2021 and October 2022. Forty holes' worth of data did not make it into the resource update because results are still pending.
Low All-In Discovery Cost
Nizami pointed out, too, that Liberty Gold's total capital spend on Black Pine so far has been low, at US$48.7 million, or US$16 per ounce.
"Continued investment in exploration at Black Pine is worthwhile and should continue to be a focus for Liberty Gold in 2023 while also advancing engineering and permitting work towards a prefeasibility study decision."
What To Watch For
The Canadian company has a drill program underway at Black Pine, the results of which constitute potential catalysts for the stock, noted Nizami. Other possible stock-moving events are the results of the as yet unreported 40 holes drilled in 2022, receipt of amended permits allowing for a greater drilling area, and data from phase five metallurgical testing.
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1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
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Disclosures for National Bank of Canada Financial Markets, Liberty Gold Corp., February 10, 2023
Financing risk: There is risk to our valuation that future financing terms are less attractive than we currently model which could result in greater dilution to shareholders or more onerous debt constraints. Lack of economic study at Black Pine: With a maiden resource but no publicly available economic study at Black Pine, there is a risk that the eventual study contains less attractive economics than we model.
Exploration risk: Our investment thesis considers exploration upside. There is no assurance that the company will realize exploration success in the future.
Permitting risk: The Company’s portfolio of projects in the United States will be subject to environmental regulations and governmental approvals, and permits will be required to advance the projects to production.
ADDITIONAL COMPANY RELATED DISCLOSURES
National Bank Financial Inc. has acted as an underwriter with respect to this issuer within the past 12 months. National Bank Financial Inc. has provided investment banking services for this issuer within the past 12 months. National Bank Financial Inc. or an affiliate has managed or co-managed a public offering of securities with respect to this issuer within the past 12 months. National Bank Financial Inc. or an affiliate has received compensation for investment banking services from this issuer within the past 12 months.The issuer is a client, or was a client, of National Bank Financial Inc. or an affiliate within the past 12 months.
DISCLOSURES
This Report was prepared by National Bank Financial Inc. (NBF), a Canadian investment dealer, a dealer member of IIROC and an indirect wholly owned subsidiary of National Bank of Canada. National Bank of Canada is a public company listed on the Toronto Stock Exchange. The particulars contained herein were obtained from sources which we believe to be reliable but are not guaranteed by us and may be incomplete and may be subject to change without notice. The information is current as of the date of this document. Neither the author nor NBF assumes any obligation to update the information or advise on further developments relating to the topics or securities discussed. The opinions expressed are based upon the author(s) analysis and interpretation of these particulars and are not to be construed as a solicitation or offer to buy or sell the securities mentioned herein, and nothing in this Report constitutes a representation that any investment strategy or recommendation contained herein is suitable or appropriate to a recipient’s individual circumstances. In all cases, investors should conduct their own investigation and analysis of such information before taking or omitting to take any action in relation to securities or markets that are analyzed in this Report. The Report alone is not intended to form the basis for an investment decision, or to replace any due diligence or analytical work required by you in making an investment decision.
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