Drilling Confirms Gold Expansion Beyond Previous Estimates in Nova Scotia

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NexGold Mining Corp. (NEXG.V:TSXV; NXGCF:OTCQX; TRC1.F:FRA) has initiated its inaugural 25,000-meter diamond drilling program at the Goldboro Gold Project in Nova Scotia. This effort aims to refine geological and grade continuity within the project's open-pit mineral resource and potentially upgrade areas classified as Inferred or Indicated resources. The drill program will proceed in two phases, with Phase I encompassing 15,000 meters and Phase II allowing for an additional 10,000 meters, pending a review of initial results.

The collected data will contribute to an updated Mineral Resource Estimate for Goldboro, incorporating results from the western extension drilling campaigns conducted in 2023 and 2024. Historical drill results have demonstrated the continuity of gold mineralization over 450 meters beyond the existing resource boundary, suggesting significant potential for further resource expansion.

Kevin Bullock, NexGold's President and CEO, remarked in the news release, "This drilling program marks a pivotal step in advancing pre-construction activities at Goldboro. The data will not only enhance our resource understanding but also inform an updated Feasibility Study for the project, expected in 2025."

The Goldboro project is strategically positioned within a stable jurisdiction, with infrastructure development and permitting milestones, including a Benefits Agreement with the Assembly of Nova Scotia Mi'kmaw Chiefs, laying the groundwork for its near-term progression.

Record-High Gold Prices Highlight Market Optimism

According to Mining.com on January 4, the CPM Group highlighted that "investment demand drives prices," with expectations of sustained investor interest in 2025 due to global economic and political instability. The group projected an average gold price of US$2,730 per ounce in 2025, reflecting a 13% increase from the previous year. Rising global mine production and recycled gold were expected to support this demand, with supply projected to increase by approximately 3.8%.

In a December 19 research note, Red Cloud Securities analyst Ron Stewart maintained a speculative Buy rating on NexGold Mining Corp., assigning a target price of CA$2.50. 

That same day, Adam Hamilton, writing for Ahead of the Herd, described the gold mining sector as "seriously oversold, deeply undervalued, and really out of favor," presenting a contrarian investment opportunity. He noted that the sector's stock prices remained disconnected from underlying record earnings, stating, "Gold-stock prices need to normalize with underlying profits, which is likely in 2025." He attributed this undervaluation to lagging investor sentiment despite record-high gold prices.

Reuters reported on January 6 that Nitesh Shah, a commodity strategist at WisdomTree, forecasted a year-end gold price of US$3,050 per ounce, citing potential dollar depreciation and falling bond yields as key drivers. Shah noted that "further escalation in tension in the Middle East could drive upside risk to our forecast," underscoring geopolitical factors' influence on the precious metals market.

Stewart Thomson of 321Gold highlighted on January 7 that gold's current pricing environment was creating favorable conditions for miners, particularly due to a projected "range trade" scenario for gold. He remarked, "Ironically, this modest upside scenario could provide an incredibly favorable set-up for gold miners and silver bullion." Thomson further emphasized the potential for junior and intermediate miners to benefit significantly in the coming months, suggesting substantial profit opportunities in this segment.

Most recently, on January 19, Ronnie Stoeferle of GoldSwitzerland reflected on gold's stellar performance in 2024, where it gained 27.2% in US dollars, outperforming most asset classes. He remarked, "Despite the record run in 2024, gold is not overpriced," adding that the economic and geopolitical climate in 2025 would likely continue supporting gold prices. Stoeferle cited persistent high demand for gold, particularly from central banks, as a stabilizing factor for the sector.

A Buy-Rated Stock

In a December 19 research note, Red Cloud Securities analyst Ron Stewart maintained a speculative Buy rating on NexGold Mining Corp., assigning a target price of CA$2.50. Stewart highlighted the transformative nature of NexGold's merger with Signal Gold, which added the 3.1-million-ounce Goldboro gold deposit in Nova Scotia to the company's portfolio. He emphasized that the project's robust Feasibility Study demonstrated a post-tax NPV5% of CA$328 million and an IRR of 25.5% at US$1,600 per ounce of gold, increasing significantly to CA$556 million and 37.5%, respectively, at US$1,920 per ounce.

The Goldboro deposit, with historical open-pit Measured and Indicated resources of 15.7 million tonnes grading 2.822 grams per tonne gold for 1.4 million ounces and underground resources of 5.9 million tonnes grading 6.085 grams per tonne gold for 1.2 million ounces, offers substantial growth potential. Stewart noted, "Infill drilling has the potential to reduce the strip ratio by upgrading and incorporating Inferred resources, expanding the optimized pit design." He further highlighted the potential for deeper exploration to significantly extend the mine's life by developing an underground operation.

Stewart also underscored the favorable economics and scalability of the project, with an initial capital expenditure of CA$271 million and an all-in-sustaining cost (AISC) of US$849 per ounce. The anticipated mineral resource updates, combined with the project's location in a stable jurisdiction and recent permitting advancements, were cited as key catalysts for NexGold's growth. At the report's publication, NexGold's share price of CA$0.69 represented a potential 262% upside to the target price, solidifying its appeal as an attractive investment opportunity. 

Key Drivers and Catalysts For NexGold

NexGold's recent investor presentation highlights the company's competitive positioning as one of Canada's most advanced gold developers. Goldboro's 2021 Feasibility Study outlined a projected mine life of 10.9 years, with an average annual production of 100,000 ounces of gold and a robust after-tax internal rate of return (IRR) of 25.5% at a gold price of US$1,600 per ounce. The all-in-sustaining cost (AISC) for the project stands at a competitive US$849 per ounce, underscoring its financial viability.

The ongoing drilling program and planned mineral resource update are anticipated to add value by expanding the mineral resource base and improving project economics. The western extension alone offers untapped potential, with initial drilling confirming high-grade gold zones that could further enhance Goldboro's production profile.

NexGold's financial position, bolstered by recent capital raises, ensures sufficient funding for its exploration and development activities. The company's management team, with decades of combined experience in mine building and project execution, provides additional confidence in achieving its operational milestones. 

Ownership and Share Structure

The company notes management and insiders own 3.1% of NexGold. 

Institutions own 22.5%. 

Strategic investors own 35.7%. Frank Guistra owns 8.6% on a partially diluted basis. On a partially diluted basis, Sprott owns 9.3%. Extract owns 10.6%. First Mining owns 2.1%. Matrix owns 1.0%, and Teck owns 1.0%. 

NexGold has 143.5 million shares and a market cap of CA$100.1 million.