Premier gathers momentum on grade

Many stocks within the junior gold sector are languishing, but Premier Gold Mines (PG-T) is showing there is still life for explorers that find the grade.

Premier’s shares got moving after the company announced high-grade results from its Trans-Canada property in the Beardmore-Geraldton greenstone belt of northwestern Ontario.

Drilling focused on the Hardrock deposit, which is the largest of four deposits at Trans-Canada. There they encountered a highlight intercept of 5 metres grading 400.53 grams gold per tonne.

The eye-catching intercept came from an infill hole, though most of the current drill program is made up of delineation drilling. But it wasn’t only infill drilling that was drawing market attention.

Premier also said it hit a new zone that it is calling North Wall. The zone is north of the primary resource area and returned highlights of 132.32 grams gold over 3.9 metres and 13.96 grams gold over 6 metres.

With intercepts like that, Premier is hopeful that the new zone can extend the pit shell to the north.

Such an extension could involve deepening the current pit outline down to 400 metres from the current model of 200 metres. The resource estimate is based on the 200-metre model, but the company has eight drills testing whether a pit could be optimized by going deeper and wider.

CIBC Capital market analyst Jeff Killeen is optimistic on the bigger build.

“We anticipate the 400-metre-deep pit will be selected for the preliminary economic assessment (PEA), but further drilling will be conducted prior to determining the scale of the PEA pit design,” Killeen says in a research note.

Investors will have to wait until a later date to find out exactly how much the North Wall zone may contribute to the economics of the project, as Premier says it will not to be part of the upcoming PEA.

The PEA will focus on both the Hardrock and the Brookbank deposits and should be released in this year’s third quarter.

The Trans-Canada property is host to four gold deposits with open-pit and underground mining potential.

The Hardrock project sits 3 km south of town of Geraldton.

The deposit has open-pit measured and indicated resources of 46.7 million tonnes, with an average grade of 1.51 grams gold for 2.26 million oz. and underground resources of 5.05 million tonnes grading 5.48 grams gold for 889,000 oz., and another 16 million tonnes grading 5.91 grams for 3.04 million oz. gold.

Brookbank sits 14 km northeast of the town of Beardmore and has open-pit measured and indicated resources of 2.6 million tonnes grading 2.02 grams gold for 171,000 oz., and underground measured and indicated resources of 1.85 million tonnes grading 7.21 grams gold for 429,000 oz. gold.

While the upcoming PEA will be based on these existing resources, Premier is looking to have a resource update out by year-end.

At press time Premier shares were trading for $2.49 apiece, up 50% since releasing the drill results last month. The stock has fluctuated between $1.57 and $6.79 over the last 52-week period, and the company has 150 million shares outstanding.