Canagold adds to gold resource at New Polaris project in BC

An updated resource from Canagold Resources’ (TSX: CCM, US-OTC: CRCUF) raises the indicated ounces at its flagship New Polaris gold project in British Columbia by 89%, the company said Tuesday. 

The update, based on infill drilling from 2021-2022 saw the resource increase to 1.1 million contained oz. of gold in 2.9 million indicated tonnes grading 11.61 grams gold per tonne. That’s up from 586,000 contained oz. in 1.6 million tonnes grading 10.8 grams gold in a 2019 preliminary economic assessment (PEA).

The updated underground resource also includes 930,000 inferred tonnes grading 8.93 grams gold for 270,000 contained ounces.  

The 23% increase in the overall resource tonnage is due to additional veins being defined by the 2021-22 program that were integrated into the new geological model, the company said. 

The gold grade was also improved by 8% in the indicated category, rising to 11.61 grams gold from 10.8 in the PEA, due to refined modelling. 

“Canagold’s 2021-22 exploration program has proved highly successful in reaching our primary objective of adding more gold ounces into the indicated category,” said Catalin Kilofliski, CEO of Canagold, in a release.  

“The company’s goal has been to hit our target of more than one million ounces to feed into the feasibility study currently underway with Ausenco Engineering. Right now, we’re working with a potential mine plan that targets 100,000 ounces per year based on an approximately 10-year mine life and assuming the current drilling depth we’ve achieved to date,” Kilofliski added. 

New Polaris is about 100 km south of Atlin, B.C. and 60 km northeast of Juneau, Alaska, and is located within the traditional territory of the Taku River Tlingit First Nation.   

The updated 2023 resource comes after Canagold completed an additional 40,000 metres of infill drilling, targeting areas of the inferred category resource from the 2019 PEA.

The company updated the economics of the PEA in 2020 using a gold price of US$1,500 per oz., and estimated cash costs of US$400 per oz, an after-tax net present value (at a 5% discount rate) of $469 million and an internal rate of return of 56%. The payback period was pegged at 1.9 years and the mine life at 8.7 years for an 80,000 oz. gold per year operation.

In a research note on Wednesday, Red Cloud Securities analyst Taylor Combaluzier said the increase in the project’s resource and grade profile bodes well for its economics and brings it one step closer to its feasibility study. 

“Canagold is already one of the highest-grade primary gold developers in Canada and the increase in tonnage, contained gold and indicated resource grade helps bolster the company’s resource profile,” he said. 

Red Cloud also updated its modelled mine life for New Polaris and extended it by three years to 13 years (to 2039) and its net asset value to $473.3 million from about $363 million. 

Red Cloud maintains its buy rating for Canagold and increases its target price to $1.40 from $1.10, based on the discounted cash flow model of the project. 

The New Polaris property consists of 61 contiguous crown-granted mineral claims and one modified grid claim covering 8.5 sq. km.

Canagold shares traded at 24¢ in Toronto on Wednesday morning, for a market cap of $33.5 million. Its shares traded in a 52-week window of 17¢ and 32¢.