Valley tonnage balloons in Snowline Gold update

A resource update for Snowline Gold’s (TSX-V: SGD; US-OTC: SNWGF) Valley project in east-central Yukon adds more than 3 million contained oz. in the measured category while almost doubling indicated tonnage over last June’s initial resource.

The Valley resource now totals 204 million measured and indicated tonnes grading 1.21 grams gold per tonne for 7.94 million contained oz., Snowline reported Thursday. Inferred resources total 45 million tonnes at 0.62 gram gold for 890,000 contained ounces. Valley and the larger Rogue project are about 380 km northeast of Whitehorse.

Canaccord Genuity analyst Peter Bell offered a positive take on the update in his note on Thursday. The company has succeeded in its drilling efforts over the last year in converting inferred to measured and indicated resources, he said. 

‘Bodes well for PEA’

“We believe the updated resource provides a strong base for growth at Valley and in the region and should bode well for the upcoming preliminary economic assessment, which is expected to be released in the coming weeks,” Bell said. 

He models a global resource for Valley of 212.3 million tonnes grading 1.35 grams gold for 9.2 million oz., which is higher grade but smaller than Snowline’s global estimate of 248.5 million tonnes at 1.11 grams gold for 8.83 million ounces. 

Snowline CEO Scott Berdahl said the update comes after 53 km of drilling that has discovered and de-risked a large, continuous, non-refractory gold deposit exposed at surface in an under-explored region with several large greenfield gold anomalies. 

“Importantly, a considerable majority of the known system at Valley has been upgraded into measured and indicated categories, which can be used to inform pre-feasibility and feasibility studies,” he said.

King of the belt

Thursday’s update further highlights Valley as one of the largest and highest-grade deposits on the Tombstone gold belt that stretches under Alaska and through Yukon. It dwarfs the deposits at Victoria Gold’s former Eagle mine and at Sitka Gold’s (CSE: SIG) RC project in western Yukon, as well as at Kinross Gold’s (TSX: K; NYSE: KGC) Fort Knox mine in Alaska.

The update follows almost one year of consistently high-grade drill results at Valley for Snowline, in which major B2Gold (TSX: BTO) holds a 9.9% stake. However, an RCP Resource Finance analyst noted in January that the assays present a “Hollywood problem” for Snowline because the strong results could de-sensitize the market.

Snowline shares fell 3.5% to $7.20 apiece after markets opened on Thursday in Toronto, for a market capitalization of $1.15 billion. Its shares traded in a 12-month range of $3.88 to $8.95.

The resource remains open for expansion along several drill testing limits. There is potential for more high-grade gold zones outside the current resource, Snowline said.