Brigus piles on the ounces in latest resource update

Brigus Gold (BRD-T) has updated its resource estimate for the Grey Fox gold property and the results show the company is particularly adept at pushing  inferred resources up into a ballooning indicated category. Grey Fox is 4 km southeast of Brigus’ operating Black Fox gold mine in Timmins, Ont. 

The new Grey Fox estimate outlined resources in the 147 and Contact zones, with 147 holding 279,244 indicated oz. gold and 51,261 inferred oz. gold, while Contact now holds 201,606 indicated oz. gold and 39,800 inferred oz. gold.

Overall, indicated resources now stand at 7.1 million tonnes grading 2.1 grams gold for 480,849 oz. gold with most of the mineralized material coming from open pittable resources, which account for 440,342 oz. of the total ounces. Indicated resources previously stood at just 116,7810 oz. gold. 

Inferred resources came in at 1.69 million tonnes grading 1.7 grams gold for 91,061 oz, and again open pit resources dominated accounting for 73,843 oz. gold.

Overall Brigus says 84% of the new resources occur within 200 metres from surface, and thus have open pit potential.

The update was based on 488 holes and roughly 65,000 metres of drilling but doesn’t include results from its newly discovered Grey Fox South zone, which sits 400 metres to the east and runs sub-parallel to the 147 Zone.

Drilling is on-going at Grey Fox South, where the company has intersected a mineralized trend over a 275-metre strike length. The zone remains open in all directions and is currently being explored by two drilling rigs.

Kerry Smith, an analyst at Haywood Securities, commended Brigus for how far it has come on the property in a relatively short time, as it only began exploring Grey Fox in September 2010.

Smith also pointed to the cost benefits of exploring in an established gold camp like Timmins.

“We estimate Brigus added these ounces at a cost of US$14 per oz.,” Smith writes in his investors’ note, “a very low cost for resource additions.”

Smith also describes the resource as being “well defined” given that it was based on dense drilling with 15 metres spacing.

Haywood Securities has a $2.00 target for Brigus, which is based on a 6 times multiple to its estimated cash flow per share of US$0.35 and a gold price of US$1,650 per oz.

Brigus plans to have a preliminary economic assessment (PEA) on the property out in November of this year.

In Toronto on Sept. 20, Brigus shares were off a penny to $1.01 on 1.65 million shares traded.