Mabilo drilling delivers strong results for RTG Mining

Drill results from RTG Mining’s (TSX: RTG) flagship Mabilo gold–copper project in the Philippines sent the company’s shares up 2.78% to $1.11 per share on Aug. 13, and another 24.32% to $1.38 on Aug. 14.

Drilling that targeted an extension of the South Mineralized Zone to the north intersected high-grade supergene copper mineralization, and returned an intercept from hole 66 of 64.2 metres grading 2.96 grams gold per tonne, 7.91% copper and 44.57% iron from a downhole depth of 37.8 metres, including 33 metres  of 14.2% copper.

Another two drill holes designed to test the downdip extension of the magnetite skarn to the southwest returned intercepts of 16 metres grading 2.84 grams gold per tonne, 3% copper and 45.9% iron from a downhole depth of 210 metres in hole 60, and 20 metres of 1.96 grams gold, 2.8% copper and 43.2% iron from a downhole depth of 185 metres in hole 65.

“The recent drilling further confirmed the near-term development potential of the Mabilo project producing extensions to both the oxide material and downdip extensions to the south, while the system remains open along strike in both directions,” says Justine Magee, the company’s CEO.

The results “confirm the presence of the higher-grade supergene copper–gold mineralized zone, and identified the downdip extension of magnetite-rich mineralization to the southwest,” Mick Carew and Geordie Mark of Haywood Securities wrote in a research note. “We look forward to the assay results from hole 71, which intersected the supergene zone 20 metres northeast of hole 66. In addition, we look forward to the results of drilling northwest of hole 29, which intersected sulphide-mineralized, calc-silicate altered sedimentary rocks.”

Drilling to date has identified a broad, continuous high-grade zone over more than 400 metres in strike, and the company expects to complete its first resource on the near-surface Mabilo deposit in this year’s fourth quarter.

“We have three drill rigs working around the clock and we remain on track to deliver a maiden resource, with the majority likely to fall into the indicated category, in early November,” Magee writes in an email. “Once the infill drilling is completed early next month, exploration programs will focus on more regional and new magnetic anomalies, which are as yet untested.”

RTG’s management team is made up of members from CGA Mining, which redeveloped and reopened the Masbate gold mine in the Philippines and merged with B2Gold (TSX: BTO; NYSE-MKT: BTG) in 2013, in a deal worth US$1.1 billion.

RTG chairman Michael Carrick knows the Philippines well after developing Masbate, the country’s largest operating gold mine. He also presided over three gold mines developed in Western Australia (Marymia, Bullabulling and Chalice), one in Ghana (Obotan) and the first major gold mines in Tanzania (Golden Pride) and Mongolia (Boroo).

In addition to high grades, with gold equivalents north of 6 grams gold per tonne, Mabilo has a number of other advantages, including a direct-shipping opportunity in the early years of operation that could mitigate the need for development capital. A privately owned operating port is within 35 km of the site, requires no capital and can handle ships with up to a 100,000-tonne capacity.

The company’s joint-venture partner has a direct-shipping operation in the Philippines and a strong network into China for off-take. The joint-venture partner, Galeo Mining, is a local contracting company that also worked on CGA Mining’s Masbate project, and is owned by Filipino businessman Eric Gutierrez.

Another advantage is that Mabilo is situated in the Philippines’ mining friendly Paracale region in an area that is both flat and sparsely populated. Infrastructure is good with paved roads, power and water readily available. And there is no artisanal activity, because there is a volcanic cover over the orebody.

“After looking at over 70 projects in the last 12 months before committing to the next deal, Mabilo was a standout opportunity with both high grades and low capital needs that could largely be internally financed, materially reducing potential future dilution that often comes with development capital,” Magee says. “It was a rare find in this market.”

Mabilo is one of six exploration projects RTG has in the Philippines, covering an area of more than 365 sq. km in two of the main gold provinces: Paracale in eastern Luzon, and the eastern Mindanao mineral belt located in the southern Philippines. All of the properties are proximal to the Philippine Rift Fault, which has a strike length of more than 1,200 sq. km and hosts a number of world-class porphyry copper and epithermal gold deposits.

Its Bunawan project in eastern Mindanao, 190 km northwest of Davao, is next to Medusa Mining’s (LSE: MML; US-OTC: MDSMF) high-grade Co-O underground mine, and the setting is thought to be favourable for low-sulphidation high-grade epithermal gold deposits. The tenement covers multiple known gold occurrences and hosts artisanal activity around the Red Mountain area, Magee says.

The company was granted an exploration permit for Bunawan on Aug. 20. The EP covers 6.77 sq. km in the Rosario area of Mindanao’s Agusan del Sur.

RTG merged in early June with Sierra Mining.

“Our experience in the Philippines continues to be a productive and positive one, having delivered the Bunawan exploration permit in just over two months after taking control of Sierra,” Magee says. “It is a true testament to both the operating regime in the Philippines and the goodwill established by the management team while developing and operating the Masbate gold project.”

At its Nalesbitan project in Eastern Luzon, the most advanced deposit is Nalesbitan Hill, which has an inferred resource of 5 million tonnes grading 1.1 grams gold and 4 grams silver, using a 0.5-gram-gold-per-tonne cut-off grade.

Mineralization identified so far includes both low-sulphidation and high-sulphidation epithermal gold veins, which the company says are potentially proximal to porphyry copper at depth. Induced polarization charegeability anomalies, interpreted to be due to sulphides associated with porphyry copper mineralization, have been outlined in the southern part of the alteration zone.

Its other projects — Bahayan, Mawab/Nabunturan and Taguibo — are also promising, the company says. Bahayan is near the Diwalwal mining camp, where high-grade gold veins were discovered in the early 1980s, but there has been little modern exploration in the area.

At press time RTG traded at $1.24 per share within a 52-week range of 50¢ to $1.40. The company has 112 million shares outstanding.