Shares of Newcastle Gold (TSX:NCA) surged 11.1% today on the heaviest trading volume in more than three years after reporting impressive drill results at its Castle Mountain gold project in California. Newcastle intersected 31.19 grams/tonne Au over 29.0 meters in addition to 2.26 grams/tonne Au over 126.5 meters while identifying a new zone of high-grade gold mineralization. Haywood Securities commented on NCA’s drill results:
“High grade zone extended – Today’s reported drill hole was a follow up on two previously drilled high grade holes in the Lucky John Zone in 2014 on the southern portion of the Ore Belle Trend (CMM-054: 30.31 g/t au over 33.3 metres, and CMM-060: 18.97 g/t Au over 35.1 metres). Drill hole CMM-195, released today, targeted the extension of the steeply dipping OB-2 fault structure, and intersected another high-grade zone 65 metres down dip of CMM-054 and 150 metres north of CMM-060, with 31.19 g/t Au over 29.0 metres.
- Note all these intercepts are apparent thickness, with true thickness interpreted to be 70-85%. This zone is currently not big, but remains open to the north, south and at depth and has the potential to develop into a very high-grade zone. Currently this zone is probably less than 20,000 ounces of gold and still open, but grades look stellar at over 20 g/t gold. It should be noted that the historical operation produced 1.2 million ounces of gold from 1991 to 2004, with 22% of the ounces produced coming from only 5% of the total tonnes processed. These higher-grade tonnes were milled at an average grade of ~5 g/t versus the heap leach grade of ~1.27 g/t gold.”
Drill hole CMM-195 started at 299 meters downhole and oxides typically extend to 600 meters below surface at Castle Mountain. Moreover, this zone is open in all directions which means that there is potential for significant upside to be added to the resource.
Newcastle President and CEO Gerald Panneton added that they would be following up immediately with expanded drilling of these new targets:
“Our focused definition/exploration strategy has been extremely effective in demonstrating that the higher grade near-vertical zones are more predictable than anticipated, and could be an important component of the significant upside potential of this deposit. In addition, the new Footwall discovery opens up new possibilities to expand the deposit immediately below and along strike from the JSLA pit and Oro Belle South. Due to the nature of this new discovery, and the OB-2 sub-vertical structure at Lucky John, we are expanding our drilling immediately to follow up on these exciting new targets.”
Even after today’s gains the high-volume breakout above resistance which had capped rallies since November offers ample potential for another ~20% of upside over the near term:
Today’s breakout targets ~C$1.10 and the C$.83-C$.85 area becomes support.
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