It’s rare for a junior gold mining company to be able to legitimately say that they have a chance of having a tier-1 gold asset. In the case of Goldshore Resources (TSX-V:GSHR, OTC: GSHRF) the potential for having a tier-1 asset as defined by Barrick CEO Mark Bristow is very real. In a statement last year, Bristow clearly defined what he views as tier-1 credentials:
- 10+ million ounces of gold in resources.
- 10+ year mine life.
- Minimum annual production of 500,000 ounces.
- Bottom quartile of cost curve.
Goldshore is in the midst of a 100,000 meter drill program at its Moss Lake Project in Ontario. Moss Lake hosts total indicated resources of 1,473,700 ounces of gold and inferred resources of 2,514,876 ounces of gold at an average grade of slightly more than 1.0 g/t gold. That means that Goldshore is already 40% of the way to the 10,000,000 ounce mark that defines a tier-1 gold asset.
The good news is that the Moss Lake Deposit sits on a 20 kilometer mineral trend with multiple other mineralized zones and targets ready for follow-up.
The full extent of the known mineralized trend has not seen sufficient drilling to fully explore its potential. However, targets such as Iris Lake, Hamlin Lake, and North/East Coldstream have displayed impressive historical drill results that need to be followed up with modern exploration techniques and additional drill testing.
Recent drilling at Moss Lake has confirmed the historical resource estimate modeled in 2013, in addition to intersecting significant extensions outside of the historical resource. Goldshore has also discovered additional parallel zones that will improve the project economics by replacing waste material in a design pit with mineralized blocks.
Two recently published drill sections illustrate how Goldshore continues to expand the mineralized zones at Moss Lake:
Goldshore has begun step-out drilling with an aim of expanding the deposit beyond the strike of the current mineralization envelope. This drilling will run concurrently with the resource development drilling of the main deposit. With four drill rigs working across the Moss Lake Property a steady flow of drill results will continue for the rest of 2022, and well into 2023.
Goldshore plans to deliver a resource update in the 2nd half of this year, and metallurgical test results in June/July, followed by an updated PEA in Q1 of 2023. The updated PEA will include drilling from 2021/2022 as well as infrastructure improvements that have occurred in the area since the 2013 PEA. In addition, the economic analysis will be based on a 30,000 tonnes per day operation.
The opportunity in Goldshore shares is quite significant considering that the 2013 PEA demonstrated an after-tax NPV(5) of $572 million using a US$1,700 gold price. I expect that Goldshore’s update PEA will use $1,700 as a baseline gold price scenario and the economics will be significantly improved due to a combination of improved infrastructure, mine planning, and a 2x daily ore throughput. It’s not unreasonable to think that the economics could be 40%-50% better than the 2013 PEA demonstrated. At Goldshore’s current C$55 million market cap there is a high probability of share appreciation over the next 12 months as the company aggressively drills out the Moss Lake Property and delivers a positive PEA update early next year.
Technically speaking, GSHR shares are deeply oversold after suffering a 30%+ in January:
With a four million 43-101 resource that is rapidly becoming larger, GSHR shares offer an embedded call option in the gold price. The size and grade of the gold resources at Moss Lake also gives a firm anchor to GSHR’s market valuation. The quality and track record of Goldshore’s management team and advisors are the final checkmark that motivated me to accumulate additional shares in recent days.
Disclosure: Author owns GSHR.V shares at the time of publishing and may choose to buy or sell at any time without notice.
The article is for informational purposes only and is neither a solicitation for the purchase of securities nor an offer of securities. Readers of the article are expressly cautioned to seek the advice of a registered investment advisor and other professional advisors, as applicable, regarding the appropriateness of investing in any securities or any investment strategies, including those discussed above. Goldshore Resources Inc. is a high-risk venture stock and not suitable for most investors. Consult Goldshore Resources Inc.’s SEDAR profile for important risk disclosures.
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