Gold Terra Resource: ‘A Step in the Right Direction’

Source: Gary Sidhu of Intrynsyc Capital for Streetwise Reports 03/05/2020

The maiden Inferred resource estimate is discussed in this report.

Gold Terra Resource Corp. (YGT:TSX.V) [which until February 2020 was known as TerraX Minerals] announced last November an overall maiden Inferred resource of 735,000 gold ounces (oz Au).

Incremental Positive: The company announced an overall maiden Inferred resource of 735,000 oz Au at an average grade of 1.79 gpt Au. The global resource is a combination of open pit and underground resources from four different deposits (Crestaurum, Mispickel, Sam Otto and Barney), all located within a 3-kilometer (3 km) radius. The resource is based on 90,751 meters (90,751 m) of drilling (463 drill holes), with spacing varying between drill holes from 25–100m apart. Recall, Gold Terra provides exposure to a district-scale land package with multiple high-grade targets and initial work focused mainly on exploration. The focus has now shifted to resource delineation which will be aimed at unlocking the multimillion ounce potential of the district.

Analysis

Optionality: The resource is separated into an open pit (OP) scenario and underground (UG) scenario based on the current limits of drilling. The OP Inferred resource is estimated at 523,000 ounces (523 Koz) at a grade of 1.4 gpt Au, and an UG inferred resource of 212 Koz at a grade of 5.7 gpt Au. The bulk of the OP resource (81%) is from the Sam Otto Pit at a grade of 1.23 gpt Au, whereas the UG resource (72%) is driven by Crestaurum at a grade of 6.56 gpt Au.
High Grade—At Surface: The Crestaurum deposit is proposed as a potential starter open pit estimating 38,000 oz Au at a grade of 9.41 gpt Au with an UG component. Mineralization has been identified over a 1-km strike length and significant potential remains to be tested at depth. The current resource only tests a fraction of strike length with no drilling at Crestaurum North; a new discovery on surface returning 2.0 m of 21.4 gpt Au. We believe additional drilling has the potential to increase the size of the open pit and show that the high grade extends at depth.

Bulk Tonnage OP: Sam Otto comprises a bulk tonnage target that has limited drilling along a 1.5 km mineralized footprint outside of the resource area. A recent three-hole drill program successfully extended mineralization along strike and at depth (an additional ~50 m vertical depth), returning an interval of 25.5 m of 1.26 gpt Au, including 10 m of 1.76 gpt Au and 3 m of 2.01 gpt Au. We believe additional drilling will continue to show the district-scale potential along the 2.5 km Sam Otto Trend and clearly illustrate the bulk tonnage nature of this target.
The resource was estimated using US$1,300 gold price; US$2.20/tonne for mining cost; US$16.00/tonne for processing and G&A (general and administrative) costs; 90% metallurgical recovery; 5% dilution (external); 5% mining loss and 55⁰ pit slopes. These parameters are inline with current operating OP mines and other resource estimates.

Takeaway

In our view, a common theme emerges from the recent maiden resource and our discussion, which is the significant upside of the property. This maiden resource, albeit small, is the first step toward unlocking the multimillion ounce potential of the district. Historical drilling has been spread out across multiple targets not fully testing any one target properly, but demonstrating that mineralization is still open ended. We view this resource as a positive step in the right direction, which will allow YGT to expand on each of the deposits with a clear focus towards resource growth and development.

Upcoming Catalysts:

Resource Expansion Drilling at Sam Otto and Crestaurum—Q1/20

Gary Sidhu, an analyst with Intrynsyc Capital Corp., has been involved in the mineral exploration industry for almost 20 years. Early in his career he gained extensive technical experience with “boots on the ground” knowledge of early to advanced stage projects including mapping, drilling, milling and mining experience. Until recently he worked as a sell side analyst focusing on early to advanced stage junior exploration companies.

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This publication is intended only to convey information. It is not to be construed as an investment guide and may be construed as an offer or solicitation of an offer to buy securities mentioned in it. The author has taken all usual and reasonable precautions to determine that the information contained in this publication has been obtained from sources believed to be reliable and that the procedures used to summarize and analyze such information are based on approved practices and principles in the investment industry. However, the market forces underlying investment value are subject to sudden and dramatic changes and data availability varies from one moment to the next. Consequently, neither the author nor Intrynsyc Capital Corporation can make any warranty as to the accuracy or completeness of information, analysis or views contained in this publication or their usefulness or suitability in any particular circumstance. You should not undertake any investment solely on the basis of this publication, but should first consult your investment adviser, who can assess all relevant particulars of your proposed investment. The author and Intrynsyc Capital Corporation accept no liability of any kind whatsoever or any damages or losses incurred by you as a result of reliance upon or use of this publication.

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( Companies Mentioned: YGT:TSX.V,
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