Anaconda updates resource at Goldboro in Nova Scotia

Goldboro project, Nova Scotia. Photo by Anaconda Mining

Anaconda Mining (TSX: ANX; US-OTC: ANXGF) has updated the mineral resource at its wholly owned Goldboro gold project in Nova Scotia.

Measured and indicated resources now stand at 4.1 million tonnes grading 5.3 grams gold per tonne for 698,600 contained oz. gold. Inferred resources add 3 million tonnes grading 7.09 grams gold per tonne for 685,100 contained oz. gold.

The updated resource represents a 6.9% increase in the combined open-pit and underground grade in the measured and indicated categories, and boosts combined open-pit and underground ounces 15.9%.

Inferred ounces rose 51.2% in the combined open-pit and underground resource.

The updated resource represents a 6.9% increase in the combined open-pit and underground grade in the measured and indicated categories

In addition, the latest resource expands the deposit 375 metres east, and incorporates 21 new mineralized zones.

Kevin Bullock, Anaconda's president and CEO, says the global resource of almost 1.4 million oz. gold makes Goldboro "the largest single deposit in the province," and notes the numbers will "add a positive economic benefit to the ongoing feasibility study."

Anaconda plans to complete the feasibility study before year-end, and permitting is underway. "Pending permits and the feasibility, we should be able to break ground mid next year," Bullock says, noting that construction of the processing plant and associated infrastructure of the open-pit mine will take 14 months.

Anaconda acquired the project from Orex Exploration in March 2017.

Goldboro, 175 km northeast of Halifax, hosts three mineralized zones: West Goldbrook, Boston-Richardson and East Goldbrook.

Gold mineralization on the property was first discovered in 1862 by Howard Richardson of the Geological Survey of Canada. Richardson Gold Mining Co. began production from the belt in 1893. Government records show that total gold recovery from 1893 to 1910 was 54,871 oz., with an average recovered grade of 4.11 grams gold per tonne. Intermittent work between 1910 and 1981 included metallurgical test work, reprocessing of mine tailings, shaft sinking and cross-cutting.

A 2018 preliminary economic assessment (PEA) forecast a mine life just under nine years. The study estimated life-of-mine production of 375,931 oz. gold, or 41,000 oz. gold a year, at all-in sustaining costs of $640 per ounce.

The company will transition mining from Pine Cove to Argyle next year, after discovering more near-surface ore

The PEA forecast preproduction capex of $47 million to build an open-pit operation before underground development and production. The study envisioned a conventional truck-and-shovel, 600-tonne-per-day, open-pit mining operation at a single pit in the first three years, during which time it would build underground access, sublevels and ventilation.

"There may be a period of time where there is both [open-pit and underground mining] for several months, but it transitions from open pit to underground in year three," Bullock says.

In addition to the Goldboro project, Anaconda has been operating the Pine Cove open-pit mine since 2010. The Pine Cove mine is part of the Point Rousse project, 6 km northeast of the town of Baie Verte in Newfoundland. Point Rousse, which had record production of 20,149 oz. gold last year, covers three prospective gold trends: Scrape, Goldenville and Deer Cove. These trends have 20 km of cumulative strike length and include three deposits: Pine Cove, Stog'er Tight and Argyle.

The company will transition mining from Pine Cove to Argyle next year, after discovering more near-surface ore. The Argyle deposit is located within 4.5 km of the Pine Cove mill. Mining at Stog'er Tight was completed earlier this year.

Bereket Berhe, an analyst at M Partners, has a "buy" rating on the company, with a 12-month target price of 70 ? per share.

"Given the quality of its Goldboro project and its producing asset, [Anaconda] is currently undervalued," Berhe wrote in a recent research note.

Michael Curran, an analyst at Beacon Securities, has a "buy" rating on the company, with a 12-month target price of 90 ? per share.

"We consider Anaconda Mining to be an attractive investment for the successful delivery of production growth over the next few years," Curran said in a research note.

Curran regards Nova Scotia and Newfoundland as among the lower-risk jurisdictions in the mining industry. The company has 134 million common shares outstanding for a C$27-million market capitalization.

(This article first appeared in The Northern Miner).