Eldorado Gold (TSX: ELD; NYSE: EGO) has announced the discovery of a new zone of gold mineralization, the Ormaque zone, at its Lamaque gold project.
Drill highlights include 27 metres of 10.2 grams gold per tonne; 12 metres of 26.82 grams gold per tonne; and 16 metres of 25.53 grams gold per tonne.
The Ormaque zone is located within a previously-undrilled gap in mineralization between the historic Sigma deposit and the Triangle deposit, which is being mined. It is in close proximity to the company's proposed ramp that would link the Triangle underground mine to the Sigma mill.
In the latter half of last year, Eldorado completed 13 drill holes over an area of 250 metres by 300 metres and assays for seven have now been received. The drilling completed so far has traced mineralized zones at depths of 200 metres to 500 metres below surface. Ormaque remains open and drilling is ongoing.
"This drilling success really highlights the prospectivity of the Abitibi region generally and this area specifically, and we think Ormaque has the potential for at least 0.7 to 1 million ounces of new resource once additional drilling is completed," Kerry Smith of Haywood Securities comments in a research note. "Note the current reserve at Lamaque is 0.97 million ounces grading 7.4 grams gold per tonne with a further 2.6 million ounces of resources, all categories."
The Lamaque mine achieved commercial production at the end of March 2019. Last year, the asset produced a total of 113,940 oz. gold.
The company is evaluating a 50% expansion of the mill to 2,500 tonnes per day. The release of an associated preliminary economic assessment (PEA) has been delayed to incorporate Ormaque in the study.
The study would outline three potential projects to boost production: Sigma mill upgrades, development of a decline from the mill to the Triangle deposit, and construction of a paste plant to provide a tailings disposal solution.
In December, Eldorado closed two transactions that increased its eastern Abitibi holdings: it invested $4 million in QMX Gold (TSXV: QMX) and now holds a 19.99% stake in the company; and executed an option agreement with Sparton Resources (TSXV: SRI) to earn up to a 75% initial interest in the Bruell project, 35 km east of Lamaque.
"The discovery of the Ormaque zone further confirms the geological prospectivity of our property and the tremendous potential we see at Lamaque," George Burns, Eldorado's president and CEO says in a press release. "Additionally, the transactions demonstrate our commitment to growing our asset base in Quebec and increasing our exposure to early-stage exploration in the eastern Abitibi."
Eldorado acquired a 100% interest in the Lamaque operations in July 2017, and poured first gold from the project in December 2018.
Smith of Haywood Securities has a buy rating on the stock with a target price of $15 per share, well above Eldorado's $9.65 share price on the Toronto Stock Exchange.
"Sigma and the old Lamaque mine were both prolific gold producers, with Sigma producing about 4.5 million oz. at an average grade of 5.8 grams gold per tonne from 1937 to 1997, with a further ~500,000 oz. mined by McWatters and Century Mining from 1997 to 2003 in an open pit," the mining analyst writes. "The old Lamaque mine, located 2.5 km northwest of Triangle, produced about 4.6 million oz. grading 5.9 grams gold per tonne from 1935 to 1985. This is a significant gold endowment, and Eldorado looks like they will continue the legacy of this camp with this new discovery."