Just a month after posting a hefty increase in reserves and resources at its Beta Hunt mine in Australia, Karora Resources (TSX: KRR) has released high-grade exploration results that point to further expansion potential.
Drilling at the new Larkin zone discovery made in September has returned several high-grade hits. Highlights from the infill and stepout drill program in hole 023E included: 9 metres of 19 grams gold per tonne from 221 metres depth, including 0.3 metre of 542 grams gold per tonne; 3 metres of 6.4 grams gold from 233 metres depth, including 1 metre of 16.2 grams gold; and 9.7 metres of 2.3 grams gold from 164 metres. (True widths are estimated at 90% of reported widths.) In addition, drill hole 018E intersected 3 metres of 4 grams gold from 163 metres depth.
The highest-grade intersection featured visible gold mineralization along the quartz vein/altered basalt contact.
Karora, which is about halfway through a 6,100-metre drill program at Larkin, hopes to define a resource at the zone this year. Current resources and reserves at Beta Hunt are hosted in the A Zone and Western Flanks zone.
"Today's high grade gold drill results continue to demonstrate the exciting potential in a new zone outside of the current production centres of Western Flanks and A Zone," said Paul Huet, chairman and CEO of Karora, in a press release. "The results reinforce our strong belief that the Beta Hunt mine has the potential for significant gold resource growth and expansion beyond the substantial increase in reserves and resources announced in December 2020. We are excited by the potential at Larkin and are keen to bring the zone into our Mineral Resource this year."
Huet added that preliminary engineering work is already underway to prepare the Larkin zone as the next mining zone at Beta Hunt. The zone benefits from nearby infrastructure, consisting of development drifts that were put in to access nickel mineralization at the mine. Beta Hunt has a production history (including both gold and nickel) dating back to the 1970s.
The Larkin zone is open for expansion at depth and along strike to the southeast. Karora believes the zone, which consists of two steeply dipping mineralized zones that vary between 3 and 10 metres in width, is the faulted southern offset of the Western Flanks zone.
The discovery hole at Larkin returned 3.5 metres of 15.3 grams in September, as well as a wall sample of 5.0 grams gold over 14.4 metres.
The zone is also located just a few metres beneath a new high-grade nickel zone discovered at the same time - 30C.
Karora operates the Beta Hunt underground mine, the Higginsville open pit mine, and the Higginsville processing plant in Western Australia.
In January, the Toronto-based company upped its production guidance for 2021 by 21%. Karora, which produced a record 99,249 oz. last year, expects to produce 105,000 oz. gold to 115,000 oz. gold in 2021 at all-in sustaining costs of US$985-US$1,085 per ounce.
The company's last resources and reserves update in December boosted proven and probable reserve ounces by 334% and measured and indicated resources by 167%.
Proven and probable reserves now stand at 1.3 million oz. in 23.5 million tonnes grading 1.8 grams gold.
Measured and indicated resources total 2.5 million oz. in 42 million tonnes averaging 1.9 grams gold.
"The recent drill results from the Larkin Zone suggest there is attractive potential to grow the company's resource base at Beta Hunt beyond the Western Flanks and A Zone production centers," Pierre Vaillancourt of Haywood Securities commented in a research note to clients. "Ongoing drilling at Beta Hunt should help to establish a long mine life at the deposit."
Vaillancourt has a 12-month price target on the company of $6.00 per share. Over the last year Karora has traded in a range of 88 ? and $4.49 per share and at presstime was trading at $3.35 per share.
The company has about 146 million common shares outstanding for a market cap of about $490 million.