The Gold Report - Thu, Mar 1, 2018

Gold Miner's Maiden Resource 'Provides a Strong Base' to Utah Project

Industry analysts discussed the inaugural resource estimate as well as the final 2017 drill results at one of this company's Utah projects, and provided targets of up to 2.5 times the current share price.

Liberty-cover

Liberty Gold Corp. (LGD:TSX) announced a maiden resource for its Goldstrike project in southwestern Utah. The resource totaled 1.139 million ounces (1.139 Moz) of gold. Of that, 865,000 ounces (865 Koz) were in the Indicated category and had a grade of 0.54 g/t. About 274 Koz were Inferred, with a 0.52 g/t grade. The cutoff grade was 0.25 g/t.

The company noted "that this resource estimate crystallizes three years of data compilation and drilling, and is a strong foundation on which to layer engineering, metallurgical studies, as well as ongoing expansion drilling. It is a key asset in Liberty Gold's portfolio of advanced-staged, Carlin-style gold projects in the Great Basin of the USA."

Mick Carew, a Haywood Securities analyst, in a Feb. 8 report, described the release of the initial estimate as "an important first step for Liberty Gold."

He reiterated that much of the Goldstrike property remains unexplored, "providing significant upside in terms of total resource growth. In particular, the Dip Slope zone remains open in several directions for expansion."

Consequently, Liberty will begin its 2018 drilling in early March. The program objectives are to test new targets and expand the resource.

Haywood's rating on Liberty is a Buy; its price target is CA$1. Liberty's shares are currently trading at around $0.40 per share.

Liberty's Goldstrike maiden resource, 1.139 Moz gold at 0.54 g/t, exceeded RBC Capital Markets' estimate of ~750 Koz at ~0.75 g/ton, relayed analyst Mark Mihaljevic in a Feb. 8 research note. He added that the resource estimate indicates the asset could become a solid economic project "given scale, potential to optimize grades and attractive metallurgy." It also provides a solid foundation upon which to further advance Goldstrike." Additionally, he said the project is "approaching the critical mass necessary to attract greater investor/corporate interest."

Michael Gray, a Macquarie Research analyst, in his Feb. 9 report, indicated Goldstrike could be a heap-leach mine. "We see potential for an eight-year, ~100 Koz Au per year, OP [open pit], run-of-mine operation at Goldstrike and await the technical report (in ~45 days) to confirm potential operational viability."

Macquarie has an Outperform recommendation and a CA$1.05 per share price target on Liberty.

Analyst Shane Nagle wrote in a Feb. 8 report that Liberty's maiden resource is "broadly in line" with National Bank of Canada's expectation of 1 Moz gold grading 0.6 g/t. He pointed out that much of Goldstrike's resource can be retained at higher cutoff grades, "providing optionality in different price environments and mine planning scenarios."

The analyst reiterated that the resource estimate encompasses historic and recent drilling, the latter by Liberty and incorporating results from 153,000m and 1,730 holes, from the Main-Dip Slope, Peg Leg and Western zones and some of the Mineral Mountain area.

National Bank has an Outperform rating and a per share price target of CA$0.70 on Liberty.

CIBC analyst Cosmos Chiu, in a Feb. 8 note, wrote that the maiden resource "is a solid foundation for continued progress at the project." CIBC has a Neutral rating on Liberty.

Just prior to the release of the initial resource, Liberty Gold announced the last set of results from its 2017 drill program at Goldstrike that encompassed 285 holes and 45,811 meters (45,811m).

In a Feb. 6 research note, analyst Mick Carew at Haywood Securities noted that the highlight from the eastern Dip Slop zone was hole PGS461. It intersected gold at a grade of 0.91 grams per ton (0.91 g/ton) at 13.7m, along with 2.39 g/ton gold at 7.6m.

The two new drilled areas, located 1.5 kilometers (1.5 km) northwest and 1.5 km south-southwest of the Beavertail pit, "confirm new gold discoveries," Carew noted. Hole PGS473, for example, hit 1.46 g/ton gold at 24.3m, including 2.25 g/ton graded gold at 13.7m.

"Particularly interesting," Carew added, are the holes drilled to the west of the Beavertail pit, where two holes showed the intersected oxide gold mineralization to be "potentially quite extensive and suggests significant expansion potential well beyond the areas that will comprise the initial maiden resource." As such, Liberty plans to conduct follow-up drilling this year.

These exploration results are "positive for Liberty Gold's shares, with the company continuing to demonstrate upside at the property," wrote analyst Mark Mihaljevic with RBC Capital Markets in a Feb. 6, 2018 research report.

He indicated that 2018 drilling aims to show "continuity between the various target areas at the property." Along with further exploration, the company this year aims to finish phase 2 metallurgical testing and expand permitting, as well as release a maiden resource estimate for Goldstrike, which it did two days later.

RBC rates the mining company Outperform and has a CA$0.70 per share price target.

Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Liberty Gold. Click below for important disclosures about sponsor fees.
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