AuTECO Minerals Ltd (ASX:AUT, OTC:MNXMF) has five diamond rigs on site with the focus for the remainder of 2021 to be near-mine drilling with the results expected to contribute to the updated resource scheduled for February 2022, according to Canaccord Genuity (TSX:CF, LSE:CF).
The company remains well funded with A$16.4 million in cash at end SepQ’21 and is expected to see steady news flow in the lead-up to the resource update.
Canaccord has maintained its SPEC BUY recommendation for Auteco with a price target of $0.23 (current share price: $0.072).
The following is an extract from the research update:
On track for +2Moz
Drill results extend high-grade mineralisation. AUT has released another suite of high-grade drill results from its ongoing 50,000m drill program at Pickle Crow in Ontario. Drilling within the main Shaft 1 and 3 areas continues to identify significant high-grade mineralised vein structures outside the existing high-grade vein hosted Resource of 1.47Moz @ 10.1g/t. Intercepts, include:
- 2.0m @ 68.3g/t gold from 471m (136.6 gt*m)
- 2.1m @ 31.8g/t gold from 246m (66.8)
- 4.1m @ 11.2g/t gold from 424m (45.3)
- 4.7m @ 6.3g/t gold from 733m (29.6)
- 2.4m @ 9.9g/t gold from 19m (23.3)
Alteration-hosted gold zones amenable to bulk mining continue to grow in scale. In addition to the vein-hosted Resource, Pickle Crow also contains an alterationhosted Resource of 240koz at 3.7g/t (largely BIF mineralisation) which is of particular interest to us as it demonstrates potential for low-cost bulk mining methods to be utilised. Recent drilling, proximal to the Shaft 1 area, was undertaken to test for broad alteration-hosted mineralisation. Assay results for the first hole of the program included 19.5m @ 3.3g/t gold from 341m (63.2 gt*m), which we see as extremely encouraging, as it proves up a new geological concept and serves as an exciting followup target, particularly if mineralisation begins projecting back towards surface. The recently discovered Carey prospect has also returned solid results. Carey is unique in that it contains both broad widths of alteration-hosted mineralisation and highgrade vein hosted mineralisation. While early stage, the relatively shallow, high-grade intersections at decent widths, open up good optionality with respect to bulk mining. Intercepts include:
- 4.0m @ 9.9g/t gold from 267m (39.1)
- 11.5m @ 1.5g/t gold from 164m (17.5)
- 1.5m @ 10.3g/t gold from 90m (15.4)
- 7.0m @ 2.0g/t gold from 289m (14.0)
Forward plan. AUT currently has five diamond rigs on site with the focus for the remainder of 2021 to be near-mine drilling with the results expected to contribute to the updated Resource scheduled for February 2022. The 50,000m drill program (27,500m completed for 63 holes) is on track for completion in MarQ'22. We highlight that at the current discovery rate, we continue to see good potential for the total Resource (1.7Moz @ 8.1g/t) to grow to +2Moz in the MarQ'22 update. It is also worth highlighting the current Resource sits within a small footprint of ~5km2, relative to AUT’s total landholding of 496km2, and the regional prospectivity remains an attractive part of the investment thesis that remains to be tested.
Upcoming potential catalysts:
- Drill results from the targeted BIF — DecQ’21/MarcQ'22.
- Drill results from the Tyson discovery — DecQ’21 into 1H’CY22.
- Accelerated regional exploration drilling — MarQ’22.
- Resource update February 2022.
Comment. AUT remains well funded with A$16.4m in cash at end SepQ’21 and with five rigs on site, we expect to see steady news flow in the lead-up to the Resource update early next year. While AUT continues to screen as having one of the highest grade Resource bases on the ASX, we believe the emerging bulk tonnage story bodes well for not only increasing the Resource scale markedly, but also offers development optionality in the future. SPEC BUY recommendation maintained with a $0.23 PT.