NuLegacy, 2nd Carlin-type Discovery

 NuLegacy Gold Corp (TSX-V: NUG) / (OTCQX: NULGF) 

NuLegacy Gold Corp. is an exploration company run by an expert team led by Chairman and co-Founder Albert J. Matter & CEO James Anderson, featuring Chief Geoscience Officer, Dr. Roger Steininger. Several management, Board, geotechnical and Advisory Council team members have notable successes under their belts. NuLegacy has ~C$13 million in cash, funding the Company through 2017, if not longer, including drilling 100+ holes {if warranted}

The Company’s primary focus is expanding its near-surface, Carlin-type, Iceberg gold deposit, hosting an exploration target of 90-110 million Metric tonnes (“Mt“) of 0.9 to 1.1 grams per tonne (“g/Mt“) gold. NOTE: {these figures are conceptual in nature}

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The Iceberg deposit is located on trend and adjacent to two of Barrick Gold’s multi-million ounce gold producers, [Pipeline (~21 mm+ ounces @2.2 g/Mt) & Cortez Hills (~15 mm+ ounces @ 4.1 g/Mt)]. These are reported to be Barrick’s lowest cost, most profitable mines. Located north of Iceberg, is Barrick’s advanced exploration project Goldrush {~10 mm+ ounces Inferred @ 10.2 g/Mt

Pipeline and Cortez Hills are in production at All-in Sustaining Costs (“AISC“) of ~US$550 to ~US$650/oz.

According to Barrick’s website, the Goldrush project is contemplated as a third Cortez trend giant mine with an AISC of US$665/oz, with first production proposed for 2021. 

Why am I mentioning Barrick so much? A very senior executive, Rob Krcmarov, is on NuLegacy’s Board, and Barrick is a top shareholder, owning 11.8% of the Company. 

Deep Drill Hole AV-02 Confirms 2nd Carlin-type System

As of September 13th, a second key objective has taken on new meaning, making discoveries on its 100% owned 38 sq. mile Cortez trend property. Readers following the NuLegacy story are aware that there are a number of anomalies/targets of interest, including; Avocado, VIO, the Jasperiod basin and Idaho. In addition to those targets potentially being extensions of Iceberg, each is prospective for entirely new discoveries. {See September Corp. Presentation}

Working off a single assay at Avocado, AV-02 was drilled 120 meters north of AV-01 {reported on 10/28/2014}, about 1,750 meters north-west of Iceberg. AV-01 returned a seemingly unexciting three anomalous {less than 0.1 g/Mt} gold intervals of 12, 20 & 35 meters. The Avocado geophysical anomaly is approximately 2.5 km long and 1.0 km wide.

However those intervals led to today’s AV-02 assay confirming the discovery of a 2nd Carlin-type gold system. A broad, low-grade zone of 200 meters (655 feet) was intersected at the 415 meter mark. Intercepts include 10.7 m at 1.01 g/Mt and 13.7 m of 1.03 g/Mt gold.  Notice how quickly grade and thickness can change, in this case from less than 0.1 g/Mt in AV-01 from 12 to 35 meter intervals, to the following values from areas up to 200 meters thick. In Avocado, Roger saw something few others did, and he was right to have conviction in choosing this particular drill target. 

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Steininger as quoted in the press release

“This is the second Carlin-type gold system we have confirmed on the property. It is at the same depth as Barrick Gold’s multi-million ounce Goldrush deposit just 9 km to the northwest, and on trend with the Avocado and Iceberg deposits.”

With decades of experience in Nevada, Steininger continues to prove that discovery is as much art as it is science. In my opinion, Avocado is a potential game-changer in that it expands the opportunity set for a very talented geotechnical team, armed with ample cash and the skill set to study and identify optimal drill targets. Management awaits results from AV-03, drilled ~650 meters east of Hole AV-02.  

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Make no mistake, it’s still early days at Avocado, but today’s news demonstrates why OceanaGold [TSX: OGX] Barrick & Tocqueville combined, own about 36.6% of the Company. They share management’s belief that the Iceberg project is aptly named, i.e. there’s likely to be more than meets the eye in and around it. 

NuLegacy shares are falling into stronger hands, shareholders with longer-term time horizons. Investors buying shares at 40c are probably not looking to sell at 50c or 60c. This bodes well for trading once the Waterton Precious Metals Fund II is finished selling its position. 

Turning Back to Iceberg / Drill Results

July & August were not the kindest months. Waterton sold millions of shares and NuLegacy’s 1st set of ten assays at Iceberg were not a hit with investors. The share price churned at around C$0.25 to C$0.30 through the 1st week of September. 

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Obviously September has been a blockbuster month by comparison. While Waterton continues to sell millions of shares {overall, roughly 20 million NUG & NULGF shares have traded hands in the past weeks} there’s been tremendous demand. Shares are up about 35%, with most of the gain occurring on the day that Byron King released a favorable article. Note: {I’ve not seen Byron King’s piece, it’s available only to paid subscribers} Also this month, a second set of drill results centered on the higher-grade North zone delivered an improvement over the first batch. Highlights of drilling in the North zone to date are in the chart on the left, followed by the best intervals from the September 7th press release

Despite today’s news, it must be remembered that NuLegacy is a pure exploration play. There has been, and will continue to be, hits and misses. Still, every drill hole contributes to a better overall understanding of NuLegacy’s vast land holdings. Finding attractive and potentially economic ounces in a timeframe constrained by a finite budget can make or break any gold junior. However, two things reduce exploration risk …. CASH and a strong, experienced geotechnical team, working in a well understood geological setting. In my mind, if there’s anything substantial to find, NuLegacy’s team is likely to find it. They have the talent and capital to drill methodically, while also stepping out on highly prospective targets like Avocado.

 Is Nevada’s Gold Standard Ventures a Valuation Benchmark? 

I think that a valuation comparison sometimes made between NuLegacy & Gold Standard Ventures “(“GSV“) is instructive. However, instead of comparing them apples to apples, let’s assume GSV is 12-18 months ahead of NuLegacy in its exploration activities. If NuLegacy’s valuation were to double upon continued exploration success, the valuation would still be just one-third that of GSV’s. GSV has a larger land package and a NI 43-101 compliant resource, but both companies have very substantial blue-sky potential. Both are in elephant country, in two of the best regarded gold trends on the planet. As mentioned, both have strong financial backing and geotechnical teams. 

NuLegacy and GSV have the foremost footprints {not controlled by majors} in the Cortez and Carlin trends, respectively. Both are perceived to be eventual, if not inevitable, takeout targets. Both have enough balance sheet liquidity to move the ball forward with minimal or no additional equity dilution. Both have embedded call options on the price of gold. I think if the gold price were to hit US$ 1,500/oz next year, neither company would exist in its current form.

Conclusion 

NuLegacy has entered a new and exciting stage of exploration. The Company has both time and talent to discover and delineate NI 43-101 compliant mineral resource estimates sufficient to attract strategic investors and investment capital in the years to come. Avocado is the Company’s 2nd Carlin-type gold system and there could be more. Whether it requires a further 30 holes, 60  or 100+, NuLegacy has the flexibly to do what it takes to succeed. OceanaGold and Barrick are watching, as are many others. It would take dozens of mediocre or blank drill holes to kill IceBerg & Avocado, but relatively few to make NuLegacy a highly valuable, keenly sought after, global strategic asset.  

Disclosure:

The contents of this article are for informational purposes only. Readers fully understand and agree that nothing contained herein, including but not limited to, commentary, opinions, views, assumptions, reported facts, calculations, etc. is to be considered, in any way whatsoever, implicit or explicit investment advice. Further, nothing contained herein is a recommendation or solicitation to buy, hold or sell any security. The content is not directed at any individual or group. Peter Epstein and  Epstein Research [ER] are not responsible, under any circumstances whatsoever, for investment actions taken by the reader. Peter Epstein and  [ER] have never been, and are not currently, a registered or licensed financial advisor or broker/dealer, investment advisor, stockbroker, trader, money manager, compliance or legal officer, and they do not perform market making activities. Peter Epstein and [ER] are not directly employed by any company, group, organization, party or person. The shares of NuLegacy Gold are highly speculative, not suitable for all investors. Readers understand and agree that investments in small cap stocks can result in a 100% loss of invested funds. It is assumed and agreed upon by readers of this interview that they will consult with their own licensed or registered financial advisors before making any investment decisions.

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