High Desert Gold (HDG.V) has announced an updated resource estimate on their 82%- owned Gold Springs project to the market last week.
Using a cutoff grade of 0.3g/t AuEq, this new resource estimate contains approximately 415k gold-equivalent ounces at an average grade of 0.67g/t AuEq. If we raise the cutoff rade to 0.5g/t AuEq, the resource base drops to 295koz AuEq but at an average grade of 0.94g/t AuEq.
These numbers are very encouraging, given the anticipated recovery rate for the gold will be in excess of 90%, and if we apply an average recovery rate of 90% for the gold and 60% for the silver, the average recoverable grade is 0.546g/t AuEq using a 0.3g/t cutoff grade. If we use a more conservative cutoff grade of 0.5g/t AuEq, the average recoverable gold-equivalent grade is a very healthy 0.778g/t AuEq.
As the Gold Springs project is on the border of Nevada and Utah – two mining-friendly states – we don’t expect a lot of problems for a heap leach operation in the future. The mineralization starts at surface, so we don’t expect high capital expenditures either. High Desert Gold is gearing up for their 2013 exploration program which will consist of approximately 100 drill holes and should result into an updated resource estimate early next year. If you keep in mind the current resource estimate was based on 70 drill holes, we think the company should be able to have 750koz AuEq+ in the next resource estimate after drilling an additional 100 holes.
Disclosure: The author holds a long position in High Desert Gold Corp. and adds on weakness. Please see our disclaimer for current positions.
