High Desert Gold – Update

High Desert Gold hit gold mineralization in the first 9 drill holes on the Jumbo and Grey Eagle Zone. This is very encouraging to quickly expand the current resource estimate towards the 1M gold-equivalent ounces mark. As the company is halfway its drill campaign, we expect a very continuous newsflow from now on.

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Introduction

High Desert Gold’s flagship is the Gold Springs project in Nevada and Utah. It is 82% owned by HDG and 18% by Pilot Gold Inc. (“PGI”), with HDG as the managing partner.

The drill program

High Desert Gold started drilling on April 25th of this year, and plans to drill approximately 100 holes to expand the resource estimate on their 82%-owned Gold Spring Project (Pilot Gold holds the remaining 18% interest) on the Nevada/Utah border.

The company has released a first batch of drill results in June, and intersected very encouraging intercepts.

Of interest is the interval of almost 26 meters at a grade of 0.97g/t gold and almost 1.5oz/t silver, resulting in a gold-equivalent grade of 1.76g/t. This is a very encouraging intercept as a grade of almost 1g/t of gold in an oxide zone near surface is highly economical and might be helpful to increase the overall grade of the project which currently stands at 0.48g/t when using a 0.3g/t cutoff-grade and 0.81 g/t when using a cutoff grade of 0.6g/t.

High Desert Gold has now completed 22 holes of their planned 100-hole drill program, so we expect a very steady news flow in the next few months, including some more results on the metallurgical test work.

The grade

Grade is king in the current gold price environment, so we are keeping a close eye on the exploration developments at Gold Springs. The first resource estimate contained 193koz gold and almost 3.5Moz of silver if we use a 0.6 g/t AuEq cutoff grade. If we use a 100% recovery rate and a gold and silver price of $1250/oz and $20/oz respectively, the rock value using a 0.6g/t cutoff grade is approximately $41/tonne of ore.

The recovery rate will obviously be lower than 10%, so if we apply a recovery rate of 90% for the gold and 70% for the silver, the rock value at the same prices using the same cutoff grade goes down to approximately $35/ton which is still workable.

On the other hand, if a cutoff grade of 0.3g/t AuEq would be used, the rock value per tonne based on the same gold and silver price would drop to just over $22/tonne, which might be too low to be economic in this gold market.

The recovery rate of silver will prove to be extremely important for High Desert Gold, as every 10% increase in the recovery rate at the 0.6g/t AuEq cutoff-scenario would increase the rock value by approximately $1/tonne. Obviously a lot more test work will be needed on the silver, as one would expect the first lab results will show a high variability in recovery rates. Silver is also harder to extract compared to gold, as silver tends to dissolve more slowly in cyanide than gold does.

Conclusion

The fact High Desert Gold hit gold mineralization in the first 9 drill holes on the Jumbo and Grey Eagle Zone is very encouraging to quickly expand the current resource estimate towards the 1M gold-equivalent ounces mark. As the company is halfway its drill campaign, we expect a very continuous newsflow from now on.