Ausgold (ASX:AUC) has announced a first resource estimate at their Katanning Gold Project in Australia. This first JORC-compliant estimate contains 225koz of gold in the Measured and Indicated categories, and an additional 175koz of gold in the Inferred category.
We like the fact that over half of the resources already are in the M&I category, but we are a bit disappointed with the size of the overall resource. We expected more ounces after drilling in excess of 50,000 meters RC and Diamond, and almost 40,000 meters aircore drilling. However, if we apply a lower cut-off grade of 0.4g/t, the total resource estimate climbs to almost 700,000 ounces of gold, which is more in line with our expectations.
Ausgold stated they will start drilling again in January and will drill-test new targets with an 8,000 meter drill program.
At a current marketcap of A$22.5M, Ausgold isn’t very cheap. It is very likely the company will have to raise additional capital in January to complete their drill program, as Ausgold expects to have A$1.5M in cash at the end of this year (excluding their Praetorian-shares).
Disclosure: The author holds no position in Ausgold Ltd. Please see our disclaimer for current positions.
