Freeman Gold (FMAN.C) did what it promised as it released the first NI43-101 compliant resource just last week and by (barely) exceeding the 1 million ounce threshold. About 75% of the resource is categorized as an indicated resource while the remaining 250,000 ounces are considered an inferred resource.
Freeman’s consultants used a cutoff grade of 0.5 g/t gold which is relatively high for an oxide gold project, but keep in mind Freeman will likely use a dual approach whereby the lower grade material will be processed through heap leaching and the higher grade oxide resource will be processed using CIL processing options. That’s the main reason for Freeman to use a cutoff grade of 0.5 g/t as the cutoff grade includes an anticipated CIL cost of US$8/t (while the processing cost for the heap leach portion is estimated at US$2.4/t).
Freeman reached the 1 million ounce mark ‘despite’ using a 0.5 g/t cutoff grade, but the resource seems to be relatively resilient. Applying a 20% higher cutoff grade at 0.6 g/t would reduce the total gold content to just under 900,000 ounces (-10%) but there would be a 11% grade boost to 1.12 g/t in the indicated category and 1.16 g/t in the inferred resource category.
This is the first time a compliant resource was defined and this is an important step forward for the company as it can now freely discuss the resources at Lemhi rather than having to put in numerous disclaimers when referring to a historical resource estimate. The 1 million ounces were defined on a 400 by 500 meter surface area but the mineralization seems to continue along strike to the north and south while there also is additional potential towards the west and at depth. So the current 1 million ounces is likely just the starting point and lends more credibility to Freeman’s exploration target of 1.5-2 million ounces of gold.
Freeman Gold had a C$2.7M working capital position as of the end of February (the most recent published financial statements). The Q2 financials should be out soon and those will provide a good indication of how much cash Freeman has left in its treasury.
Disclosure: The author has a long position in Freeman Gold. Freeman currently is not a sponsor of the website but has been a sponsor in the past 12 months. Please read our disclaimer.
