With the price of gold soaring to yet another all-time high in recent weeks, interest in gold mining stocks is heating up. Here, investors have a multitude of choices.
There are the gold
producers. Already in production, these mining stocks represent a lower level of risk, but further gains in share price generally require a continued rise in the price of gold.
Then there are the advanced-staged gold
development companies. These companies have already-defined mineralization, perhaps even a resource estimate, and are moving toward production over the longer term.
With substantial growth potential, these companies can (potentially) produce solid returns for investors, even with a static gold price.
The most explosive investment potential is found with gold
exploration stocks. As experienced mining investors know, any important gold discovery is akin to the proverbial pot of gold at the end of a rainbow.
Among gold mining investors, greatest reverence is for those few gold mining companies who make a discovery with “bonanza” grades of gold. These are rich deposits of gold with mineralization approaching or even exceeding 1 ounce of gold per ton of ore.
Bonanza-grade gold opportunity
Rua Gold Inc. (CAN:RUA / US:NZAUF) is a new junior gold exploration public company that began trading on
February 27, 2024, via an RTO.
The Company is exploring for potential bonanza-grade gold on not one but two flagship projects:
Reefton and
Glamorgan, both located in gold-rich New Zealand.
Tyron Breytenbach is a geologist with capital markets experience, and a deep understanding of mining from both an operations and financial perspective. Breytenbach founded
Reefton Goldfields Inc., the predecessor to Rua Gold, as a private company, roughly four years ago – and today is part of the Board at Rua Gold.
The original flagship project of Reefton Goldfields Inc. was the Reefton Goldfield Project.
Reefton has a history of bonanza-grade gold production on New Zealand’s South Island, part of a huge orogenic gold formation. The Reefton Goldfields district has yielded 2 million ounces of gold with average grades of
~24.5 grams per tonne of gold (nearly 1 ounce).
Today, this geological formation is more famous for high-grade gold mining in Australia: the world-famous Fosterville Gold Mine.
Fosterville is a modern Holy Grail for gold mining investors. The Mine boasts
outstanding grades with an
average of 23.19 g/t gold and ranging as high as an average grade of 31.0 g/t in the Lower Phoenix zone. Cash costs are under USD$500 per ounce.
What makes Fosterville resonate so strongly with gold mining investors is that the Mine is located in a massive geological formation that spans not only a large portion of Australia, but also extends (under the sea)
into New Zealand.
Two high-grade flagship gold projects
The Reefton Goldfield Project is located in the same geological belt as the Fosterville Gold Mine.
Officially, this geological formation is known as the Lachlan Fold, or
Lachlan Orogen. This formation covers much of eastern Australia – including the Fosterville Mine.
The geology extends eastward undersea to the South Island of New Zealand. Indeed, the Lachlan Orogen also includes parts of New Guinea and some geologists are now speculating that it extends to the south
all the way to Antarctica.
Historically, orogenic gold formations are associated with both large deposits and exceptional grades of gold.
Orogenic gold deposits account for over 75% of all of the gold mined in human history.
Given this reality, it’s perhaps not a surprise that New Zealand’s early economy was primarily based upon gold mining.
Like California in the U.S. and the Yukon in Canada, both Australia and New Zealand had their own “gold rush”. New Zealand’s gold rush is referred to locally as
the Otago Gold Rush, named after the Central Otago region of the South Island where the first major discovery was made in the early 1860s.
This became the West Coast Gold Rush by the mid-1860s, as the prospectors moved to the west coast of the South Island. Over 18 million ounces of alluvial gold was found and extracted by these early New Zealand prospectors. By 1867, most of this alluvial gold had been exhausted.
However, as with California, the Yukon, and Australia, after the prospectors left the gold mining companies moved in. High-grade gold mining blossomed on the South Island (and the North Island).
Reefton Goldfield Project
One of these gold-rich mining regions was the Reefton Goldfields, in the northwest corner of the South Island. Gold mining commenced here in 1872, with over 2 million ounces of high-grade gold extracted from orogenic quartz vein systems.
Historical gold deposits in the Reefton Goldfields ranged from an average grade of 14 grams per tonne of gold (Au) at the low end all the way
up to 61.4 g/t Au in the Welcome-Hopeful deposit.
Rua Gold’s Reefton Goldfield Project encompasses many of the richest of these historical gold mining operations such as
the Capleston Area, which produced 136,000 ounces of gold with an average grade of 30.2 g/t Au – including Welcome-Hopeful.
The Company has already invested several years in the necessary exploration field work at Reefton. This includes more than 16,000 soil samples, extensive UAV geophysics, and 3-D modeling.
Surface trenching has yielded encouraging numbers associated with the Pactolus Vein, located in the Capleston Area. This includes assays of:
- 5 meters @ 12.2 g/t Au
- 4 meters @ 6.9 g/t Au
Drilling is now underway on the Reefton Goldfield Project. A total of 30 drill holes have been completed in and around the Pactolus Vein. Previous field work indicates that this mineralization system extends for roughly 550 meters.
Drilling around the historical gold workings here has yielded intercepts of up to
9.41 g/t gold over 12 meters. Much more exciting is a strong intercept from a “discovery outcrop”.
- 7 meters @ 16.4 g/t Au, including two 1-meter intervals of >1 oz per ton (28 grams) Au
Earlier this year, the Company conducted
step-out drilling at Pactolus. Six preliminary holes have already been completed with two intercepts generating significant gold mineralization.
- 2 meters @ 5.13 g/t
- 2 meters @ 3.61 g/t
Not the bonanza grades that Rua’s exploration team is seeking. However, mineralization here indicates the potential for another gold discovery.
Rua Gold has planned (and funded) a total of 2,500 meters of drilling this year on the Reefton Goldfield Project, spread across three phases. The next high-priority target to be tested in 2024 at Reefton is
Murray Creek.
Historical mining at Murray Creek yielded ~40,000 ounces of gold with
an average grade of 19.57 g/t Au.
Recent field work here has uncovered many bonanza-grade rock chip samples of 56.2 g/t, 48.0 g/t, 35.1 g/t, 34.5 g/t, 33.3 g/t, and 27.8 g/t Au. Trenching has also produced some robust gold intercepts, such as
3 meters @ 31.7 Au, including 2 meters @ 47.1 g/t Au.
Glamorgan Gold Project
Prospecting on New Zealand’s North Island also commenced in the 1860s. However, the geology is considerably different.
While the high-grade gold of the South Island is hosted in orogenic formations, the gold of the North Island is found in robust, high-grade
epithermal deposits. Indeed, of the roughly 25 million ounces of gold mined in New Zealand following the initial gold rush,
epithermal deposits now account for over 15 million ounces of gold.
The epithermal gold mineralization on the North Island ranges from average grades of 1 g/t Au (or less) to
bonanza grades in excess of 70 g/t Au.
Much of the credit for new gold discoveries on the North Island in the modern era of gold mining belongs to the Chief Operating Officer of Rua Gold, Simon Henderson. He is an icon for gold exploration in New Zealand, with a stellar resume that boasts 30+ years of gold exploration experience in New Zealand alone.
Henderson is responsible, on several levels, for the recent addition of Rua Gold’s second flagship project: Glamorgan.
The Glamorgan Project is a 4644-hectare property situated in
the high-grade Hauraki Goldfields district. This is the North Island’s premier historical district for gold mining.
Dynamic Wealth Research will tell the full story of how Simon Henderson became synonymous with gold exploration on New Zealand’s North Island in a future article on Rua Gold.
While working as a senior geologist for OceanaGold Corporation, Henderson played an instrumental role in defining the resources of OceanaGold’s Waihi gold discovery – which became the Waihi Gold Mine.
Today, Waihi is a 10-million ounce gold mine boasting grades ranging up to and above 20 g/t Au. But Simon Henderson was just getting started.
Henderson went independent and personally staked out two additional gold properties:
Wharekirauponga (WKP) and
Glamorgan.
To shorten the story, WKP is now owned and operated by OceanaGold. In October 2023, Rua Gold acquired the Glamorgan Gold Project for
a total purchase price of NZ$4,000.
Early drilling successes and emerging high-grade resources at WKP are generating a serious buzz with both the exploration team of OceanaGold and New Zealand mining insiders.
Drilling:
- 48.9 meters @ 22.8 g/t Au and 39.0 g/t Ag
- 5.0 meters @ 77.1 g/t Au
Resources:
- 1.01 million ounces @ 15.9 g/t (Indicated)
- 0.35 million ounces @9.0 g/t (Inferred)
In geological terms, WKP is looking more and more like a clone of Waihi, and potentially another 10-million ounce gold mine.
COO Simon Henderson shared some personal insights on Rua Gold’s Glamorgan Project, which is a mere 2.8 kilometers from WKP.
“Glamorgan has the classic surface features of a major epithermal gold-silver system, identical to what I found on the WKP deposit.”
WKP is looking like another Waihi. And the geologist who played a major role in both of those gold projects thinks that Glamorgan looks “identical” to WKP.
There are no guarantees in gold mining exploration. But Rua Gold shareholders will be very encouraged by this assessment.
The Company still needs to get exploration permitting approved for its recently-acquired property. In speaking with Dynamic Wealth Research, CEO Robert Eckford indicated that this could take another 6 – 8 months.
Eckford’s mining resume spans Australia, Africa and South America. His most notable role is as Co-founder and Head of Finance for mid-tier gold miner, Aris Mining Corp (CAN:ARIS).
The
Reefton Goldfield Project boasts spectacular gold grades from historical mining operations. Early drilling here has already produced one significant discovery, with home-run potential should more bonanza grades be uncovered.
The
Glamorgan Project could prove to be the third major gold discovery with which COO (and geologist) Simon Henderson is associated. While North Island average grades tend to be slightly lower than gold grades on the South Island, overall potential in tonnage and ounces is greater.
For this reason, CEO Eckford sees Glamorgan as offering the most blue-sky potential for investors.
What would a major exploration success look like for Rua Gold investors? Dynamic Wealth Research’s next coverage will focus on that question, in part through looking at some of the recent major successes among other junior gold exploration companies.
Ruagold.com
Corporate presentation (April 2024)
Disclosure: Rua Gold Inc. is a paid client of Dynamic Wealth Research.
