We previously introduced the Dynamic Wealth Research audience to New Zealand-based
Rua Gold Corp. (CAN:RUA / US:NZAUF) in a full-length feature article.
That feature alerted readers to a re-emerging gold jurisdiction that is a long way from North American investors: New Zealand.
New Zealand’s economy leaned heavily on its high-grade gold mining industry in its early years. This was especially true from the initial
Otago Gold Rush in the 1860s through the several decades of gold mining that followed, in rich gold deposits that often reached “bonanza grade”.
Over 44 million ounces of gold has been extracted from New Zealand to date.
New Zealand gold opportunity
Led by
OceanaGold Corp (CAN:OGC) on New Zealand’s North Island, gold mining is re-emerging in New Zealand in a big way. OGC’s Waihi Gold Mine is
a 10+ million-ounce high-grade gold operation.
Waihi is a huge, epithermal gold deposit that represents not only major tonnages but very high grades of gold, which exceed 20 g/t gold (Au) on the high end. Already at the resource stage is OceanaGold’s second North Island project: Wharekirauponga (WKP).
WKP boasts a 1-million ounce Indicated gold resource grading at 15.9 g/t Au. An additional Inferred resource adds another 0.4 million ounces at 9 g/t Au.
However, exploration at WKP is still in its early stages. Gold mining insiders familiar with North Island geology see WKP as a potential clone of Waihi and, perhaps, a 2nd 10 million-ounce gold deposit.
The geologist associated with both of those high-grade gold successes,
Simon Henderson, is now the COO of Rua Gold.
After playing an important role with Waihi’s development, Henderson personally staked the WKP property. He also staked
the Glamorgan property: very similar geology to WKP which Rua Gold acquired (due to a license expiry) for
a price of only NZ$4,000.
Glamorgan is one-half of the value proposition for Rua Gold, which sits with a current market cap of $26 million. At a more advanced stage of development is Rua’s
Reefton Goldfield Project.
The Reefton Project is on New Zealand’s South Island. This is where the bulk of New Zealand’s original gold rush took place.
This is orogenic gold, with even more exceptional grades than what has been found/mined on the North Island. We provided a number of examples of the bonanza grades from historical gold mining on the South Island in our previous feature article.
The Reefton Goldfields district is part of a massive orogenic gold geological formation that extends (undersea) into Australia, the Lachlan Orogen. We’ll have more to say about that later.
Drilling is already underway at Reefton. Early drilling identified a “discovery outcrop” around the Pactolus Vein.
- 7 meters @ 16.4 g/t Au, including two 1-meter intervals of bonanza-grade gold (>1 oz per ton)
Rua Gold is engaging in a 2,500-meter drill program at Reefton in 2024, conducted in three phases. All the drilling is fully funded.
The Company is still at the permitting stage with respect to the Glamorgan Project. Once exploration permitting is in place, Rua Gold (and Simon Henderson) will commence operations on the North Island as well.
The mega-bagger potential of a high-grade gold discovery
What is the investment potential of a junior gold exploration stock after a major gold discovery? The poster child here is
Great Bear Resources.
In the middle of 2017, Great Bear Resources was a junior gold exploration stock trading at ~CAD$0.20 on the TSX Venture Exchange with a market cap below CAD$20 million.
Then Great Bear made a major gold discovery on its Ontario-based Dixie Project. Five years later, Great Bear Resources was
acquired by Kinross Gold in February 2022 for a take-out price of CAD$1.4 billion (USD$1.1 billion).
That’s more than a 70-bagger in less than five years. Today, Kinross’ Dixie Project is a 5 million ounce gold deposit with an average grade of ~3 g/t Au.
Looking for a peer comparison that is even more recent and closer to home for Rua Gold? How about ASX-listed
Southern Cross Gold (AUS:SXG)?
Southern Cross’s Sunday Creek Project has become a company-maker following a major gold discovery that has produced some monster drill intercepts.
- 455.3 meters @ 7.2 g/t Au
- 404.4 meters @ 5.1 g/t Au
- 331.5 meters @ 6.8 g/t Au
And Southern Cross has also found some bonanza-grade gold:
- 20.0 meters @ 62.7 g/t Au
Rua Gold’s Reefton Goldfield Project is located in the same geological formation as Southern Cross and Southern Cross’s neighbor to the west: Agnico Eagle’s Fosterville Gold Mine.
All of these Southern Cross drilling intercepts are at depths below 400 meters. This is part of the reason that this gold discovery is causing such a buzz in the mining industry.
None of the high-grade historical gold mining operations in either Australia or New Zealand could approach such depths with the more limited mining technologies that existed a century ago.
This means that gold exploration companies such as Southern Cross and Rua Gold have exciting potential for new gold discoveries – especially through testing areas of historical mineralization at depth.
On September 9, 2022, Southern Cross Gold closed at AUD$0.25. Then came its Sunday Creek gold discovery.
By May 6, 2024, SXG closed at AUD$3.21 and is currently trading slightly below that level.
That’s more than a 12-bagger in less than two years.
Will Rua Gold become another Great Bear Resources? Statistically speaking, that’s highly unlikely.
Could RUA become another SXG as it continues drilling on its Reefton Goldfield Project? This is much more possible – especially with the additional blue-sky potential of Rua Gold’s Glamorgan Project on the North Island.
Market conditions vary and no two gold projects are exactly alike. However, history tells us that any major high-grade gold discovery made by Rua Gold on either of its two New Zealand flagship projects should mean a multi-bagger return for the Company’s investors.
Ruagold.com
Rua Gold corporate presentation
DISCLOSURE: Rua Gold is a paid client of Dynamic Wealth Research.
