Newcore Gold (NCAU) - PEA Exceeds Expectation as Mgt Chases 4Moz

Newcore Gold is a gold exploration company listed on the Toronto Stock Exchange (TSX-V: NCAU) and also trades on the OTC Market in the U.S. (OTCQX: NCAUF). The company's vision entails building a world-class, responsible gold enterprise providing exceptional returns to the shareholders through building asset value.

The company takes a scientific approach towards exploration and has consistently released findings from their PEA to ensure the data is up-to-date. Their flagship project is the Enchi Gold Project in Ghana, Africa.

We met with Luke Alexander, President and CEO at Newcore Gold, who joined us from Vancouver. Luke has extensive experience in the resource sector in West Africa. As an investment banker, Luke is credited with raising billions of dollars in structured deals for mining companies and some of the top institutional investment funds globally. He also founded Park Road Capital, a natural resource consulting company in 2018, based out of Vancouver.

Company overview

Newcore Gold (formerly known as Pinecrest Resources) is a gold exploration company founded in 2014 headquartered in Vancouver, Canada. The company's team has a strong track record in management, acquiring assets, raising capital, and making well-informed decisions leading to breakthrough deals. Management owns 32% of the company's shares which aligns the team with shareholders.

The Enchi Gold Project

The Enchi Gold Project is located in Ghana. Enchi encompasses a district-scale area with multi-million-ounce potential. Newcore Gold has 100% ownership of the property that spreads across an area of 216 square kilometres.

The company is carrying out extensive exploration work on the project, including drilling on existing resource areas while simultaneously exploring new, higher-grade targets across the property. The site currently hosts a 1.4Moz inferred mineral resource estimate and the ongoing drilling is targeted towards expansion of these resources.

This site offers exceptional growth potential both laterally and depth-wise. The drilling carried out at the site averages at 130m, with a maximum vertical depth of 250m. The company has already identified multiple high-priority gold targets along with the existing oxide resources that were found near the surface.

The PEA Findings

The results of the PEA (Preliminary Economic Assessment) returned a NPV5% (Net Present Value) of US$212M at a gold price of US$1,650 per ounce with a 42% IRR (Internal Rate of Return) along with a short after-tax payback period of 2.3 years. These results outperformed the company's expectations. This led to an 8% jump in Newcore Gold's stock prices with close to 750,000 shares traded within a 2.5-hour window.  According to the block traders, a majority of this trade volume was carried out by multiple institutional investors. At a US$1,850 per ounce gold price, the post-tax NPV5% is US$302M with a 54% IRR and an under 2-year payback.  

Being a heap leach project, the initial CapEx (Capital Expenditure) was estimated at US$97M. Overall the NPV increases by US$90M NPV as the gold price assumed increases from US$1,650 to US$1,850 per ounce.  

The project offers a low-risk investment opportunity as the NPV to CapEx ratio is 1:3 and the project has a strip ratio of 2.1:1.

Newcore Gold has forecast a strong production profile with an average supply of 104,000oz within 2-5 years of operations, further benefiting the overall economics of the project.

Newcore Gold's main focus lies in exploration. A 66,000 metre drill program is planned for 2020 - 2021, with the released PEA incorporating only 20,000m of the planned drilling. Future studies will look to incorporate the additional 46,000 metres of drilling that is currently underway.

The Portfolio

Newcore Gold has carried out extensive work on the project, with the recently completed PEA and a 66,000 metre drill program underway focused on resource growth. The current resource consists of four deposits: Sewum, Boin, Nyam and Kwakyekrom. An initial resource was defined at Kwakyekrom as part of the PEA as a result of the positive drilling completed on the target. With drilling underway, a strong focus remains on growing the resource through step-out drilling at the existing deposits. A key benefit of the existing resource is that all resources are open along strike and at depth. In addition, exploration work is underway on earlier stage targets across the property including Sewum South which is the largest gold-in-soil anomaly on the project where trenching is underway and first drilling is planned later in 2021. On the northern end of the property, the company will be drilling the Eradi gold target, following up on 10 historical holes.

Newcore Gold intends to bring additional resources on board to the existing ones as they grow their overall ounces towards the 4Moz - 5Moz range.

Ongoing Drill Program

A 66,000 metre drill program is underway at the company’s Enchi project, which includes step-out drilling on the existing deposit areas.

The first half of the program was heavily focused on RC drilling, which has returned promising results. The company was able to drill between 2,500m - 3,500m monthly on a consistent basis.

Since the company has shifted towards diamond drilling for further exploration, the overall volume may observe a dip as diamond drilling has a slower pace compared to RC drilling.

Utilizing RC drilling, the company received positive indication at the Nyam site.  The company has drilled up to 200m at this site with 5.4g deposits at 9m, and 5.8g deposits at 7m depth. The company will now utilize a diamond rig for further exploration, pursuing higher-grade material.

Kwakyekrom Gold Deposit

The Kwakyekrom Gold Deposit has a drill tested strike extent of 1.3 kilometres with approximately 40% of the surface anomaly untested to date. An initial resource was defined at Kwakyekrom as part of the recently announced PEA. Gold mineralization at Kwakyekrom is open along strike and down dip, with strong growth potential.

Kojina Hill Gold Target

Kojina Hill is an advanced target at Enchi that has also returned strong drill results. The company plans to continue to advance exploration of the target through drilling.

The Eradi Site

The Eradi Site features 10 historical holes with good mineralization. The company plans to carry out sufficient drilling that would allow warping of the pits, leading to the development of a new resource.  

‍West Africa's Mining Giant

The average company in West Africa has a gold resource of 1Moz, while Newcore Gold has already surpassed that benchmark with a defined Inferred mineral resource of 1.4Moz, with a focus on resource growth. Combined with the PEA study and the potential for discovery at the Enchi project, Newcore Gold has garnered renewed interest from the market.

Newcore Gold has uncovered several high-grade indications at the Boin, Sewum, Nyam and Kwakyekrom sites and plans to systematically target these sites while further exploring the property's overall geology and structure.

2021 Targets

The company's end goal is to grow the Enchi Gold Project into a 4Moz - 5Moz resource. It intends to continue exploration, grow the resources and update the studies so that the company's outstanding assets are re-evaluated. A  66,000 metre drill program commenced in 2020 and is still underway with 20,000 metres included in the PEA results, another 26,000 metres of results released that has yet to be incorporated into a resource and another 20,000 metres of drilling underway and yet to be released.

This multi-pronged approach helps create a low-risk exploration strategy which further ramps up the chances for significant discoveries, creating substantial value for shareholders.

The company has been consistent with news updates in the past year as the project moves forward. They intend to post drill results every 3-4 weeks along with a final technical report scheduled for release in the coming 6 weeks.

To find out more, go to the Newcore Gold Website