Research #13 Trenching Discovers High

July 6, 2016
Research #13
Gold Mining in Brazil
Nickel Exploration in Canada
Company Details
Equitas Resources Corp.
1450 - 789 W Pender Street
Vancouver, BC, Canada V6C 1H2
Phone: +1 604 681 1568
Email: [email protected]
www.equitasresources.com
Shares Issued & Outstanding: 213,819,243
Trenching Discovers High-Grade Gold at
Surface – Assays from 31 Holes Pending
Today, Equitas Resources Corp. released assay results from trenching activities
at its 100% owned Cajueiro Gold Project in the Brazilian states Para and Mato
Grosso. The results revealed high-grade gold mineralization at surface: 24 g/t,
19 g/t and 5.5 g/t over 2 m each in 3 separate trenches. Most of the assays
from 9 trenches have been received, ranging from 1.16 to 24.26 g/t gold, including
a broader near-surface interval of 1.42 g/t over 12 m. This is significant when
considering that most gold open pits worldwide operate with average grades
between 0.7 and 2 g/t. The significance of today’s results are perfectly summed
up by VP Exploration, Everett Makela: “All eight of the intersections achieved
to date are worthy of follow-up, as the saprolite can be directly excavated on
surface and trucked to a processing plant, without the need for drilling and
blasting.” The Baldo Zone is already in moderate sluice-box production, set
to expand significantly with plans for a new gravity and CIL processing plant.
The current exploration program has been designed to increase resources and
provide further information to support open-pit development. If today’s results
are any indication, the best could be yet to come: 31 HQ holes have been
recently drilled with assays pending. As a result of today’s assays, management
has announced that they intend to expand the current drilling program.
Chart
Canada (TSX.V)
Canadian Symbol (TSX.V): EQT
Current Price: $0.085 CAD (July 5, 2016)
Market Capitalization: $18 million CAD
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Germany (Frankfurt)
German Symbol / WN: T6UN / A12CWK
Current Price: €0.046 EUR (July 5, 2016)
Market Capitalization: €10 million EUR
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Research #13 | Equitas Resources Corp.
T
oday’s initial results from
Equitas’ exploration program
on its newly acquired Cajueiro
Property are surprisingly high-grade,
or as Equitas put it: “The program has
significantly changed the interpretation
of prospective altered and mineralized
structures in the target area, as shown
in Figure 2 below.”
To date, 1,680 m of trenching in 9
trenches and 31 HQ diamond drill
holes totaling 1,585 m (51 m per hole
on average) have been completed in
the Baldo target area. Assays from 24
trench samples are still pending. Assays
from all 31 drill holes are pending.
More work, including diamond drilling,
auger drilling and trenching, is set to
commence. Thus, an increased flow of
updates from the activities, including
assays, is expected over the shortterm, potentially hand in hand with
a further appreciation of gold prices.
Chris Harris, President and CEO of
Equitas, said today: “We are very
encouraged by the strong trenching
results from the Baldo area, with results
ranging from 1.16 g/t Au up to 24.26
g/t Au. This provides good support for
the Company’s focus on fast track gold
production and potential for further
upgrading of the resource. The team
has completed the initial exploration
programme on time, and on budget,
and with these exciting results we
have decided to extend our drilling
programme. We are well positioned
for further news with all of our drilling
results yet to come in.”
Everett Makela, VP Exploration,
added: “Results so far have confirmed
our expectation that the oxidized
saprolite component of the bedrock
mineralization at Baldo is host to
significant gold concentrations. All
eight of the intersections achieved to
date are worthy of follow-up, as the
saprolite can be directly excavated on
surface and trucked to a processing
plant, without the need for drilling and
blasting. The high grade intervals in
trenches TCBL_0003 and TCBL_0004
appear to represent a corresponding
increase in structural complexity
that adds an exciting new element to
Figure 1: Baldo Target at the Cajueiro Project
the Baldo environment. I would also
emphasize that a majority of the assay
results have yet to be received, so there
is considerable new information still to
come from this exploration program.”
Interestingly, the goal of the initial
exploration program was to prove the
oxide potential of the Baldo deposit as,
until now, only the alluvium has been
mined sporadically. Previous mapping
and surface sampling has revealed the
Baldo area as host to widespread gold
mineralization in the saprolite.
To date, 3 additional target signatures
similar to the current focus area have
been identified. Targets will be reviewed
in detail and ranked in preparation for
upcoming exploration programs.
Prospecting for alluvials at the Baldo Zone in June 2016
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Research #13 | Equitas Resources Corp.
The trenching program targeted gold
mineralization in the near-surface
saprolite (the oxidized equivalent
of hydrothermally altered bedrock
structures hosting gold mineralization
with associated pyrite and quartz
veining).
Assays received to date (for trenches #1
to #5 inclusive a portion of #6 and #7)
have identified 8 discrete intervals of
interest, as listed in the table below:
> 1g/t gold intervals achieved to date in
saprolite @ Baldo Zone (Cajueiro Property)
Trench
#1
incl.
#3
incl.
incl.
#4
incl.
#6
From
(m)
47
60
23
167
197
146
173
31
To Interval Gold
(m)
(m)
(g/t)
49
2
1.16
72
12
1.4
28
5
1.26
171
4
2.12
199
2
24.26
148
2
5.54
175
2
18.86
38
7
1.57
Initial assays as released July 6, 2016
Observations of the high grade areas
in trenches #3 and #4 indicate that
this mineralization and associated
alteration may have been focused by a
combination of NE and EW deformation
events. Further delineation of the
high-grade intervals is in progress with
diamond drilling, auger drilling and
Figure 2: Plan view of Baldo target area with new geological interpretation, trenches, drill
hole traces and current intersections of interest
trench sampling. Final results and an
updated structural interpretation will
be announced when completed. It is
anticipated that a follow-up program
of resource definition and further
exploration will commence once
all results have been received and
incorporated into the model.
Fast Track to Gold Production
Last month, Equitas signed a long-term
funding term sheet for $6 million USD
($5 million a revolving gold prepay and
a $1 million equity financing) from the
well-reputed private equity fund Cartesian Capital Group (founders of AIG
Capital). Cartesian showed great longterm support as their equity portion is
locked up for 18 months. Hence, this
funding partnership gives Equitas the
ability to grow their gold production as
rapidly as they choose to. With the revolving factor in place, this could give
Equitas the opportunity of possibly acquiring other near-term gold projects
nearby.
This year Equitas plans on constructing a
gravity and CIL plant, and sometime next
year they plan to mutiply these plants on
other zones of the Cajueiro Project. The
processing plants should increase gold
output significantly and could lift the
company to a strong/positive cash-flow
position. In Equitas’ corporate presentation they state that the first gravity plant
will put the company at a self-sustaining
position. The production from the CIL
plant is projected to put the company
into a cash-flow position from where
they can then grow organically.
With assays from 31 drill holes pending,
metallurgical results from a 100 kg sample of gold-mineralized saprolite; additional drilling and trenching, the exciting
times are just getting started for Equitas
and its shareholders.
As noted in “Ready to make money as
an incrementally growing gold miner”
(April 27, 2016):
The gravity plant is expected to cost
$300,000 USD and has a general production capacity of roughly 3,000 ounces
(“oz”) of gold annually. Hence with gold
selling for $1,200 USD, Equitas could
generate $300,000 USD monthly. The
annual production capacity of a CIL plant
(~$2 million USD) is roughly between
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Research #14 | Equitas Resources Corp.
10,000 and 12,000 oz of gold.
Potentially, 1 CIL plant and 1-2 gravity
plants could be added each year for the
next 4 years, resulting in an annual output of >60,000 oz.
This significant production growth potential over the next few years is providing shareholders with an exciting opportunity.
According to an interview between Chris
Parry and Equitas’ CEO Chris Harris, Brazil now offers tremendous opportunities,
especially for such low-cost, close to surface, open pit gold deposits amenable
for rapid development and expansion.
For example, Equitas’ drilling costs currently stand at less than $100 USD per
meter (a fraction of the costs a few years
ago or when compared to North America), whereas the capital costs for the
gravity plant are said to have fallen by
more than 50% over the last year.
Such cost compressions in Brazil will result in much faster payback periods and
higher profitability.
Above: Core from sulphide-oxide transition zone, Baldo June 2016
Below left: Richard Crew and VP Exploration Everett Makela at Layne drill rig, Baldo June 2016
Below right: Everett Makela reviews Baldo core, June 2016
Water is readily available from a nearby
river, whereas a new hydro dam will supply the area with cheap electricity within
the next 2 years, which may drive down
the mine’s operating costs significantly
and potentially make this area a worldclass mining district, in which Equitas
now controls major land holdings.
The recently secured funding could partly be used for new acquisition opportunities in Brazil.
Equitas’ team in Brazil is highly experienced in gold exploration, development
and mining, with a strong track-record in
South America including Brazil.
Major milestones ahead
First, Equitas will acquire and install a
gravity plant to process the saprolite
mineralization from the Baldo Zone.
Once permits and the necessary
supply agreements are in hand, the
second phase of the plan envisions the
construction of a CIL plant between the
Baldo and Crente Zones. These 2 zones
are less than 1 km apart.
Initial metallurgical test work indicates
that in excess of 85% gold recovery can
be achieved through gravity separation
and cyanide leaching.
The 3rd phase would be to increase
production Cajueiro under a full
production licence. Rockstone expects
that this could be funded through
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Research #14 | Equitas Resources Corp.
operating cash-flows.
This could mean that no further equity
dilution is targeted. To achieve this,
the plan is to put the Baldo and Crente
Zones into dual production through CIL
and gravity plants.
While Baldo already produces gold with
a “modest” rate, Crente is set to be tied
into the Baldo production.
Other target areas on Cajueiro are
also highly prospective, with previous
artisanal mining activity across the
property.
The Juruena gold belt has historic
artisanal regional gold production of
7-10 million oz and its considered a
recognized mining friendly jurisdiction.
Several major miners have an active
presence (e.g. Vale, Anglo, BHP Billiton,
Anglogold, Kinross).
Brazil owns the 7th largest gold reserves
globally. The country produced >$6.5
billion worth of gold in 2012, yet a large
proportion of the country is underexplored and as such is offering a
distinguished opportunity through the
use of modern exploration and mining
technologies.
Brazil is ranked 3/12 of its regional
countries for doing good business. Brazil
is the world’s 6th largest economy and
5th largest by population. It is rated
investment grade by both S&P and
Moody’s.
Net inflows of foreign investment have
increased by a factor of >5 (from $12
billion in 2003 to $67 billion in 2011).
Brazilian mining law includes a 1%
royalty fee on gold, transparent title
and highly competitive tax rates. Brazil’s
economy has been on a downtrend for a
handful of years.
Rockstone believes this all makes for a
very rare and exceptional opportunity
to rapidly develop, grow and acquire
additional projects within Central Brazil.
Above: Trench reclamation at the Baldo Zone in June 2016
Below: Drilling on the Cajueiro Property
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Above left and right: Trenching and trench sampling at the Baldo Zone in June 2016
Below: Everett Makela examining trench excavation in June 2016
Research #14 | Equitas Resources Corp.
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Research #13 | Equitas Resources Corp.
About Equitas Resources Corp.
Equitas Resources Corp.’s objective is to
create shareholder value through new
mineral discoveries and through expansion of
current gold mining operations.
Previous Coverage:
Research #12 “Equitas secures innovative
funding for an unique opportunity“
(June 7, 2016)
Research #11 “Equitas starts drilling to prove
up more gold for production“
(May 26, 2016)
Research #10 “Ready to make money as an
incrementally growing gold miner“
(April 27, 2016)
Research #9 “Equitas Acquires Turnkey Gold
Mine For Near-Term Cash Flow Growth While Getting Ready For Garland Nickel Exploration“ (January 15, 2016)
Research #8 “The Pathway To Discovery“
(December 16, 2015)
Research #7 “Voisey‘s Bay 2.0“ (October 21, 2015)
Research #6 “Equitas Starts Drilling and
Triggers Buying Rush“ (September 24, 2015)
Research #5 “Kingsley Arrives at Equitas‘
Garland Base Camp“ (September 10, 2015)
Research #4 “Early Warning Report on Equitas
Resources“ (September 2, 2015)
Research #3 “Beyond Our Wildest Dreams
(Revisited)“ (June 26, 2015)
Research #2 “King & Makela Identify 9 KnockYour-Socks-Off-Targets near Voisey`s Bay
Nickel Mine“ (May 13, 2015)
Source: Equitas Resources Corp. corporate presentation (June 2016)
Research #1 “Vale Vale! Ex-Vale‘s Principal
Geologist and Chief Geophysicist on the Case
to Answer the Multi-Billion-Dollar-Question“
(April 20, 2015)
8
Disclaimer and Information on
Forward Looking Statements:
All statements in this report, other than
statements of historical fact should be considered forward-looking statements. Much
of this report is comprised of statements
of projection. Statements in this report
that are forward looking include that base
and precious metal prices are expected to
rebound; that Equitas Resources Corp. or
its partner(s) can and will start exploring
further; that exploration has or will discover a mineable deposit; that the company
can raise sufficient funds; that any of the
mentioned mineralization indications or
estimates are valid or economic. Such statements involve known and unknown risks,
uncertainties and other factors that may
cause actual results or events to differ materially from those anticipated in these forward-looking statements. Risks and uncertainties respecting mineral exploration and
mining companies are generally disclosed
in the annual financial or other filing documents of Equitas Resources Corp. and similar
companies as filed with the relevant securities commissions, and should be reviewed
by any reader of this report. In addition,
with respect to Equitas Resources Corp., a
number of risks relate to any statement of
projection or forward statements, including
among other risks: closing of the proposed
transaction with Alta Floresta Gold Ltd.; the
receipt of all necessary approvals and permits; the ability to conclude a transaction to
start or continue exploration; uncertainty of
future base and precious metal prices, capital expenditures and other costs; financings
and additional capital requirements for exploration, development, construction, and
operating of a mine; the receipt in a timely
fashion of further permitting for its legislative, political, social or economic developments in the jurisdictions in which Equitas
Resources Corp. carries on business; operating or technical difficulties in connection
with mining or development activities; the
ability to keep key employees, joint-venture
partner(s), and operations financed. There
can be no assurance that such statements
will prove to be accurate, as actual results
and future events could differ materially
from those anticipated in such statements.
Accordingly, readers should not place
undue reliance on forward-looking information. Rockstone and the author of this
report do not undertake any obligation to
update any statements made in this report.
Research #13 | Equitas Resources Corp.
Disclosure of Interest and
Advisory Cautions:
Nothing in this report should be construed
as a solicitation to buy or sell any securities
mentioned. Rockstone, its owners and the
author of this report are not registered
broker-dealers or financial advisors. Before investing in any securities, you should
consult with your financial advisor and a
registered broker-dealer. Never make an investment based solely on what you read in
an online or printed report, including Rockstone’s report, especially if the investment
involves a small, thinly-traded company that
isn’t well known. The author of this report is
paid by Zimtu Capital Corp., a TSX Venture
Exchange listed investment company. Part
of the author’s responsibilities at Zimtu is to
research and report on companies in which
Zimtu has an investment. So while the author of this report is not paid directly by
Equitas Resources Corp., the author’s employer Zimtu will benefit from appreciation
of Equitas Resources Corp.’s stock price. The
author does NOT own any shares or other
kinds of interests or securities of Equitas
Resources Corp., however he owns shares
of Zimtu Capital Corp. and thus would also
benefit from volume and price appreciation of its stocks (Zimtu owns ~6.4 million
common shares and ~10.9 million share
purchase warrants of Equitas Resources
Corp.). The company may have one or more
common directors with Zimtu Capital Corp.
Thus, multiple conflicts of interests exist.
Therefore, the information provided herewithin should not be construed as a financial analysis but rather as advertisement.
The author’s views and opinions regarding
the companies featured in reports are his
own views and are based on information
that he has researched independently and
has received, which the author assumes to
be reliable. Equitas Resources Corp. has not
reviewed this content prior to publication.
Rockstone and the author of this report
do not guarantee the accuracy, completeness, or usefulness of any content of this
report, nor its fitness for any particular purpose. Lastly, the author does not guarantee
that any of the companies mentioned in
the reports will perform as expected, and
any comparisons made to other companies may not be valid or come into effect.
Please read the entire Disclaimer carefully.
If you do not agree to all of the Disclaimer, do not access this website or any of its
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Analyst Profile and Contact:
Stephan Bogner (Dipl. Kfm., FH)
Mining Analyst
Rockstone Research
8050 Zurich, Switzerland
+41-44-5862323
[email protected]
Stephan Bogner
studied at the
International School
of Management
(Dortmund,
Germany), the
European Business
School (London)
and the University of Queensland
(Brisbane, Australia). Under supervision
of Prof. Dr. Hans J. Bocker, Stephan
completed his diploma thesis (“Gold In
A Macroeconomic Context With Special
Consideration Of The Price Formation
Process”) in 2002. A year later, he
marketed and translated into German
Ferdinand Lips‘ bestseller („Gold Wars“).
After working in Dubai for 5 years, he
now lives in Switzerland and is the CEO of
Elementum International AG specialized
in duty-free storage of gold and silver
bullion in a high-security vaulting facility
within the St. Gotthard Mountain Massif
in central Switzerland.
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