Moneta finds new gold zone at Golden Highway

Toronto-based Moneta Porcupine Mines (TSX: ME; OTC: MPUCF) is up on strong assays from a hole drilled outside of the current resource at its 100% owned Golden Highway gold project in Timmins, Ont.

The news pushed Moneta’s shares up 18% to 16¢ after it reported an intercept carrying 2.02 grams gold per tonne over 114.5 metres. The hit included a 24-metre interval grading 3.9 grams gold and 9 metres of 5.5 grams gold.

What makes these assays exciting is that they were pulled from a hole drilled only 100 metres from the project’s existing resource base, suggesting a new gold zone on the property, Haywood Securities analyst Kerry Smith writes in a note.

The Golden Highway property hosts a global gold resource of 4.3 million oz. on six zones. It has another four gold zones — Windjammer North, Landing, Twin Creeks and LCZ — that were not included in a 2012 resource estimate.

The recent hole, designed to test a 400-metre drilling gap between the volcanic-hosted Windjammer North and Landing zones — unearthed another zone, Moneta says.

“This discovery confirms the mineralization potential along a 12 km stretch of Destor volcanic that has seen limited drilling,” Ian Peres, the company’s president and CEO, says in a statement. More drilling on the zone could boost the overall economics of the project, he adds.

“Moneta believes that this new zone could add 0.5 to 1 million oz. to the project’s open-pittable resource base, which could be incorporated into the current pit or developed as a starter pit,” Smith notes.

Golden Highway hosts an open-pit resource of 977,000 indicated oz. grading 1.01 grams gold and 1.97 million inferred oz. of 0.86 gram gold. It also has an underground resource of 114,000 indicated oz. at 3.29 grams gold and 1.23 million inferred oz. at 3.28 grams.

Due to the recent assays, Moneta plans to defer publishing the updated resource estimate to the second half of the year from the first quarter. This new discovery, along with the pending drill results, could “significantly alter” Golden Highway’s current preliminary econo-mic assessment (PEA), Moneta says. 

A November 2012 PEA envisions the project as a combined open-pit and underground operation processing 25,000 tonnes per day to produce 288,000 oz. gold a year over a 12-year life. Start-up costs are pegged at $607 million.

Using a US$1,350 per oz. gold price and a 5% discount, Golden Highway has a pre-tax net present value of $748 million and a 24.4% internal rate of return. Payback is estimated in four years.

The company intends to drill 10,000 to 15,000 metres on the 100 sq. km Golden Highway property this year, Smith says. The program will focus on six areas, including north of the discovered zone, as well as on the four zones that were excluded from the current resource.