Brigus piles on the ounces in Grey Fox update

Brigus Gold (BRD-T, BRD-X) has updated its resource estimate for the Grey Fox gold property, and the results show the company is particularly adept at pushing inferred resources up into a ballooning “indicated” category. 

Grey Fox is about 4 km southeast of Brigus’ operating Black Fox gold mine in Timmins, Ont. 

The new Grey Fox estimate outlines resources in the 147 and Contact zones, with 147 holding 279,244 indicated oz. gold and 51,261 inferred oz. gold. Contact holds 201,606 indicated oz. gold and 39,800 inferred oz. gold.

Indicated resources stand at 7.1 million tonnes grading 2.1 grams gold for 480,849 oz. gold, with most of the mineralized material coming from open-pittable resources, which account for 440,342 oz. of the total ounces. Indicated resources previously stood at 116,7810 oz. gold. 

Inferred resources come in at 1.69 million tonnes grading 1.7 grams gold for 91,061 oz., and again open-pit resources dominate, accounting for 73,843 oz. gold.

Brigus says 84% of the new resources occur within 200 metres from surface, and thus have open-pit potential.

The update is based on 488 holes and 65,000 metres of drilling, but doesn’t include results from its newly discovered Grey Fox South zone, which sits 400 metres east and runs sub-parallel to the 147 zone.

Drilling is ongoing at Grey Fox South, where the company has intersected a mineralized trend over a 275-metre strike length. The zone remains open in all directions, and is being explored by two drilling rigs.

Kerry Smith, an analyst at Haywood Securities, commended Brigus for how far it has come on the property in a relatively short time — it only began exploring Grey Fox in September 2010.

Smith also pointed to the cost benefits of exploring in an established gold camp like Timmins.

“We estimate Brigus added these ounces at a cost of US$14 per oz.,” Smith writes in his investors’ note, which he says is “a very low cost for resource additions.”

Smith also describes the resource as being “well defined,” given that it was based on dense drilling with 15-metre spacing.

Haywood Securities has a $2 target for Brigus, which is based on a six-time multiple to its estimated cash flow per share of US35¢, and a gold price of US$1,650 per oz.

Brigus plans to have a preliminary economic assessment on the property out this November.

In Toronto on Sept. 20, Brigus shares were off a penny to $1.01, on 1.65 million shares traded.