Heliostar Metals stock rises on updated Ana Paula gold resource

Heliostar Metals‘ (TSXV: HSTR; US-OTC: HSTXF) stock surged on Monday after the junior posted an updated resource estimate for its Ana Paula project in Guerrero, Mexico, acquired from Argonaut Gold (TSX: AR) for US$30 million earlier this year.

Using on a cut-off grade of 2.5 grams per tonne gold, the new resource contains 710,920 measured and indicated oz. of gold in 3.4 million tonnes grading 6.6 grams gold per tonne. Another 447,512 oz. is in the indicated category, in 4.2 million tonnes grading 4.24 grams gold.

This represents a 58% increase in measured and 30% increase in indicated gold grades since the the previous resource in March. For the improvement in grade, however, measured and indicated categories saw declines in ounces from nearly 1.5 million ounces. The previous estimate used a cutoff grade of 0.6 gram gold per tonne within the open pit shell and 1.6 grams gold outside of it, while the new resource uses a cutoff grade of 1 gram gold for both.

Shares of Heliostar Metals closed Monday’s session 5.3% higher at 30¢ apiece. The Vancouver-based miner has a market capitalization of $43.4 million.

According to Heliostar, the grade growth was the result of tighter spaced drilling undertaken at the Ana Paula deposit this year, a requirement for an underground mining focused resource estimate.

At the core of the resource is a high-grade panel that measures 280 metres long, 100 metres high and 60 metres thick. Drilling in this area has supported reporting to the measured and indicated categories in the updated resource.

The company believes that the connected zone of greater than 200,000 oz. grading over 10 grams gold per tonne within the high-grade panel can be targeted in the initial years of mining.

“At the beginning of this year, Heliostar set out to transform the Ana Paula project into a deposit that will support a high-margin, underground gold mine. Today’s updated resource estimate is a major milestone on this rapid path of growth and de-risking toward production,” Heliostar’s CEO Charles Funk said in a release.

He also noted that these additional resources have been delivered at a cost of just US$16 per gold oz., calculated from the roughly US$4.7 million spent on exploration by the company to date.