Kaminak Gold's (KAM-X) Coffee property is really turning up the goods, and the market has not given the latest drill results the credit they deserve.
Before last week's drill results, the Supremo zone was a high grade but small zone with a fair amount of low grade stuff around it. Probably a marginally economic deposit just because of the high grade core. The kicker was that two of the lower grade zones nearby might extend to the Supremo zone and contain some higher grade material. That has now been proven.
Let me give you some context. In 2010, the Golden Saddle property just to the north and across the river from Coffee was purchased by Kinross for a cash-and-stock value of $139 million, at the drill result stage. The drill results over there looked like this:
- 18.1 m at 4.35 g/t
- 17.7 m at 4.38 g/t
- 16.0 m at 4.20 g/t
- 16.0 m at 4.16 g/t
- 21.6 m at 5.60 g/t
- 14.2 m at 3.38 g/t
- 50.7 m at 3.10 g/t
Mining company executives look at any decent (couple hundred metre box) accumulation of 3-5 g/t as economically minable rock, and the Golden Saddle deposit was looking like that. The ensuing resource estimate produced just over 1 million ounces.
Previous to this news release, I was thinking Coffee was a bit lower grade overall than Golden Saddle, but also with a higher grade core. Now these drill results have produced lots of the same type and grade of rock that Golden Saddle was purchased based on. Coffee is now bigger than Golden Saddle, and it's still only at the drill result stage, where Golden Saddle was purchased.
With 85 million fully diluted shares, Kaminak is worth about $195 million now. This is about 40% more than Underworld Resources when it was purchased, but I will bet that Kaminak is sitting on a 3 million ounce deposit instead of 1 million. The share price should be closer to $6 - $8 right now.
The Junior Gold blog