Emerging New Gold Exposure In Anova

By Gavin Wendt | More Articles by Gavin Wendt

Anova Metals (ASX: AWV, Share Price: $0.032, Market Cap: $8.4m) is an Australian based junior developer concentrating activities on the Big Springs Gold Project in northern Nevada. Since acquiring the historical producer in 2012, Anova has progressed steadily towards production. With permitting for the initial stages expected during Q1 2015, open-pit mining will commence during mid-2015. An initial three-year, four-stage mining plan is being developed, which will include one open-pit and three underground operations mining a total of 780,620t @ 5.52g/t gold.

The company this week announced high-grade assay results from recent infill-drilling at Big Springs, which provide added confidence in the 601 deposit to host robust grade, near-surface mineralization.

Market Significance

Anova Metals is a brand new Portfolio introduction that complements our gold sector exposure at a time when we believe gold prices have bottomed, and investors should looking out for cheap sector entry points. Anova is a relatively low-risk exposure because it is mining already-identified gold resources and utilising neighbouring production infrastructure, therefore minimizing start-up costs and overall investment risk. It therefore represents the ideal investment opportunity to take advantage of oversold gold prices.

Announcement Detail

Anova has released high-grade assay results from its infill-drilling program at its 100%-owned Big Springs project in North Eastern Nevada, USA. The infill program was focused on the 601 deposit at South Sammy, with the results providing great confidence in its capacity to host robust grade, near-surface mineralization.

So far, results from eight holes have been received and include high-grade intercepts as shown in Table 1 below. Anova has completed the diamond and RC drilling programs for 2014, with the assay results for the remaining 38 holes to be released as soon as they are received.

Hydrogeological drilling is also being undertaken to test water flows as part of the mine planning and permitting for planned mining operations at North Sammy. Permitting and mine planning activities are continuing to advance with the Mine Reclamation permit and Water Pollution Control permit applications due to be lodged mid‐December. Current expectations for the granting of the mine permit approval are late Q2 2015.

Technical Significance

The results reinforce Anova’s production plans at Big Springs. The project is situated within the Carlin region of northern Nevada, a truly world-class mining district that produces approximately 75% of the USA’s annual gold output. The state has produced more than 150Moz of gold, largely over the last 30 years, and is a mining-friendly jurisdiction.

The project incorporates a well-defined resource of 16Mt @ 2.0g/t for 1.03Moz, with a higher grade component of 3.1Mt @ 4.2g/t for 415koz. The initial mining inventory includes 781kt @ 5.52g/t Au, for 138,600oz of contained gold, with the 272koz balance of the high-grade component to be further evaluated.

The mineralisation, including metallurgy, is well understood, and hence will help mitigate start-up risk. Ore from Big Springs was previously processed through a 1,000 tpd trial roaster located at Big Springs, which was the pre-cursor to the much larger 6,000 tpd Jerritt Canyon facility. Recoveries averaged 86% through the trial roaster. Jerritt Canyon has been treating similar ores for over 30 years, with good metallurgical recoveries of 85-90% expected. Geologically the mineralisation is well-understood and defined.

Furthermore, there is considerable potential to expand current resources, through extensions to the known mineralisation, and through new discoveries on the surrounding tenements. A number of the ore shoots that Anova is looking at mining are still open down-plunge.

Project Overview

The project was acquired by Anova (then Kimberley Rare Earths Limited) from Victoria Gold Corporation with completion in February 2013. Cash consideration was in the order of A$4.65 million, plus 20 million consideration shares and 30 million performance shares (in three tranches) being issued or vested. There are currently another 15 million performance shares that are yet to vest – these will vest should a Probable Ore Reserve of at least 75,000oz be delineated by February 2015.

The key to the Project is the low start-up capital cost of around US$2 million for the initial open-pit, which will mainly be for the re-grading of internal roads, preparation of a ROM pad and the payment of rehabilitation bonds. Initial access to the underground operations will be paid out of cash flow.

Summary

We were impressed by the recent initial presentation by Anova here in Sydney and hence we have been looking for a solid initial entry point to the stock, taking into account the ongoing volatility in both markets and metal prices. We believe now is the right time for investors to buy into a relatively low-risk, low capex gold play in one of the world’s most prolific gold-producing regions. Accordingly, we are introducing Anova Metals for the first time, with an initial Speculative Buy recommendation around $0.032.

About Gavin Wendt

Gavin Wendt is the Founder and Senior Resource Analyst with MineLife. He has been involved in the Australian share market for more than 20 years as a resource analyst, employed primarily within the stockbroking and finance industries.

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