Analyst: Idaho Project's Metallurgical Tests 'Encouraging'

Oxide material metallurgical test results have returned "encouraging" column leach results from the Rangefront Zone at Liberty Gold Corp.'s (LGD:TSX; LGDTF:OTCQX) flagship Black Pine project in Idaho, one analyst said.

Tests returned a weighted average gold recovery of 86.9%, the company announced.

The results "support significantly higher recovery rates than modeled (~74%) for grades that compare favorably with our LOM (life of mine) modeled average grade for Black Pine (~0.5 grams per tonne gold [g/t Au])," wrote Chris Thompson of PI Financial in a March 23 research note.

"Weighted average gold extraction of ~87% is a pleasant beat on our LOM modeled recovery," he wrote. "Results continue to support a technically simple, low initial capital, low operating cost, ROM (run of mine) heap leach processing route for Black Pine."

Thompson maintained his Buy rating of the stock with a CA$0.90 per share target price.

The company recently announced it had increased its resource estimate for Black Pine by 52% in indicated and 31% in inferred ounces.

Then it released new drill results that included the highest-grade gold assay ever returned on the project. Hole LBP813 in the M zone returned 7.07 g/t Au over 18.3 meters, including 11.92 g/t Au over 10.7 meters and 46.7 g/t Au over 1.5 meters.

That hole provided "the grade kicker that many have forgotten Black Pine can deliver," Thompson wrote in a February note.

Analyst Geordie Mark of Haywood Capital Markets recently doubled down on his view that Liberty could be an M&A target downstream.

"We continue to be encouraged by ongoing exploration success at Black Pine," said Mark, who reiterated his Buy rating with a target of CA$2.

The Catalyst: 'Highest-Recovery Oxide Material' at Site

The column leach testing on the Rangefront Zone included 24 variability composites from large-diameter drill cores representing the range of rock types and gold grades encountered in oxide mineralization, the company said.

Gold extractions ranged from 54.1% to 95.8%. More than 80% of the leachable gold was extracted within ten days.

These new data were not included in the recent resource update and will be added to the next resource update, which is expected in late 2023, the company said.

Thompson maintained his Buy rating of the stock with a CA$0.90 per share target price.

"We see these metallurgical results as a nice follow-on from the release of a revised resource estimate from Black Pine last month," Thompson with PI Financial wrote. "All in all, the resource estimate and metallurgical results released to date confirm our view of Black Pine's potential to deliver ~200 oz Au in average annual production over a healthy plus-10-year LOM."

The Rangefront Zone of mineralization makes up about 27% of the Black Pine resource, the company said.

"The Rangefront Zone is now the highest-recovery oxide material we have found at Black Pine," Liberty Chief Operating Officer Jon Gilligan said. "The quality and quantity of metallurgical information today equals or exceeds pre-feasibility level requirements, significantly de-risking the project."

Strong Potential for Larger Mineral Endowment

The resource estimate just released builds on a maiden resource released in 2021. It shows an indicated resource of 2.6 million ounces (Moz) of oxide Au at an average grade of 0.52 g/t Au totaling 157.3 million tonnes, and an inferred resource of 483,000 ounces of oxide Au at an average grade of 0.43 g/t Au totaling 35.1 million tonnes.

"In our view, these new holes once again demonstrate both strong potential for a larger mineral endowment than that published in the Feb. 7 Mineral Resource Estimate, as well as the potential for higher grades," Alex Terentiew of Stifel GMP wrote.

The resource used a constraining resource pit at a cut-off grade (COG) of 0.2 g/t Au.

That estimate and recent drilling results may just be the beginning of the potential for the project, analyst Alex Terentiew of Stifel GMP wrote in an update note. He reiterated his Buy rating with a target price of CA$1.80 per share.

"In our view, these new holes once again demonstrate both strong potential for a larger mineral endowment than that published in the Feb. 7 Mineral Resource Estimate, as well as the potential for higher grades," he wrote.

Terentiew said Black Pine is "one of the most advanced and prospective gold deposits in the Great Basin."

Black Pine is a Carlin-style gold system, like the prolific deposits on Nevada's Carlin trend. It operated from 1992 to 1997, producing 435,000 ounces Au.

Liberty said it is continuing to de-risk the project by advancing the geotechnical program, waste-rock characterization, hydrologic work program, and permitting to preliminary feasibility study (PFS) level. It also plans to drill 32,000 more meters at Black Pine. 

Ownership and Share Structure

Institutions own 37.3% of Liberty, the company said. Those include Van Eck Associates Corp. with 11.83% or 37.75 million shares, and Franklin Advisers Inc. with 8.28% or 26.43 million shares, according to Reuters.

Strategic investor Newmont Corp. (NEM:NYSE) owns 4.3% or 13.76 million shares.

Management and insiders own 7.6%, including Director Cal Everett, who owns 3.01% or 9.6 million shares, and Board Chairman Mark O'Dea, who owns 1.74% or 5.56 million shares.

The rest, 50.8%, is retail.

Liberty has a market cap of CA$190.7 million with 319.2 million shares outstanding, including 295.6 million free-floating, Reuters reported. It trades in a 52-week range of CA$1.04 and CA$0.315.

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