In recent weeks, the price of gold has gyrated within a fairly tight range as the market has managed to shrug off just about any and all macro-economic and geopolitical headwinds. In addition, the massive influx of investor interest into the cryptocurrency space as a new “gold standard” and hedging instrument has also taken some shine off of the yellow commodity. Digital currencies like bitcoin have attracted investors with promises of a new uncorrelated asset class that serves a modern alternative to gold as an inflation hedge. Yet, while it’s true that bitcoin and other digital currencies have a predetermined number of coins in circulation, one look at the amount of initial coin offerings—which has soared to over 1,000 just this past year—and the number “forks” in which one coin splits into two totally separate coins, raises serious concerns about that thesis.
Contrast that with the global gold supply. Gold production over the past several decades has actually been dwindling down to alarming levels. As Bloomberg recently reported, Peak Gold is a real concern and supply constraints could mean there won’t be enough gold produced to meet demand in the relatively near future.
“Prices could climb to as high as $1,400 an ounce in the next 12 months, and top record highs in the “medium term,” Oliphant said at the Denver Gold Forum, the 28th annual gathering of mining executives, hedge funds, bankers and analysts that attracted about 1,100 attendees.”
That supply shortage would, in turn, put significantly upward pressure on gold prices. For resource companies sitting on quality gold projects, this could provide a major tailwind and generational opportunity to capitalize on. Take Winston Gold Mining Corp. (WGC:CNX)(WGMCF) for example. The junior miner is currently developing its Winston Gold Project, which is located in Helena, Montana. The region has a rich history of gold production. The company has repeatedly expressed its excitement regarding the potential of the Winston Gold Project.
In October, Winston Gold announced the initial drill results from the 10-hole drilling program it started two months prior on property, which represents a very promising opportunity, with four significant veins in Custer, West Edna, Parallel and Block 93, as well as a potential fifth that’s yet to be named.
Most significant was the early data that doubled the strike length of the Parallel Vein to 385 ft. at the company’s wholly-owned Winston gold property near Helena, Montana. The vertical extent has also increased to 277 ft. from 65 ft.
“The results have not only significantly expanded the strike length of the Parallel vein but also identified a number of previously unknown veins between the Block 93 and the Parallel veins,” Murray Nye, CEO and Director of Winston Gold Mining.
As Nye explained in an August interview with Equities.com, the close proximity of the veins to each other serves as a significant advantage for Winston Gold. “We think that by cross cutting one vein, we could start a couple of headings on some material that might run commercially in one section,” he said. “In the Parallel Vein area, we think we can access that area and establish another couple of headings on that material. We think we can very quickly be in a position where we’re hauling out maybe 100 to 150 tons a day of material that we get to use for our bulk sample, and hopefully it would run on the grade that we think it will run on a continuous basis. That will offset a lot of the expense that we’ll incur as we explore this.”
And as Nye put it, these are “very high-grade veins by any standard.”
Among the highlights of the initial drill results include:
- Hole W77 was drilled to test both the Parallel Vein and the Block 93 vein west, which intersected a 6-ft. interval of the Parallel Vein at a down-hole depth of 344 ft. that averaged 0.338 oz./ton (11.59 g/t) gold. This intercept increased the strike length of the Parallel Vein by about 55 ft. to the west bringing the total strike length to about 385 ft.
- In the footwall zone of the Parallel vein, hole W77 intersected a previously unknown vein averaging 0.124 oz./ton (4.25 g/t) over 7 ft. This included a 2-ft. interval averaging 0.385 oz./ton (13.2 g/t) gold.
- Hole W77 also intersected three separate mineralized zones in the Block 93 vein system stretching across 16 ft. of core from 121 to 137 ft. down hole. These three zones together averaged 0.214 oz./ton (7.34 g/t) gold over 16 ft. The true width of this zone is estimate at about 6.5 ft. Highlights within this zone included a 1 ft. section averaging 0.568 oz./ton (19.47 g/t) gold.
- A new vein was discovered in the hanging wall between the Block 93 and Parallel veins at a down-hole depth of 183 ft. It averaged 0.199 oz./ton (6.82 g/t) gold over 1 ft.
- Hole W75 was drilled to test the northeastern extension of the Parallel Vein intersected high-grade gold mineralization in the structure and effectively doubled its strike length from 150 ft. to almost 330 ft. The vertical extent of the vein was also increased from 65 ft. to 277 ft.
- Hole W75 intersected 1 ft. averaging 1.756 ounces per ton (60.2 g/t) gold within a 4-ft. section of the Parallel vein
- Hole W75 also intersected a vein at 53 ft. down-hole located just above the workings where holes W74 and W76 were lost. It averaged 0.281 oz./ton (9.63 g/t) gold over 3 ft. including a 1 ft. interval averaging 0.656 oz./ton (22.5 g/t) gold over 1 ft.
Winston Gold also stated that it expects the last two holes of the drill program to be completed within the next month.
“I think getting us to a bulk sample would be a big story,” Nye told Equities.com in August. “We’ve been saying all along that we think this thing could be commercially viable, and I think a bulk sample would tell us that in spades. I’m quite excited about the previous drilling done here and the way that it’s all shaping up. We’ve got a very good mining opportunity ahead of ourselves, and that’s what we’ll be focusing on for sure.”
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