Wednesday, December 6th 2023

Lexington Gold Ltd

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“There’s Gold in them thar hills” for Lexington Gold. But just how much?


“…The Lexington Gold Team has a proven track record, the assets look good, and initial results are encouraging. Sulphide mineralisation was observed in all six drill holes, a well established indicator of gold…”


One of AIM’s newest mining companies, Lexington Gold (AIM:LEX), has returned to one of the industry’s oldest sites, the location of the US gold rush of the early 1800s to seek its fortune.

Lexington is working to realise the potential of four gold projects covering a 1,675 acre site crossing the Carolina Super Terrane (CST) geological feature in North and South Carolina, a historic mining site to which the industry has only recently begun to apply modern mining technologies. As the company’s CEO Dr Bernard Olivier said in an interview with TMS earlier this month , the Lexington’s assets sit amidst multi-million-ounce mines operated by large-scale companies, including the world class Haile Mine run by the OceanaGold Corporation (ASX/TSX:OGC).

Richland Resources becomes Lexington


Lexington is the product of a reverse takeover completed earlier this year when Richland Resources (AIM:RLD), an AIM cash shell, took ownership of Global Asset Resources (GAR), the previous owner of the projects. At present Lexington has a 51pc membership interest in each project, with the rest owned by joint venture partner Uwharrie Resources Inc. The deal gives Lexington the option to take an 80pc stake after four years should Uwharrie choose not to fund its proportionate share of future costs. Lexington is committed to contribute at least AU$5 million to the projects over the next four years to maintain its majority stake.

If the projects prove as productive as the company hopes, it would seem to have secured a bargain. Richland paid just AU$60,000 in cash to acquire the assets, granting GAR AU$1.04m in shares in the new company. The takeover announcement was followed last November with a £3.3m fundraise, some £2.5m of which will finance working capital requirements and a planned two year work programme.

Lexington has assembled a management team with considerable experience in developing the potential of mining small caps. Dr Olivier, previously Richland’s CEO, is credited with restructuring and returning the group to profitability, and leading the team which established a maiden JORC Resource estimate of 3.9 million gold ounces for Bezant Resources’ Mankayan project, returning an 8p per share return of capital to its shareholders.

Non-Executive Chairman Edward Nealon, who brings 40 years mining and exploration experience, founded South Africa and Zimbabwe miner Aquarius Platinum, which went on to become the fourth largest platinum producer in the world. He also co-founded well regarded AIM miner Sylvania Platinum (AIM:SLP). Non-Executive Director Rhoderick Grivas managed ASX and TSX listed gold miner Dioro Exploration NL (ASX:DIO), where he oversaw the discovery and development of a gold resource through feasibility to production, and is currently Non-Executive Chairman of ASX listed explorer Okapi Resources Limited (ASX: OKR). Non-Executive Director Melissa Sturgess, a founding director of Sylvania Resources Limited and a Aquarius Platinum veteran, has held directorships at several other AIM-quoted and ASX-listed companies, with a particular focus on the acquisition, structuring and financing of natural resources transactions across Africa.

Old mines, new gold?


Any summary of Lexington’s four projects reads rather like a potted history of the early US gold industry. Gold production at the Jennings-Pioneer Project, part of the Barite Hill Gold district in South Carolina, began in 1852, its oxidized sulphide ores proving themselves among the richest in the US, producing approximately 45,000 ounces of gold. Like all four projects, Jennings-Pioneer offers several greenfield exploration prospects with well-defined and potentially continuous zones of gold and base metal mineralisation already identified from historic mines and surface workings. The most recent mine to operate in the area was commissioned, mined and reclaimed by former TSX listed Nevada Goldfields.

The Argo Project in the northwest corner of Nash County, just north of Nashville, North Carolina, was last mined in 1894. Lexington believes the Project offers potential for systematic surface prospecting and mapping to define extensions to known mineralisation. The Carolina Belle Project, in Montgomery County, just north of Candor, North Carolina, has rarely been mined since it was discovered at the turn of the last century when it produced 50,000oz of gold until a dispute between the neighbouring mines prevented continued mining activities after 1916. The JKL Project, which combines the Jones-Keystone Properties and the Loflin Properties, was first mined by small scale prospectors from 1852 until the Civil War (1861) and then again up and until the mid-1930s. The site is studded with pits, trenches, shafts, adits and glory holes at several workings, offering evidence of widespread gold mineralisation with grades ranging between 0.5g/t to 2.5g/t within a structurally complex setting typical of the CST.

The intriguing geological features the JLK Project shares with the Haile Mine led Lexington to select it for the company’s first drill campaign, which began in March. The first phase of the programme, completed last month, drilled six diamond holes to a minimum of 610 metres on the south-western Loflin side of the Project, following up on historical third-party drill intersections such as hole LOC90-01, where a 48.8 metre interval @ 1.12g/t Au from surface including 18.3m @ 1.57g/t Au, was recorded.

The signs so far are promising. Sulphide mineralisation was observed in all six drill holes, a well established indicator of gold. Initial assay results from the first four drill holes are expected very soon, possibly in the next few days: the company’s most recent operations update published on 21 April stated they would received ‘in approximately two to three weeks’ time’. Lexington will use the results to establish an initial maiden resource estimate for JKL with a view to expanding it through additional future drilling. In March the company secured an agreement with landowners to lease an additional 129 acres of mineral exploration rights and a further 22 acres of surface rights on the south-western Loflin side of the JKL Project, bringing the Project’s acreage to 179.66 acres.

Last month the company also completed a 937 line-kilometre fixed-wing airborne geophysical survey flown over the JKL, Carolina Belle and Argo Projects. Data from the survey, designed to further define and delineate the known areas of mineralisation over the licence areas, and identify new targets for geological studies and potential drilling, is currently being interpreted. Initial results are in from an earlier helicopter-borne versatile time domain electromagnetic (VTEM) geophysical survey over the Jennings-Pioneer Project, designed to identify volcanic massive sulphide (VMS) style mineralisation. A high-level overview of the unprocessed data has identified two potential anomalies that will be further investigated through soil sampling, trenching and drilling.

Gold’s green shoots


Lexington’s promising progress dovetails with signs that the price of gold is picking up after retreating from the highs of more than $2,000 reached last August, as investors looked for safe havens from pandemic uncertainties. The price fell at the turn of the year after money piled into equities following the rollout of coronavirus vaccines in the US and Europe, and as bond yields rose.

But the price has risen by some 5pc over the past month, moving back above $1,800. Demand has spiked in China and India, two of the biggest consumer markets for the yellow metal. The amount of gold withdrawn from the Shanghai Gold Exchange doubled in March from a year earlier to 168 tonnes, and demand for gold jewellery has rebounded in India, where imports hit a near two-year high in March of 98.6 tonnes. Fears of a possible uptick in inflation as the world economy recovers from the pandemic have prompted investors and central banks to increase their holdings, underlining the metal’s continued status as a safe-haven asset and store of value.

During his interview with TMS Dr Olivier discussed Lexington’s prospects in the context of TSX-listed Romarco Minerals Inc, which after mining 4.8 million ounces of gold from assets close to Lexington’s projects over the past decade was sold to OceanaGold Corp for around $856 million. Lexington, he argued, has an experienced team in place able to do ‘exploration quicker and cheaper than a lot of the majors’, and to secure a deal with a major if the resource is proven up.

It’s a bold comparison. But the team has a proven track record, the assets look good, and initial results are encouraging. The company’s share price is currently around 3.5p, up from just under 3p at the start of the year, and will only go one way if the next set of results – due very shortly – turn out to be as good as hoped.