An exciting month beckons for Lexington Gold
“…But the fundamental case for Lexington has not changed. Indeed the initial findings from Carolina Belle give grounds for hope that the company now has two decent looking prospects. With programmes at both due to start later this month, and a maiden resource estimate for the Loflin prospect on the horizon, Lexington is well worth a look at this price…”
The latest in our series of updates on summer drilling by some of AIM’s more promising small cap miners returns to Lexington Gold (AIM:LEX), an exploration company – which we last covered in July – seeking to bring new technology to the historic sites of the US gold rush.
A brief recap: Lexington is working to realise the potential of four gold projects across a 1,675 acre slice of the Carolina Super Terrane geological feature in North and South Carolina, location of the OceanaGold Corporation’s world class Haile Mine. The company has a 51pc membership interest in each project, with the rest owned by joint venture partner Uwharrie Resources. The deal gives Lexington the option to take an 80pc stake after four years should Uwharrie choose not to fund the future costs it would be obliged to pay to retain its interest. Lexington followed up the acquisition with a £3.3m placing to fund a two year work programme.
The 179.66 acre JKL Project combines the Jones-Keystone and Loflin Properties that small prospectors mined till the outbreak of the Civil War, and then again up to the Great Depression. Pits, trenches, shafts and glory holes at several workings offer evidence of widespread gold mineralisation, with grades ranging between 0.5 and 2.5 g/t. Lexington believes the licence shares intriguing geological resemblances with the Haile Mine.
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 50,000 ounces of gold until a 1916 dispute between the neighbouring mines ending further exploration and production.
The Jennings-Pioneer Project, part of the Barite Hill Gold district in South Carolina, 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. During its 19th century heyday the mine produced 45,000 ounces of gold.
The Argo Project in the northwest corner of Nash County, just north of Nashville, was last mined in 1894. Lexington believes the Project offers potential for systematic surface prospecting and extensions to known mineralisation.
Lexington’s management team has a track record of developing mining small caps. CEO Dr Bernard Olivier is credited with restructuring and returning Richland Resources to profitability, and led efforts to establish a JORC Resource estimate of 3.9 million ounces (MoZ) of gold at the Mankayan project operated by Bezant Resources. Non-Executive Chairman Edward Nealon founded Aquarius Platinum – which went on to become the fourth largest platinum producer in the world – and well regarded AIM miner Sylvania Platinum.
Progress at JKL
The JKL campaign began this March with the drilling of six diamond holes 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 metres interval @ 1.12g/t gold from surface, including 18.3 metres @ 1.57g/t gold, was recorded. Drilling followed a 937 line-kilometre fixed-wing airborne geophysical survey over the JKL, Carolina Belle and Argo Projects in April.
Assay results for the first six drill holes, received in May and June, all recorded gold intersects, the highlights including 35.7 metres @ 1.15 g/t gold from surface to 35.7 metres, 32 metres @ 0.97 g/t gold from 53.9 metres to 85.9 metres, 12.2 metres @ 1.39 g/t gold from 23.5 metres to 35.7 metres, and 35 metres @ 0.79 g/t gold from 9.8 metres to 44.8 metres. The results will be incorporated into the company’s 3D model, with a view to establishing a maiden Mineral Resource Estimate. A subsequent update reported that consultants had been engaged to review and analyse the new drilling data, and to recommend whether a second phase of drilling will be required to develop the estimate, which will integrate new and historic data.
Exploration at Carolina Belle
In July Lexington reported positive assay results from the first ever surface exploration sampling programme at the Carolina Belle Project, undertaken earlier this year. Soil, rock chip, and grab samples conducted on a 50 by 100 metre grid covering the entire 391.98 project acre identified new areas of alteration and mineralisation, and additional drill targets. Selected gold assay results over 1 g/t included 17 g/t, 5.1 g/t, and 3.5 g/t, and a previously unknown gold anomaly was located over an initial surface area of approximately 350 by 250 metres.
A major update published late last month announced that modelling and interpretation of the geophysical data gathered this year would allow drilling programmes to begin at both the Carolina Belle and JKL Projects on 20 September. Some 5,000 metres of Reverse Circulation (RC) drilling will be carried out by Canada-based operator FTE Drilling, which has a track record of operations at the Haile Mine.
Drilling at Carolina Belle will explore the Project’s historic Iola and Uwarra gold mining operations, historical surface workings, and other known areas of gold mineralisation. Operations at the JKL Project will focus on extending the asset’s Loflin and Jones-Keystone prospects. The Loflin programme will seek to build on a maiden resource estimate for the prospect, expected to be received from consultants ‘in the coming weeks’ once their resource and 3D modelling process has been completed.
Gold price holding steady
Lexington has been forging ahead against the background of a gold market that has recovered somewhat after falling back earlier this year from the record highs recorded 12 months ago. Investors who took refuge in the metal before the vaccinations promised a way out of the pandemic returned to equities through the spring and early summer.
But gold’s price has stabilised at just over $1,800 in recent weeks as governments continue to resist interest rate rises and monetary tapering that may disturb a global economy still struggling to emerge from Covid’s shadow. Gold is poised to resume its historic role as a haven asset should economic conditions deterioate again.
Looking ahead
Lexington’s share price hasn’t moved much since we last looked at the company. The price rose sharply during the spring as its drilling programme gathered momentum, spiking from 3.25p in late April to nearly 6p a month later. It has hovered around the 3.5p to 4p mark since June, trading at just over 3.6p at the time of writing.
But the fundamental case for Lexington has not changed. Indeed the initial findings from Carolina Belle give grounds for hope that the company now has two decent looking prospects. With programmes at both due to start later this month, and a maiden resource estimate for the Loflin prospect on the horizon, Lexington is well worth a look at this price.
