Wednesday, September 27th 2023

Lexington Gold Ltd

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Time to buckle up tight for the Lexington Gold ride…


“…Ongoing exploration is funded by a £335,000 unsecured convertible loan secured this April from ‘two significant #LEX shareholders and three directors’. The loan’s conversion price was set at 30.6pc above the prevailing market share price, indicating the investors’ confidence in the company’s future…”


Lexington Gold (AIM:LEX) continues to make steady progress towards defining the potential of the four gold projects it holds across a 1,675 acre slice of the Carolina Super Terrane geological feature running through North and South Carolina. The company has a 51pc interest in each project, with an option to take an 80pc stake should venture partner Uwharrie Resources drop out.

LEX wants to open up some of the historic mines of the US gold rush with cutting edge drilling technology. The 179.66 acre JKL Project combines the Jones-Keystone and Loflin Properties mined by small prospectors until the outbreak of the Civil War, and then again up to the Great Depression. Pits, trenches, shafts and glory holes at several workings offered evidence of widespread gold mineralisation, with historic grades ranging between 0.5 and 2.5g/t. 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 ended 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-articulated and potentially continuous zones of gold and base metal mineralisation already identified from historic mines and surface workings. The Argo Project in the northwest corner of Nash County, north of Nashville, was last mined in 1894. LEX is seeking to follow in the footsteps of fellow Carolina Super Terrane explorer Romarco Minerals, which was aquired by ASX-listed OceanaGold after delineating a resource estimate of 4.5Moz @ 1.8g/t.

Progress at the JKL and Carolina Belle Projects


After acquiring the four projects two years ago LEX spent a busy 2021 working to define their potential, beginning with a 207.3 line-kilometre VTEM geophysical survey over the Jennings-Pioneer Project to identify conductors associated with volcanic massive sulphide (VMS) style mineralisation. The survey identified two potential anomalies for further investigation through soil sampling, trenching and potential drilling.

A Phase 1 JKL Project campaign drilled six diamond drill holes for a total of 562 metres at Loflin with a view to enabling a maiden JORC resource estimate. Assay results indicated the continuation of broad zones of shallow gold mineralisation and demonstrated good correlation to historic drilling, all six holes encountering intervals of gold mineralisation of more than 1g/t Au above 100m depth. The estimate was published in the autumn, stating a resource of approximately two million tonnes at 1g/t gold for 65,000 oz of contained gold, and highlighting the potential for additional discoveries.

LEX also carried out the Carolina Belle Project’s first known systematic surface sampling programme, results indicating the presence of a new gold anomaly not associated with the known gold mineralisation in the project area. Rock chip and grab samples from the newly identified mineralised zone returned 10 samples with gold grades over 1g/t including 17g/t; 5.1g/t; 3.5g/t, 3.2g/t; 2.7g/t; and 2.2g/t.

Following a fixed-wing airborne geophysical survey, a 5,000 metre reverse circulation (RC) drilling programme commenced at both Carolina Belle and JKL. Results have been coming in this year. In March LEX reported that the final assay results of RC drilling at Carolina Belle  had ‘exceeded our expectations’, two targets, McMaster and Martha Washington South, recording multiple intersections of 1g/t Au or more close to surface, including 3m @ 3.68g/t Au from 64m and 4m @ 1.8g/t Au from 28m. Drilling data and assay results will enable the design of a Phase II drill campaign to further target, define and expand the intersected gold mineralisation from the various targets so far identified .

Two months later LEX reported the remaining assay results for the JKL Project’s current programme, which found ‘signficant shallow level intersections’ outside of the known north-eastern boundary of the main Loflin resource, and indicated the main Loflin deposit remains open to the north-east and also to the south and south-east, with a potential link to Loflin South. Highlights included 24m @ 1.07g/t Au and 2.76g/t Ag from 4m to 28m for Hole LFRC-018, and 16m @ 1.27g/t Au and 3.79g/t Ag from 16m to 32m at Hole LFRC-009. 

Earlier this month LEX reported positive assay results for the Project’s Jones-Keystone prospect, recording multiple intersections of 24m width and over and grades of between 1.37g/t and 1.69 g/t gold. All the intersections start above 100m depth and ‘represent commercial grades and mineable widths’. The results should support and facilitate the production of a maiden JORC resource estimation for Jones-Keystone to be added to the existing resource for Loflin. LEX is now planning further drilling at JKL to further define the extent of the resource. The Jones-Keystone deposit remains open in all directions, both along strike and down dip, and the Loflin deposit remains open along strike to the north-east, down-dip as well as to the south.

Gold holds up


LEX’s recent operations come against the backcloth of turbulent markets that have highlighted the continued value of gold as diversifier. Though the yellow metal has not reached the record heights scaled at the peak of the pandemic its value is hovering just below the $2,000 mark, and it has consistently traded above $1,800 over the past two years. Economists have never quite been able to establish a secure link between the price of gold and any one factor, be it inflation, interest rates or war, but it continues to manifest the age-old capacity to float free of the wider market that safeguards its status as a safe haven asset. Speaking to Investors’ Chronicle, George Milling Stanley, chief gold strategist at State Street, said that ‘in previous years where inflation was over 5pc … in the US, equities had dropped 1pc, US treasuries 2.4pc, and gold increased 12pc.’

LEX’s most recent results, for the year ended 31 December 2021, stated a net loss from operations of $1m (2020: $0.7m), total assets of $4.8m (2020: $5.5m), and net cash of $0.9m (2020: $2.9m). The company’s ongoing exploration is funded by a £335,000 unsecured convertible loan secured this April from ‘two significant shareholders and three directors’. The loan’s conversion price was set at 30.6pc above the prevailing market share price, indicating the investors’ confidence in the company’s future.

LEX’s share price spiked last September at 4.5p on the publication of its maiden JORC resource estimate for the JKL Project, and as work has quietly continued has drifted down to around 2.35p at the time of writing, taking the company’s market cap to £6.05m. Current and prospective shareholders can look forward to a further round of updates over the next few months, including a Phase II campaign at Carolina Belle and a maiden JORC resource estimate for the JKL Project’s Jones-Keystone prospect, which will be added to the existing estimate for Loflin. We’ve been watching this story for a while and in light of continued solid progress and upward pressure on the price of gold, continue to recommend LEX as one to follow, particularly at the company’s relatively current low valuation.