Five Gold Stars for Lexington Gold
“…With money in the bank, backing from notable mining industry veterans, an ongoing gold rally, continued progress in both South Africa and the US, and the prospect offered by the exciting Kroonstad opportunity, now may be the time to consider taking a stake in an ambitious miner that continues to prove the value of its assets…”
With the publication earlier this month of a mutli-million ounce Mineral Resource Estimate (MRE) in the prolific Witwatersrand region, Lexington Gold (AIM:LEX) continues to establish itself as an international exploration company, pursuing five highly prospective gold projects in South Africa and the US.
Publication of Jelani Resources Project MRE, South Africa
To recap our coverage earlier this year, LEX took a 76pc stake in White Rivers Exploration Proprietary Limited (WRE) last summer, a major tenement holder in South Africa’s historic Witwatersrand gold fields, with interests covering internally estimated resources of more than 37 million ounces of gold over 89,499 hectares.
Witwatersrand has been the world’s largest gold producing district for more than a century, contributing a third of global gold production – some two billion ounces – since 1886. The region is estimated to host a further 1.2 billion ounces. LEX raised £2.5m in support of the acquisition, with WRE’s founder, billionaire private prospector Mark Creasy – well known across the mining industry for leading the discovery of Australia’s prolific Nova Mine – becoming a significant shareholder. Mr Creasy currently holds 13.4pc of LEX with options and milestones to increase his stake to 35%.
The potential of WRE’s tenements, comprising 10 prospecting rights grouped into five projects, was illustrated earlier this month through the publication of a significant MRE for the Jelani Resources Project, a Joint Venture (JV) between WRE (65pc interest) and the Harmony Gold Mining Company, South Africa’s largest gold producer by volume (35pc).
The MRE, drawn up in 2018 and now authorised for publication, indicates a total of 6.02 Moz gold with an average grade of 6.47 g/t comprising 4.88 Moz at 6.48 g/t gold located in the project’s Buffer Zone, and 1.14 Moz at 6.41 g/t gold in the JV area. The net total resources attributable to LEX’s effective 76pc interest in the current JV region are 2.72 Mt for 0.56 Moz of gold, potentially increasing to 10.78 Mt for 2.24 Moz of gold should the JV parties proceed to future production on the basis of a revised ownership interest of 49% for WRE.
LEX Non-Executive Chairman Ed Nealon called the project ‘a very significant resource’ that showcased ‘the huge potential of not only the Jelani Resources JV asset but Lexington Gold’s assets in South Africa as a whole.’ The initial assessment offers a platform for fresh exploration with potential to further extend Jelani’s resource. LEX also notes the presence of extensive infrastructure in place at Harmony’s nearby Target mine that might greatly reduce the cost of future operations.
Defining a gold system at Bothaville, South Africa
Drilling at WRE’s Bothaville Project in the Witwatersrand Gold Basin, some 70 km from the established Welkom Goldfield, got underway late last year, targeting an area around a historic drill hole where five previous intersections reported an average gold grade of approximately 5.1 g/t Au over a 77 cm interval. The programme is exploring both down-channel and cross-channel gold mineralisation potential at an estimated 350 to 450 metres below surface.
Assay results published in May confirmed the presence ‘of a potentially significant gold system’: three of four holes over some 2,355 metres were completed successfully, intersecting gold mineralisation some 250 metres from the historic holes and ‘significantly expanding the potential area of mineralisation’. Key intercepts included 1.2 g/t gold and 111 cmg/t over 92.7 cm from 275.89 metres, and 0.76 g/t and 160 cmg/t over 209 cm from 442.68 metres.
LEX said the ‘intersection of gold mineralisation within approximately 250 metres, in three directions, from historical drill holes significantly enhances the project’s prospectivity.’ Although some of the new intersections were lower than historical grades, predominantly due to their position within the channel system, drilling had yielded an ‘improved understanding of the depositional environment, including potential areas of high gold mineralisation and channel orientation’, providing ‘valuable insights for developing our geological model and target’s for future exploration.’ There is further potential, with work so far having tested only a localised portion of the 180 km2 site.
An additional WRE project, Kroonstad, has the potential to become a major new Witwatersrand field, with an estimated gold exploration resource target – based on historic drilling of 23 holes – of between 6.06 million ounces and 62.41 million ounces, and a gold grade of between 4.96 g/t and 11.54 g/t. Further drilling needs to be completed to start the reserve process, but like the other WRE prospects, Kroonstad offers shallow gold with initial target depths between 250 and 500 metres, conditions that promise to limit the cost of future operations.
The Jennings-Pioneer and Argo Projects, US
While pressing ahead in South Africa LEX has continued to define the potential of its gold projects in the US, focused on bringing the latest exploration technology to the Carolina Super Terrane, the site of the first gold rush in the early 1800s. Last year the company recorded promising exploration results at both its Jennings-Pioneer and Argo projects.
Work has continued to clarify the promise of the Jennings-Pioneer Project, a cluster of greenfield exploration prospects next door to the Barite Hill Gold mine in South Carolina. Assay results from a soil and surface sampling programme last year targeting gold, silver and base metals identified 13 gossans (targets at surface) within three separate mineralisation trends, yielding evidence of barite, tellurium and other minerals designated as critical minerals by the US federal government. Barite is used in drilling fluids for oil and gas wells, and in paint and in glassmaking and tellurium is typically employed in solar panels and thermoelectric devices.
Assay results from 495 metres of drill core from three drill holes at Jennings-Pioneer, published this June, confirmed ‘the along strike and down plunge continuation of the Barite Hill Trend gold mineralisation’. All three target zones of the Trend were successfully intersected, finding ‘massive sulphides, semi-massive sulphides and associated quartz barite veins’. Significant intercepts from drill core gold and tellurium assays included 1.14 g/t gold from 127metres to 150 metres, and 0.80 g/t gold and 60.49 ppm (60.49 g/t) tellurium from 14 metres to 53 metres. Potential by-product intercepts from drill core silver, copper, and zinc assays include 10 metres at 1.33pc zinc, 22.17 g/t silver and 0.11 g/t gold, and 6 metres at 0.52pc copper 13.16 g/t silver and 0.35 g/t gold.
LEX said the results ‘validate our geological models and reaffirm the potential of our regional exploration strategy.’ The results ‘confirmed significant gold and tellurium mineralisation along strike and down plunge of the Barite Hill Trend onto our project area.’ The multi-element assays had also ‘revealed significant by-product mineralisation, including zinc, silver and copper, which could enhance the overall economic viability of the project. The presence of broad zones of silica-sericite alteration and intervals of massive to semi-massive sulphides associated with quartz veining and breccia further support the high potential of this exploration area.’
The Barite Hill Mine next to Jennings-Pioneer produced 50,000 oz gold from an open pit/leach operation in the mid-90s before falling gold prices forced its parent company to close it. The mine is currently held by the US Environmental Protection Agency (EPA). LEX notes that the EPA recently disposed of another mine held in trust, the Brewer Mine in North Carolina, to a new owner prepared to take on associated environmental liabilities should an ongoing drilling programme find commercial quantities of mineralisation. The EPA might welcome a similar opportunity to reduce its exposure and costs at the Barite Hill Mine.
Surface trenching, sampling and mapping designed to define the grade distribution and structure of mineralised zones at Argo, a historic gold prospect unexplored since the 19th century, have indicated high-grade surface mineralisation at the site’s north-eastern and southern workings.
The Jones-Keystone-Loflin and Carolina Belle Projects, US
LEX also has an interest in the 179.66 acre Jones-Keystone-Loflin Project combining the Jones-Keystone and Loflin Properties mined by small prospectors during the 19th century until the outbreak of the Civil War, and again up to the Great Depression. Pits, trenches, shafts and glory holes at several workings offer evidence of widespread gold mineralisation, with historic grades ranging between 0.5 and 2.5 g/t. The combined JORC resource for both Jones Keystone and Loflin is estimated at approximately two million tonnes at 6,796,000 tonnes at 0.92 g/t for 210,000 oz of contained gold, with potential for further discoveries at depth and along strike at both locations.
The company’s Carolina Belle Project, in Montgomery County produced 50,000 ounces of gold until a 1916 dispute between the neighbouring mines ended further exploration and production. Recent drilling has confirmed the continued presence of gold, with full evaluation of the prospect’s potential requiring further exploration.
Outlook
LEX has forged ahead with its multi-project programme as the price of gold has continued to surge. The value of the metal has soared over $2,600 per troy ounce in May, spurred by high demand among Asian consumers, buying by central banks keen to diversify from the US dollar amid geopolitical uncertainty, and expectations of lower US interest rates: lower borrowing costs increase the attraction of assets – like gold – that have no yield, and are also likely to put pressure on the dollar, in which gold is denominated. Other minerals assayed by LEX, including copper, zinc and tellurium, are key energy transition metals.
LEX’s current programme is supported by the £2.5m raise last year that funded the South African acquisition. The company’s most recent final results, to 31 December 2023, stated net cash of $2.6m (2022: $0.42m) and total assets of $18.2m (2022: $5.1m) at the year end, reflecting the acquisition of the South African assets. The net loss for the year from continuing operations was $0.1m (2022: $0.9m).
LEX has made solid progress this year in navigating the challenge of making the transition from a single to a multi-jurisdiction company. The scope of the Jelani and Bothaville assets are becoming clearer, and the company continues to confirm the high-grade mineralisation potential of multiple gold-bearing structures at Argo and Jennings-Pioneer. LEX’s prospects should also be viewed in the light cast by the potentially transformative Kroonstad concession, a 62 Moz exploration target with the potential to become a new gold field.
Market sentiment has turned sharply towards the company over the past few weeks, its share price rising by more than a third over the past month, to 4.7p at the time of writing, taking its market cap to £18.75m. With money in the bank, backing from notable mining industry veterans, an ongoing gold rally, continued progress in both South Africa and the US, and the prospect offered by the exciting Kroonstad opportunity, now may be the time to consider taking a stake in an ambitious miner that continues to prove the value of its assets.
