In early March, P2 Gold advanced with a strategic debt settlement that would allow for a convertible debenture to fuel its growth. Today, management announced an updated Inferred Resource at the Gabbs Project, which is situated along the Walker-Lane Trend in Nevada. The revised estimates are part of the company’s 2024 Preliminary Economic Assessment and reflect optimized operating costs and increased resource potential, signaling a positive outlook for the project’s development.

The updated Mineral Resource Estimate (MRE) prepared by P&E Mining Consultants Inc. and compliant with the National Instrument 43-101, shows a notable increase in both oxide and sulphide mineral resources due to lowered cut-off grades. The reduction in oxide cut-off grade to 0.27 grams per tonne (g/t) gold equivalent from the previous 0.28 g/t, and in sulphide from 0.44 g/t to 0.36 g/t gold equivalent, has expanded the estimated resources significantly.

What is a cut-off grade? It is the minimum grade at which a unit of ore will be economically viable to mine and process. Lowering the cut-off grade means that ore which previously was considered too low in mineral content to be worth extracting is now deemed economically viable. This change typically happens when operating costs decrease, market prices for metals increase, or processing technology improves, making it cost-effective to extract and process lower-grade ores. Oxide minerals are typically easier and cheaper to process than sulphide minerals because they do not require complex processing methods. The presence and expansion of both resource types, however, offers flexibility in processing techniques and can help optimize overall metal recovery.

In this case, the lower cut-off grade for Gabbs resulted in more ounces—69% more. This table shows the grade (far right column) of the new Resource.

The updated MRE now has an Indicated Mineral Resource of 760,000 gold equivalent ounces, while the Inferred Mineral Resources have been reported at 1,040,000 gold equivalent ounces. This makes Gabbs increasingly attractive to a major.

The stock is up 5.5% at the time of writing and trades at $0.10 per share. While that’s down from 1-year highs of $0.20 per share, the chart shows some bullish behavior as it:

1) recently approached its 200-day moving average and bounced upwards

2) the stochastics seem to have hit their floor and are moving back into an upward trend.

Chart courtesy of Yahoo! Finance

Author holds no positions at this time. Jeff Clark remains overweight.

Courtesy of The Gold Advisor