Dear Pilar Gold shareholders and interested parties,
As we reach the first year of our drilling at Sertão, it’s becoming increasingly clear that this incredible deposit is likely to become one of the highest-grade gold mines in the industry in 2023. It’s also becoming evident that the success of the shallow hole drilling program to date has only scratched the surface of what we believe to be a very large high-grade system. I expect Sertão to provide us with 45,000 ounces at an average grade of 16 g/t and cash costs of $500 per ounce in 2023, and I see no reason why this couldn’t increase significantly thereafter.
Last month, Paulo and the Pilar Gold team intersected the Lima vein with 0.75 m @ 97 g/t Au, 2.1 m @ 9.9 g/t and 0.5 m @ 77 g/t in the Crew vein, and made a surprising discovery 40 meters below the Crew vein with 1 m @ 237 g/t. We’re not sure if this is a new vein lying below Crew and will need to do more drilling to check the potential.
Pages 11-16 in the presentation linked below contain a very detailed summary of the 41 drill holes with mineralization west of the old Troy open pit. Before our campaign began in July last year, the average width and grade of these historical drill holes was 1.3 meters at 23.2 g/t. Since then, Paulo and the team have intersected a series of very high grades and improved the overall average by 82% to 1.3 meters at 40.3 g/t. Interestingly, Troy only drilled six holes west of the open pit and apparently pulled out prematurely without checking where the gold that fed their 260,000-ounce pit at an average grade of 29 g/t came from.
Lima’s vein appears to be the old Stage 5 vein system at Troy. As a thank you to Marcelo Lima for all his hard work and loyalty over the past four years, we’ve renamed Stage 5 to Lima’s Reef. Marcelo has stuck with me through thick and thin, and there were some very tough times when he could have taken much better-paying jobs.
Pages 20-24 of the presentation show never-before-seen results of grade control from Stage 5 as Troy prepared to mine it in 2006. We found this data on an old server in the Orinoco Gold office, which until recently was used by Pilar Gold in the beautiful town of Goiás Velho. Orinoco bought Sertão from Troy in 2014.
We’ve included these slides to illustrate how high-grade the Lima vein can be, and 0.75 @ 97 g/t immediately told us it came from the same mineralization Troy called Stage 5. Characteristic of the Sertão mineralization in both the Lima and Nilsson veins is that there are typically 0.5 to 1.0 meters with extremely high grades (50 to 400 g/t) that give the whole thing an extra kick in the mill. A really important point is also that this high-grade mineralization typically has a very low nugget effect, meaning the results are not skewed by nuggets getting into the core.
Sertão is very unassuming and reminds me a bit of the character Roy Hobbs in the movie The Natural. Roy, played by Robert Redford, sat out half the season because his coach refused to play him, thinking he was too old. When given the chance to take a few batting practices, it was the beginning of the turnaround for the New York Knights, who went on to win the World Series. This scene is one of my favorites and it perfectly summarizes Sertão – a forgotten mine that will knock everything out of the park.
If Sertão proves to be as good as we’re now beginning to believe, then our current $1 financing round with a full warrant will result in a low valuation of C$207 million for Pilar Gold. And this is despite our company already having about $400 million in sunk capital, with four mills (3 on standby) + seven mines (5 dormant) and a real possibility of delivering 90,000 ounces in 2023 with AISC below $1,000 per ounce.
In conclusion, we would like to warmly welcome James ‘Jim’ Jackson and his family, who are arriving today from Mackay, Queensland, in Brazil. Jim will be our project manager in Sertão and will work closely with Paulo, Israel, Richard, Juliana, Rafael, Fransisco, Ramon, Wallacy, Marcelo, and the entire team to make Sertão our number one priority so that mining can begin in January. I believe Jim will achieve great things for Sertão and Pilar Gold, and I am truly proud to have him on the team.
Thank you once again for your support.
Best regards,
Jeremy Gray | CEO
jeremy.gray@pilargold.com
Charles Chebry | President
charles.chebry@pilargold.com
Edward Balme | Head of Investor Relations
edward.balme@pilargold.com
