Signs are mounting that the high-grade Sertão gold project, located 180 km south of Pilar Gold’s producing mine in the Brazilian state of Goiás, could indeed become the hoped-for company maker for the (still) private enterprise. For about a year, Pilar has been exploring Sertão west of the historical open pit. A total of 41 drill holes have been completed there, about half by previous owners Troy Resources and Orinoco Gold, and the more recent half by Pilar Gold itself.

The latest results not only confirm the bonanza grades of the three parallel gold reefs (Nilsson, Lima, and Crew, see Figure 1) but also suggest the existence of a new, deeper gold reef that was overlooked by predecessors. Completely unexpectedly, a section of 1 m with 237 g/t gold was recently intersected 40 meters below Crew’s Reef. Pilar suspects that they have only scratched the surface of what could be a much larger high-grade system.

The Pilar CEO Jeremy Gray, never at a loss for bold statements, predicts: ‘I expect Sertão to deliver 45,000 ounces to us in 2023 with an average grade of 16 g/t and cash costs of $500 per ounce, and I see no reason why this couldn’t increase significantly thereafter.’ Of course, Gray couldn’t take such liberties as the CEO of a publicly listed company. But his confidence seems refreshing in a tired gold market, and in the end, his forecast will have to be measured against reality.

The Sertão project is famous in the gold industry because the Australian company Troy Resources mined 260,000 ounces of gold there in just three years in the early 2000s with an average grade of 29 g/t in open-pit mining. The cash costs at that time were a remarkable 52 USD per ounce. Pilar Gold’s thesis is that Troy Resources prematurely turned its back on Sertão. Troy had only drilled six holes west of the open pit and left without checking where the gold came from. This is exactly what Pilar seems to be succeeding at with its recent drilling. At the beginning of the campaign in July last year, the average thickness and grade of the historical drill holes was 1.3 meters at 23.2 g/t. Since then, the Pilar team has intersected a series of very high grades and improved the overall average by 82% to 1.3 meters at 40.3 g/t.

Figure 1: Characteristic of the Sertão mineralization in both the Lima and Nilsson reefs are typically 0.5 to 1.0 meters with extremely high grades (50 to 400 g/t gold). As a thank you for his hard work, Pilar named the Lima Reef after geologist Marcelo Lima. He suspects that the Lima Reef structure is identical to the structure Troy referred to as Stage 5 and which provided much of the production.

Surprising Discovery 40 Meters Below Crew’s Reef

Just last month, a surprising discovery of 1 m @ 237 g/t was made 40 meters below the Crew’s Reef. A classic scenario: the drilling crew, which usually moves quickly to the next hole after penetrating a reef structure, had simply let the drill continue running. The discovery is still too fresh for a final assessment. Pilar CEO Gray stated for the record: ‘We’re not sure if this is a new reef lying below Crew’s, and we’ll need to do more drilling to verify the potential.’

Supported by steady production from the Pilar Mine and the rapidly growing discovery at Sertão, Pilar Gold is currently planning a new capital round at 1 CAD to further accelerate activities on the Sertão project. Gray argues that the proposed valuation of 207 million CAD for Pilar Gold is more than covered by the capital invested by predecessors alone. He calculates that around 400 million USD has been invested in the 4 mills (3 currently not in operation) and 7 mining projects (5 dormant). However, his strongest argument is the prospect of production of 90,000 ounces in 2023 with all-in sustaining costs (AISC) of under 1,000 USD per ounce.

Figure 2: This is what gold investors want to see – Rising gold production with declining total costs.

Conclusion: Persistence pays off. Pilar Gold has a volatile history that hasn’t been easy for investors. After all, they had to cope with the insolvency of the predecessor company Orinoco Gold on the Australian stock exchange. That same Orinoco which had already acquired Sertão from Troy Resources in 2014. Sertão is a prime example of the success of systematic exploration, driven by a team’s conviction that Troy had wrongly abandoned the project. Sertão fits perfectly with the concept of centralized processing at Pilar. The high-grade ore from Sertão could transform the average Pilar asset into a world-class operation in the future.