Sitka Gold Corp. (CSE: SIG; FRA:1RF) has a lot planned for the current season. Two drill programs are currently underway: one in the Yukon, where the company aims to develop last year's discovery on the Eiger Zone at its RC Gold Project by drilling up to 10,000 meters to a maiden resource, and the second in Nevada, where Sitka Gold is systematically working towards the discovery of a Carlin-type deposit at its Alpha Gold Project on the southeast foothills of the Cortez Trend. Initial drill results from both projects are expected shortly.
Drill core from both projects has now been sent to the laboratories for analysis, so results from both projects are expected shortly.
RC Gold Project, Yukon: Seven drill cores already at the laboratory
Since diamond drilling began in June of this year, a total of nine (9) drill holes totaling 3494 meters have been completed on the 372 square kilometer RC Gold Project. The RC Gold Project, located approximately 110 km east of Dawson City, is located within the geologically prolific Tombstone Gold Belt, which is part of the larger and even better known Tintina Gold Belt. Diamond drilling in 2021 will focus on expanding the area of newly discovered gold mineralization in the Saddle and Eiger zones, where drilling in 2020 returned gold grades and mineralization similar to that known from other intrusion-related gold deposits in the neighborhood, such as Victoria Gold’s producing Eagle Gold Mine (see news release June 8, 2021). The total number of diamond drill holes in the Saddle-Eiger Zone area, including discovery holes last season, now stands at 13 holes with a total metre count of 4981 metres. Observations of mineralization in the drill holes confirm previous soil geochemical surveys that defined a very strong gold-in-soil anomaly extending over an area approximately 2 km long and 500 m wide. The first seven holes, drilled in the 2021 season, have now been submitted to ALS Global's laboratories in Whitehorse for assaying. The Company is also advancing other potential drill targets within the district-wide RC Gold Project.
Figure 1: Discovery drilling on the Saddle Eiger zone in 2020 was consistently mineralized and reminiscent of Victoria Gold's related deposit 40 kilometers to the south.
Alpha Gold Project, Nevada: New mineralization is reminiscent of Carlin-type gold system
Drilling is also underway at the Alpha Gold Project, located along the southeastern projection of the Cortez gold trend in Nevada. Reverse circulation (RC) hole AG21-04, the first hole of the current phase of drilling, has been drilled to 1,000 feet (305 meters). This drill hole is located approximately 500 meters southeast of Discovery hole AG21-02 and successfully intersected alteration and mineralization at the base of the Horse Canyon sedimentary layer similar to that encountered in holes AG21-02 and 03. This style of mineralization is considered typical of a Carlin-type gold system. The Company considers the results "very encouraging" as the surface alteration at the drilled location appears to indicate alteration at depth. In addition, it is considered important that this drill hole has an increased sulfide concentration compared to previous holes. Drill hole AG21-05 is currently being drilled and is a step-out hole approximately 900 meters south of AG21-04 to test potential high-grade zones within the Carlin-type gold system. Samples from drill hole AG21-04 have been sent to ALS Global Labs in Elko, Nevada for assaying.
Figure 2: Carlin-type discoveries are the order of the day in Nevada. Because the gold occurs structurally bound at the contact zone between limestone sediments and overlying shale layers, Carlin deposits are particularly well suited for large-scale industrial mining. As a result, virtually all major gold producers are present in the Cortez and Carlin trend. A Carlin-type discovery would automatically make Sitka a takeover target.
Summary: Sitka Gold's stock has suffered from a sell-off after the end of the four-month holding period following the recent financing round. Apparently, larger investors have engaged in so-called warrant clipping, meaning they sell the stock and keep the attached warrant. As a result, Sitka's valuation has returned to around CAD 0.12, the same level at which it was financed. Sitka raised more than six million CAD in capital at the time, more than would have been needed for the drilling programs this year. Therefore, new financing is not expected in the short and medium term. Therefore, good drilling results from one or even both projects could boost the stock. Sitka is oversold at current levels, in our view. In particular, a Carlin-type discovery could make Sitka a takeover candidate overnight. And if Alpha Gold is unsuccessful after all, there is always the Yukon development, which is already further along.
The stock market value is currently around 13 million CAD, and if you also take into account the cash reserves, the enterprise value is well below 10 million CAD. These are almost junk prices for projects that are anything but junk. We believe Sitka has a lot to offer in the future and are looking forward to the upcoming results.
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