Barry FitzGerald: Prodigious gold region a yellow brick road for Arika
In a $5100/oz-plus Aussie gold market there is nothing quite like a big targeted exploration program in a prodigious gold region to get the interest up.
And so it is with Arika Resources (ASX:ARI), which has been attracting followers of late on the strength of its 10,000m drilling program at two projects in the Leonora-Laverton district.
It is funded for the hunt after a $5 million capital raise in May and at a share price of 3.9c for a market cap of $33.5 million, Arika has plenty of leverage to exploration success.
Investors won't die wondering with this one, as there will be a steady flow of exploration results over the next 6-12 months.
Both of the company's projects – Yundamindra and Kookynie – are surrounded by the region's big name producers like Genesis, Northern Star and Gold Fields, among others.
As recent activity in the region has demonstrated, there are plenty of options around toll treatment/ore purchase/acquisitions should Arika work up a deposit that is measured in the hundreds of thousands of ounces rather than the millions of ounces category.
Arika is after the big discovery for sure. It's just that in this gold price environment there is plenty of value to be had with smaller finds. Think of it as a potential value backstop while Arika continues the hunt for the game changing discovery.
Where is the game changer?
Both of Arika's projects are peppered with historic workings which are obvious drilling targets. But there are also a bunch of targets hidden from oldtimers by cover.
Geophysics and geochemical work leading up to the drilling program has taken what could be called high-priority targets to more than 50.
Arika reported first results from drilling at the F1 Fault at the Landed at Last prospect at Yundamindra on Monday.
The best intercepts included 4m at 41.56g/t from 52m and 27m at 2.45g/t from 61m, and they've served to rev up interest in the stock.
F1is one of several north-east trending structures which cross-cut Landed at Last's mineralisation towards the northern end of what Arika, without blushing, calls the Yellow Brick Road.
It is a mineralised structural corridor than extends for more than 16km along the western flank of the Yundamindra syncline. A 10km section of the Yellow Brick Road is dotted with historical workings.
Despite its location and history of gold mining, the Yundamindra area has only ever been lightly explored. What modern era drilling was conducted by previous owners was mostly shallow at less than 50m.
Before the latest drilling Arika tested for depth extensions, with the deepest hole to date at the prospect returning a super encouraging 14.8m grading 3.1g/t from 87m.
More where that came from
Arika boss Justin Barton said on Monday that it was important to remember that F1 was just one of the many under-explored prospects along the Yellow Brick Road. Garimpeiro reckons Dorothy most likely agrees.
The drill rig motored on from F1 to another highly ranked prospect called Bonaparte (assays pending) and is now testing the Banjo's Camp prospect. As indicated earlier, assay results from the drilling campaign will be rolled out on a regular basis.
Over at Kookynie, Arika shares tenement boundaries with Genesis Minerals (ASX:GMD). An aeromagnetic survey has been completed at the Ithaca prospect, which sits immediately along strike from Genesis' Ulysses gold mine.
Like the prospective areas at Yundamindra much of the prospective ground at Kookynie is on mining leases, which means if there is a near-term opportunity to monetise a smallish discovery while the search for the big one goes on, Arika will be able to act quickly.
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