TMR announces 523g/t gold hit

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 3,432,000 TMR at the time of publishing this article. The Company has been engaged by TMR to share our commentary on the progress of our Investment in TMR over time.

Is there such a thing as “better than bonanza grades”?

Our junior gold exploration Investment Tempus Resources (ASX:TMR) may have just defined it as it seeks to bring its historically producing Canadian gold project back to life.

This morning TMR put out assay results measuring 523g/t gold over 0.42 meters from a depth of only 96.91 meters.

This is the best intercept ever made at the Elizabeth Gold Project — not just at the Blue Vein discovery but across TMR’s entire project.

No, that grade wasn't a typo.

523g/t of gold. That’s over half a kilo of gold per tonne.

We rarely ever see intercepts grading this high, and while we hoped for good assay results, these exceeded our expectations in a big way. Keep in mind that to be considered ‘bonanza grade’ is anything above 34g/t.

We do note that the intercept is only 0.42m thick, so while the grade is truly excellent, we still want to see the high grades continue over thicker intercepts in more holes.

In our last TMR note, we said anything above 4-5g/t would make it “game on” for the Blue Vein discovery, as we viewed those grades as being what was needed for TMR to declare a potentially economic discovery.

Today’s results exceeded our expectations by almost 100x.

These weren't the only results from TMR’s announcement today either.

The remaining two drillholes also exceeded our expectations — one assay measured 32.7g/t gold over 0.45 metres and the other 7.4g/t gold over 1.73m.

With all three drillholes intercepting high grade gold, the Blue Vein discovery continues to widen and is starting to exhibit a common characteristic of these style vein deposits — a “stacked vein” structure.

Instead of all of the gold sitting inside one orebody, TMR’s Blue Vein discovery has “sheets” of high grade gold running parallel to each other.

The best way we have found to visualise what TMR is drilling for is to think of its project as a slice of cake, and the veins TMR is looking to discover/extend are the layers of icing.

TMR’s in the past produced gold out of one layer of icing (SW Vein), and now the focus is on extending a newly found strip of icing (Blue Vein).

The target is to find as many layers of icing as possible and work out how big they are before putting them into production through TMR’s existing processing mill.

It's now been just under a year since TMR accidentally made the Blue Vein discovery (whilst trying to extend its already well understood SW Vein).

After an initial 33.7g/t gold intercept, TMR focused on drilling around this new discovery and has brought it up to where it is today.

Today we are sharing a document we use to track the progress of the TMR’s drilling over time, showing how the Blue Vein discovery has come to life and where we want to see it end up.

Click on the image below OR here to see our document:

TMR also confirmed today that it is now 18 drillholes into its 2022 drilling program with ~15 more assays currently in the labs pending testing. The 2022 drilling program at the Blue Vein (as well as new vein targets - Main Vein, West Vein, Ella Zone) includes up to 30 diamond drill-holes for approximately 8,500m of drilling.

Having just raised $1.05M at 5c per share via a placement and an entitlement offer currently open to raise a further $3.9M from existing shareholders, TMR is adding to its ~$1.1M cash balance (at 30 June 2022) so that it can finance this year's drilling program.

The ultimate purpose of this year's drilling program is for TMR to try and extend its NEW Blue Vein discovery and try and extend its resource base with a view of getting its once operational project back online.

With the gold price trading at near all-time highs, TMR needs to extend the known resource area and add to it with more high grade gold deposits that could be fed back into the company’s already well established processing infrastructure.

To do this successfully, TMR will need to keep putting up intercepts like the ones announced today and continue extending the high grade Blue Vein discovery.

In our 2022 Investment memo for TMR, we set some clear and concise objectives that we wanted to see TMR achieve in 2022.

Below is a snapshot of these:

More on today’s results

The headline from today’s announcement is the 523g/t gold intercept — enough for it to stand on its own. But there is a lot more to today’s announcement past the first glance.

Fun fact, the gold in that assay alone would fetch ~$47,000 at today’s gold prices, a figure that would help pay for the drilling program.

The key takeaways from today’s announcement for us were:

1. The highest grade gold intercepts ever intercepted over TMR’s entire project.
2. All three holes intercepted gold multiple times, indicating potential stacked gold structures over a wider vein system.
3. 15 assays pending along strike and down dip.

First, the three assays that were reported today.

Today’s announcement is a milestone moment for the company, primarily because the grades are the highest ever recorded over the entire Elizabeth gold project.

This includes any historic intercepts made on the SW Vein, which has a ~144k ounce historic gold resource.

For context, some of the best intercepts from the SW Vein returned grades of ~60 to 72g/t gold.

Again, the Blue Vein intercept measured 523g/t gold over 0.42 metres from a depth of only 96.91 metres.

That’s more than 7x higher than some of the best intercepts made at the SW Vein.

The positive is that the higher the grades TMR intercepts, the more compelling the Blue Vein discovery gets from an economic point of view, and the more likely TMR can turn its processing plant back on to produce gold.

Second, all three holes had multiple intercepts spaced closely together.

This is significant as it’s the first indication that the Blue Vein discovery potentially hosts multiple stacked high-grade vein systems within the wider Blue Vein structure.

The best way to visualise this is with the image below.

The black lines running through would be the mineralised gold zones inside a broader Blue Vein structure (the red lines).

Instead of one single vein, it would be several multiple veins inside a thicker structure.

In a previous note, we asked the question Could the Blue Vein be a replica of the SW Vein?

Today's news is a first step in answering that question, confirming the blue vein is getting thicker at depth with grades increasing. All that’s left to do now is to prove out extensions along strike.

That brings us to the third key takeaway from today’s article - the 15 assays currently pending.

TMR is currently drilling ~18 holes into its 30-hole 2022 drilling program, with a large chunk of these completed drillholes testing for extensions along strike and down dip at the Blue Vein discovery.

Here TMR is targeting a ~400m strike zone and testing down to depths of ~150m.

For some context, the existing historical resource at the SW Vein (~144k ounce gold resource) sits inside a gold structure extending over 400m down to depths of ~200m.

After the next round of assay results, we should know with a relatively decent level of confidence if TMR has drilled out a new discovery which could have the scale to warrant putting the project back into production.

More on the recent capital raise

A few weeks back, TMR closed out a $1.05M capital raise via a placement at 5c per share.

Investors who participated in the raise were issued one free option for every share purchased. The options expire in three years and are exercisable at 7.5c per share.

This adds to the company’s existing cash balance of ~$1.1M (at 30 June 2022), meaning the company should have around $2.15M in cash on hand to finance the rest of its 2022 drilling program.

At the same time, TMR announced a partially underwritten (by non-executive chairman Alexander Molyneux) entitlement offer open to existing shareholders to raise a further $3.9M on the same terms as the placement.

This gives current TMR shareholders the opportunity to purchase more shares off market at the same price as the private investors who got the placement at 5c per share along with the free attaching options.

In a recent Next Investors weekend email, we touched on the different types of capital raises to look out for when a company’s share price is down.

In that email, we said that we prefer our Portfolio companies to tap existing shareholders if new funds are needed when markets are down or the company’s share price has been sold off aggressively for no apparent reason.

TMR’s raise stands out to us as one that rewards its existing shareholder base. We especially like that TMR kept the placement portion of the raise small and offered almost 4x more shares to existing shareholders.

With the share price trading at 6.0c per share, and after the news released today, the 5.0c entitlement offer allows existing shareholders to top up their shareholdings at a discount to the current market price.

Given where the company’s share price is trading, we like that TMR hasn’t solely reserved the placement for sophisticated investors.

The key dates for the entitlement offer are:

• Ex-date 9 August 2022 (today) - This is when TMR shares start trading on an ex-rights basis, meaning those who purchase shares today or after today won't be able to participate in the entitlement offer.
• Record date 10 August 2022 - This is the date at which entitlements are calculated, i.e. if you are a shareholder in TMR at this date, then you get to purchase shares in the entitlement offer.
• Offer closing date 29 August 2022 - Last day to accept entitlement.
• Offer issue date 5 September 2022 - This is when the entitlement offer shares are expected to be issued.

Given that the share price is trading above the entitlement offer price, after the news today, we intend to take up our full entitlement and apply for any of the shortfall.

If TMR raises the full $3.9M, the company will significantly de-risk its financing risk for this year's drilling program.

What’s next?

30 hole (8,500m) drilling program at TMR’s Canadian gold project 🔄

As of today, TMR is ~18 holes into its 30-hole 2022 drilling program.

So far, the drilling has mostly focused on the Blue Vein discovery.

TMR is also looking to drill across the other prospects at its Canadian gold project as follows:

• Main and West veins: 10 drillholes targeting extensions to both of these discoveries.
• Ella Zone: 3 drillholes following up a 2m intercept made last year.
• Exploration holes: up to 5 drillholes focused on making new discoveries.

Below (in green) is where TMR plans to drill as part of the 2022 drilling program.

We previously mentioned we would classify TMR’s 2022 drilling program as a success if it could show that the Blue Vein discovery extends along strike and down dip.

The assays released today are a first step in the right direction, but the next round of assays will give us a better understanding if the discovery is growing.

Another sign of success will be if TMR makes new vein discoveries.

Below are the milestones we will be tracking for the drilling program:

✅ Drilling program commencement

🔄 Drilling results

🔄 Assay results

Ultimately the determinant of success will be whether TMR intercepts high grade gold structures.

Given TMR is targeting thin gold veins, our focus will predominantly be on the grades of mineralisation.

We expect that anything above ~4-5g/t of gold will mean TMR could be onto something commercially mineable.

2022 TMR Investment Memo

Below is our 2022 Investment Memo for TMR where you can find a short, high level summary of our reasons for investing.

The ultimate purpose of the memo is to record our current thinking in order to benchmark the company's performance against 12 months from now.

In our TMR Investment Memo, you’ll find:

• Key objectives we want to see TMR achieve in 2022
• Why we invested in TMR
• What the key risks to our investment thesis are
• Our investment plan

Disclosure: S3 Consortium Pty Ltd (the Company) and Associated Entities own 3,432,000 TMR at the time of publishing this article. The Company has been engaged by TMR to share our commentary on the progress of our Investment in TMR over time.