Special Report: The resource upgrade announced for one of the deposits that make up Musgrave Minerals’ Cue Gold Project in Western Australia this week was just the starting point for what is shaping as a big year for the company.

Musgrave (ASX: MGV) said on Monday that successful reverse circulation and diamond drilling programs completed over the past six months at the Lena deposit at Cue had boosted its resource to 4.3 million tonnes at 2.3 g/t for 325,000 contained ounces of gold, an increase of 112% on the previous estimate and a 28% lift in grade.

The upgrade also saw a 72% increase in the portion of the resource in the higher confidence indicated category, with 121,000 ounces now classified as such.

With the added ounces at Lena, Musgrave’s 100%-owned resources at Cue have grown to 6.45 million tonnes at 3.0 g/t for 613,000 contained ounces of gold, a healthy inventory that has grown quickly since the company acquired the project in late 2015.

But there is plenty of additional activity underway at Cue that is likely to build the resource further towards the million-ounce mark and potentially result in new discoveries as well.

First and arguably foremost, reverse circulation (RC) drilling is in progress at the Break of Day deposit, just 130m west of Lena, where the company is seeking to confirm the theory that high grade gold mineralisation connects the deposit’s two main gold lodes.

In December Musgrave announced the intercept that gave rise to this theory – 45m at 11.8 g/t from 144m including 11m at 14 g/t and 23m at 16.2 g/t – which was returned from a central position between the Twilight and Velvet lodes.

The company said the result “opens numerous possibilities and opportunities to discover additional lodes” and has “the potential to add significant upside to the high-grade Break of Day resource”, which is currently 868,000 tonnes at 7.2 g/t for 199,000 ounces of gold.

Results from the drilling program testing the “link-lode” theory are anticipated in early March and will be incorporated into a resource update for Break of Day expected in the June quarter.

The drill rig that has been in action at Break of Day has also recently been put to work on the Mainland area to the north, where Musgrave is following up high grade hits including 3m at 38.2 g/t gold from 113m and 2m at 55.4 g/t gold from 52m.

The company only secured an option over Mainland in March last year, meaning exploration there is less advanced than on other parts of the Cue project.

But the area has produced plenty of nuggets for the prospectors that have worked it over the years and there are high hopes of finding the deeper source of the gold.

“You have all this alluvial gold; it’s come from somewhere,” Musgrave managing director Rob Waugh said last year. “If we find that source, we know the grades are going to be high.”

First results from the recent Mainland RC drilling are anticipated in mid-March and will be used to inform further drilling to be undertaken in 2020.


Joint venture promise

In September last year, Musgrave signed an $18 million earn-in and exploration joint venture agreement with Australian gold heavyweight Evolution Mining over the Lake Austin area at Cue.

The joint venture excludes the existing resources at Lena and Break of Day and at the smaller Leviticus and Numbers deposits as well as the Mainland area.

Assays from the first diamond drilling program undertaken at the Lake Austin North prospect since Evolution came on the scene are due in March, while a regional aircore drilling program began earlier this month to test the extension of the Lena-Break of Day mineralised corridor north under Lake Austin.

Musgrave has already identified significant gold mineralisation at Lake Austin North and could be in a position to announce a maiden resource for the prospect later this year.

With a steady flow of drilling results from Cue and corporate interest from the likes of Evolution and Westgold Resources, both significant presences on the register, Musgrave shares have doubled this financial year.

They closed at 10c on Wednesday, capitalising the company at around $40 million.


This story was developed in collaboration with Musgrave, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.