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Matador Mining (MZZ:ASX)

Initiation Report

6 Videos - Nov 18
  • Matador Mining is a gold exploration company who recently consolidated 65 kilometres of strike along the Cape Ray sheer in Newfoundland.
  • This is widely regarded as one of the more prospective, yet under-explored gold regions in Canada.
  • The project has a current resource of 750,000oz Au, however it is the greenfield potential that holds the long term value in the project.

Canada’s emerging gold province

1 Video - Nov 18

Matador Mining a gold exploration and development company, is focusing on the Cape Ray gold project in Newfoundland, Canada. In a first for that project, Matador has consolidated 65 kilometres (km) of strike along the southern portion of the Cape Ray shear, a highly prospective but largely under-explored gold region. Since acquiring the project in mid-2018, the company has achieved the following milestones.

  • Maiden JORC resource – 750,000 oz Au at 1.8 g/t Au:
    • based entirely on historical drilling, the resource is contained within 3 km of the total 65 km package, and
    • MZZ valuation (contained gold resource ounce multiple) $20/oz versus average of peer group (ASX developers/explorers) $30/oz.
  • Completion of 4,000-metre diamond drill program targeting extensions to known deposits, and follow-up of historical drilling in areas where no resource defined:
    • 21 of 22 assay results to date (36-hole program) encountered gold mineralisation, indicating a likely resource upgrade in early 2019, and
    •  assay results to date include 4.9 m at 4.8 g/t Au from 63 m (04 deposit),1.6 m at 24.36 g/t Au from 128.2 m (04/41 area) and 10.6 m at 2.26 g/t Au (Isle aux Morts deposit).
  • Following commencement of the first greenfield exploration program at the project in more than two decades, two highly prospective gold anomalies identified – more drilling planned for the start of the 2019 season.

Why wasn’t this ground consolidated previously?  Historically, Newfoundland had a somewhat archaic tenement system. That, to a large extent, restricted groups from consolidating significant and continuous holdings along the Cape Ray shear. Moreover, it led to a patchwork of ownership across the shear – typically by under-funded explorers and prospectors – and that meant only limited groundwork being completed due to lack of funds. Although changes to management of the tenement system occurred eventually, they were seemingly overlooked by the Canadian market as investors shifted from the resources sector into new growth industries (such as crypto-currencies and marijuana).

Current resource alone underpins valuation uplift:  The resource at Cape Ray (750,000 oz Au) does provide a solid platform for Matador. Indeed, following on from the recent drill program, which successfully extended the known mineralised zones at the defined deposits and continues to prove up prospects outside the current resource, an upgrade to the size of the gold endowment appears likely in the new year.

Blue sky opportunity: Despite the size of the existing resource, for shareholders the greatest long-term value may lie in the project’s greenfield potential, which is more difficult to quantify. That said, consolidating 65 km of highly prospective ground along a known mineralised shear for the first time in a first-world jurisdiction is a real achievement, something we feel the market has so far overlooked. Although there are a number of single, million-ounce gold deposits along the shear already, given the current state of the junior resource sector it seems unlikely that the project’s potential will be recognised overnight. It’s more probable that only greenfield exploration success will adequately highlight it.

While the first greenfield program was only a small step beyond the defined resource area (within the central zone – 3 km of the 65 km shear), Matador has already identified two highly prospective targets. These are likely to be drill-tested in the new year, at which time a more thorough greenfield exploration program will assess the rest of the shear, of which more than 62 km has seen little to no exploration in the past two decades (if ever), despite its prospectively. Work on that program has begun and will ramp up in 2019.

Virtual site trip – Cape Ray gold project

1 Video - Nov 18

Overview of the Cape Ray gold project in Newfoundland, Canada.

Corporate strategy

1 Video - Nov 18

Review what the reasons why Matador acquired the Cape Ray project and the strategy for the company in the future.

Why wasn’t this ground consolidated previously?

1 Video - Nov 18

Matador has consolidate the southern portion (65km) of the Cape Ray sheer, in Newfoundland Canada. Given this is a highly prospective resources rich region we asked the company what are the reasons why they were able to consolidate such a highly prospective package for the first time.

Exploration – greenfield

1 Video - Nov 18

Matador has consolidate 65km of ground along the southern portion of the Cape Ray shear, which despite its prospective remains largely untested using modern exploration techniques.

Exploration – brownfield

1 Video - Nov 18
  • Historically more than 85,000m of drilling has been completed at the Cape Ray project, resulting in a resource of 750,000oz Au.
  • Matador recently commenced their inaugural 4,000m program targeting extensions to the known deposits and follow up historical drilling in areas where no resource has been defined.