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Galileo Resources has the gift of the Gabbs

Published: 05:38 18 May 2015 EDT

gabbs
Pictured is recent drill work on the Gabbs project in Nevada, which already boasts 1.6mln ounces of gold.

“There is a suspicion that this is a new Carlin Trend emerging,” says chairman Colin Bird of Galileo Resources (LON:GLR). 

For the avoidance of doubt the Carlin Trend is one of the most prolific gold producing regions of the world, situated in the heart of one of the world’s most friendly mining jurisdictions, Nevada, and in the past hundred years or so has accounted for more than 70mln ounces of gold.

In the world of gold mining it is the place to be. 

So for Bird to say that Galileo is sitting on part of what might be the next Carlin Trend is no small claim. 

But in making it he has several things running in his favour. First, the Galileo property he’s referring to, Gabbs, already boasts over 1.6mln ounces of gold equivalent using a 0.4 gram per tonne cut off. 

And, as Bird noted early on in his own evaluation of the project, if the cut-off is lowered to 0.2 grams the head grade remains relatively unaffected but the overall resource goes up to nearly four million ounces. 

So there’s gold and plenty of it. And if the company’s acquisition of Gabbs hasn’t exactly lit a fire under its share price over the past year or so, though there’s plenty of time yet. 

“If it isn’t valuable today it will be tomorrow,” says Bird. And he’s right. The market may not be backing exploration with any real enthusiasm just at the minute, but there will come a time when a potential four million ounce gold resource will be just what the doctor ordered.

Let’s back up a little as we ask: what does being part a trend say about the wider prospectivity? 

The answer to that is less concerned with Gabbs itself, but with the activities of another company working in the neighbourhood, Pilot Gold. 

The Carlin Trend lies some way to the north east of where Pilot and Galileo are both working on the south-western border of Nevada. The work Pilot is doing at its Kinsley Mountain project appears to have found something new, rather than an extension of the Carlin Trend. 

But, as Pilot says in its literature on Kinsley Mountain, the mineralisation there is “Carlin-style”. And when the Pilot team says something like that it’s worth sitting up and taking notice. The previous company they worked on was called Fronteer Gold. Fronteer worked up another “Carlin-style” project in Nevada and then sold it on to Newmont, the regional superpower, for US$2.3bn.

Already Pilot Gold has been hitting some spectacular grades at Kinsley, and Bird has no doubt that in time the benefits of that work will accrue to Galileo too.

“Just by proximity we’re in the right space,” says Bird. Specifically, Gabbs is just twelve kilometres away from Kinsley Mountain.

But while work continues at Gabbs and indeed at Kinsley, Bird is also keeping his eye out for other deals. 

One such will be the sale of the company’s South African phosphate and rare earths project, which is now at stage where it needs serious capital spent on it. Of more long-term significance to Galileo shareholders though are likely to be Bird’s proposed forays into the copper space.

Gabbs already boasts significant copper mineralisation as part of the larger gold equivalent resource. It also has a copper target on the Crow Springs property to the south of Gabbs. But he wants more. 

“I’m looking at a couple of things,” he says. “I’ve always been a copper bug. By 2030 we’ll need twice as much copper as we’ve got now.”

Having said that, he’s also interested in relatively rapid returns. “I’m against the big porphyrys,” he says, citing six-or-seven year development horizons and low grades. Instead he’s interested in small tonnage operations with reasonable grades, running at around the 2% mark, and bigger near-surface systems.

“Galileo is going to be copper, copper, copper,” Bird says enthusiastically. And if anyone should argue that now is not the time to be putting together a portfolio of exploration assets, Bird has the perfect rejoinder.

“You can’t wait for the tide to turn,” he says. “If you hit the deck running when there is a change you can stand out from the crowd. I want to be there before it all starts.”

Remember, this is the man who sold his last copper company, Kiwara, for upwards of US$200mln. Will he do it again? Well, you wouldn’t bet against it.

 

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