HRA Special Delivery Alert #564 - 7 Sep 2014
Barisan Gold (BG-V; $0.19)

Eric Coffin
Hard Rock Analyst
Posted Sep 9, 2014

Barisan Gold (BG-V; $0.19) released more drill results from Upper Tengkereng, specifically the bottom of Hole 7 and Hole 8. The holes were drilled in the southern (Hole 8) and eastern (Hole 7) portions of the porphyry surface trace and were intended to test higher grade phases of the porphyry. Hole 7 was vertical, near the eastern margin while Hole 8 was drilled SW from the same pad as Holes 5 and 6 as can be seen in the drill plan to the right. Both holes were highly successful in generating impressive intercepts, the best two so far in fact.

(Click on image to enlarge)

Tengkereng continues to evolve as a fairly complex porphyry which has three higher grade zones within the surrounding lower (but not low by porphyry standards) intrusive body. As I’ve noted before, these higher grade zones will be critical in determining the ultimate economic viability of this target. Upper Tengereng has a surface trace of roughly 350 by 500 metres. That isn’t huge by porphyry standards and implies tonnage potential in the 150-300 million tonnes to depths of 400 to 800 metres. What it does have going for it is grade as shown again by the latest results. I’ve spoken to a couple of friends with a lot of porphyry experience. I was surprised by how high a strip ratio and depth to mineralization companies that focus on large scale bulk tonnage are willing put up with. Even so, the underlying assumption is that these companies want something in the 500 million – 1 billion tonne plus range that would have a very long mine life. That won’t be the case at Tengkereng from what I can see so a suitor will have to be wooed with the promise of grades that will drive production costs down.

The latest release was full of references to “tracing near surface high grade mineralization” which I was happy to see. BG executives realize how important this is and they are trying to make sure the market knows it. There were distinct references to the top 100 metres in the southern/eastern part of the target being composed of “advanced argillic hydro breccia grading 0.3-0.4% copper equivalent”. Those aren’t high grades but they are probably high enough to define the top 100 metres in that area as ore not waste in a calculation. That’s important. The more drilling can dive down the internal strip ratio and keep the waste to the edges of the pit the better the odds will be for Tengkereng.

Hole 8 reported 890 metres grading 0.51 g/t gold and 0.47% copper starting at 4 metres including 276 metres grading 0.68 g/t gold and 0.74% copper starting at 188 metres. That is a very good drill hole and Hole 7 wasn’t much worse now that all the assays are in for it, though its intercepts start deeper. Hole 7 reported 824 metres grading 0.65 g/t gold and 0.34% copper starting at 292 metres including 558 metres grading 0.77 g/t gold and 0.39% copper starting at 510 metres. Much of the higher grade material is within a chalcocite-chalcopyrite rich zone that has a depth extent of 400-500 metres starting at about 300 metres depth.

The stock performed better before and after the release than it has for some time, trading at five month highs and back where I started talking about the past few sessions. The new enthusiasm is based not just on drill results but also the appointment of Shawn Westcott as President. Westcott comes off a highly successful tenure as corporate development for NioCorp (NB-V), one of the most successful resource stocks on the Venture this year (hat tip to my broker Peter Irvine – shoulda listen to you Peter!). Bringing that sort of track record to a new deal means having a set of happy shareholders that will look at the new company Westcott is involved with and take it seriously. Alex Granger is staying on as CEO. Granger has done a good job but it’s hard to manage the market for a company from the other side of the Pacific even when you’re willing to endure the amount of jet lag he accepted. BG still has a sales job on its hands on Tengkereng and, as importantly, Indonesia. Indonesia has a new president who is very different from traditional Javanese politicians. There are high hopes he’ll be a breath of fresh air for a corrupt system that really needs one. We’ll see. Westcott and Granger’s first task will be closing the placement that has been hanging fire for a couple of months. The way the stock is trading the odds are it closes now and BG may enjoy a better autumn now that the story is being seen by a new group of traders.

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Eric Coffin

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