Extracted from HRA Special Delivery #924 - Apr 23, 2020
Precipitate Gold (PRG-V)

Eric Coffin
Hard Rock Analyst
Posted Apr 27, 2020

Precipitate Gold (PRG-V, PRIEF-OTC, up 2 cents on 1.23 million shares at $0.145) gave its Ponton project a proper introduction in a news release this morning. While there are still traders who feel stung by the recently announced Pueblo Grande JV, I think today’s news about Ponton makes the decision by PRG’s board to JV Grande easier to understand. Precipitate clearly isn’t out of targets yet.

The map below shows the location of Ponton relative to Pueblo Grande and the Pueblo Viejo and other regional mines. The green outlines are the surface outline of the Los Ranchos formation, the volcanic sequence that hosts Pueblo Viejo. Ponton is mainly underlain by the same rocks and PV. That increases my level of interest in the geochemical target outlined in the release and, frankly, makes it a bigger head scratcher why past workers didn’t drill test it.

(Click on images to enlarge)

HRA followed predecessor Everton way, way back in the day. I remember Ponton from back then, but Everton’s focus was never gold targets. The broad soil surveys that generated the gold target also generated a copper porphyry target 2.5 km to the northeast, Majagual. It’s the porphyry target that received most of the follow up attention by EVR and all of the drill budget. I think that was due to copper being more in vogue at the time, and perhaps a simple preference for the porphyry model by EVR’s technical crew. Majagual generated only middling drill results and doesn’t hold a lot of interest for me.

The target PRG will concentrate on is Copey Hill, and it’s easy to see why based on the geochem maps reproduced below. The maps are small scale here and harder to read (much better versions on the company website) but they get the point across. You can see the obvious strong multi-element anomaly that defines Copey Hill as a target. The anomaly is defined by Gold, its common fellow traveler Arsenic, as well as by Antimony and Mercury, both volatile elements often associated with the upper level of epithermal systems. The anomaly is roughly 1 by 1.2 kilometres in size and is still open to the NE. One of the first things PRG wants to do is expand the soil grid in that direction to close the anomaly off.

So why wasn’t Copey focused on sooner by PRG? In simple terms, it wasn’t the reason for the Everton deal. The main reason for acquiring ground in the region was to get access to the area immediately surrounding Pueblo Viejo. Precipitate concentrated its efforts and money there for the past year. The areas immediately surrounding PV received priority when it came to importing, cleaning and integrating historic data, which was a very large job in itself. And perhaps the fact that past workers chose not to drill at Copey lowered its priority level too.

Whatever the case, PRG personnel did not get most of the Ponton data cleaned up (that’s still in progress, actually) until recently and didn’t get on the ground there until a field visit in December. That visit, while short, immediately elevated Copey Hill as a potential target. The area within the anomaly displayed classic signs of the upper reaches of an epithermal system at surface including broad areas of argillic alteration, silica flooding and quartz veining with open spaced and cockscomb textures, indicative of a near-surface low temperature environment.

PRG immediately decided to design a follow up program to properly map the area and extend the soil grid. Then Barrick and covid came along. Although Precipitate wants to do its own drill targeting work, management was impressed enough to start the drill permitting process two months ago. Permits take time but PRG has a head start on them and has already spent time getting the locals on board, which is required before any permit will be granted. Once government offices are back in full operation I expect PRG will get its drill permits by the time its ready to bring the rig on site.

This is a large epithermal target. PRG wants to get a new grid down and property surface map the area to look for structures and properly tie the soil anomaly to underlying hard rock features. While it already looks like what PRG director Quinton Hennigh might call “a walk-up drill target’, they still want to narrow things down and improve the odds as much as they can. Past sampling has reported gold grades up to 4.4 g/t, which is good for the top of a system like this. Although the area is pretty and has great access, PRG’s VP Exploration noted that the outcrop exposure isn’t bad, and he wants to take advantage of that by getting a proper mapping job done and doing more sampling while they’re at it. PRG also plans a ground mag survey to help highlight areas of magnetic destruction caused by alteration and underlying fluid flow when the system was active. None of that should take long to do given the superior access and logistics. Copey Hill will then be ready to drill. Note the targets to the SE of Copey on the geochem maps. Those are not well developed yet, but all have reported anomalous gold in rocks at surface and deserve some follow up too.

The bottom line is that I think Copey was bound to get more attention from PRG anyway once they had a chance to see it on the ground. The deal with Barrick on Pueblo Grande is simply accelerating the process. And, truth be told, I’ve personally got more comfort with geochemical targets at surface that can be ground proofed prior to drilling than I do with geophysical targets at depth that are model driven and conjectural. Don’t get me wrong. I like the PG targets, but I don’t have any illusions about the odds. And Copey is a large target itself, with the right geochemistry in the right rocks. I’m looking forward to seeing some mapping and specific targeting, but I wouldn’t make the mistake of viewing Copey as a “consolation prize”. It’s not. I’m willing to bet the technical types around PRG have more comfort with a target they can touch too.

On that note, I am excerpting comments in today’s release from Quinton Hennigh, one of Precipitate’s directors. He makes some positive comments about the Copey Hill target. As a director, Quinton is bound to be supportive, but he doesn’t often get this vocal in a public way about a specific project. I think it is significant that he does in this case and that too gives me some added comfort. Here’s the quote:

"Given its close proximity to the world class Pueblo Viejo mine operated by Barrick, it is astonishing such a target has not yet been tested, especially given the fact this system is hosted by the same prospective host rocks, the Los Ranchos Formation. Based on the existing available data, the Company's initial assessment suggests the Copey Hill anomaly possesses the geochemical characteristics to host a significant untested epithermal target and warrants accelerated advancement toward a first phase of drill testing. Precipitate aims to soon fully develop this drill target in preparation for drilling using the Company's recently acquired drill equipment. Having now closed the Pueblo Grande transaction with Barrick, Precipitate is well cashed up with approximately $2.3M to aggressively pursue this high value target."

I think Q sums it up well, as he usually does. I do not know why Copey wasn’t tested before, but I’m glad PRG will get a chance to be the one to do it. Management tells me at least one of the drills purchased last year is now ready for service. There is still a bit of background government paperwork that is stalled by covid-19 but that too should be wrapped up quickly once the bureaucrats are back in their offices. Being able to use its own rigs means low per metre costs which means more drill holes, Once things kick off there should be plenty of reporting from Copey and perhaps the targets to the SE as well if they get worked up fast enough. All things considered, I think this turn of events, namely the Barrick JV and elevation of Ponton as a target area, is a net positive for Precipitate. Maybe it’s time to give management a break and let PRG out of the penalty box.

Precipitate Gold Corp.
PRG-V
Precipitate Gold website

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Apr 23, 2020
Eric Coffin
Editor of HRA
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