Drilling Extends Gold Zone at South Dakota Project

Source: Andrew Mikitchook 12/06/2024

Dakota Gold Corp.’s (DC:NYSE American) Maitland Project in the historic Homestake District of South Dakota has extended the strike length of known mineralization by about 700 meters. A BMO Capital Markets analyst says further extensions or discoveries “will be rewarded by the market.”

Dakota Gold Corp.’s (DC:NYSE American) Maitland Project in the historic Homestake District of South Dakota has extended the strike length of known mineralization by about 700 meters, BMO Capital Markets Analyst Andrew Mikitchook noted in an updated research note on December 3.

The drilling “delineated iron-formation gold mineralization, similar to the past producing Homestake mine, in four distinct ledges,” wrote the analyst, rated the stock Outperform with a US$6 per share target price, which would be a return of 182% over its price on December 2.

“Dakota is currently assessing results and updating the geological model, with a view to 2025 follow-up drill program,” Mikitchook wrote. “In our opinion, further extensions or new discoveries at Maitland will be rewarded by the market.”

Strike Length Nearly Doubled

Highlights of newly released results by Dakota at Maitland include 1.8 meters of 14.45 grams per tonne gold (g/t Au), 3.5 meters of 8.93 g/t Au, 1.6 meters of 11.5 g/t Au, and 0.8 meters at 28.1 g/t Au, which was a step-out intercept.

“The significance of the step out hole, drilled ~700m to the north of JB Zone, is nearly the doubling the known strike length of gold mineralization at Maitland to ~1,600m and the system remains open in both strike directions and at depth,” the analyst wrote.

The drilling found ledges of Homestake-style iron formation and gold mineralization similar to the “West Ledge” system of the historic Homestake mine, he noted.

“In our initiation note, we described the similarities between the JB Gold Zone and the historic Homestake Mine that produced > 40 million oz (Moz) gold,” Mikitchook noted.

Follow-Up Drilling in 2025

With the 2024 program now finished, Dakota is assessing the results to refine its geological model for a follow-up drill campaign next year.

Further growth through extension of JB Zone or discovery of other high-grade zones at Maitland will be rewarded by the market,” he wrote. “We will monitor exploration updates closely.”

An updated resource is expected in Q1 2025, Mikitchook noted, and an SK-1300 Initial Assessment with cashflow (a preliminary economic assessment equivalent) is planned for the second quarter. It’s other main project in the Homestake District, Richmond Hill, remains priority for the company, Mikitchook wrote.

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Important Disclosures:

1. Dakota Gold Corp. is a billboard sponsor of Streetwise Reports and pays SWR a monthly sponsorship fee between US$4,000 and US$5,000.
2. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Dakota Gold Corp.
3. Steve Sobek wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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Disclosures for BMO Capital Markets, Dakota Gold Corp., December 3, 2024

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Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Dakota Gold Corp within the past 12 months.

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Methodology and Risks to Target Price/Valuation for Dakota Gold Corp (DC-NYSE)

Methodology: We use an NAV multiple inline with other explorers and developers in the mining sector under coverage at BMO. We apply a 1.0x multiple to our NAV, which is appropriate given the early stage of exploration. To calculate NAV we assign placeholder exploration values to the JB Gold and Unionville Zones, and we model a modest heap leach mine at Richmond Hill based on existing resource base. We have not modeled financing debt or equity costs/dilution as these structures are unknown.

Risks: In our opinion, there is high exploration risk to meet market expectations of continuing strong drill results from the JB Gold Zone and other targets. We also view financing risk as high — although 2024 exploration is fully funded, there is a significant amount of investment (time and money) required to advance a project from exploration through engineering studies and finally construction phase. Dakota has mitigated this risk through a non-binding proposal with Orion for up to $300m in financing support for any future construction and development. We view jurisdictional risk as low and as an added advantage, Dakota is in a known mining jurisdiction and in addition all exploration licenses are on private land.

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