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Bonanza grade gold and silver assays discovered in the Altenburg Valley. Speculative Buy at 3.87p with an 8.9p target price.

Noricum Gold is a mineral exploration vehicle focused on Austria. There has been no shortage of good news coming from its sampling and reconnaissance work in the Altenburg Valley target that lies within the 8 kilometre of prospective strike that passes straight through Noricum’s 100%-owned Rotgülden mine in south-central Austria. Earlier on in the month, investors learnt that 92 samples taken from the Altenburg Valley targeted returned value up to a staggering 86.4 g/t gold, which is a bonanza grade in anyone’s book. Now further work on these samples and assessing for other metals has revealed bonanza silver as well, with grades as high 1,011g/t and copper at 4.49%. What is obvious is that such high grades of both gold and silver being found outside of the historic mining centre at Rotgülden does highlight the possible scale of the potential here. The results will be used to plan a significant drilling programme in 2012.

Attention is being focused on the company’s two most advanced exploration projects at Rotgülden and Kliening to bring them up to drill ready status with the goal of delineating a maiden JORC resource. At both these projects, the team already knows that gold is present as the Rotgülden gold project includes the old gold/copper/silver Rotgülden mine at which recent drilling by previous explorers resulted in intersections of up to 2.7 metres at 44 g/t gold. At Rotgülden, a regional drilling company was appointed to complete an initial 1,800 metre drill programme which commenced in August. While an initial 2,000 metre drilling programme at Kliening started in July. There is little doubt that the delineation of a JORC resource could lead to a substantially higher valuation being given to the stock.

Austria may not immediate conjure up gold potential in one’s mind but the country possesses a historic high grade gold region as well as a supportive jurisdiction. In fact the country has an active mining industry and is the world’s tenth largest producer of graphite and talc. It is politically stable, has good infrastructure and no royalties plus a standard company tax similar to the UK. Exploration licences are granted for an initial 5 year period and are renewable. Licence fees are nominal and there is no minimum annual spend. There are numerous examples of exploration licences being turned into mining licences. The south of the country is highly prospective for gold and that is where Noricum has acquired a total of 518 licences covering 165 square kilometres, lying in five key groups which have all been the subject of mining activity in the past. These licence areas are not in national parks and well away from tourist areas.

The Rotgülden and Kliening projects are Noricum’s top priorities for exploration. Rotgülden is a high grade, narrow vein gold deposit with grades of up to 40g/t. If the veins were not attractive enough in their own right, there are also pockets of high grade massive sulphide that run at 100g/t gold and up to 80-90 ounces per tonne silver. These caverns are about the size of a large room and could possibly contain substantial amounts of gold. Between 2005 and 2007, the previous licence holder Alpine Metals spent approximately £3.2 million at Rotgülden mainly on extensive underground development and 1,500 metre underground drilling programme at the Friedrich adit in the old mine. The budget for the current season will fund down-hole electromagnetic and magnetic work to define massive sulphide drill targets; to be tested by 1,800 metres of drilling from surface above the existing mine entrance. This old mine produced arsenic and gold as a credit; but there is obviously tremendous potential in these licences with Alpine Metals suggesting a potential resource of 4 million ounces of gold.

At Kliening there are two targets. Along with small tailings dumps there is also lode style mineralisation at Buchbauer-Bischofeck. Old records show that the mineralisation in the area consists of steeply dipping veins ranging in thickness from 0.5 – 2.5 metres which seem to occur in parallel vein swarms with individual veins some 25 metres apart, these veins appear to strike for 4km within Noricum’s tenure. Previous work included the cutting of two trenches, one of which exhibited gold grades between 11.8 – 23.6g/t. In total, the Directors have an agreed programme of up to 2,000 metres of a combination Reverse Circulation and diamond drilling at Buchbauer-Bischofeck which will be systematically investigated to determine the potential of these vein swarms.  Approximately 1,400 metres has been drilled to date before the drill rigs were moved to Rotgülden to fast track the drill programme there. Initial results look promising including one intersection of 0.5 metres at 12.52 g/t gold which should improve as the assay results from the metres around it are received over the coming weeks.

Noricum presents investors with the opportunity to back a high growth exploration and development business concentrating on gold, silver and copper. The management is highly experienced in high grade narrow vein gold mining and is fast tracking the Rotgülden and Kliening projects which both seem to offer the potential for near term production. Following an extensive evaluation of the results of previous exploration work, the company has a well-planned exploration programme which could help begin to define an economic JORC-compliant resource at both these projects. When the interim results were announced in mid-September, the board reported that two clear targets had already been identified at Kliening for further exploration with a five hole 1,800 metre drilling programme had begun at Rotgülden where results are anticipated to be received during Q4 2011. This work could lead to a healthy newsflow but more importantly could rapidly accelerate a thorough understanding of the opportunities. Noricum, sensibly, will be seeking to consolidate its land holding by acquiring adjacent licences.  With the shares standing at 3.75p we rate them as a Speculative Buy with a target price of 8.9p.

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