Medallion Metals Ltd (ASX: MM8) this week released some news about its Lounge Lizard Gold deposit in Western Australia, with new drilling validating historical exploration results and moving it closer to being a viable project for the company.
The team at Canaccord Genuity follows the company and has a very bullish share price target on the stock, but more on that later.
First to what the company announced this week.
Image source: Getty Images
Historical gold hits hold up
The Lounge Lizard deposit is part of the recently-acquired Forrestania Gold Project, which Medallion is looking to develop into a gold processing hub.
Medallion was seeking to replicate the results from historical drilling with new drilling over the deposit, and did so, returning intersections including 23m at 5.85 grams per tonne of gold and 21m at 4.02 grams per tonne of gold.
The company said the mineralisation was defined along a 1km strike length and remained open along strike and at depth.
Medallion managing director Paul Bennett said regarding the results:
The Forrestania Gold Project represents the dominant ground holding on a historically productive and fertile greenstone belt that has yielded multiple gold discoveries. Lounge Lizard represents the first step by Medallion to systematically unlocking the broader gold opportunity across the Project. Historical work has outlined a consistent mineralised system over approximately one kilometre of strike, with limited systematic gold exploration undertaken in recent decades. With the asset now under our control, we are progressing multiple work streams to define resources and assess development pathways. Our strategy is to establish Forrestania as a long-term gold processing and production hub in the region, supported by multiple potential feed sources across the tenure.
The Forrestania project is about 450km east of Perth, and includes the Cosmic Boy concentrator and associated infrastructure, which is intended to form the basis of a planned gold processing hub.
Historical drilling at Lounge Lizard was carried out between 1995 and 1999 and the company said it has started a systematic validation of the drilling database, which should support a maiden mineral resource estimate targeted for the third quarter of 2026.
Medallion said two shallow open pits were developed over the deposit in 1996-97, with reported production of 244,602 tonnes of ore at a grade of 4.54 grams per tonne.
But following the discovery of nickel sulphides at the nearby Flying Fox deposit in 2003, "regional exploration focus shifted toward nickel and gold exploration at Lounge Lizard largely ceased'' the company said.
Shares looking cheap
Canaccord, which covers Medallion shares, noted the news this week, but said it was not currently modelling the Lounge Lizard deposit into its calculations.
Even so, Canaccord has a price target on Medallion shares of 95 cents, compared with the current share price of 46.5 cents.
Medallion was valued at $369.8 million at the close of trade on Wednesday.
