Alio Gold Inc. (ALO, Financial) has informed its shareholders through a news release published on its website that high-grade mineralization has been confirmed in the mineral resource at Ana Paula in Mexico with the results of a 2,000 meters drilling program. The drillings were made for metallurgical sampling.
At Ana Paula, a mineral project the miner is undertaking in the province of Guerrero, the mineral resources were estimated by the exploration team on May 16. These results are contained in the Preliminary Feasibility Study.
The aforementioned results say the miner has intersected a 33.1-112 meters ranging subspace of mineralization whose gold grade ranges between 3.85 g/t and 7.19 g/t.
The gold grade measures the concentration of the precious metal in the ore. The higher the
concentration, the lower the costs associated with the processing of the mineral to obtain gold.
Greg McCunn, Alio Gold's CEO, commented on the drilling results.
“These final results of the drill program are again a reminder of the high-grade nature of the breccia mineralization within the proposed open pit at Ana Paula and give us further confidence in our existing block model," he said.
At the beginning of 2018, the company will start a surface drill program to test “the extension of the breccia zone below the proposed pre-feasibility study pit,” said McCunn, together with the creation of an underground decline that will enable the exploration team to test from underground.
These results are very important for investors because the miner is defining a high grade gold deposit at Ana Paula. It may produce a positive impact on the market value of the stock over the coming trading days.
Alio Gold is currently trading at $3.47 per share on the NYSE American stock exchange. The stock has a market capitalization of $156.4 million, a price-book (P/B) ratio of 0.71 versus an industry average of 2.01 and an EV-to-Ebitda ratio of 1.87 versus an industry average of 10.14.
For the 52-weeks through Dec. 20m Alio Gold gained 15.7%:
The gold stock is now trading close to the 50-simple moving average line but far below the 200-simple moving average line:
The average target price for Alio Gold is $5.74 per share and the recommendation rating is 2.4 out of a total of 5.
Alio Gold is a Canadian gold explorer with only one operating mine. This is the San Francisco mine, which is located in the Mexican state of Sonora from which the miner expects to produce between 82,000 and 86,000 ounces of gold in 2017 at an all-in sustaining cost per ounce of $1,000 to $1,100.
Alio Gold aims to become a mid-tier gold producer through a buy-and-build approach.
Alio Gold is not only engaged in the Alio Gold project. The company also has exploration activities at the Ejutla property in the Mexican state of Oaxaca.
Disclosure: No positions in Alio Gold.
