Investors disinterested as OzAurum posts thick but low-grade intersections

OzAurum (ASX:OZM) investors may be wondering why the share price has dropped -6%, even as geos find multiple thick intersections with mineralised gold. 

Assay results for four of six RC holes sunk at the Mulgabbie North Project provide long core equivalents with considerable mineralisation contained within. 

OzAurum notes the Mulgabbie North shear geology continues to demonstrate potential for significant gold mineralisation nearby Northern Star’s (ASX:NST) Carosue Dam. 

So, what did OzAurum find? 

Today’s assay results do not boast eye-catching and unusually high grades, and this development is likely part of investor fright leading to a small sell-off today. 

Whether or not this is a fair reaction remains to be seen. 

Investor information service Undervalued Equity notes low-to-mid grade gold is that from 1 gram of gold per tonne (g/t) to 3g/t. 

Today, OzAurum is reporting: 

• 57 metres at 1.05 g/t

• 43m at 0.82 g/t 

• 20m at 2.55g/t 

So, it's clear we aren't talking about high grades.

Food for thought

However, consider yesterday’s findings from Aurimin (ASX:AUN). 

Aurimin on Monday found over 300m at 1g/t, which led to a healthy boost the company’s share price. 

The low grades hit by OzAurum today are to a degree offset by the length of its core equivalent sections—leaving one justified to ask if OzAurum could prove to be undervalued. 

Quality is important, but if the economics of a mine can be pinned down, quantity can be just as good.

More drilling ahead 

Starting on 18 July, OzAurum will see RC drills fire up on-site with a nine hole program for 1900m set to launch. 

That RC drilling program will turn over data which will then be used to compile a potential JORC 2012 compliant resource estimate, boosting project bankability. 

At this time, an additional diamond drill rig continues to sink further down at the Mulgabbie ‘Demag Zone’ with results to be reported in the coming weeks and months. 

Despite today's dip, OzAurum continues to outperform the Materials Index. Is today's -6% drop little more than a risk-off reaction?