New Carolin Gold Corp. (LAD)

[talius]

Valuation Commentary: New Carolin Gold Corp.'s (TSX-V: LAD) (OTC: MDULF) Ladner Gold Project is located only 150 km East of Vancouver, BC, Canada, in the Coquihalla Gold Belt. It hosts 5 past producing mines and a high-grade underground historic (non 43-101) resource at the Carolin Mine of 728,429 gold ounces (2009 estimate of potential quantity: 5+ million tonnes grading 4.2 - 4.8 g/t gold, or ~1 million tonnes grading 8 - 9 g/t gold). LAD.V is advancing with plans to bring this historic gold resource compliant, and also prove-up the larger multi-million oz high-grade mesothermal Bralorn/Motherlode-type model potential.

The latent intrinsic value of LAD.V relative to its current market capitalization of <$5 million (~74M shares outstanding X ~6 cents (~113M fully diluted)) appears to present exceptional opportunity -- bringing the 2009 estimate of potential quantity into resource will give LAD.V immediate intrinsic value worth several times the current market cap. Shares of LAD.V are poised for upside revaluation as the inherent value and accomplishments are appreciated by the market, and apt to respond in multiples as gold retrenches and strengthens.

This project is a highly coveted asset, and due to its desirability the property was essentially in abeyance for several years; despite LAD.V originally only having 10% ownership (now 40%), LAD.V was the controlling operator and owned 100% of the salient pieces that made the property functional to LAD.V alone (mine permit, environmental bond, roads, water licenses, etc.), the receiver for Century Mining (60%) and related Tamerlane (30%) held the balance. New Carolin Gold Corp. is at an improved level of relationship with the receiver for Century Mining, whom we believe is Deutsche Bank. The improved relationship will see LAD.V increase its ownership of the Ladner Gold Project to 100% and enable LAD.V to facilitate the exploration and development of the Ladner Gold Project. The receiver has acquiesced and the relationship is cooperative; the transfer of Tamerlane's interest to LAD.V in September-2015 marks a turn in the relationship -- LAD.V now owns 40% and there is an agreement in place whereby LAD.V only needs to provide ~$1,250,000 (remaining, however we speculate as little as $750K will suffice if presented) to Deutsche Bank in return for the remaining 60%, additionally Deutsche Bank has agreed to allow that money be applied towards exploration in exchange for 20,000,000 shares (at which time it will become the largest shareholder of LAD.V). Mining MarketWatch Journal estimates that a nominal capex of $1M is sufficient for LAD.V to push the project into 1 million - 1.5 million ounces gold with a mineable grade, this high-impact/low-cost program is facilitated by the high standard of historical drilling and associated database (700+ holes, ~50,000 m). There is also potential to prove up a new major gold zone adjacent the Carolin Mine in the process.

Past production, development, and exploration on the Ladner Gold Project: The property has been producing gold since 1890, there are numerous high-grade artisan workings along the fault line that runs the length of the 28 km-long property, mostly they were chasing very high-grade surface showings, some up to 120 - 130 oz/tonne. Meaningful exploration and development of the property started in 1975 with a mining company that drilled out the Carolin Ladner Gold Project and put it into production in 1982 -- unfortunately gold prices were uncooperative; when they drilled they were at near-$800/oz gold and when they got the mine into production gold was at $400/oz and heading the wrong way. The project had terrific headgrades (near-5 g/T) but the operators were deficient in their mill set-up and operating skills, attaining only near-30% recoveries for the first ~3/4 of their operation before upgrades yielding ~60% recoveries -- this has serendipitously set-up an opportunity for the current owners of the property as the tailings are richly-laden in gold and readily exploitable. Athabaska Gold explored and developed underground in the mid-90's with the intent of blocking-out a solid mineable grade and released a resource estimate in 1997:
- 2,517,500 Tonnes grading 4.29 g/T (347,543 oz gold) Measured & Indicated
- 2,569,540 Tonnes grading 4.61 g/T (380,886 oz gold) Inferred
(This 'historic' resource estimate pre-dates NI43-101 standards)

Athabaska Gold spent ~$3.5 million proving up new ounces and defining high-grade areas they could mine, but by the time they were looking to raise money to put the Carolin back into production gold was down in the $300 range heading toward $250. Tamerlane and its sister company Century Mining picked-up the property to take the Carolin Mine to production but it got financially spread thin and bogged down elsewhere. LAD.V stepped in late in the game just prior to the receiver getting involved and got its foot in the door.

Ability to add significant ounces: The Carolin Mine mineralized zone is open in all directions, the underground workings are dry, and fully accessible. A mine development map from 1981 shows level 800 being extended north for 1.2 km to the McMaster Zone, this was never performed, however this area between is highly prospective for additional ounces. Most of the drilling to date on the project has been to expand existing mining that originated from surface showings (chasing the known mineralized structure), the project has received next to nothing (only been drilled sporadically & nominally) for exploration and remains largely untested even in obvious areas where confidence is high something major geologically has occurred. The McMaster zone has a heavily discounted current resource of ~79,540 oz with over half the existing resource at ~2+ g/t and near surface, but the bigger story is in what the confirmation drilling on Carolin & McMaster and other new targets will yield; it is theorized the McMaster has the potential to rival and surpass the historical Carolin figures in size and grades. All drill holes on the project to date have been relatively short (nothing more than ~200 m) and all have intersected gold.

The Hozameen fault runs along the length of the Ladner Gold Project: All the mineralized gold zones on New Carolin's Ladner Gold Project appear to be like streams coming from the fault to surface; 30 degree-angled down-dipping stacked zones. High priority target areas LAD.V has identified are expected to affirm Ladner Gold Project has similar geological makeup to a high-grade shale-based mesothermal Bralorne (4M oz) & Motherlode (7 million oz producer) mining camps. The theory is there is a brand new zone running between 1.5 - 3 km that needs to be drilled. Confirming a new major gold zone will demonstrate multi-million ounce large-scale exploration potential of the model -- if so, there could be potential for 10 - 20 million ounces on the property.

Additional related insight on the New Carolin Ladner Gold Project may be viewed at http://miningmarketwatch.net/lad.htm online.