Exploration and Development in Newfoundland and Labrador

New Discoveries Reveal Rich Potential

The discussion around mining in Eastern Canada is often overshadowed by the prolific Abitibi greenstone belt that spans across the border between Ontario and Québec, but Newfoundland offers one of the most extensive mining histories in Canada, with small-scale mining being undertaken as early as the 1770s, and expanding into a major industry by the 1860s, when Tilt Cove was one of the world’s largest copper producers. In many ways, mining has shaped the economic, social and cultural history of Newfoundland. For today’s mining companies the province offers world-class geology, significant infrastructure and exceptional access to a skilled workforce.

That said, it is fair to wonder why Newfoundland’s mining sector has been in relative hibernation for many decades. The answer is in large part due to a lack of accessible land. Before joining Canada, Newfoundland was developing its own railway system. Part of the deal in order to get a company to build and operate the railway system across Newfoundland was that they had to tie up land tenure for 50 years. Therefore, all the mineral rights were locked up. After this period, the province shifted to developing the pulp and paper industry, so the ability to capitalize on all the gold potential was again pushed back many decades.

With those impediments to development now removed, exploration is being reignited throughout the province. In a conversation with Matt Manson, president & CEO of Marathon Gold, he provided a brief history, recalling that there has been a gold mining industry in Newfoundland for quite a while, as there are relatively small gold mining projects on the Baie Verte peninsula in the north of the island. That includes Anaconda, Rambler and Maritime Resources. Large scale mining in Newfoundland has either been centered around Voisey's Bay with the iron ore projects in Labrador, or base metal VMS deposits in Central Newfoundland, where you find the Buchans deposit and later the Duck Pond mine. The big change, however, pertains to gold. Projects of the kind Marathon is bringing - a large scale open-pittable project with millions of ounces of resources and a substantial gold production profile - are new.

After being spun out from the acquisition of Marathon PGM, one of the first projects that the company became involved in was the Valentine gold project. There had been gold showings in the Valentine Lake area of central Newfoundland going back as far as the 80s, but in 2010, Marathon made a series of deals where it ended up owning 100% of the asset. Since then, there has been a consistent program of drilling. By 2020, over 4 million ounces had been identified, and the mine was ready to be built. As of summer 2021, Marathon completed its feasibility study and is now in the homestretch of its environmental assessment permitting process. According to Matt Manson: “Of the crop of gold explorers and developers in Newfoundland we are the most advanced with our project in the final stretches of permitting and it is ready to be built.”

Valentine will be a two pit open pit mine producing 173,000 ounces per year with a 13 year mine life and a lot of exploration potential to push that further. “We are several years ahead of everybody else in terms of the development timeline, but certainly the exploration going on is showing that a lot of good projects are emerging in the province. I do not think we are going to be the only larger scale gold mine that is developed in the near to medium term future in Newfoundland,” Manson proclaimed.

"The Appalachian gold belt has been a forgotten child amongst major gold belts in North America. However, it is four times longer than the Abitibi. It also has the same structural environment geologically as other major gold belts in the world.”

Lew Lawrick, President & CEO, Magna Terra Minerals

New Sprottland

The reason Manson and many others including renowned investor Eric Sprott have strong conviction that Newfoundland has tremendous potential to bring gold mining projects into development is that there has been a host of excellent drill results coming out of the area. The leading company from this perspective is New Found Gold Corp.

When New Found was established in 2016, the founding team was focused on finding opportunities with high grade potential, and one of the first projects they visited was what is today the Queensway project. Historical drilling on the property delivered high grade gold results, but the operating company at the time was interested in base metals and did not continue with the project. Between 2016 and 2019 approximately C$8 million of work was done on the property, including a detailed till sampling program covering the JBP fault zone, a property wide VTEM magnetic and EM survey covering 821 km2, a regional scale till survey to sample over 750 locations, and a 1,950 m diamond drilling program at the JBP and Appleton fault zone. In late 2019 an initial 10 hole drill program returned 19 m of 92.9 g/t Au at the Keats zone on the Appleton fault. Success at Keats was further bolstered by New Found’s high-grade discovery at Lotto, 2.0 kilometers to the north, and by other recent high-grade drill intercepts along the Appletone fault zone.

These results catapulted the notoriety of New Found and enabled it to IPO in August, 2020. Since that time, New Found has continued to capture investor enthusiasm. Eric Sprott has also stayed true to his philosophy of doubling down on winning companies, even as valuations rise. Consequently he now has a 20% stake in New Found along with Palisades Goldcorp at 31%, and a strong retail and institutional base that owns 33% (as of July 2, 2021). “Moving forward, our plan is to continue to step out on these discoveries and to test multiple additional high grade gold targets. We have eight drills currently running and may expand this further to accelerate drill testing of a very large prospective target area. With approximately C$80 million in working capital, New Found is well funded to pursue our exploration programs,” detailed Craig Roberts, CEO, New Found Gold.

New Found and Sprott have also been active backers of companies that own adjacent land packages. In this case Labrador Gold Corp is well positioned with its Kingsway property that it acquired in March 2020. Roberts explained that there are different styles of geology and mineralization moving east to west. “Looking specifically at the corridor that the Queensway project lies on, Labrador Gold has what appears to be a continuation of the structures we are exploring to the north. We see good potential in a number of juniors in Newfoundland, New Found is most familiar with the specific project area we operate in, so we have invested in companies that adjoin us that can complement our asset.”

In conversation with Roger Moss, Labrador Gold Corp’s president and CEO, he outlined the young company’s history recalling conversations with Shawn Ryan, whose soil-sampling technique is responsible for the discovery of millions of ounces of gold in the Yukon, where he plied his trade for decades. Over the past few years, his sights have been set on Newfoundland and Labrador. “I knew that he had claims in Newfoundland, and it turns out they were next door to New Found Gold and along strike from that discovery,” said Moss. “We were aggressive in acquiring that property from Shawn and ended up in a bidding war, which we ultimately won. These two licenses followed by a third license became our Kingsway property, which covers 77 km2.”

Since beginning work on the property in July 2020, Lab Gold has completed 1,600 m of RAB drilling, and in early October, the company identified visible gold in a boulder of quartz vein, very close to what they are now calling Big Vein because it stands up out of the ground and it is visible over 25 meters.

Although there is still a long road ahead for Lab Gold, Moss commented: “Our land package has incredible potential. When we look at what New Found Gold has along the Appleton fault zone, they are looking at 7.5 km strike length in the northern part of their Queensway project. That extends onto our ground and continues across it for 12 km.” He added: “We have explored the idea of getting more ground, but most of it has been staked now, and I think we have some of the best ground in Newfoundland.”

Another relatively new exploration play being backed by Sprott and New Found Gold is Exploits Discovery. After seeing the work that GoldSpot Discoveries and New Found Gold had done on the Appleton fault, Exploits’ team assembled a land package consisting of over 2,000 km2 of ground surrounding New Found Gold. Exploits’ land package was selected to be around deep seated structures including the Appleton fault, Dog Bay Line, and GRUB Line, and made its IPO in September of 2020. “With such a large land package one of the key things we have focused on are these deep-seated structures. The great thing about that is they show up with geophysics. Exploits has flown over 12,000 blind kilometers for our VTEM survey, which means that every 100 m we have a helicopter flying back and forth with a geophysics tool over the ground,” said Chris Huggins, director of Exploits Discovery Corp.

Moving forward, Exploits will continue to establish knowledge of the ground it is on and the ground that it has acquired to date is built on the epizonal Fosterville model. “We are doing the geophysics and geology to understand what is going on, while also investing our money in the ground to test these theses out” Huggins affirmed.

“In Newfoundland there is low-cost power which is 95% renewable. The mining industry has the support of local government, provincial government, local communities and the first nation groups, and all want exploration and mine development to be successful. They understand that it contributes to job and wealth creation for the island.”

Ian Murray, Executive Chairman of Matador Mining LTD.

Cape Ray Shear

Along the Cape Ray Shear, Australia based Matador Mining owns a tenement in Newfoundland that includes the Cape Ray gold project and the recently acquired Hermitage project, which will act as a bolt-on to the Cape Ray project. Matador published a PEA on the Cape Ray project, revealing 837,000 ounces of gold in mineral resource all within a 15 km strike zone. “We own over 120 strike kilometers of the Cape Ray shear and see vast potential beyond what we have already discovered to add more resources and to grow the mining inventory in Newfoundland,” stated Ian Murray, executive chairman of Matador Mining.

Magna Terra Minerals was founded as a spin out of Anaconda Mining, a company founded by Magna Terra president & CEO, Lew Lawrick, when the focus for Anaconda shifted to Nova Scotia and resources were directed there. Since August of 2020, Magna Terra has been working to advance its 100% owned Great Northern and Viking projects. These projects are on a major fault structure that runs though the entire island and is a splay off of another major fault structure where Marathon has its Valentine Lake camp. It is on these structures where older granitic rocks intersect younger sedimentary rocks, and the secondary fault that splays off of these major faults is where there is a better propensity to define mineralizing events where gold will have come to surface. “These structural corridors are where you want to look, and Magna Terra has multiple kilometers along this major structure,” Lawrick underscored.

Brownfield Potential

Newfoundland also has brownfield operations that are not far behind Marathon’s Valentine project in their development. Maritime Resources flagship Hammerdown gold project had a PEA completed on it in March 2020 with the aim to restart the historic Hammerdown mine. Garett Macdonald, president & CEO of Maritime Resources pointed out that Hammerdown was the highest grade gold mine ever to operate in Newfoundland’s history at roughly 15 g/t. “Mining concluded in 2004 due to a significant decrease in gold prices. Gold prices have increased substantially from that point, so we are currently drilling around the established deposit with the hope of making a significant discovery,” Macdonald said.

Explaining Maritime’s strategy, Macdonald stated that the goal was to look for a low capital, high margin opportunity to get to cash flow quickly, utilizing what was available locally. Maritime had a brownfield mine site and a processing facility in the vicinity that had treated ore from Hammerdown before. Maritime then went through the motions to put everything back together and did a technical study that looked at a 70,000 ounce per year operation for the first five years. “We are now following up with all the technical work to advance the project to the next stage of feasibility. The fact that there is already an existing mill and permitted tailings pond contributed to us getting through the permitting process quickly, and we submitted our project for registration in July 2020,” Macdonald said.

Maritime has subsequently received approval for its EIA in May 2021, and it has a compact, low capital, high grade, high margin starter operation that will soon begin to generate to cash flow.

Looking Forward

This combination of early stage exploration and later stage development, brownfield and greenfield projects continues to excite many in the mining world, and undoubtedly Newfoundland will be an exceedingly important region for mining investors to understand and gain exposure to. So long as government continues with its supportive and transparent policies, discoveries will continue to be made, and in time, mining will return in a big way to Newfoundland and Labrador.

Image courtesy of New Found Gold Corp.