Gold Juniors Replacing Depleting Resources
Solidifying future reserves
As commodity prices rise and enthusiasm ripples across the sector, M&A activity is expected to increase. New discoveries need to be developed and producers will be looking to replace depleting reserves. “World-class mining companies now have to focus on incremental growth in and around existing mine camps,” said Michael White, President & CEO of IBK Capital.
White predicts a rise in M&A activity through the consolidation of each area as companies look to ‘buy the district’. With a gold and iron ore history dating back to 1897, the Sault Ste. Marie region in the municipality of Wawa, Ontario, became a steel empire. Today Wawa no longer relies on iron ore, but rather focuses on gold, diamonds and other minerals. Built around those initial gold mines, Red Pine Exploration has now obtained a 100% interest in the Wawa gold project, located in the Michipicoten greenstone belt. Red Pine spent C$14.2 million out of a C$20 million raise in March 2021 to consolidate its 100% interest in the operation. “We attained new shareholders along with the financing raise and the additional interest transaction was quite accretive for our shareholder base,” said Quentin Yarie, president and CEO of Red Pine Exploration.
Red Pine Exploration intends to expand its current 700,000-oz inferred and indicated resource, to what Yarie believes could become 2 million oz of inferred and indicated resources. With a 15,000-meter drill program completed in 2021, and more to follow in 2022, the company is still looking to acquire and explore further in the area. Red Pine has purchased a 100% interest in additional mining claims in the McMurray Township. “I believe we are watching the development of a gold camp not dissimilar to the Timmins gold camp,” said Yarie.
“Cashflow is the Queen that actually runs the kingdom. If you can cover your SG&A (Selling, General and Administrative Expenses) with the cash flow generated by one asset, you have significantly more latitude to feed your team while not burning treasury funds, which in my opinion, should be used for exploration or bringing mines to production.”
James Tworek, CEO, Element79 Gold
Element79 Gold has an LOI with Plutus Gold to ultimately acquire the Snowbird property, and is focused on M&A activity to grow and generate value for shareholders. Element79 chose to finance Plutus Gold’s Q4 2021 drill program with a C$1.1 million loan facility, which allows for Plutus to complete the remaining obligations they have to Gitennes Exploration under an option agreement. “Our acquisition focus is on easy to develop properties and formerly producing mines in de-risked and politically friendly mining jurisdictions, which we can turn back on and develop within a relatively small capex budget and short timeframe to be able to bring cashflow into the company,” said James Tworek, CEO.
Located about 110 km to the northeast of Red Lake, First Mining Gold’s Springpole asset asset is one of the largest undeveloped gold projects in Canada. A PFS was completed Q1 2021 showing a production output of more than 300,000 oz/y at the lowest quartile all-in sustaining costs. Optimizing the treatment plant for tailings and waste rock has been a focus, while producing first drafts for an EA to be submitted Q1 2023. Dan Wilton, First Mining’s CEO, revealed he is open to partnerships and has not yet decided whether to develop the asset alone.
In December 2020, First Mining also consolidated the land package around the Cameron project, a 1 million oz resource located 80 km from Kenora city. “We have signed an exploration agreement with the AWZ 37 community and this has been a great partnership thus far,” said Wilton.
Recently re-branded Moneta Gold, previously Moneta Porcupine Mines, added a new underground discovery with open pit resources at Westaway in Q4 2021 and recently acquired the Garrison project. “This increased our mineral resources to 8.4 million oz, of which 4.4 million oz are indicated, 4 million are inferred, and 2.8 million oz are underground, while 5.6 million are open pit,” said Gary O’Connor, CEO of Moneta Gold.
Moneta’s share price has performed well following a 2021 resource update and signing a deal with O3 Mining, an Osisko Group company.
With gold prices on the rise and a positive outlook for the precious metal, Goldshore Resources decided to take over the Moss Lake gold project, which sits in Kashabowie within 1 km of Highway 11, and 130 km west of Thunder Bay. "We believe that gold is going to trade between US$1,800 and US$2,200 for the foreseeable future, and the project works in this gold trading range. There has been a PEA completed, which, when sensitized to today’s numbers relates to more than a US$1 billion NPV on the historical resource we acquired, “ said Brett Richards, CEO and director at Goldshore Resources.
In order to acquire the asset, Goldshore resources sourced C$25 million in Sudbury seed financing, with C$15 million as hard dollars and C$10 million as flow-through receipts into Sierra Madre. “We were doing a reverse takeover on Goldshore into Sierra Madre and changed the name to Goldshore Resources. Everything was submitted to the TXS for approval, and we were admitted for trading on June 4, 2021,” added Richards.
Goldshore Resources aims to ramp up to four rigs by Q4 2021, and hold about C$11 million in the bank to push its operations forward for the next nine months. It was admitted into the TSXV and is currently on the OTC pink and also hopes to be approved for the OTCQB and the Frankfurt Stock Exchange.
With a C$139 million market cap as of Q4 2021, 03 Mining remains focused on the conversion and expansion of resources and making new discoveries. Following the trend of consolidation, Kinross announced the acquisition of Great Bear Resources for C$1.8 billion in December 2020, after being actively involved in the project since 2018. Much excitement revolves around the flagship Dixie project, which has the potential to become a top-tier deposit with a long-life mine complex to boost Kinross’ future production.
Dixie also remains a highly prospective area with vast exploration potential, including the LP Fault, Hinge and Limb Primary Zones. Great Bear completed over 340,000 m of drilling at the time of sale and Kinross has announced a 200,000 m drill plan for 2022 on the LP Fault Zone. The project has the possibility of long-term tax benefits due to Kinross' tax pools in the country and power supplies stem from Ontario's low-carbon energy grid. The Dixie property is located 25 km southeast of Red Lake, in the highly prolific mining district of Northern Ontario, proportionally reducing Kinross' need to expose to higher risk jurisdictions to increase their portfolio of operations and secure future resources.
“As we drilled deeper into the LP fault, we noticed that the target is larger than anticipated with higher gold recovery,” added Chris Taylor, president and CEO of Great Bear Resources, who mentioned that Kinross has already slated a 200,000-m drill plan on the LP Fault Zone for 2022.
Another junior operation in the ‘back yard’ of the Red Lake mining district is Signature Resources, which owns the Lingman Lake Gold deposit containing 234,000 historical oz Au grading at approximately 7 g/t, according to president and CEO, Robert Vallis.
The Lingman Lake project is located approximately 40 km East of Sachigo Lake First Nations in Ontario and 55 km from Red Sucker Lake First Nations in Manitoba, and Vallis spoke of the benefits of planned power infrastructure development into Northwestern Ontario communities over the next two years: “Mining projects and communities lying within these areas are poised to benefit greatly from this infrastructure development. I believe that this development acts as a unifier between mining projects and nearby communities and paints a picture of an exciting, viable future for the communities and mineral industry in this jurisdiction.”
On the topic on infrastructure, another of Ontario landmark mining regions, Timmins, has become a hive of exploration activity in recent years. Galleon Gold acquired its West Cache project in 2020, and since then has advanced drilling and studies, and initiated permitting activities, according to David Russell, president, CEO and chairman.
Having developed several mines in the area, Russel highlighted the opportunity he sees for big ounces at stake at West Cache: “The project is located on the Porcupine – Destor Deformation Zone, only 13 km west of the town of Timmins. Provincial Highway 101 bisects the property. Our neighbor to the west is Pan American Silver’s Timmins West mine and Newmont’s Hollinger mine is only 14 km to the northeast.”
Images courtesy of Element79 Gold and Goldshore Resources