Junior Exploration

Hunting for Ontario’s next transition metals mines

Exciting transactions have taken place in the sector, such as Noront Resources reaching an agreement with Wyloo Metals and Kinross’ purchase of Great Bear Resources. Majors from all over the world are looking closely at the Ontario junior sector to secure future reserves and consolidate land packages. As commodity prices improve and critical metals enter the spotlight with more force than ever before, a drilling frenzy seems to be taking over the province.

The Covid pandemic exacerbated the challenges historically faced by the junior sector. Many projects experienced delays and limited access to services, parts and equipment. The need for speedier permitting to build new mines remains a challenge, but demand for new projects is on the rise and the relevance of the sector has never been stronger. "We are witnessing high levels of exploration activities in Red Lake, Timmins, Wawa and other greenstone areas, led by juniors, seniors and mid-tiers,” said Michael White, president and CEO of IBK Capital.

When it comes to services, such as drilling or laboratory results, explorers have faced costly delays and a shortage of skilled labor. Assay delays causes junior mining companies to mount extreme balancing acts in order to sustain on-going news flow for investors. In some instances, companies sent assays to three different laboratories hoping for speedier turnarounds. Periods of twelve or more weeks were not unheard of. “The problem really begins to hit home on projects where there is no visible mineralization, which means geologists need the assays from previous holes to guide the next set of holes,” said Adam Schatzker, managing director for mining research at Research Capital Corp.

“With the start of the industrial revolution, man did not only start to burn coal, but also started to cut down trees which is the earth natural way of carbon sequestration.”

Wilson Robb, Executive Chairman, Aurum Exploration

Investors’ interest in drill results to better comprehend mineral content can place undue pressure on explorers who are trying to preserve stakeholder value and capital investment. Without timely results, drill programs can be rushed, at times reducing the quality of the work, and in turn negatively impacting companies' financials and market valuation. “Laboratories are overwhelmed and were unprepared for the large volume of work this year. We have been affected by that in North America, and it has impacted the timing of our resource update,” said Gary O’Connor, CEO and chief geologist of Moneta Gold.

With companies such as Electra Battery Materials, formerly First Cobalt, aiming to increase the capacity of its hydrometallurgical cobalt refinery, and Canada Nickel Company expanding with the acquisition of 13 new properties near the Crawford nickel sulphide project, transition metals are primed to solidify as Ontario’s core assets. The province remains the largest nickel producer in the country.

Access to capital and permitting are two historical challenges the junior sector has faced, however, juniors have experienced larger flow-through financings in the past year. PearTree Securities’s CEO, Lisa Davis, said: “Four transactions this year were all over C$50 million, with one – OSK – at C$70 million. I think we are likely to continue to see the trend accelerating value creation in the junior market.”

“At the beginning of 2022, companies will be drilling to explore until they hit a target, which is when they will ramp up their definition drilling. This is why we forecasted 2023 as the time when we will see extensive definition drilling programs.”

Denis Larocque, President & CEO, Major Drilling

Considering the surging value of metals in 2022, from base metals to PMs, exploration activity is also expect to ramp up. Denis Larocque, president and CEO of Major Drilling, expects base metal companies to increase their budgets, but suggested this could be somewhat problematic for the industry because there is already shortage of rig supply with only gold companies increasing their production to date. He added: “At the beginning of 2022, companies will be drilling to explore until they hit a target, which is when they will ramp up their definition drilling. This is why we forecasted 2023 as the time when we will see extensive definition drilling programs.”

“Drilling crews are limited and in high demand,” observed Vance White, president and CEO, of Noble Mineral Exploration, the Ontario-based project generator which has sold 30,000 hectares of its Project 81 property to Canada Nickel Company (CNC), including CNC’s flagship Crawford asset. White went on to define Noble’s exploration plans for 2022: “Over the next six months, apart from the drilling that is currently underway at the Dargavel-Aubin Township Gold Trend near Cochrane, we are going to be putting a drill on our Nagagami carbonatite niobium/rare earth project near Hearst, Ontario (…) I also expect that we will mobilize a drill into the Buckingham graphite property that we acquired just east of Ottawa.”

Image courtesy of Great Bear Resources