Exploration
Unearthing new treasures
Since 2020, spending by Canadian junior exploration companies has far outpaced that of senior companies. While senior companies tend to invest exploration dollars near existing mine sites, junior companies generally search for new deposits in less developed regions. According to Statistics Canada, gold accounted for 67% of Ontario’s exploration spending in 2022, and with more than 30 mineral deposits each having more than 500,000 troy ounces of gold (measured and indicated resources inclusive of reserves), Ontario has plenty of resources for the future.
2023 saw some exciting discoveries made by Ontario’s juniors. Delta Resources was awarded the 2022 Bernie Schnieders Discovery of the Year Award by the Northwestern Ontario Prospectors Association for its Delta-1 gold project, 50 km west of Thunder Bay. Although many juniors have struggled to secure financing this year, for those that have the cash, Ontario’s land still holds riches that are yet to be unearthed. “In April/May of 2023, we hit Bonanza-grade gold, including an intersection of 1.6 kg/t over 1 m. In summary, we have uncovered very wide intercepts of gold ranging from 1.2-1.5 g/t with some sweet spots of Bonanza-grade gold mineralization,” shared André Tessier, president and CEO, Delta Resources.
High-grade discoveries like these are thanks in part to the Ontario government’s continued efforts to incentivize exploration: “Ontario has some great programs, like the Ontario Junior Exploration Program (OJEP), which granted us C$200,000 for exploration two years in a row,” Tessier explained.
Similarly, in Ontario’s northwest, newly listed Dryden Gold has also been using Ontario’s OJEP, METC and charitable flow-through incentives to fund the 2024 field season. “The OJEP and METC highlight the supportive mining culture in Ontario. We find Ontario to be an excellent jurisdiction, possibly surpassing Nevada, where I have spent a significant part of my career in the gold mining business,” said Trey Wasser, CEO, Dryden Gold.
Backed by renowned investors including Alamos Gold and Eric Sprott, Dryden are playing to their strengths by focusing on conducting the early-stage meticulous groundwork that often eludes larger players. “The possibility of a JV, especially for our grassroots properties, is on the table. However, we aim to take a similar approach to companies like Great Bear Resources—developing high-grade zones ourselves, with a potential exit strategy involving a sale to a major down the line,” continued Wasser.
Further west, McFarlane Lake Mining concluded a 10,000 m drill program in 2023 at its flagship High Lake property by the Ontario-Manitoba border. McFarlane Lake managed to successfully navigate the tricky funding environment for juniors by leaning on Canadian industry veterans and doubled its market cap after a successful financing round. “Despite our marketing efforts in major financial hubs like New York and Toronto, the initial market response was lackluster. However, a pivotal turning point came when we had the opportunity to present to industry veterans like Rob McEwen and Frank Giustra later in the year. Their subsequent investment played a transformative role,” shared Mark Trevisiol, president and CEO, McFarlane Lake Mining.
Frank Giustra also holds a 10% stake in West Red Lake Gold Mines (WRLG), which recently acquired the Madsen mine for C$6.5 million. WRLG is hoping to learn from the previous owners’ mistakes and capitalize on the C$350 million worth of existing infrastructure. Shane Williams, president and CEO of WRLG, shared: “We strategically chose this region for its government support and successful mining track record. With major players like Evolution Mining and Kinross, there is an opportunity for growth, and we are exploring JVs or partnerships with Madsen to align with our long-term vision of building a successful mid-tier producer in Red Lake.”
“The OJEP and METC highlight the supportive mining culture in Ontario. We find Ontario to be an excellent jurisdiction, possibly surpassing Nevada, where I have spent a significant part of my career.”
Trey Wasser, CEO, Dryden Gold
Madsen mine operated for 18 months, before its previous owners Pure Gold faced difficulties and were forced to sell the mine. Having recently raised nearly C$50 million through a private placement, WRLG are confident they can succeed where Pure Gold failed. “By intensifying underground drilling and development over the next 12 months, we aim to address historical setbacks, including issues arising from the Covid pandemic and debt-related pressures. Our goal is to capitalize on the existing infrastructure, eliminate challenges associated with greenfield development, and position the Madsen Mine for success,” continued Williams.
Globally, the focus on minerals and metals for the energy transition has seen an increase in exploration, particularly in nickel and lithium. Canada surged ahead to take the first spot in gold exploration spending with US$1.38 billion spent in 2023, with Ontario being among the top 10 jurisdictions in the world for mineral exploration spending. In 2022, gold was the most sought-after mineral in Ontario, with exploration spending of C$659 million totaling 67% of the province’s total exploration spending.
Despite this, most juniors interviewed for this report stated that 2023 was a particularly difficult year for raising funds, indicating that much of the vast exploration spending in Ontario was thanks to funds raised in 2022 or earlier. “Miners face challenges due to investor apathy towards the sector. There is frustration, especially for Canadian juniors, about stock market responses not aligning with high commodity prices like gold and uranium. Despite interesting drill results, there is minimal response in the marketplace. Mining constitutes a small part of portfolios, and higher prices are needed to generate excitement,” said Rob McEwen, chairman and chief owner, McEwen Mining.
Capital climbed eight spots to reach second place in EY’s ‘Top 10 business risks and opportunities for mining and metals 2024’ report, highlighting the severity of the situation. As the 2024 field season ramps up, Ontario’s juniors will have to balance minimizing their stock dilution and securing the necessary funds to finance ambitious drill programs. “Financing is currently the most significant challenge for junior mining companies. Many juniors have been unable to secure adequate financing and have been forced to release shares into the market,” shared Tessier.
Many of these issues are not exclusive to Ontario, as some factors such as inflation are present in many jurisdictions globally. Luckily for Ontario’s juniors, they are just a stone’s throw away from the mining finance capital of the world – Toronto.
Article header image courtesy of First Class Metals