Abitibi Exploration and Development
Healthy exploration environment builds on past successes
The latest map of exploration drilling in Canada resembles a nighttime satellite image of the country: vast expanses of monochrome punctuated by clusters of brightness. If the clusters represented urban areas, the Abitibi greenstone belt would be a bustling metropolis.
Although the Abitibi has undergone several cycles of exploration and development since 1901, explorers see potential for more ore to be found, especially at depth. It is a more mature area, but with continuing improvements in mining technology, companies can now mine a lot deeper than in the past and still make money.
Most of the major base metal and gold mining camps on the Québec side, such as Malartic, Rouyn-Noranda and Val-d’Or, fall along the east-west trending Cadillac-Larder fault zone. Other well-known camps, including Casa Berardi and Matagami, occur along the Casa Berardi and Sunday Lake fault zones in the northern part of the belt.
Val-d’Or
One of the burgeoning stars in Val-d’Or is O3 mining, which after releasing two PEA’s in a year is transitioning from explorer to developer. O3 was efficient in completing a PEA with an after-tax net present value (NPV5%) of C$423 million and a CAPEX of C$256 million in five months for its Marban project. Subsequently O3 entered a strategic partnership with Moneta Porcupine for the sale of Garrison where O3 Mining will continue with approximately 27% ownership in the Timmins camp. “Our decision to reallocate the Garrison project in Ontario enabled us to consolidate our focus on our projects in Val-d’Or, which host 3.7 million ounces of gold, and advance our exploration projects, all while maintaining exposure in the Timmins camp,” said José Vizquerra, president & CEO of O3 Mining.
With the focus now fully on Marban and Alpha, O3 will continue its aggressive drill program to grow its resource at depth along the Cadillac Fault. “There is much more to be discovered in Québec at depth,” Vizquerra added, pointing to the unrealized potential East Gouldie represented for Canadian Malartic.
Similarly, at Lamaque, O3 was able to find Triangle, a parallel structure that is now the future of Sigma-Lamaque. “The next parallel structure along the belt is at Omega within our Alpha project, and we are very excited about that,” Vizquerra affirmed.
“Everybody had drilled from one direction to the other, but when we decided to drill the other way we found our Area 51 discovery. The challenge is to not be pressured by a certain group or dogmas, but to listen to the people who are intimate with the project, your field geologists. If you can do that you will be successful.”
Marz Kord, President & CEO, Wallbridge Mining
These moves are part of a broader strategy that the former Osisko spinout is deploying to become a best-in-class gold producer by 2026. The intent is to achieve this goal by focusing on projects where there is the most fundamental value and building on the corporate strategy implemented a few years ago, which is to convert and expand resources while making new discoveries.
Another spinout of the old Osisko, which sold the Canadian Malartic mine to Agnico Eagle and Yamana for C$4.3 billion in 2015, is Osisko Mining. Their Windfall gold deposit is located between Val-d'Or and Chibougamau in the Abitibi region in Urban Township.
Following a succession of deals, the company initiated a 50,000 meter drill program at Windfall, and following the consistent and exceptional results, the program was increased to 1.5 million meters, making Windfall the fastest advancing project in Canada. Approximately three years ago, Osisko sat at 3.1 million ounces gold. However, the most recent resource estimate brought Windfall to 6.1 million ounces. “Windfall is now firmly in the World-Class category (over 5 million ounces, over 8 g/mt Au average grade) of high-grade gold deposits in size and grade,” noted Osisko Mining president Mathieu Savard.
This growth comes from the significant results Osisko had in the expansion of the Lynx zones that now represent over 60% of the resource base. “We are optimizing the capital program and operating plans as we advance our goal to move the project to first production in 2024. Our management team has a strong track record of delivering value for shareholders and stakeholders, and we believe that Windfall will soon be the second world-class deposit that we put into production in Québec,” detailed Savard.
A stone throw from Osisko’s Windfall project, BonTerra Resources has a resource portfolio of over 3 million ounces of gold from three deposits that were just updated in June 2021, as well as an operational mill within trucking distance from the three deposits. The company, which counts Wexford Capital and Kirkland Lake Gold amongst its largest shareholders, has been working hard to expand the resource at Gladiator, a high grade, narrow vein deposit. BonTerra CEO Pascal Hamelin explained: “It is fairly young in terms of geological knowledge, and in 2019, when we released the resource we did not even have 200,000 meters of drilling on the deposit. The deposit looks very promising and is open along strike and at depth.”
As of June 2021, BonTerra had expanded the resource to 1.4 million ounces with a total of 246,386 m of drilling. The Gladiator deposit is on the shore of Lac Barry, and two drill rigs on the water are drilling through the summer into late fall. “Being a narrow vein subvertical structure, it is more inclined to be mined through underground mining techniques. Therefore, we are in the permitting process to start a decline which will allow us to drill year-round,” Hamelin stated.
Another component of BonTerra’s strategy is that it has the only permitted mill in the Urban-Barry camp. Their Bachelor mill is on the power grid, which provides a significant advantage in terms of operating costs. “Having an existing mill and an existing tailings facility reduces capex significantly when doing an economic assessment and putting projects into production. It also reduces the timeline of the permitting process,” Hamelin said
Initially the mill is going to be licensed to process material from Barry and Moroy. However, once Gladiator is further ahead in the permitting process, the company will also get the license to accommodate material from this project. “The mining industry needs to start thinking about hauling materials to a central mill as this is much more economical, especially for smaller deposits which cannot justify the capex of a mill,” Hamelin concluded.
A 2.5-hour drive north of Val d’Or along the paved 2-lane Hwy #109 and you hit Maple Gold Mines’ Douay project, which covers 55 km of the Casa Berardi Deformation Zone. This project has been explored since Aurvista Gold delineated a substantial gold resource and consolidated a commanding land position the area. When the company rebranded in 2017, and brought on Ivanhoe veteran Matthew Horner, it changed its name to Maple Gold
Mines, as they set about upgrading all the software of the company including transitioning from outsourcing technical work to establishing an in-house technical team. The company has created a new 45-person camp and they delivered a more conservative, updated resource estimate at Douay. According to Horner, the goal from the beginning was to build a major mining camp, and the way to achieve this was to line the project and company up with a strategic group.
Things came together in early 2021 when Maple formed a 50-50 JV partnership with Agnico Eagle to advance work at Douay. As a sweetener, Agnico also contributed its past-producing Joutel project into the partnership, so the property is now consolidated with two highly prospective projects that could become a major emerging gold camp in the region.
The idea of a joint venture was appealing to Maple, because despite public skepticism, Agnico’s interest shows that there is potential for the project to become big and important. The second benefit of the deal was bringing in Agnico’s Joutel project, which adjoins the Douay project to the south and diversifies the portfolio given Agnico produced at Joutel for 19 years when gold was at far lower prices. “Looking at comparable scenarios, Canadian Malartic is an example of a restart in Québec that is now the largest mine in Canada, and nobody thought it would work at the beginning. Kirkland Lake's Macassa is a similar example. It is well-known in our space that the best place to build a new mine is in the shadow of a headframe,” Horner emphasized.
Another company active on the deal making front in the Abitibi was Monarch Mining, which holds a 100% interest in the Beaufor mine located about 20 km northeast of the town of Val-d’Or. Monarch Mining was created as a spinoff of some assets that were with Monarch Gold prior to its acquisition by Yamana, which closed January 21st, 2021. About 70% of the land package was transferred to the newly listed Monarch Mining. The rest, which mostly consists of the ounces in the Wasamac asset, was left behind with Yamana. 90% of the team transferred over to Monarch Mining, and the company now has four advanced properties with a fully permitted mill.
Beaufor is a mine that has produced 1.2 million ounces over the last 30 years, and the asset is currently being explored, as Monarch looks to add more ounces to the previously known mineralized envelope. “We are giving Beaufor a second chance at producing for many years to come, and we hope to start producing by the end of 2021 or beginning of 2022. We already knew the asset well since we operated it the last two years of its life in 2018 and 2019. It was put on care and maintenance in 2019, so it is very easy to put back into production,” said Monarch Mining Corporation president and CEO Jean-Marc Lacoste.
Rouyn-Noranda
In Rouyn-Noranda, one of the most promising projects is Falco Resources’ Horne 5, which is adjacent to Glencore’s Horne smelter. The Horne 5 project has a long history, with Noranda successfully operating the original Horne mine for almost 50 years. Since 2018, Falco has been engaged in extensive consultation and outreach programs with the Province of Québec and the community of Rouyn-Noranda.
Horne 5 lies at a depth of between 600 and 2,300 m below the past-producing Horne mine. In order to access the gold-silver-copper-zinc deposit, Falco needs to rehabilitate an existing shaft, owned by Glencore. Glencore owns the mining concession at the property, while Falco holds mineral rights below 200 meters and surface rights around the shaft. According to Luc Lessard, president & CEO of Falco Resources: “After three years of working closely with Glencore to complete technical analysis, we signed copper and zinc offtake agreements in late 2020, and recently signed an Agreement in Principle to finalize a Principal Operating Agreement, expected in Q3 of this year. These are major milestones for Falco and position the company to advance the Horne 5 project through 2022 and beyond.”
Falco released an updated feasibility study in May 2021 which estimated annual gold production of over 220,000 oz/year with low All-in Sustaining Costs of US$587/oz resulting in a robust NPV of US$761 million and an IRR of 18.9% after taxes and mining duties. The location is also advantageous because it gives Falco access to a highly skilled and experienced labor force with a long history in the mining industry. Key infrastructure is already in place to support the Horne 5 project, which includes the green Hydro Québec power source, surface access, underground workings, and airport and railway facilities.
Mines in Between
About halfway between the towns of Rouyn-Noranda and Val-d’Or, Radisson Mining Resources has its O’Brien project located in the heart of one of the most productive gold mining camps in Canada, the Cadillac Mining Camp, which boasts over 45 million ounces of gold (produced and in reserves and resources) and three mines presently in commercial production.
O’Brien was a consistent high grade producer for 20 years and produced just under 600,000 ounces from 1926 to 1957, with average grades in excess of 15 grams per tonne. The old timers mined down to 1.1 kilometers before the shutdown in 1957, and that was not because they ran out of gold, but because the gold price at the time was US$35 per ounce, which did not justify extending the shaft any deeper.
Since the mine was shut-down there was very little work done at O’Brien until the 70s, when the gold price began to move higher. A few companies undertook exploration programs at the project but the geology was not well understood until early 2019, when Radisson took a fresh look at the asset. This led to a new structural model, and that is when things started to fall into place. When asked what made him bullish on the future of O’Brien, Radisson president and CEO, Rahul Paul, replied: “Yes, costs are ten times higher today, but on the other hand the gold price is fifty times higher. To me this highlights the upside potential at O’Brien and explains why we are so eager to advance this project.”
Radisson has also been actively working to grow its land position, and recently closed on the New Alger project acquisition and partnership with Renforth Resources. New Alger increased Radisson’s land position nine-fold, giving it the scale to be relevant to a broader audience. It also increased the prospective strike Radisson controls along the Cadillac Break to over 5 km. “Prior to the deal, most of our work was focused to the east of the old O'Brien mine. The acquisition opened up the full potential from 2.5 km to the west of the O’Brien mine, with the same geologic setting but largely untested so far,” Paul affirmed.
The acquisition is also important, because the camp is strategically significant to many large companies, and there have been notable acquisitions over the past year with Yamana acquiring the Wasamac project and Eldorado Gold acquiring QMX. There are no longer many smaller players with meaningful land positions left in the camp.
Another brownfield operation along the Cadillac Trend is the Granada gold mine, which has had a long but sporadic history of small-scale mining activities since the 1930’s. Frank J. Basa, president & CEO of Granada Gold Mine looked at the core and felt there was value that had been missed. Initially the design was to develop the mine as a low-grade open pit, and the first resource was 2.8 million ounces at one gram per tonne. “To improve the economics, we then brought it down to 1.2 million ounces, and we were trying to sell it as a shipper. However, at one gram it does not ship well. This year, we took the grade to two grams in a smaller open pit,” said Basa. “Now we are running a second 120,000 m of drilling. By the time that is done, we expect to have met our target of 2.5-3.0 million ounces with most of it underground at four grams, and we have all the permits required in order to ship. The ideal situation is somebody takes us out, and Granada begins shipping rock,” Basa plotted.
Northern Abitibi
Approximately 110 km north of the town of Rouyn-Noranda lies Amex Exploration’s Perron gold property. In 2018, as the company was exploring the property, their stock fluctuated between .06 and .10 cents. Three years later, in 2021 that stock trades between C$3.26 and C$2.31 thanks to a high-grade discovery on the Eastern Gold Zone. Since then, as Amex president & CEO, Victor Cantore puts it, it has been one financing after another. The company recruited Eric Sprott to join its shareholder ranks, and today he stands as the company’s largest shareholder with a 15% stake in the company. As a consequence of a widespread willingness to finance further exploration on the property, Amex presently has 10 drills as part of its drilling program, which is one of the largest of its kind in Canada’s mining industry.
For the 300,000 m drill program at Perron, 120,000 m were completed in 2020, with another 180,000 slated for 2021. “The goal of this large program is to start a resource calculation sometime at the end of 2021, and hopefully, in the first or second quarter of 2022 we should come up with a with a resource calculation,” Cantore noted.
He also contends that Amex has barely scratched the surface of its property. “We have only explored 3.5 km of the 15 km of faults. Right now, we are looking at three main gold zones plus one polymetallic, and we intend to continue to expand and find new zones, just like the Eastern Gold Zone,” Cantore said.
To complement such a large program, Amex also purchased a 7,000 ft2 core shack facility in Normétal. Speaking to the logic behind this investment Cantore explained: “It allows us to do everything in house without much traveling. We save on costs and it allows us to bring the core in, cut it, and send it off to the lab as quickly as possible.”
Wallbridge Mining, located in Québec’s northern Abitibi Greenstone Belt along the Detour-Fenelon Gold Trend, is another company seeking for world-class gold deposits. The area is highly underexplored in comparison to the other prolific gold belts in the southern portion of the Abitibi, like the Timmins-Porcupine, Kirkland Lake and Val d’Or camps. Spanning 97 km in east-west direction within this belt, Wallbridge’s extensive 910 km2 regional land package offers excellent potential for new gold discoveries.
Momentum started to build in 2019 at Fenelon when Wallbridge discovered Area 51. Following this, Wallbridge made another discovery called Tabasco, but as it continued throughout 2019, it realized that the mineralization was expanding outside of the original property boundary they purchased. A year later, Wallbridged purchased Balmoral, which held the neighboring property, in an all share deal. This increased the size of the Fenelon property from 10 km2 to over 85 km2. More importantly, Balmoral owned pretty well the entire land package from the Ontario border, where Kirkland Lake owns its Detour Lake mine 90 km east on the Québec side. In the words of Marz Kord, president & CEO of Wallbridge Mining: “This deal was not only accretive in terms of the Fenelon project, but it was also accretive in terms of organic growth, giving Wallbridge district scale potential. It is like owning between Val d'Or and Rouyn-Noranda but with 100 years less research and mining on it because this area is very underexplored.”
Another attraction for investors is Kord’s contrarian exploration philosophy. He posits that in exploration you need to be bold and sometimes a contrarian. “When people tell me you need to drill from north to south, I ask why don't you drill from south to north to see if there is a difference. That is how we get to discoveries. In the 10 years prior to our arrival, the owners had followed up in a small known area, whereas if they looked at the geology and tested some of the geologists’ ideas, they would have made those discoveries before us.”
Images courtesy of Amex and AMQ