Chibougamau Exploration and Development
Reviving past mining camps
Though the Abitibi remains in the spotlight for gold production, a handful of juniors have been willing to take on the risk of exploring and developing a mine in one of Québec’s less known areas. Although the Chibougamau region is best known for its copper production in the 1930s to 1960s, significant gold potential has been demonstrated in recent years. As momentum in commodities as wide ranging as gold, copper and iron has picked up, so has the attention and funding.
Troilus Gold Corp and Kenorland Minerals are leading the push for a gold mining renaissance in Chibougamau. In the case of Troilus, it is pursuing a brownfield opportunity at the Troilus mine that formerly produced two million ounces of gold and 70,000 tons copper from 1996-2010. Despite this success, the corporate objectives of Inmet, who operated the mine during that period, were focused elsewhere. Troilus took over in 2017 and shortly thereafter, CEO Justin Reid began deploying a strategy to put substantial money into the ground and significantly increase the resource to give the project a new life. In the past two and a half years, Troilus has added 6.5 million ounces. “The reserve was exhausted, it was an undercapitalized mine, and most importantly it had not been explored at all for 25 years. We saw this as an opportunity to acquire a past producing mine that over its life had seen very little expansionary or exploration capital put into it, not because it was not a good asset, but because corporate priorities were elsewhere,” Reid explained.
The Frotet-Evans Belt, where the Troilus mine lies, is part of a broader story where companies are now applying modern exploration techniques to the belt. Reid posits that the Frotet-Evans is the same greenstone belt, the same age, and same metamorphic grade as the Abitibi. However, the difference is that the Abitibi is exposed at surface, while minerals in the Frotet-Evans belt are buried underneath 10 to 15 meters of glacial till. “Historically, the majority of exploration in Northern Québec has been overwhelmingly focused on rocks that you can see, and the Frotet-Evans belt was considered more of a base metal belt than a gold belt,” Reid said.
South of the Troilus mine on the Frotet-Evans belt is Kenorland Minerals’ Frotet project. Kenorland, which was founded in 2016, began as a private company focusing mostly on project generation. In 2020, after two years of greenfield exploration in northern Québec, the company saw its Frotet project reach initial drill stage. Shortly after beginning its drill campaign in Q1 2020, it ended up making a significant high grade gold discovery, which compelled the company to list on the TSXV in 2021. The Frotet project is now under joint venture with Sumitomo Metal Mining, who holds an 80% interest while Kenorland remains the operator.
Although it is still early stages for a completely greenfields discovery, the team recognizes that it is just beginning to understand the geology and controls on mineralization. Fortunately, the early stage drill results have been impressive to many onlookers. Kenorland drilled a total of 7,800 meters during its discovery program in 2020, and on the second hole of the program hit 3.75 meters at 16.06 g/t Au. On the seventh hole they hit 29.08 meters at 8.47 g/t Au, a phenomenal intercept regardless of whether it is a first pass drill program or a mature exploration project. “That indicated right away that we were probably onto something special,” noted Kenorland president and CEO, Zach Flood.
The next big drill program for the company was in Q1 of 2021, and this program revealed 5.72 meters at 90.56 grams. “We began to define an east-west vein that is carrying significant high grade gold. The grade is what is going to separate this project from other projects. If you have extraordinary grades, you can build ounces very quickly in a relatively small volume of rock,” Flood added.
Other early stage exploration projects in the Chibougamau area include Delta Resources’ Delta-2 property and Vanstar’s Nelligan asset, which is in joint venture with IAMGOLD.
IAMGOLD currently owns 75% of the Nelligan project and they are earning-in by spending exploration dollars to advance the project. As part of its strategy to “re-seed” its pipeline with disciplined investment in organic growth, IAMGOLD is betting on the long term success of Chibougamau. According to Gordon Stothart, president and CEO of IAMGOLD: “Nelligan has significant opportunity to provide meaningful production in the future, and we would love to see this resource grow as we progress with exploration and development.”
In cohesion, IAMGOLD also has its Monster Lake asset located 15km north of Nelligan, which has an identified resource of approximately 430,000 ounces at a grade of 12 g/t, and will continue to explore the deposit as it could provide a great sweetener to any startup operation at Nelligan. “We are excited about the Chibougamau district and expanding within the complex could bring some great long-term opportunities for IAMGOLD,” Stothart affirmed.
Meanwhile, at Delta-2 the property is subdivided in two, because it has high potential for VMS deposits similar to the old high-grade Lemoine deposit, while also having potential for gold deposits, such as the Joe Mann deposit. These past producers are located respectively 1.5 km north and 15 km south of the Delta-2 property. Delta believes there is magmatic hydrothermal gold potential, and it recently completed over 6,100 meters of drilling that led to a new discovery called the Oli-Gold vein, where it intersected about 28 g/t gold over 3.3 meters near surface.
“In terms of incentives, exploring in Chibougamau is terrific because infrastructure is very close. The government of Québec is also giving great incentives through credits for exploration. In the case of Delta Resources, we have never funded with flow-through funds, and as a result, we are getting a good chunk of money back from government when we spend our hard dollars in the field.”
André Tessier, President & CEO, Delta Resources Inc.
Copper
With an awareness of the Chibougamau/Lac Doré mining camp’s history as a prolific copper producer, Doré Copper became public in December 2019. After studying historical production and exploration in the camp to better understand which deposits would have the best mineral potential going forward, the group settled on the high-grade Corner Bay copper deposit. Located on the south flank of the Chibougamau pluton, Corner Bay is in a relatively under-explored part of the Chibougamau/Lac Doré camp. Having spent over C$16 million since 2017, Doré plans to spend another C$14 million on exploration and infill drilling prior to the end of 2022. Doré expects to grow resources in the camp and have enough tonnage to look at a greater than 10 year life of mine plan.
The asset could also be used as part of a broader hub-and-spoke strategy, where its mill, which is located 14 km from the town of Chibougamau, could treat ores from nearby deposits. “In the case where another company finds a resource that is high-grade but not big enough to justify its own mill, being the only mill in the district, it would make sense to come to some type of arrangement, either toll milling or acquisition,” said Doré Copper president and CEO Ernest Mast.
Mast believes market forces will continue to work in their favor moving forward as the world continues to decarbonize. Large copper projects are taking a long time to get permitted or they are not being approved, and with that comes difficulties in getting financed particularly given large capex requirements. “It opens the opportunity for smaller high-grade copper projects like Doré Copper’s to advance because the impact is much smaller and there is still strong economics at these higher prices,” Mast concluded.
Iron and Vanadium
Two of the most advanced projects in the Chibougamau area are Vanadium One Iron Corp’s Mont Sorcier project and BlackRock Metals’ BlackRock project.
In BlackRock Metals’ case, its asset is fully permitted and ready for construction, but the company is still working on completing its construction financing, which amounts to a little over C$1 billion for phase 1 of the project. BlackRock’s aim is to complete financing within 2021 in order to be in full construction in early 2022. The overall timeline for the project is approximately two years of construction prior to the ramp up and commercialization of the project itself.
BlackRock will develop vanadium, titanium and nodular iron – of which vanadium and titanium are on the critical minerals list. The underlying thesis supporting the development of the BlackRock mine is that electric furnaces only represent about 20% of global steel production. Many countries have set targets to increase this amount and, as a result, blast furnace plants will either be idled and replaced or refitted with electric furnaces. BlackRock estimates that the transition from 80% blast furnace to 80% electric furnace will reduce global CO2 emissions in the order of 4-6%.
If this transition were to play out as some expect, the scrap market will be greatly impacted, because scrap contains contaminants which will increase demand for virgin iron units used to dilute contaminants. “We expect to see significant demand for nodular iron, foundry iron, pig iron and direct reduced iron. This is one of the reasons why we are seeing significant interest in our project. It fits all political and environmental agendas, and it has a great economic outlook with the demand for the products being fundamental to the green economy,” affirmed BlackRock Metals president and CEO Sean Cleary.
Similar to Troilus’s approach, Vanadium One revisited Mont Sorcier, which had extensive exploration and metallurgical testing done on it in the 1960’s and 70’s, using modern technology and exploration techniques. That resulted in the first 43-101 compliant resource being completed in 2019. The company’s initial work delivered a resource of over 630 million tonnes, grading approximately 32% magnetite with very low titanium and other deleterious elements such as phosphorus, aluminum and silica, set to deliver a premium 65% iron ore concentrate with 0.6% vanadium pentoxide.
Vanadium One is now working toward the construction decision phase, the key focus being to deliver a bankable feasibility study that demonstrates the robustness of the project in order to attract the requisite investor interest. Vanadium One president and CEO Cliff Hale-Sanders outlined: “Mont Sorcier is well positioned to capitalize on this trend towards increasing demand for higher grade iron concentrates. Based on test work to date, we are very confident that we will be able to produce a clean 65% grade or better iron concentrate. This will put us in a premium product category, which typically attracts a 15-20% premium over the more standard 62% material.”
Image courtesy of AMQ