When the gold price crashed to less than $300 an ounce in the late 1990s many gold mines in Canada went into “care and maintenance”. And when that price failed to recover these mines were, effectively abandoned.
When the Chimo mine was shut down in 1997 it had produced 379,000 ounces of gold from 19 mining levels which went nearly 800 meters into the rich rock of the Abitibi. Chimo did not run out of ore, in fact, when the mine ceased operations there was a large amount of identified mineralization which had simply never been mined.
For Philippe Cloutier CEO of Cartier Resources (V.ECR), the Chimo mine checked all the boxes. It was fifty kilometres from the mining centre of Val-d’Or Quebec, there was an all-season road, power and a mining positive community. “We weren’t starting from scratch,” said Cloutier, “We are exploring under the old mine. We have all of the historical data, drill holes, metallurgy and rock mechanics information.”
Most of all, Cartier has a model to test. The Abitibi runs deep. Productive mines have been built going down over 3000 meters. Cartier’s model – which you can see in the Figure above (click for full-sized) – suggests a mineralized zone extending well beyond the 800 meters of the Chimo mine. Essentially the model suggests that the Chimo mine was taking ore from a body which extends at least another 900 meters down and remains at least 300 meters strike. The cross-section shows the zone of interest being at least 50 meters thick.
But is the model right?
Cloutier is optimistic. On March 20, 2018, Cartier released the first results of a deeper drilling program. As you can see from the Figure the first core from the deeper program had a 60.0 m section grading 1.0 g / t Au with an intersection of a grade of 7.6 g / t Au over 5.0 m, including 12.2 g / t Au over 2.5 m.
“This is the first of the holes punched into the zone,” said Cloutier. “We are seeing ore grades and continuity. We are seeing a system over 50 meters thick.”
Cartier is taking advantage of directional drilling. First, they drill a pilot hole down to the target area and then they branch off from the main hole. “We will be completing seven branches, and another six side lateral branches, from the parent hole. We still have a lot of samples still in the lab,” said Cloutier.
(Update: On March 27 Cartier released the second result from its deeper drilling program. Another red dot is added to the picture with “intersection grading 8.5 g/t Au over 3.5 m, including 14.6 g/t Au over 2.0 m and included within a 12.0 m section grading 3.0 g/t Au which is included in a 71.0 m section grading 1.0 g/t Au”. Read the full release here. You can see the full revised Figure here.]
“Hopefully every third week we expect to have results and news,” said Cloutier. “The market may be bad but our investors will be getting results. We are working diligently and we’ll deliver.”
Those results are anticipated to tell Cartier the grade and continuity of the mineralized zone below the existing mine. Cloutier is also hoping that they will confirm the sizeable volume of mineralized zones. As Cloutier puts it, “We want to keep adding red dots.”
With enough red dots indicating gold intercepts below the old mine, and the known historic mineralization which was left in the old mine, Cartier hopes that this will show that a new deposit is growing at depth with sufficient ounces to justify dewatering the old mine. “By late summer people will be able to join the dots,” said Cloutier. “We have enough cash on hand to continue the program and stay the course even with the market in choppy waters.”
Having the cash is good, having committed, long-term, shareholders is even better. “Agnico Eagle holds 17% of our shares,” said Cloutier. “Government of Quebec investment funds hold over 15%, J.P. Morgan holds 9% and another, roughly 25% is held by long-term shareholders and management. Realistically, only about 10% of our current float is free.”
This stable shareholder base means Cloutier is able to position Cartier with a number of options. “First off, the expectation is that we will move towards a 43-101 Resource Estimate,” said Cloutier. A 43-101 would certainly de-risk the property from the perspective of an acquiring company or a joint venture partner. However, Cloutier sees a second possibility, “Someone might want to bid on the asset or the company before the 43-101 Resource Estimate crystalizes the value.” For now, though the president is focussed on staying the course and drilling the project, “that is what we said we would do and we will follow through”.
All of the options should increase the value of the company. “And, of course,” said Cloutier, “We could threaten to actually build the mine.”
Building the mine is not such a far-fetched idea when you look at the amount of near surface, mineralized rock which was left when the mine was closed. Particularly when you consider the excellent infrastructure and remember one critical fact about the Abitibi and Val-d’Or – there are six mills within trucking distance of Chimo.
“The “street” is starting to pay attention,” said Cloutier. “We’re getting on lots of watchlists because we have great options. With optionality there is value.”