The great thing about brownfield exploration is that you know the gold is there. All the more so if you are exploring in one of Canada’s greatest gold districts, the Abitibi and the Val-d’Or Mining Camp.
This is why Cartier Resources (V.ECR) President and CEO, Philippe Cloutier was not surprised that drilling below the old Chimo mine, which has a shaft going down 920 meters, produced results.
In a November 12 press release, Cartier reported results from drilling conducted beneath a zone which produced 75% of the ounces, or roughly 300,000 ounces, extracted from the Chimo mine. In that release Cloutier was quoted as saying, “These new results further increase the volume of gold mineralization of interest beneath the Chimo Mine to the east, significantly increasing the potential for resource development.”
“We’re seeing continued confirmation that the main mine trend continues at depth,” said Cloutier in a telephone interview. “Every hole beneath the mine has produced the same grades and widths as they mined 25 years ago.”
Cartier’s program is drilling holes 1200 to 1800 meters deep. “We’re looking 200 to 700 meters below the bottom of the shaft,” said Cloutier. “Results from our deeper holes will be coming.”
Cartier has a huge advantage because the Chimo Mine has a 920 meters shaft in place. The shaft is flooded but dewatering is a well-understood process. The value of that shaft and the tunnels which run off it and into the mineralized zones is huge. Somewhere on the order of 100 million dollars is a reasonable estimate of what it would cost to sink such a shaft.
For Cloutier the shaft and the mineralization beneath the old mine is a start. “An estimated potential of 300,000 ounces were left over from the previous producer when the old Chimo mine shut down due to low gold prices,” said Cloutier. “when you add that to the 300,000 ounces that had been mined, one can easily see what our deep drilling was targeting” adding “with our recent deep drilling we have potentially outlined an additional 600,000 ounces at depth.”
All of which is a very good start but Cloutier wanted to look for more gold in partially explored areas proximal to the shaft. “Our new zone announced in the October 9th press release, 200 meters south of the shaft, referred to as 6N1 and another zone currently being drilled 500 meters east of the shaft along the main mine trend, which we refer to as the 5M-NE, are game changers.”
“These areas are lateral to the shaft and are part of the recently commenced Phase II drilling,” said Cloutier. “For now, the zones will be drilled up to the existing shaft depth. Mining these areas would be much more profitable than having to extend the shaft to reach the areas below its current depth. We believe this drilling could bring a potential of up to 750,000 ounces additional ounces lateral to the existing shaft.”
Expanding the gold resource at depth while also stepping out laterally means that Cartier is assembling an attractive resource package which Cloutier is confident could yield over 1.5 million ounces.
“The project has the infrastructure and power, it’s right by the highway with qualified workforce nearby,” said Cloutier.
Clearly, Cloutier is looking to develop an enviable resource potential and then find a partner for the Chimo asset. But are the larger mining companies interested? “Large companies are known to pay the right price and know that Junior companies rarely have as much flexibility and therefore waiting is part of their approach. That said, with over 8 million dollars in the bank, this Junior is in a good position.”
“By April 2019 we’ll have drilled over 100 diamond drill holes for a total of 50,000 meters within a 500-meter radius of the existing shaft and evaluated the upside potential of 23 known gold zones, we expect to have identified a potential of 1.5 million ounces.” Adding “the work we’re doing is building confidence into the project’s future.”
It is a strategy designed to maximize shareholder value. “Take a quality legacy Gold project with valuable infrastructure, short lead time to production, a low environmental impact and a clear potential to be a profitable mine” says Cloutier “and you’ve provided the industry leaders with a much-needed product.” Cartier is investing to demonstrate the value of its Chimo asset. While Cartier could, almost certainly, drill up more ounces it is not clear that further investment would actually benefit shareholders.
“I am not happy with our share price at the moment. Our market value is certainly not a reflection of our enterprise value. However, with cash in the bank, a successful exploration program and a growing exploration asset in hand we believe our stock price will adjust at some point.”
As the ounces grow, the interest in the asset increases. With money in the bank, Cloutier can afford to wait for whatever trigger a company looking for more than a million ounces cares about. An increase in the price of gold is a traditional trigger. If gold begins to trend up, Cartier’s Chimo asset, with its comparative low start-up costs, easy brownfields permitting and a fast track to production, is likely to be at the top of the list for gold miners.
A good place to be.