Cartier Resources (V.ECR) has released a third, updated, resource estimate for its Chimo Mine Project: 684,000 indicated and 1,358,000 inferred gold ounces with the potential for more gold ounces in all directions and at depth. This pushes the Chimo Mine project over the 2-million-ounce mark.
I spoke to CEO Philippe Cloutier by phone. For Cloutier the report was about more than just the ounces, it was a vindication of work on Chimo which goes back to the property’s acquisition in 2013. At that point the Chimo Mine had been closed having produced 379,000 ounces of gold from 1964 to 1997.
“The previous operator of the Chimo Mine was plagued with technical and economic challenges,” said Cloutier. “when it was shut down in 1997 the price of gold dropped below $500CDN per ounce.”
The challenge Cartier faced in this brownfield exploration process was proving up ounces, grades and answering the sceptics who suggested that Chimo was mined out. 124 drill holes later, Cartier has proven that there is still plenty of gold in the central corridor of the mine but Cartier has also shown that there are North and South corridors with mineable material. The resources were delineated with 60,000 meters drilled within a 500-meter radius of the underground infrastructures.
The Chimo Mine has a 920-meter shaft and workings on 19 levels. This is a huge advantage as a shaft of that depth would cost hundreds of millions of dollars to sink from surface and take several years to develop. While it has been adding ounces, Cartier also commissioned four separate engineering studies. The Shaft haulage Capacity report was disclosed in September 2020 and presents the existing shaft’s hoisting capacity and options. The take away is that with modernized, properly sized, hoisting equipment, the Chimo Mine has a 5000 ton per day hoisting capacity.
“The technology available today is totally different,” said Cloutier. “Plus we have modern mechanization and automated bulk, underground mining methods that have been developed since 1997.”
Cartier’s new resource estimate and engineering study will lead to a Preliminary Economic Assessment (PEA) for the Chimo Mine project and in that PEA, “We will have a chapter on what Cartier could do to mine Chimo ourselves.” But that is an unlikely outcome for Cartier. After all, Cartier primarily creates shareholder value through exploration and discovery, it is not really set up to be an operator.
The good news is that the Chimo project is surrounded by other mines and other mining operators. “In the past few months there have been two M&A transactions along the Cadillac Break,” said Cloutier. “These show the value of Cadillac Break projects.”
Cloutier cannot, of course, say which majors might be interested in buying Chimo or on what terms. But he does point to Agnico Eagle’s 16% holding in Cartier. Agnico does not have a right of first refusal but its shareholding means that it will know about any offers which materialize.
Recently in the gold business, the value of an in situ ounce has hovered around $100, so 2 million ounces would have a sale value of around $200 million dollars. Of course, that price tends to fluctuate depending on what other value a particular project has. Having a 920-meter shaft and 7,000 meters of drifts on 19 levels of workings benefits the project and should secure a premium for the sale price. So will having power and road access to the site. Having a strong workforce in the area – 50 km from the aptly named Val-d’Or does not hurt. Currently, the Chimo mine is flooded, however, dewatering a brownfield site is a pretty straightforward exercise in pumping.
The reaction to the most recent resource estimate has been gratifying for Cloutier. “We’ve had a positive response in the market,” said Cloutier. “The resource estimate is seen as robust and reliable. The analysts are impressed.”
Patience and science have revived the Chimo Mine’s prospects and there are plenty of gold producers looking to add to their gold reserves and to find material for their mills. Cartier has a solid reputation in the local gold community.
The catalyst for the purchase of the Chimo project may be as simple as a small rise in the price of gold. Or an improvement in the medium-term outlook for gold. Right now, as Cloutier points out, “The Chimo Mine project can be seen as warehousing two million ounces of gold for a prospective purchaser.” adding. “and it can grow.”
The hard work of de-risking the Chimo mine with the drill and with solid modelling and engineering has been done. Cloutier knows what Cartier has at Chimo, and so do all the majors and mid-tier gold operators along the Cadillac Break. Cloutier and his shareholders are ready to seize the best opportunity for reward.