The Gold Report: In
the month since the Prospectors & Developers Association of Canada
convention (PDAC), the markets have been holding steady. Has the "PDAC
curse"-where mining equities fall after the PDAC convention-been broken?
Eric Lemieux: I hope so,
although it really is still too early to say. Perhaps at this stage, with the
drop in copper prices and gold in the $1,240/ounce range, we're in a gray
zone. However, there's a certain sense of optimism based on the fact that
we're in the last amplitudes of a bottom. Certainly medium fundamentals look
interesting. Gold supply is getting tighter, deposits of quality are getting
rarer, and there is a lengthening timeline for the development of projects
because of more stringent permitting and social acceptability elements.
TGR: What is going on with
merger and acquisition (M&A) activity in Quebec and Ontario?
EL: There has been a recent flurry of M&A activity in Quebec
and Ontario. One could almost say it is the flight to the old parents.
. .comfort in stability, access to know-how and the realization that there is
still much to discover in the 'old' Archean greenstone belts of the
Canadian Shield, a geological province that covers the heart of Canada. It is
notorious for being very well endowed with different commodities.
The merger announced last week between Adventure Gold
Inc. (AGE:TSX.V) and Probe Metals Inc. (PRB:TSX.V) is a terrific fit. The
combination of two strong exploration teams that merge good Québec and
Ontario expertise, as well as project know-how, sets the stage for
advancements in exploration. The combined company should continue to unlock
value within Adventure's portfolio of ~20 projects. Goldcorp Inc. (G:TSX;
GG:NYSE), with a 17.7% stake in Probe, will invest an additional $2.9 million
($2.9M). Probe will have a treasury of ~$22M, well positioned to finance a
portfolio of projects.
Indeed Ontario saw much activity in 2016 as Tahoe
Resources Inc. (TAHO:NYSE; THO:TSX) merged with Lake Shore Gold Corp.
(LSG:TSX) for a foothold in West Timmins; Kirkland Lake Gold Inc. (KGI:TSX)
acquired St Andrew Goldfields Ltd. (SAS:TSX) and its East Kirkland assets;
Wesdome Gold Mines Ltd. (WDO:TSX) expanded its Moss Lake land package in
northwestern Ontario; and, finally, BonTerra
Resources Inc. (BTR:TSX.V, BONXF:OTCMKTS, 9BR1:FSE) is acquiring ground
in the Kirkland Lake-Virginiatown area via an agreement with Kerr Mines Inc.
(KER:TSX).
All this suggests that there remains excellent geological potential in
Québec and Ontario. With distressed assets because of the lack of cash-good
assets with no monies to advance-inside quality jurisdictions and with
relative proximity to infrastructure, the M&A of certain issuers should
keep on pace.
TGR: Would you talk about some of the companies you follow that are
active in the area?
EL: Integra Gold Corp. (ICG:TSX.V; ICGQF:OTCQX) is advancing
the Triangle zone. Integra's Gold Rush Challenge was a success and showed
that the company has matured and grown. Integra hosted the Gold Rush Finale
at the PDAC Convention after making available over 6 terabytes of digital
mining and exploration data from Sigma-Lamaque in Val-d'Or. The Gold Rush
Challenge has given Integra a wealth of enticing information and
interpretation of targets. The new platform should incite mining companies,
governments and mining financiers to go beyond traditional thinking, share
information and consider disruptive technology as a means to captivate a new generation
of industry professionals.
Integra is in a drill campaign with eight drill rigs with over 52,000
meters of drilling. Recent infill drilling at Triangle has targeted the C1
and C2 structures, providing more confidence in the current resource estimate.
The company released a fourth round of drill results from its fall/winter
drill program on March 31; results were highlighted by good intercepts from
the C1/C2 structures located near surface.
Sigma/Lamaque Map. Courtesy of Integra Gold.
Integra's announcement of a friendly $6M strategic investment in Eastmain
Resources Inc. (ER:TSX) was a surprise. Eastmain's flagship project, the
Clearwater project in the James Region, Québec, has had six mineral resource
estimates since 2002 and is seeing a preliminary economic assessment being
completed. Although Eastmain received the 2015 Discovery of the Year award
from the Association de l'exploration minière du Québec (AEMQ), it's really
important that management work at a reasonable pace and keep some momentum.
Eastmain was certainly shaken into action by the proxy battle launched by Columbus Gold
Corp. (CGT:TSX; CBGDF:OTCQX) on March 28; Columbus had now withdrawn its
slate of board directors. Integra's investment represents 9.9% of Eastmain's
shares and is conditional on the election of a new slate of Eastmain Board
nominees, composed of four new directors that would join some of Eastmain's
existing independent directors.
TGR: What is another company advancing in Quebec?
EL: Balmoral Resources Ltd. (BAR:TSX; BAMLF:OTCQX) released a
maiden resource estimate on March 7 for its 100%-owned and royalty-free
Grasset nickel-copper-PGE deposit. This discovery received AEMQ's 2014
Prospector of the Year award. The combined Indicated resource is 3.45 million
tonnes nickel equivalent. It's important to remember Grasset is still open;
it's an ultramafic complex that hasn't been explored that much, so there
might be other pearls in that string of potential deposits.
Balmoral location map. Courtesy of Balmoral Resources.
Balmoral has the whole Detour Trend project land package to continue to
pursue gold discoveries. It has gold optionality with Martiniere, Bug Lake
and Lac du Doigt, and I suspect it will have other discoveries. Balmoral is
another example of being well positioned at the right moment with the
financial capacity and will to advance assets.
TGR: Any parting thoughts?
EL: The spotlight is on the Canadian Shield right now; it still has
a lot of potential and we could see some new world-class deposits emerge. When
I was at PDAC a few weeks ago, and also when I was at the Cambridge House
conference in Vancouver in the beginning of the year, there were a lot of
things going on up in Northern Canada, including Agnico Eagle Mines Ltd.'s
(AEM:TSX; AEM:NYSE) Amaruq deposit near Meadowbank. Other companies are also
working in Northern Canada, mostly on what I would consider greenstone belts,
many of which have not been worked a lot. These jurisdictions are safe and
stable, so they do hold an attraction for major companies.
TGR: Eric, thank you for your time.
Eric
Lemieux is a consulting technical advisor to Peartree Securities
Inc. of Toronto. Previously he was a mining analyst with Laurentian Bank
Securities. He worked for nine years as a consultant responsible for applying
Regulation NI 43-101. He has worked at the Montreal Exchange, and prior to
that managed exploration projects for Cambior, Noranda and Soquem. He holds
two master's degrees, in mineral economics from the Colorado School of Mines
and in metamorphic-structural geology from Laval University.
