Gold Seeker Issue #84 ~ This Week In Mining: Mega M&A, New Canadian Gold Powerhouse

The metals remain in a downtrend, with the precious metals and miners selling off during the first three days of the week. On Thursday, there was a dead cat bounce, likely due to oversold conditions. The technical picture is weak, and it feels like gold prices are headed lower. Gold must hold the $1,675-$1,680/oz level, where it previously put in a double bottom; otherwise, gold could head much lower. 

$AGG, $AEM, $KL, $AZT, $CXB, $EGO, $FSM, $GROY, $RZZ, $MOZ, $MMX, $STRR, $WDO

African Gold Group: announce an updated Mineral Reserve Estimate for its Kobada Gold Project. The reserve estimate is an update to the reserve disclosed in the National Instrument 43-101 with an effective date of June 17, 2020. It will be the basis for the updated feasibility study (expected to be delivered before mid-October 2021). Highlights from the reserve update include:

• Reserves increased by 66% to 1.252m oz Au, an increase of 497.77k oz. in the previous MRE in the 2020 feasibility study.
• The growth in reserves highlights the significant upside potential to further increase reserves and resources.
• The initial mine life has increased to 16-years, with the potential for average annual production of 100k oz Au over the first ten years.
• The inclusion of sulphides within the new pit shells opens the potential for a meaningful sulphide resource below the oxides.
• Optimized pit shell and mine plan to maximize free cash flow.

Generally, assets that produce less than 100k oz Au p.a. get little to no attention from investors or potential bidders, so it is important that the Company establish production rates above 100k oz. Au.

Agnico-Eagle/Kirkland Lake Gold: The two companies announced that they agreed to combine assets in a merger of equals. The combined Company continues under the name Agnico Eagle Mines. The Merger will establish the new Agnico Eagle as the gold industry's highest-quality senior producer, with the lowest unit costs, highest margins, and most favorable risk profile (geopolitically). The new Agnico should become the go-to senior gold producer as it provides scale (approx. 3.4m oz Au of annual production, with the potential to increase to between 3.7-4m oz Au by 2025/2026, with 2.5m oz. of gold production from Canadian assets, which will also increase over the next several years).

Aztec Minerals: reports assay results for the final five holes from its now completed 2021, Phase 2, 23-hole, 2,716m reverse circulation (RC) drill program on the Tombstone project, which covers most of the historic Tombstone silver mining district in southeastern Arizona. Highlights include:

• 9.1m @ 0.78 g/t Au and 81.60 g/t Ag
• 47.3m @ 0.25 g/t Au and 15.20 g/t Ag
• 18.3m @ 0.80 g/t Au and 15 g/t Ag
• 65.5m @ 2.44 g/t Au and 66.56 g/t Ag
• 24.4m @ 0.56 g/t Au and 16.62 g/t Ag

Calibre Mining: One of our favorite junior gold producers provided an update on the Company's 2021 resource expansion and discovery drilling program, highlighting drilling completed at high-grade deposits and targets within the Company's producing Limon Mine Complex. Calibre has issued several news releases this year regarding exploration, all of which have been impressive. Resource expansion highlights at and around Limon include:

• 3m @ 9.02 g/t Au (Atravesada Underground)
• 6.2m @ 6.39 g/t (Atravesada Underground)
• 4.2m @ 4.27 g/t (Atravesada Underground)
• 4.3m @ 6.82 g/t (Tigra, beyond the reserve pit shell)
• 4.8m @ 5.28 g/t (Tigra, beyond the reserve pit shell)
• 2.2m @ 12.17 g/t (Tigra, beyond the reserve pit shell)
• 2m @ 7.12 g/t (Tigra, beyond the reserve pit shell)
• 2.3m @ 5.75 g/t (Portal target, new gold zone within the Limon Complex)
• 4.1m @ 2.77 g/t (Portal target, new gold zone within the Limon Complex)
• 18.6m @ 1.68 g.t (Portal target, new gold zone within the Limon Complex)

El-Dorado Gold: Provided an update of results from exploration projects at the Lamaque and Efemcukuru operations. Brownfield exploration activities at these sites included a combination of resource conversion drilling, step-out drilling of existing resources, and testing new near-mine targets.

Ormaque: Infill drilling at the Ormaque deposit at the Lamaque operations has confirmed grade continuity within ore lenses of the maiden inferred resource and has expanded several lenses laterally. Drill holes testing deeper levels identified several new mineralized zones. Notable step-out intercepts include 2.2m @ 21.3 g/t Au and 1.0m @ 40.4 g/t Au. Intercepts from new zones include 5.3m @ 25.0 g/t Au and 33.9m @ 16.5 g/t Au.

Bonnefond: Significant drill results from the Bonnefond deposit in the recently acquired Bourlamaque project area (formerly QMX project area) include 50.2m @ 6.0 g/t Au from an extension veinlet zone within the Bonnefond tonalite and 12.9m @ 5.1 g/t gold from shear vein hosted mineralization cutting across the tonalite.

Efemcukuru: Drilling at Kokarpinar focused on both conversion drilling within inferred resources and testing the previously undrilled Kokarpinar Northwest Splay, with the latter returning intercepts of 1.6m @ 18.3 g/t gold and 2.1m @ 8.0 g/t Au.

Fortuna Silver Mines: Announced that the Company's Board of Directors decided to proceed with the construction of an open-pit mine at the Séguéla gold Project in Côte d'Ivoire. The Company is ready to immediately commence construction with long lead items procured and development teams established. While the mine is currently only projected to produce 130k oz Au in the initial six years of operation, there are numerous opportunities to optimize production rates and maintain them for longer periods. We expect Séguéla to surprise on the upside.

Gold Royalty, Abitibi Royalty & Golden Valley: The companies announced an update on certain royalties that will form part of the new Gold Royalty upon closing the transactions announced on September 7, 2021. This news release highlights the internal growth across the new Gold Royalty's cash flowing, development, and exploration stage royalties for selected key assets. Going forward, the Company expects to issue royalty and asset updates to shareholders quarterly. Update on cash flowing royalties:

Jerritt Canyon (0.50% NSR royalty and a per ton royalty): In 2020, Jerritt Canyon produced 112.75k oz of gold at a cash cost of $1,289/oz, according to First Majestic Silver. The 119 square mile land package at Jerritt Canyon holds significant exploration potential but has been starved of capital for nearly 20 years under various owners. Gold Royalty believes that First Majestic, which acquired the mine in April 2021, possesses the experience and resources to transform the mine once again into a significant gold producer. On August 16, 2021, First Majestic announced that during May and June of 2021 (62 days), Jerritt Canyon produced 18.76k oz Au.

Isabella Pearl Mine (0.375%-3.0% NSR): Near mine exploration drill results (650m north-west of Isabella Pearl) released on August 24, 2021, by Fortitude from the Scarlet (2.5% NSR) area returned substantial widths and gold grades that intercepted oxide mineralization with potential to be processed at Fortitude's Isabella Pearl heap leach pad and gold process plant. Drill highlights include 19.81m @ 1.57 g/t Au, 19.81m @ 1.56 g/t Au, 16.76m @ 2.23 g/t Au and 24.38m @ 1.60 g/t Au. The drill program at Scarlet was designed to further define the lower oxide-sulfide boundary and test the margins of the known mineralization. Scarlet remains a high-priority target for additional delineation drilling.

Gold Royalty holds additional royalties on key exploration areas near the Isabella Pearl Mine and operated by Fortitude, which includes a 2.5% NSR on County Line, 2.0 – 3.0% NSR at Mina Gold, and 2.0% NSR on certain claims at Camp Douglas, potentially extending Gold Royalty's cash flows from Isabella Pearl well into the future.

Royalties Under Development:

Canadian Malartic Odyssey Project (3.0% NSR): During the second quarter of 2021, underground development of the ramp at Odyssey continued. Approximately 402m of ramp development has been completed ahead of schedule and at a lower development unit cost than anticipated. The ramp is designed to support mining the upper zones of the Odyssey Project and provide further underground exploration access.

On July 27, 2021, it was announced that the excavation of the shaft collar and the concrete lining of the first 27m were completed. The headframe foundations are in progress, and headframe construction is expected to start in Q4 2021. In addition, all of the mechanical and electrical purchase orders for the sinking hoist and auxiliary hoist have been issued. Both hoists are expected to be delivered and installed by the fourth quarter of 2022. All surface construction activities are on target, and shaft sinking is expected to resume in the second half of 2022 once the headframe construction and hoists installations are completed.

On July 8, 2021, Agnico Eagle Mines Limited ("Agnico") announced an update on the Odyssey exploration drilling, which included two drill holes from the Chert Zone, which was historically part of the East Malartic Mine. The drill holes included 77.9m @ 7.0 g/t Au and 28.2m @ 6.1 g/t Au at a depth of 900m below surface. Both holes are reported as core length, with the true thickness currently unknown. The results in the Chert Zone suggest the potential to add additional mineral resources between the East Malartic and East Gouldie deposits. Also, as reported by Abitibi Royalties, regional exploration at the Radium-Nord property (15% net profit interest) has returned significant gold values from the Radium gold zone and confirmed the modeled geometry.  The Radium-Nord property is immediately adjacent to the west side of the Canadian Malartic open pit and south of the East Amphi deposit. It represents an underexplored part of the property.

 

Marathon Gold: Reported the latest drill assay results from the Valentine Gold Project in central Newfoundland (the ‘Project”; Figure 1). These latest results represent fire assay data from fifteen diamond drill holes completed as part of the ongoing in-fill drill campaign at the 1.5Km long Berry Deposit. Highlights include:

• 2m @ 10.86 g/t Au
• 2m @ 9.33 g/t
• 1m @ 12.33 g/t
• 2m @ 7.67 g/t
• 4m @ 7.64 g/t
• 13m @ 2.51 g/t

Maverix Metals: The junior royalty and streaming company announced it has reached an agreement with Auramet Capital Partners to acquire a gold stream and enter into a long-term strategic partnership. This immediately increases annual attributable gold production and cash flow and provides a platform for future acquisitions from the strategic partnership with Auramet, including through participation rights, and rights of first refusal on Auramet sourced royalty and streaming transactions. Maverix will make a cash payment equal to $50m to acquire a gold stream that will deliver 5K ounces of gold to Maverix per year. The gold stream shall be delivered quarterly, and Maverix will make ongoing cash payments equal to 16% of the spot gold price for each gold ounce delivered. After a total of 50k oz Au have been delivered from the stream, Auramet shall have the option to terminate the stream for a cash payment of $5m less certain cash flows related to the stream. Further to the gold stream, Maverix will be entitled to receive an amount in gold equivalent to all dividends distributed by Auramet on 2% of its shares outstanding, which is done semi-annually. In fiscal year 2020, Auramet paid out $35m in dividends to its shareholders.

New Found Gold: The Company’s shares started trading on the NYSE this week, which should increase trading volume. Further, the Company announced assay results from eight step-out diamond drill holes designed to expand the high-grade gold mineralization at the Golden Joint Zone, a recently made discovery located approximately 1km north of the Keats Zone and about 850m south of the Lotto Zone. Highlights include:

• 2m @ 18.04 g/t Au (Golden Join HW)
• 2m @ 20.70 g/t (Golden Joint)
• 2m @ 9.25 g/t (Golden Join HW)
• 2.10m @ 12.24 g/t (Golden Joint)
• 2.10m @ 64.94 g/t (Golden Join HW)
• 2.45m @ 17.43 g/t (Golden Join HW)
• 4.5m @ 16.35 g/t (Golden Joint)
• 4.25m @ 15.32 g/t (Golden Joint)

 

Star Royalties: announce the execution of a definitive royalty purchase agreement with Almadex Minerals to acquire an existing 2% NSR royalty on the Elk Gold Mine in BC, Canada, and owned and operated by Gold Mountain Mining Cor. for total consideration of $10.63m. Gold Mountain recently commenced operations at Elk Gold and expected first revenue in Q4 2021. Revenue is expected to increase an average of $2m annually after year three, assuming prevailing gold prices persist. The PEA outlines initial open-pit production of approximately 19,000 ounces per annum (years 1-3) and then expanded production of 65k oz per annum (years 4-11) with a further expansion target of 100k oz per annum.

Wesdome Gold Mines: Announce underground exploration results from the Kiena Deep Zoe and initial surface exploration drilling results at the Kiena Mine Complex in Quebec. On March 23, 2021, Wesdome announced the discovery of a new high-grade gold zone in the footwall of the A Zone (the Footwall Zone), which has been the focus of in-fill drilling over the past several months. Highlights of recent drilling include:

• 3.9m @ 27.6 g/t Au
• 3.5m @ 32.2 g/t
• 16m @ 13 g/t
• 9.1m @ 18.5 g/t
• 0.5m @ 1,515 g/t (Presqui and Shawkey zones)
• 2.2m @ 23.1 g/t (Presqui and Shawkey zones)
• 0.9m @ 63.9 g/t (Presqui and Shawkey zones)
• 1.5m @ 20.80 g/t (Presqui and Shawkey zones)
• 1.1m @ 29.40 g/t (Presqui and Shawkey zones)