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Industry EventsWe will be attending the Cambridge House Vancouver Resource Investment ConferenceJanuary 24-25, 2016
If you would like to meet us at one of these shows, please contact us at [email protected]
Upcoming Events
Marianne JenkeviceInstitutional [email protected] x435
peartreesecurities.com
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Trent Mell, President & Head of Mining
Last week, the Northern Miner published some interesting industry insights in a report sponsored by PearTree Securities entitled New Frontiers in Mining Finance. With traditional debt and equity financings increasingly sparse, the study reviews industry leadership’s understanding of and attitudes towards alternative methods of financing, namely: royalties, streams, private equity, traditional flow through, charity flow through and equity crowdfunding.
Northern Miner Report Reveals Poor Understanding of Charity Flow Through
A survey of 450 industry participants confirms a cautious tone heading into 2016, with an acute focus on protecting the balance sheet and on investor sentiment. Only 13% of respondents had a positive outlook whereas 45% believed that their need for new capital would increase in 2016.
The ‘traditional’ form of flow through financing was ranked as the best alternative in the current market. So what was ranked last? Would you believe charity flow through financing?
To anyone familiar with charity flow through, these responses are contradictory in the extreme. After all, charity and traditional flow through transactions are the same product – though I would advocate charity flow through is superior and a natural evolution of a decades-old financing technique. The explanation for the divergence lies in a poor under-standing of the new but increasingly popular alternative. Indeed, knowledge of alternatives was identified as the biggest obstacle to trying out a new financing method. To that end, 72% of respondents had little or no familiarity with charity deals and only 20% of respondents had ever done a transaction.
So let’s cut to the chase and review the di�erences. Flow-through shares are a financing mechanism that helps mining, oil & gas and clean energy companies raise capital for the exploration and development of natural resources in Canada. Eligible expenditures can be renounced to Canadian taxpayers who acquire flow through shares, who may deduct the expenses when calculating taxable income. Today, traditional flow through deals are done through limited partnership funds, who sell units to Canadians seeking to lower their taxable income. These flow through LPs are appealing due to their dedicated pool of capital seeking exposure to the sector. The downside is that these buyers are rarely there over the long term, placing downward pressure on stock.
Issue Six – December 2015
Perspective
@PearTreeSec
END BUYERISSUER
7,142,857 shares issuedat $1.40 ($10 million)
Shares Acquired at $1.40then resold at $1.00
7,142,857 shares acquiredat $1.00 ($7.1 million)
Northern Miner Report continued:Under the charity flow through structure, the flow through shares are acquired by Canadians who use the tax attributes in support of Canadian charities (including many of the country’s leading schools and hospitals). The shares can then be resold as regular common shares outside Canada to long-term investors – often at a meaningful discount. In the roundtable event hosted by the Northern Miner, three participants spoke favourably of their experience with charity flow through:
private equity investor David Thomas of Resource Capital Funds, Iamgold CFO Carol Banducci, and Balmoral Resources CEO Darin Wagner.
Charity flow through is arguably the most accretive source of capital and carries no residual obligations but it cannot entirely replace other sources of capital, particularly when bringing an asset through development. Despite completing 160 deals, we still have our work cut out for us to educate our stakeholders.
AME BC RoundupJanuary 25-28, 2016
PDAC ConventionMarch 6-9, 2016
PearTree Securities Expanding into Oil & Gas Sector with New Managing Director
Throughout his career, Danny has covered companies in the oil and gas, oilfield service, midstream and pipeline sectors. He has been involved in a multitude of equity and debt financings, ranging in size from $2 million to $1.7 billion. He has also structured several flow through limited partnerships and provided advice on numerous mergers and acquisitions.
Danny has previously served for five years as a board member for UEnd, a charitable organization focused on alleviating poverty in developing countries. Danny has a Bachelor of Commerce (Finance) from the University of Alberta and is a CFA charterholder.
Contact Email: [email protected] Cell: 403 615 4917
PearTree Perspective Issue Six – December 2015
Northern Miner Report continued:Under the charity flow through structure, the flow through shares are acquired by Canadians who use the tax attributes in support of Canadian charities (including many of the country’s leading schools and hospitals). The shares can then be resold as regular common shares outside Canada to long-term investors – often at a meaningful discount. In the roundtable event hosted by the Northern Miner, three participants spoke favourably of their experience with charity flow through:
private equity investor David Thomas of Resource Capital Funds, Iamgold CFO Carol Banducci, and Balmoral Resources CEO Darin Wagner.
Charity flow through is arguably the most accretive source of capital and carries no residual obligations but it cannot entirely replace other sources of capital, particularly when bringing an asset through development. Despite completing 160 deals, we still have our work cut out for us to educate our stakeholders.
We are pleased to welcome Danny Mah, Managing Director – Oil & Gas, to the PearTree Securities team.
From his base in Calgary, Danny is focused on developing relationships with oil and gas issuers and their investors. Danny is a capital markets professional with almost 20 years of energy investment banking experience. He joined BMO Capital Markets
investment banking group in Calgary in 1996 and spent 12 years before moving to Clarus Securities Inc., where he was responsible for energy investment banking.
The PearTree Advantage – Illustrative Transactions
Issuer Perspective Investor Perspective
Issuer Province Expenditures Market Price PearTree Premium to Institutional Discount to Subscription Market Price Market
Seabridge Gold (SEA.T) B.C. Super FT $8.32 $10.17 22% $7.40 11%
Lake Shore Gold (LSG.T) Ontario CEE $1.08 $1.17 8% $0.96 11%
Virginia Mines (VGQ.T) Quebec Super FT $13.64 $24.00 76% $12.00 12%
AuRico Gold (AUQ.T) B.C. & CEE $4.38 $5.12 17% $4.20 4% Manitoba
Issue Six – December 2015PearTree Perspective
Oban Mining Corp. (OBM-V)Acquiring assets full steam – In early 2015, OBM announced agreements to acquire interests in properties in Canada. On December 7, 2015 OBM acquired ownership of an aggregate of 18.3M common shares in the capital of IDM Mining Ltd. (IDM-V) consisting of a tranche of 11.1M common shares pursuant to a non-brokered private placement (price of $0.09 per IDM share for total consideration of $1M) and 7.2M IDM shares in exchange of 100% of Oban's Yukon properties (acquired by Oban on August 25, 2015 from Ryan Gold Corp), on which OBM retains a 1% NSR royalty. OBM’s ownership of IDM shares represents approximately 19.9% of the total number of issued shares. Pursuant to the transaction, Oban shall also be granted certain rights such as the right to participate in future equity financings by IDM and to appoint one director to the board of directors. Furthermore, as long as OBM holds at least 10% of the issued and outstanding IDM shares on a non-diluted basis, OBM shall have a 30 day right of first refusal over any sale of any royalty, royalty buy-back, stream, forward, o�-take, gold loan, or other agreement involving the sale of a similar interest in products that IDM proposes to enter into from time to time. On Decem-ber 8, 2015, OBM announced that it has agreed to acquire 100% of the DeSantis Property held by Excellon Resources Inc. (EXN-T) in the Porcupine Mining Division, Ogden Township, Ontario, in exchange for 850,000 common shares of OBM.
OBM is a mineral exploration company focused on the acquisi-tion, exploration, and development of precious metal resource properties in Canada. OBM owns a 100% interest in the high-grade Windfall Lake gold deposit and surrounding claims located between Val-d'Or and Chibougamau in the Urban Barry area of Québec. OBM is also the largest shareholder (at 19%) of BonTerra Resources Inc.
Azimut Exploration Inc. (AZM-V)Continuing on Opinaca – AZM reported on November 25, 2015, that Hecla Quebec Inc. (subsidiary of Hecla Mining Company, HL-NYSE) has renewed its option to earn up to 60% interest on the Opinaca B Property in the immediate vicinity of Goldcorp's Éléonore gold mine, in the James Bay region of Québec. Hecla has the option to earn up to a 60% interest from AZM and Everton Resources Inc on the Opinaca B Property (each company currently owning a 50% interest). A $60,000 option payment from Hecla was made to AZM and, during the spring and summer of 2015, Hecla conducted a $394,000 exploration program consisting of induced polarization (IP) and ground magnetic surveys, and extensive prospecting and trenching programs (153 channel samples from 6 sites). Prospective targets have been outlined carrying anomalous gold values (up to 0.11 g/t Au) and extensions have been covered with 42 new claims added to the Opinaca B Property. AZM remains slightly active with strategic land holdings and an ability to generate projects. AZM holds positions in the James Bay area with 4 gold properties (Éléonore South, Opinaca A, B and D) in the immediate vicinity of Goldcorp’s Éléonore mine, as well as a large exploration portfolio in Nunavik, with the Rex (Cu-Au-REE), Rex South (Au-Ag-Te-Cu-W), Nantais (Au-Ag-Cu-Zn), and Diana (Ni-Cu-Co) projects (see October 13, 2015 Analyst Note).
Company News – Canadian Exploration and Development
In the News
BonTerra Resources Inc. (BTR-V)Gladiator into the Urban Barry arena – BTR reported drill results of 7.7m @ 7.2 g/t Au (hole B-15-02) from its 2015 Phase 1 Exploration Program on their 100% owned West Arena Gold Property, within the Gladiator Gold Project. To date, 4 drill holes have been completed, with assays pending for the final 2 drill holes (holes BA-15-03 and BA-15-04). Results extend mineralization over 200m down dip from previous hole BA-15-01 that graded 14g/t Au over 6.6m and demonstrate the overall strength of the gold system below BonTerra’s current 43-101 mineral resource estimate competed in 2012 (Snowden July 2012).
The Gladiator Project, located in the Urban-Barry Greenstone Belt, is comprised of 3 properties: West Arena, East Arena, and Coliseum. The Spartacus Trend is identified as a NE trending shear zone primarily within mafic volcanic units that host local intrusions of syenite and gabbro. A Footwall Zone was recently discovered approximately 60m and 100m below surface in BA-15-01 and BA-15-02, grading 9.1 g/t over 3.5m and 4.7 g/t over 2.5m respectively. Drilling also discovered a mineralized and altered felsic porphyritic intrusion grading 0.5 g/t Au over 155.5m, suggesting more mineralized systems exist at the Gladiator Project. The emergence of multiple parallel zones, especially of a large mineralized felsic intrusive, is a great indicator of a very strong system. Gold mineralization is predominantly contained within quartz-carbonate veining and associated alteration related to shearing, faults, folds, and other typical structural controls.
TerraX Minerals Inc. (TXR-V)Crestaurum Shear Corridor – TXR announced on December 8, 2015, assay results from the final 22 holes (2,764m) of a 41-hole summer drill program completed at the Crestaurum Shear on its Yellowknife City Gold Project, immediately north of the city in the Northwest Territories. The program consisted of definition and extension drilling on the South Shoot of the Crestaurum Zone. Intercepts up to 4.21m @ 12.29 g/t Au (including 2.50m @ 19.43 g/t Au in hole TCR15-068), 10.8m @ 3.49 g/t Au (including 2.38m @ 8.13 g/t Au and 4.37m @ 3.46 g/t Au in hole TCR15-052), as well as 9.20m @ 3.37 g/t Au (including 2.20m @ 12.27 g/t Au in hole TCR15-064). 18 holes were drilled on the South Shoot to test the perimeters of higher grade shoots and down dip extensions. Several holes also
Below are a few of the Canadian exploration and development companies we follow at PearTree. For more Analyst Notes please click here.
By Eric Lemieux, Mining & Exploration Analytics
continued to hit significant mineralization in hanging wall veins near surface with intersections of 0.50m @ 15.65 g/t Au (hole TCR15-071) and 1m @ 5.61 g/t Au (hole TCR15-065). Drilling programs are expected to lead to a resource estimation – perhaps in H2/2016.
Gold Reach Resources Ltd. (GRV-V)Preliminary Economic Assessment on Ootsa – GRV owns a 100% interest in the 67,937ha Ootsa Property, located in the Omineca Mining Division of NW British Columbia. The Ootsa property contains 3 known porphyry deposits (the East and West Seel Porphyries, and the Ox Porphyry) and also contains zones of high grade silver and base metal veins at Damascus and Captain. From 2011 to 2014, GRV drilled over 100,000m and has significantly extended the known mineralized zones. The Ootsa Property contains a large Cu-Mo-Au-Ag resource base, where pit constrained resources are 37.8Mt in measure category, 115.6Mt in indicated and 223Mt in inferred (at > 0.5% Cu Eq), that occurs near surface with a favorable open pit geometry and an excellent potential for expansion. The resource sits adjacent to the Huckle-berry Porphyry Cu-Mo operating mine (owned by Imperial Metals Corporation and a consortium of Japanese companies) and in a stable jurisdiction favorable for mining and development. During 2016, GRV shall continue to advance the project toward a prelimi-nary economic study and further remove project risk through additional exploration, metallurgy, baseline environmental studies, and First Nation consultation. GRV has the technical and financial resources to explore and expand Cu–Au–Mo and Ag resources on the Ootsa Property and demonstrate the feasibility of a scalable higher grade operation that could supplement the Huckleberry 17,000tpd mine.
Tri-Origin Exploration Inc. (TOE-V)A 5 Pillars prospector-generator – TOE has di�erentiated itself as having a discovery generating approach specialized in identifying prospective land acreage for auriferous base metal massive sulphides and volcano-sedimentary-hosted, pyritic lode gold deposits. It has identified probable extensions of well-trodden major mining districts but where few previous explorers have ventured because of extensive overburden cover. TOE has assembled a portfolio of 5 projects within the Canadian Precambrian greenstone belts, or adjacent volcano-sedimentary basins of the Canadian Shield, and within readily accessible corridors containing established infrastructure of roads, rail lines .and electrical power which provide low-cost accessibility and lower-risk. TOE has attracted a large mining partner in the likes of SUMAC (Sumitomo Metal Mining Co, Ltd) for the Abitibi South project in the Cobalt district of Ontario. Other 100% owned projects are: Detour West project (probable western extension of the Lower Detour Deformation Zone and Sunday Lake Deformation Zone) 20km west of the Detour Lake Mine (DGC-T); RLX (Red Lake Extension) project covering potential Red Lake Mine Trend extensions of the ore hosting upper Balmer rock units; Sky Lake in the Pickle Lake area; and the Abitibi North project on western extensions of the Casa Berardi Trend in Ontario. This discovery strategy of identifying prospective terrain in non-traditional environments by systematic scientific approach may lead to early-stage exploration opportunities with camp-scale potential.
Balmoral Resources Ltd. (BAR-T)90% gold recoveries on Bug Lake and depth to Grasset – On December 10, 2015, BAR announced gold recoveries of 91.4% and silver recoveries of 80.2% were achieved in preliminary metallurgical testing on a composite sample from the Lower Bug Lake Zone on Martinière Property, in Québec. The Bug Lake composite sample was collected from previously drilled core holes comprised of material from Hanging Wall, Upper Bug Lake, and Footwall Zones of the Lower Bug Lake Zone, with an average assayed head grade of 6.3 g/t Au and 7.1 g/t Ag. This preliminary metallurgical work suggests there are no major concerns regarding the blending of the multiple zones located along the Bug Lake Trend, with still room for increased recoveries (see August 27, 2015 Analyst Note). Also on November 16, 2015, BAR announced an intercept high-grade sulphide vein/breccia system in the immediate footwall to the H3 Nickel Zone, at the -425m vertical level, with returned 7.5m @ 10.50% Ni, 0.74% Cu, 1.87% Pt, and 4.87 g/t Pd (hole GR-15-97). GR-15-97 intersected the H3 Zone approximately 50m down dip and 40m southwest of GR15-87 (42.7m @1.11% Ni, 0.12% Cu, 0.20 g/t Pt, and 0.49 g/t Pd), confirming the continu-ation of the high-grade core to depth along a sub-vertical axis. Drilling also expanded the overall scale of the mineralized system, with nickel bearing sulphides now intersected to a vertical depth of 540m along the projection of the H3 Zone. Additional drilling will be required to determine the extent and geometry of this new discovery, and an initial resource estimate for the H3 Zone is set for early in 2016.
Stornoway Diamond Corporation (SWY-T)Continuing on track with a stronger financial position – SWY announced Q2 results on December 9, 2015, with continued construction progress at the Renard Diamond Project. Incurred costs and commitments totaled $472M, and construction continues in line with the planned schedule and budget. Major facilities are well advanced, with the maintenance facility fully completed and the power and process plant buildings fully enclosed prior to the onset of winter weather. Mining in the Renard 2-3 and Renard 65 open pits stood at 4.8Mt, (92% of plan), and underground mining development stood at 837m (91% of plan). Recall during the quarter, total project Indicated Mineral Resources were increased 11% to 30.2M carats (including a 16% increase in Indicated Mineral Resources at Renard 2 to 21.6M carats) and new Inferred Mineral Resources at Renard 2 were defined to 850m depth (see September 25 and October 20, 2015 Analyst Notes). Working capital stands at $290.3M with excess financing capacity available to complete the project forecasted to be $100M. Renard is at the half way point in the construction which should be completed within the fully funded $811M capital budget.
PearTree Perspective
Oban Mining Corp. (OBM-V)Acquiring assets full steam – In early 2015, OBM announced agreements to acquire interests in properties in Canada. On December 7, 2015 OBM acquired ownership of an aggregate of 18.3M common shares in the capital of IDM Mining Ltd. (IDM-V) consisting of a tranche of 11.1M common shares pursuant to a non-brokered private placement (price of $0.09 per IDM share for total consideration of $1M) and 7.2M IDM shares in exchange of 100% of Oban's Yukon properties (acquired by Oban on August 25, 2015 from Ryan Gold Corp), on which OBM retains a 1% NSR royalty. OBM’s ownership of IDM shares represents approximately 19.9% of the total number of issued shares. Pursuant to the transaction, Oban shall also be granted certain rights such as the right to participate in future equity financings by IDM and to appoint one director to the board of directors. Furthermore, as long as OBM holds at least 10% of the issued and outstanding IDM shares on a non-diluted basis, OBM shall have a 30 day right of first refusal over any sale of any royalty, royalty buy-back, stream, forward, o�-take, gold loan, or other agreement involving the sale of a similar interest in products that IDM proposes to enter into from time to time. On Decem-ber 8, 2015, OBM announced that it has agreed to acquire 100% of the DeSantis Property held by Excellon Resources Inc. (EXN-T) in the Porcupine Mining Division, Ogden Township, Ontario, in exchange for 850,000 common shares of OBM.
OBM is a mineral exploration company focused on the acquisi-tion, exploration, and development of precious metal resource properties in Canada. OBM owns a 100% interest in the high-grade Windfall Lake gold deposit and surrounding claims located between Val-d'Or and Chibougamau in the Urban Barry area of Québec. OBM is also the largest shareholder (at 19%) of BonTerra Resources Inc.
Azimut Exploration Inc. (AZM-V)Continuing on Opinaca – AZM reported on November 25, 2015, that Hecla Quebec Inc. (subsidiary of Hecla Mining Company, HL-NYSE) has renewed its option to earn up to 60% interest on the Opinaca B Property in the immediate vicinity of Goldcorp's Éléonore gold mine, in the James Bay region of Québec. Hecla has the option to earn up to a 60% interest from AZM and Everton Resources Inc on the Opinaca B Property (each company currently owning a 50% interest). A $60,000 option payment from Hecla was made to AZM and, during the spring and summer of 2015, Hecla conducted a $394,000 exploration program consisting of induced polarization (IP) and ground magnetic surveys, and extensive prospecting and trenching programs (153 channel samples from 6 sites). Prospective targets have been outlined carrying anomalous gold values (up to 0.11 g/t Au) and extensions have been covered with 42 new claims added to the Opinaca B Property. AZM remains slightly active with strategic land holdings and an ability to generate projects. AZM holds positions in the James Bay area with 4 gold properties (Éléonore South, Opinaca A, B and D) in the immediate vicinity of Goldcorp’s Éléonore mine, as well as a large exploration portfolio in Nunavik, with the Rex (Cu-Au-REE), Rex South (Au-Ag-Te-Cu-W), Nantais (Au-Ag-Cu-Zn), and Diana (Ni-Cu-Co) projects (see October 13, 2015 Analyst Note).
BonTerra Resources Inc. (BTR-V)Gladiator into the Urban Barry arena – BTR reported drill results of 7.7m @ 7.2 g/t Au (hole B-15-02) from its 2015 Phase 1 Exploration Program on their 100% owned West Arena Gold Property, within the Gladiator Gold Project. To date, 4 drill holes have been completed, with assays pending for the final 2 drill holes (holes BA-15-03 and BA-15-04). Results extend mineralization over 200m down dip from previous hole BA-15-01 that graded 14g/t Au over 6.6m and demonstrate the overall strength of the gold system below BonTerra’s current 43-101 mineral resource estimate competed in 2012 (Snowden July 2012).
The Gladiator Project, located in the Urban-Barry Greenstone Belt, is comprised of 3 properties: West Arena, East Arena, and Coliseum. The Spartacus Trend is identified as a NE trending shear zone primarily within mafic volcanic units that host local intrusions of syenite and gabbro. A Footwall Zone was recently discovered approximately 60m and 100m below surface in BA-15-01 and BA-15-02, grading 9.1 g/t over 3.5m and 4.7 g/t over 2.5m respectively. Drilling also discovered a mineralized and altered felsic porphyritic intrusion grading 0.5 g/t Au over 155.5m, suggesting more mineralized systems exist at the Gladiator Project. The emergence of multiple parallel zones, especially of a large mineralized felsic intrusive, is a great indicator of a very strong system. Gold mineralization is predominantly contained within quartz-carbonate veining and associated alteration related to shearing, faults, folds, and other typical structural controls.
TerraX Minerals Inc. (TXR-V)Crestaurum Shear Corridor – TXR announced on December 8, 2015, assay results from the final 22 holes (2,764m) of a 41-hole summer drill program completed at the Crestaurum Shear on its Yellowknife City Gold Project, immediately north of the city in the Northwest Territories. The program consisted of definition and extension drilling on the South Shoot of the Crestaurum Zone. Intercepts up to 4.21m @ 12.29 g/t Au (including 2.50m @ 19.43 g/t Au in hole TCR15-068), 10.8m @ 3.49 g/t Au (including 2.38m @ 8.13 g/t Au and 4.37m @ 3.46 g/t Au in hole TCR15-052), as well as 9.20m @ 3.37 g/t Au (including 2.20m @ 12.27 g/t Au in hole TCR15-064). 18 holes were drilled on the South Shoot to test the perimeters of higher grade shoots and down dip extensions. Several holes also
continued to hit significant mineralization in hanging wall veins near surface with intersections of 0.50m @ 15.65 g/t Au (hole TCR15-071) and 1m @ 5.61 g/t Au (hole TCR15-065). Drilling programs are expected to lead to a resource estimation – perhaps in H2/2016.
Gold Reach Resources Ltd. (GRV-V)Preliminary Economic Assessment on Ootsa – GRV owns a 100% interest in the 67,937ha Ootsa Property, located in the Omineca Mining Division of NW British Columbia. The Ootsa property contains 3 known porphyry deposits (the East and West Seel Porphyries, and the Ox Porphyry) and also contains zones of high grade silver and base metal veins at Damascus and Captain. From 2011 to 2014, GRV drilled over 100,000m and has significantly extended the known mineralized zones. The Ootsa Property contains a large Cu-Mo-Au-Ag resource base, where pit constrained resources are 37.8Mt in measure category, 115.6Mt in indicated and 223Mt in inferred (at > 0.5% Cu Eq), that occurs near surface with a favorable open pit geometry and an excellent potential for expansion. The resource sits adjacent to the Huckle-berry Porphyry Cu-Mo operating mine (owned by Imperial Metals Corporation and a consortium of Japanese companies) and in a stable jurisdiction favorable for mining and development. During 2016, GRV shall continue to advance the project toward a prelimi-nary economic study and further remove project risk through additional exploration, metallurgy, baseline environmental studies, and First Nation consultation. GRV has the technical and financial resources to explore and expand Cu–Au–Mo and Ag resources on the Ootsa Property and demonstrate the feasibility of a scalable higher grade operation that could supplement the Huckleberry 17,000tpd mine.
Tri-Origin Exploration Inc. (TOE-V)A 5 Pillars prospector-generator – TOE has di�erentiated itself as having a discovery generating approach specialized in identifying prospective land acreage for auriferous base metal massive sulphides and volcano-sedimentary-hosted, pyritic lode gold deposits. It has identified probable extensions of well-trodden major mining districts but where few previous explorers have ventured because of extensive overburden cover. TOE has assembled a portfolio of 5 projects within the Canadian Precambrian greenstone belts, or adjacent volcano-sedimentary basins of the Canadian Shield, and within readily accessible corridors containing established infrastructure of roads, rail lines .and electrical power which provide low-cost accessibility and lower-risk. TOE has attracted a large mining partner in the likes of SUMAC (Sumitomo Metal Mining Co, Ltd) for the Abitibi South project in the Cobalt district of Ontario. Other 100% owned projects are: Detour West project (probable western extension of the Lower Detour Deformation Zone and Sunday Lake Deformation Zone) 20km west of the Detour Lake Mine (DGC-T); RLX (Red Lake Extension) project covering potential Red Lake Mine Trend extensions of the ore hosting upper Balmer rock units; Sky Lake in the Pickle Lake area; and the Abitibi North project on western extensions of the Casa Berardi Trend in Ontario. This discovery strategy of identifying prospective terrain in non-traditional environments by systematic scientific approach may lead to early-stage exploration opportunities with camp-scale potential.
Issue Six – December 2015
Balmoral Resources Ltd. (BAR-T)90% gold recoveries on Bug Lake and depth to Grasset – On December 10, 2015, BAR announced gold recoveries of 91.4% and silver recoveries of 80.2% were achieved in preliminary metallurgical testing on a composite sample from the Lower Bug Lake Zone on Martinière Property, in Québec. The Bug Lake composite sample was collected from previously drilled core holes comprised of material from Hanging Wall, Upper Bug Lake, and Footwall Zones of the Lower Bug Lake Zone, with an average assayed head grade of 6.3 g/t Au and 7.1 g/t Ag. This preliminary metallurgical work suggests there are no major concerns regarding the blending of the multiple zones located along the Bug Lake Trend, with still room for increased recoveries (see August 27, 2015 Analyst Note). Also on November 16, 2015, BAR announced an intercept high-grade sulphide vein/breccia system in the immediate footwall to the H3 Nickel Zone, at the -425m vertical level, with returned 7.5m @ 10.50% Ni, 0.74% Cu, 1.87% Pt, and 4.87 g/t Pd (hole GR-15-97). GR-15-97 intersected the H3 Zone approximately 50m down dip and 40m southwest of GR15-87 (42.7m @1.11% Ni, 0.12% Cu, 0.20 g/t Pt, and 0.49 g/t Pd), confirming the continu-ation of the high-grade core to depth along a sub-vertical axis. Drilling also expanded the overall scale of the mineralized system, with nickel bearing sulphides now intersected to a vertical depth of 540m along the projection of the H3 Zone. Additional drilling will be required to determine the extent and geometry of this new discovery, and an initial resource estimate for the H3 Zone is set for early in 2016.
Stornoway Diamond Corporation (SWY-T)Continuing on track with a stronger financial position – SWY announced Q2 results on December 9, 2015, with continued construction progress at the Renard Diamond Project. Incurred costs and commitments totaled $472M, and construction continues in line with the planned schedule and budget. Major facilities are well advanced, with the maintenance facility fully completed and the power and process plant buildings fully enclosed prior to the onset of winter weather. Mining in the Renard 2-3 and Renard 65 open pits stood at 4.8Mt, (92% of plan), and underground mining development stood at 837m (91% of plan). Recall during the quarter, total project Indicated Mineral Resources were increased 11% to 30.2M carats (including a 16% increase in Indicated Mineral Resources at Renard 2 to 21.6M carats) and new Inferred Mineral Resources at Renard 2 were defined to 850m depth (see September 25 and October 20, 2015 Analyst Notes). Working capital stands at $290.3M with excess financing capacity available to complete the project forecasted to be $100M. Renard is at the half way point in the construction which should be completed within the fully funded $811M capital budget.
Equity Research
Premier Gold Mines Limited (PG-T)Ho, Ho, Ho in Red Lake District – On December 7 and 8, 2015, PG provided an update of exploration activities on its projects in the Red Lake mining district of Northwestern Ontario. PG provided, on December 8, underground drill results from the Rahill-Bonanza Joint Venture Project (44% PG with partner Goldcorp Inc.) showing that multiple, high grade, gold intercepts have been encountered within horizons that remain open at depth. On December 7, PG gave an update of ongoing surface drilling at its 100%-owned Hasaga Project. Results from 29 holes continue to extend near surface mineralization to the SW in the direction of claims acquired from Pure Gold Mining on December 2, 2015 (513ha land package of 28 claims for $5M in cash and shares of PG. The Hasaga Porphyry drilling to the SW supports the PG model for open pit-style gold mineralization - we estimate the grade x thickness metric is in the 20 g/t x meter range and see emerging a 46.8Mt @ 0.98 g/t Au potential target.
This newsletter is dedicated to providing insight and analysis on Canadian mineral exploration and development stories. We welcome your feedback.
PearTree Securities is the largest provider of mining flow through capital in Canada. As an exempt market dealer and portfolio manager, PearTree Securities has approximately $250 million available for investments annually.
Osisko Gold Royalties Ltd. (OR-T)Foray into BC with the Cariboo Gold Project – On November 30, 2015, OR announced that it had entered into an agreement with Barkerville Gold Mines Ltd. (BGM-V) to purchase 32M common shares of Barkerville via a private placement (C0.32 per share, for total proceeds of $10.24M), as well as a 1.5% NSR royalty on the Cariboo Gold Project. OR shall own ~19.9% of the issued and outstanding Barkerville shares and, for a cash consideration of $25M, has acquired the 1.5% NSR royalty on the Cariboo Gold Project in the Cariboo Mining District in central B.C. A checkered history but a new team in place, OR should provide complementary technical support during the exploration, development, and construction phases.
Issue Six – December 2015PearTree Perspective
Integra Gold Corp. (ICG-V) Parallel Results – On December 9, 2015, ICG disclosed final results from its 2015 Parallel Zone infill drill program on the Lamaque South Gold Project, located in Val-d'Or, Québec. The infill drill program at 20 to 25m centres confirmed continuity and provided material for additional metallurgical testing. Infill drill intercepts of 1.7m @ 31.45 g/t Au, 2.3M @ 21.08 g/t Au, and 3.3m @ 19.58 g/t Au are improving confidence levels of both grade and continuity of mineralization at the Parallel deposit. The Parallel Zone could be emerging as a possible source of additional high-grade mineralized material during the production phase at Lamaque and should be part of an updated PEA of the project due to be finalized by Q2/2016.
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For more details: 12-8-2015 | Premier Gold Mines Ltd. (PG-T)More Gold at Rahill-Bonanza and continued proof of concept at expanded Hasaga
Event: Premier discloses drill results from the 44%-owned Rahill-Bonanza and 100%-owned Hasaga properties in Red Lake.
12-3-2015 | Premier Gold Mines Ltd. (PG-T)Expanding Hasaga... Impec-cable!
Event: Premier acquires 100% interest in a 513ha land package contiguous to the Hasaga property, located in Red Lake, Ontario, from Pure Gold Mining Inc. for $5M in cash and shares.
For more details: 12-10-2015 | Integra Gold Corp. (ICG-V)More optionality on the Lamaque South Gold Project
Event: Drill results from the Parallel Zone on the Lamaque South Gold Project in Québec Abitibi.
For more color: 12-2-2015 | Osisko Gold Royal-ties Ltd. (OR-T)Calling Cariboo
Event: Osisko Royalties enters into new royalty, private placement agreements in British Columbia.
