Durango reviewing the potential acquisition of ground near Lake Shore Gold (TSX-LSG) and Goldcorp (TSX-G) Whitney gold project in Ontario
LSG announced on February 4, 2016, “Lakeshore Gold drills 12 metres of 29.42g/t Au at Whitney” and “the north volcanics consists of gold mineralization and quartz veining within altered volcanic rocks located approximately 430 metres west of the 110 zone and north of previously mined structures.”
The timing is interesting. A financing deal between Agnico-Eagle and Atac Resources coincides with a marked slowdown in exploration in the Yukon over the past year especially. Agnico-Eagle and Atac announced on Tuesday that the former, which produced about a million ounces gold in 2012, would buy an eight percent stake in the junior explorer for about C$13 million.
Agnico-Eagle said in a statement it has been watching Atac’s exploration progress for the past three years. In this time Atac has racked up a series of high-grade gold discoveries which garnered it special attention for coming as Carlin-type mineralization, a kind of sediment-hosted deposit, without visible gold, that is synonymous with Nevada gold mines.
The Yukon slowdown in exploration followed a frenzy of exploration - the Yukon’s so called second gold rush - in the late 2000s. The exploration boom came on the back of gold discoveries, including Atac’s, and others such as Underworld Resources (bought up by Kinross) in the White Gold district and Kaminak Gold at the Coffee Gold project.
Thus it would appear Agnico-Eagle has exercised some patience in not making deals while Yukon exploration was particularly hot. Yet it’s interest should not come as a surprise. It is no stranger to Canada’s North as it operates the 350,000-ounce-per-year Meadowbank gold mine in Nunavut, a territory to the Yukon’s east on the other side of the Northwest Territories - all Arctic regions, the least remote of which is the Yukon.
The investment also comes as explorers in the Yukon - those remaining - catch their breath. That is: discoveries were made, some bigger than the others, and now the Yukon’s core explorers, Atac among them, are taking stock of what they have found. They are now spending much less money on far-reaching exploration programs than in recent years and are instead refocusing efforts on to how to take early-stage projects further down the road to development, if possible.
Case in point, Kaminak has brought on board Eira Thomas - formerly of Stornoway, among other junior development companies - to lead it now that it has a multi-million gold resource on its hands. Certainly early-stage exploration continues for Kaminak, but its focus has turned more clearly to producing a scoping study of its Coffee project, which will mean, among other items, further metallurgical testing and barebones engineering.
Atac, likewise, is taking stock, and refocusing. To be sure it continues to explore its recent discoveries in what it calls the Nadaleen trend. Here it has and will be drilling for extensions of multiple high-grade gold deposits en route to a resource estimate or estimates.
And surely one of Agnico-Eagle’s main interests in Atac is this larger potential in the ground Atac holds: for the junior explorer to pull its finds into a more cohesive picture and for it, hopefully, to make more discoveries or prove them better on strike and at depth. The Agnico-Eagle financing will help in this regard, basically doubling Atac’s cash position to C$27 million and, in other words, providing ample funds to keep its drills turning.
Yet, if on a smaller scale, like Kaminak, Atac also aims to generate market interest with its own more advanced-stage project.
Catching up with Atac President Rob Carne at the PDAC conference in Toronto recently, he outlined Atac's plans that include a revival of its Tigre deposit.
This was one of Atac’s projects in the mid to late 2000s that started to generate excitement in the junior explorer in the first instance.
Drilling at Tigre ended up yielding a smallish resource estimate with a core, near surface oxide deposit. In oxides, perhaps the most promising aspect to Tigre, there are 337,500 ounces gold @ 4.25 g/t gold using a 1.60 g/t gold cut-off grade in indicated resources.
But in the past couple years Tigre was put on the back burner with surging excitement over Atac’s discoveries about 100 kilometres to the east, which, as noted, Atac continues to drill.
Carne said, however, that Atac would like to see what it might make of Tigre in a mining scenario through a scoping study, noting greater interest by investors for high-grade advanced-stage gold deposits.
Indeed, it will be curious to see what comes of Tigre at the scoping level. It’s fair to say that in general a 300,000 ounce oxide gold deposit is not going to attract interest from a major mining company and that in the final analysis it’s not going to throw off a massive net present values the likes of which might make an institutional bean-counter wet their pants.
But the hope at Atac must be that the high grades allow for a high return on investment from a tight gold deposit. While much remains to be proven in terms of Tigre as a worthy development, it must be said there are not many open pit projects out there, large or small, with grades in the 4.25 g/t range and, according to very-early stage metallurgy, high gold recoveries over 90 percent.
Carne suggested it might be a seasonal, off grid operation.
But, of course, because the project is remote it will automatically have higher costs (the curse of Canada’s North as far as mining goes.) So a scoping study, which Carne says Atac plans to work on this year, will have to show this high-grade open pit gold mining project can offset the remoteness disadvantage by spinning off especially strong cash flow. Will it be worth it? This will be something for investors to consider as Atac advances the project. If it proves particularly lucrative Atac might have an enticing asset to consider selling were it to want to raise cash for its larger prospects to the east.