Mining investors are familiar with “mining camps”. These are especially prolific districts of mineralization. Typically, these “camps” boast not only vast tracts of prospective land, but also robust grades. The lure of strong grades and large tonnages attracts not just one mining company, but a group of them – and a new mining camp is born.
In particular; mining investors are familiar with gold camps. As “precious” metal, large/robust deposits of gold mineralization can be especially lucrative for mining companies and their shareholders. This means that when an exciting, new gold discovery is made, other mining companies will look to move into the new district, hoping to replicate the discovery themselves.
In Canada, several gold camps have attracted international fame, and made lots of money for mining companies and their shareholders, alike. Gold camps such as Timmins, Red Lake, and Val d’Or are household names for mining companies and investors.
However, with a century of exploration and 10’s of millions of ounces of gold production already recorded in each, most of that gold is already gone. New gold camps have become a rarity, not only in Canada, but around the globe. Why?
The answer is simple: most of the easy-to-find gold in the world is gone – already mined and crafted into jewelry, bars, and coins. Mining companies exploring for gold today are generally finding projects with lower grades, modest tonnages, in regions with high political risk and/or in previously inaccessible regions.
For this reason, the discovery of a new gold mining camp is big news in the world of mining. One junior gold mining company that is turning a lot of heads with its recent advancements is Nighthawk Gold Corp. (TSX: NHK, OTCQB: MIMZF, Forum).
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DISTRICT SCALE POTENTIAL
NHK’s flagship asset is its Colomac Gold Project, located within its 100%-owned Indin Lake Gold Property, a consolidation of the vast majority the Indin Lake Greenstone Belt. Some mining investors may think it pretentious for a single mining company to be speaking in terms of its own camp. But just look at the numbers.
The Company’s land package totals 222,205 acres, or 899 km2, located 200km north of Yellowknife in the Northwest Territories. That is roughly three times the size of the entire Timmins Gold Camp.
How did Nighthawk end up exploring for gold north of Yellowknife? Credit the Company’s CEO: Dr. Michael Byron has a nose for gold. With 30+ years of mining experience, Byron’s resume boasts being a part of the founding exploration teams at companies such as Aurora Platinum, Lakeshore Gold and Falco Resources.
Byron’s search for the next, big gold discovery didn’t start with ground work in the field. Rather, his “prospecting” took place pouring over mining records from various jurisdictions. A career geologist, Byron had a shopping list of the types of geological traits and formations for which he was searching.
Drawing him to the Indin Lake Gold Camp, was the Damoti Deposit that boasted high grade mineralization. The Indin Lake Gold Camp has characteristics indicative of a fertile and expansive gold system, with the former producing Colomac gold mine at its centre. The plan was then to stake all the prospective ground around the Colomac gold mine, which was brought into the land package in 2011.
In the 1990’s; Royal Oak Mines commissioned a 10,000 tpd mining operation: the Colomac Gold Mine. It was considered to be a low-grade/bulk-tonnage operation. In 1997; the Colomac Mine shut down and Royal Oak went into receivership. In part, this was a function of the low gold price – below $400/oz.
However, Dr. Byron also attributed the failure of mining operations to a second factor: a misreading of the geology. When he reviewed the geological data, a much different picture formed in his mind, a close parallel with a highly prolific and world-famous gold camp.
“Colomac was previously misunderstood, and capitalizing on this has allowed us to realize exciting new opportunities. It’s a differentiated sill and these types of intrusions are known to contain large gold deposits. One of the world’s largest, the Golden Mile deposit within the Kalgoorlie gold camp of western Australia, is hosted by an intrusion similar to Colomac. At Kalgoorlie, structure influenced the locations and development of higher grade mineralization, and in 2014 our Zone 1.5 discovery proved that Colomac also hosts high-grade gold zones. Understanding the Kalgoorlie analogue for Colomac has been instrumental in helping identify and target better mineralized areas within the Colomac sills, ultimately streamlining the discovery process.”
Was this delusions of grandeur? Australia’s Kalgoorlie Camp has produced over 60 million ounces of gold, over a span of roughly 100 years. The principal mining operation there was a massive open-pit gold mine nicknamed “the Super Pit”. Does Colomac really demonstrate close parallels with the Super Pit of Kalgoorlie?
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Exploratory work has since backed this up. Nighthawk acquired the Colomac Gold Project in late 2011. After an initial drill program in 2012, combined with historical drilling data, a NI 43-101 compliant technical report was generated that outlined 2.1Mozs of gold in 2013 (39.8Mt at 1.64 g/t Au). CEO Byron then tested Colomac for similarities to Kalgoorlie. The difference, the historical Colomac mine showed no signs of high grade, while high grade mineralization was mined out in the early years in Kalgoorlie.
Nighthawk began developing an exploration model based on the Kalgoorlie system. The result: NHK hit high-grade results in 2014 with its discovery hole that returned 52.50m of 7.78 g/t Au, some 100 metres north of the historical open pit at Colomac.
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Byron isn’t alone in seeing the parallel. One of Nighthawk’s strategic investors is Kinross Gold Corp. This large-cap gold producer became a shareholder in NHK following a 2016 presentation and visit to site. Kinross saw the close resemblance between Colomac and Kalgoorlie. That coupled with its district scale land position was enough to bring Kinross on board.
NHK has continued to intersect gold mineralization in almost every hole drilled at Colomac, resulting in a 97% hit rate. However, since the discovery of the high grade zone in 2014, the Company hasn’t merely been intersecting gold mineralization. It’s been generating impressive numbers: long intercepts of mineralization, at robust grades, with intervals of even higher grade gold.
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Along an overall 16 km trend of host rock, NHK has focused its exploration efforts on the Colomac Main Sill, which has been traced for approximately 9 km in strike length. The width of the trend expands to up to 160 meters.
The bulk of NHK’s recent drilling at Colomac has centered on Zone 1.5, the higher grade zone discovered in 2014. The intercepts produced from previous drilling are enough to whet the appetite of any gold mining investor.
- 52.50 meters of 7.78 g/t gold
- 52.07 meters of 7.72 g/t gold
- 72.65 meters of 5.58 g/t gold
Those are big numbers, and near-surface results. Drilling at Zone 1.5 has primarily been at depths of 350 meters or less. Along with having enormous opportunities to expand known mineralization laterally, Nighthawk has barely even begun to explore the mineralization potential at depth.
When a Company has its own 899 km2 land package to explore, uncovering the potential doesn’t occur overnight. However, rising financial support for the Project and NHK itself is allowing Nighthawk to begin to fast-track its exploration efforts.
A total of 26,168 meters of drilling at Colomac have been completed in 2017, with close to 10,000 meters of results still to be released this year. The Company is committed to a minimum 25,000 meters of drilling in 2018. With just under $30 million in the corporate treasury, all exploration initiatives for the next 24 months are fully funded.
In addition to NHK’s aggressive drilling campaign for 2017 and 2018, Nighthawk is also going to produce an updated NI 43-101 resource estimate, to incorporate much of the drilling completed since 2013, (approximately 50,000 metres of additional drill data), including the high grade intercepts. The projected completion date for that next resource estimate is within the first half of 2018.
Even with the exciting parallel to Kalgoorlie and the steady stream of impressive drilling results, experienced mining investors will be wanting more information. What about access to the project and infrastructure? How supportive is the local government? Are their environmental concerns? What about the metallurgy?
- Strong government support from both the territorial and First Nations governments
- Winter road and airstrip access all year round
- Very “clean” ore with excellent metallurgical recoveries using standard gold recovery techniques
In terms of the Canadian North, mining investors may be more familiar with gold mining operations in the Yukon or Nunavut. Both of these jurisdictions boast robust gold mining industries. Gold mining in the Yukon traces back for many decades while Nunavut has become an emerging gold mining jurisdiction.
With similar geology and geography, the Northwest Territories provides equally lucrative mining opportunities, and the Territorial government has a strong commitment to supporting mining in that jurisdiction.
Indin Lake already boasts its own 5,000-foot airstrip, capable of landing planes up to “Hercules” class. That’s a legacy of Royal Oak’s previous mining operations. In addition, NHK has access to an ice road, for bringing in larger/heavier equipment. A 100km portion of which has been approved to become an all-weather road with construction expected to commence in H2 2018.
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In a conference call with Stockhouse editorial, management noted that construction of the all-weather road to the Colomac property could (in part) be completed with waste rock from Colomac’s previous mining operations.
This speaks to the lack of contaminants found in Colomac ore. The waste rock itself contains no harmful toxins. This means that in environmental terms, the only issue is the standard precautions necessary with respect to containment of mine tailings.
Even more encouraging has been the Company’s metallurgical work. Initial testing focused on a standard gravity/floatation mining circuit. Testing here produced stellar recovery levels of roughly 96% gold. Additionally, testing of “heap leach” processing generated recoveries in excess of 81%.
The significance here is that while heap leaching produces lower recoveries, heap leach mining is a relatively simple form of metal recovery. This means both much lower cap-ex to put a heap leach operation into production and much lower operating costs.
Because of the significant cost savings associated with heap leach processing, gold deposits with grades of less than 1 g/t Au can be profitably mined – even with the current, muted price for gold. With the grades demonstrated thus far at Colomac, margins from heap leach processing should be robust.
A new gold mining camp? For mining investors still having difficulty wrapping their heads around the implications of something this big, CEO Byron connects the dots.
"Our Indin Lake Gold Project includes most of the Indin Lake Gold Camp and its various deposits and showings. Gold mineralization spans the entire length and width of our land package, including high-grade occurrences of significant width and continuity. At the centre of this lies our Colomac gold deposit, a multi-million ounce growth story of evolving grade and tonnage. There is no denying the scale of metal endowment in this camp, yet the area has experienced very little exploration activity over the years when compared to better known historic mining camps: the birth of a gold camp and herein lies the opportunity."
Mining investors can reap strong returns from both large and small mining projects. With robust grades and strong economics, even smaller deposits can produce solid investor profits. NHK’s Colomac Gold Project provides the potential for something much greater: a gold rich system with large widths and robust grades, at the centre of an Archean terrain that is largely underexplored, leaves massive upside potential for new and exciting discoveries.
What does it mean if Indin Lake does materialize as the world’s next gold camp? As already noted, Kalgoorlie has been in production for roughly a century. The children and grandchildren of NHK’s current shareholders may still be profitably investing in the next Colomac Mine.
FULL DISCLOSURE: Nighthawk Gold Corp is a paid client of Stockhouse Publishing.