After Callinex, will Searchlight be the next multibagger in the Flin Flon?
Editorial Searchlight Resources Inc February 19, 2021 1006.
The last one turns off the light, they say. Or as they say in the language of miners: Schicht im Schacht. Until recently, this fate of slow decline seemed preordained for the tradition-rich Flin Flon mining district in Saskatechwan. New geophysical survey methods and a resulting spectacular new discovery could now change the omens for the entire district. Callinex Mines Inc. (TSXV:CNX) and Searchlight Resources (TSXV:SCLT,FRA:A2JRPS) have set out to turn the lights back on at Flin Flon.
Callinex's share price has already increased tenfold since last summer and has further multiplier potential. Searchlight will soon begin drilling its first well on a similarly defined target very close by and could be the next multibagger.
There is a simple reason why the name "Flin Flon" is likely to trigger an immediate "aha" effect for few private investors. Unlike the prominent mining districts of Val d'Or in Quebec, Red Lake in Ontario or the Golden Triangle in British Columbia, there has been no marketing for Flin Flon for decades. Flin Flon simply didn't need it, because mining giant Hudbay (TSX: HBM) dominated the district almost single-handedly for a long time, leaving no room for Juniors, let alone other producers. Yet Flin Flon is one of the world's most important districts for VMS-type deposits (volcanogenic massive sulphides), with 140 million tons of copper ore produced, and one of the most productive copper districts in Canada.
Within less than 20 kilometers of the town of Flin Flon, more than 30 mines operated over a period of nearly 100 years, including the namesake Flin Flon mine itself, which produced 62.5 million tonnes of ore grading 2.2% Cu, 4.1% Zn, 2.6 g/t Au and 41.5 g/t Ag between 1930 and 1992. The weighted average grade of 144 million tonnes of ore produced from all deposits between 1917 and 2005 is 2.2% Cu, 4.4% Zn, 2.0 g/t Au and 30.6 g/t Ag. (According to 2007 statistics from Strathcona Minerals Service, see end of report.)
An estimated CAD1.6 billion, meanwhile, has been spent on road, rail, power and water infrastructure to enable rapid development of new discoveries. At the center of this is the Hudbay processing plant, which has an impressive daily capacity of 6,000 tons a day and employs more than 800 people. Because there has been a lack of new discoveries for years, the Hudbay plant is now underutilized and there are even plans to close it. This is because the special nature of the ore deposits around Flin Flon poses special challenges for a large corporation like Hudbay. This is because the polymetallic VMS projects around Flin Flon, while extremely high grade and profitable, are rather small, averaging 2 to 5 million tons of ore. For a group that wants to show the longest possible asset life on its balance sheet, this is a problem. More than a decade ago, Hudbay therefore made the strategic decision to develop large-volume, long-life projects, for example in South America. Exploration on the company's doorstep in Flin Flon has been on the back burner, if at all.
Searchlight Figure 1 Each symbolic shovel represents a mine
Figure 1: Each symbolic shovel represents a mine: 32 mines have been operated to date in the 20-kilometer radius around Flin Flon. Most of them were so-called VMS deposits with an average of 2 million to 5 million tons of ore. In the center is the large Hudbay processing plant. Searchlight Resources holds the third largest package of exploration licenses (in red) after Hudbay and SRR Mining.
Recent Callinex VMS discovery changes the rules of the game in Flin Flon.
In this mixed bag, news of the recent VMS discovery at the Rainbow project from Callinex Mines Inc. (TSXV:CNX) literally felt like someone was turning the lights back on in the Flin Flon district. Not only the "what," but the "how" of the discovery is remarkable. Modern technology in the form of deep-penetrating electromagnetic pulses has led to the new discovery, which was not discovered earlier in part because it lies beneath a lake. Geophysical measurement methods now make it possible to look as deep as 800 meters. Compared to that, Hudbay geologists were virtually blind when they went exploring in the 1950s, 1970s or even 1990s. Often back then, wells were not even advanced 100 meters deep.
Callinex, listed at CAD 0.40 as recently as last June, has just raised CAD 7.7 million at CAD 4.20 in an oversubscribed capital increase. Investors are hoping the Callinex Rainbow project will be nothing less than the largest VMS discovery ever at Flin Flon.
Searchlight Figure 2 South-west of 1960s Pine Bay Mine.
Figure 2: South-west of the 1960s Pine Bay Mine, Callinex has traced the signature of a one-kilometer anomaly. Four cross-cutting VMS packages are waiting to be tested by drilling. Most excitingly, the strike length of Flin Flon VMS deposits allows one to make statements about the expected depth extension "down plunge". Factors of five to eight are used as a rule of thumb. The map in Figure 2 shows that Hudbay has drilled unsuccessfully thousands of meters further north of Pine Bay in the past. The difference is that Callinex and also Searchlight Resources now have new geophysical tools that Hudbay geologists did not have at the time.
So modern technology in the form of deep penetrating electromagnetic pulses could completely redevelop the Flin Flon mining district! A key witness to this thesis is, of all people, Mike Muzylowski, founder of Callinex and a member of the Canadian Mining Hall of Fame. The man (86 years old), who has discovered no less than 13 mines in his long career, recently stated: "I believe the Rainbow discovery could be one of the more significant discoveries I've been involved in during my career in the Flin Flon Greenstone Belt."
Translated with www.DeepL.com/Translator (free version)