NioGold Mining Corp. (TSX: V.NOX, Stock Forum) is breathing new life into former mines and searching for the next one along the Golden Highway.
One of the areas in Canada that investors should have on their radar screen is the 2,800-2,600 million year old Abitibi Greenstone Belt – one of the world’s largest Archean (one of the four principal eons of Earth history) greenstone belts.
Trending in an east-west direction the Abitibi extends for over 650 kilometers and is 150 km wide - running from west of Timmins, Ont., to Chibougamau, Que.
The Abitibi Greenstone Belt (the minerals in the metamorphic rocks that make up greenstone belts are green in color) has proven up more than 170 million ounces of gold and is one of the most prolific gold producing areas in the world.
In 2006 there were over 40 gold deposits in the world with more than 10 million ounces of gold, five of them – Hollinger-McIntyre, Kirkland Lake, Dome, Kerr Addison and Horne Mines - are in the Abitibi. Also located in the Abitibi are the world famous Campbell Red Lake – Goldcorp and Hemlo Mines.
The two largest mining camps in the Abitibi are Timmins and Kirkland Lake. Between them they account for almost 100 million of those 170 million ounces of gold.
In the late 19th century prospectors found gold in what is now the city of Timmins. In the early twentieth century three large gold mines were found in the Timmins camp - Dome, Hollinger, and MacIntyre.
The Timmins discoveries started a huge exploration rush to explore nearby Kirkland Lake. Seven gold mines were found and these mines established Kirkland Lake as a major mining center.
There are many other large gold camps in the Abitibi Greenstone Belt:
- Cadillac
- Malartic
- Virginatown
- Rouyn-Noranda
- Val-D'Or Gold
Since the 1930s the Cadillac, Malartic, and Val d’Or (French for - “valley of gold”) camps have produced upwards of 45 million ounces of gold, and are presently home to seven producing gold mines, and one major mine development project.
NioGold Mining has consolidated a large 125 square kilometer land package in the heart of the Malartic and Val-d’Or gold mining camps.
NioGold’s Malartic - Val-d’Or project is located in proximity to the towns of Val-d’Or and Malartic. Covering 125 km², the Malatric-Val d’Or project is divided into eight properties: the Marban Block (Aurizon JV), the Malatric Hygrade, the Malatric H, the Camflo West, Val-d’Or, Héva and Siscoe East.
The Malartic - Val-d’Or project is located in close proximity to three currently producing mines - Agnico-Eagle Mines Ltd.’s (TSX: T.AEM, Stock Forum) Laronde, Lapa and Goldex Mines - and close to several active advanced exploration and mine development projects such as Kiena, Midway and Lac Herbin.
NioGolds Marban Block is adjacent to Osisko Mining’s Canadian Malartic project, one of Canada’s largest developing gold projects having close to nine million ounces of gold.
Work has been focused on the Marban Block property. This property is the result of NioGold’s consolidation of four contiguous properties in the Malartic mining camp - Norlartic, First Canadian, Marban, and Gold Hawk. The Marban Block contains 3 past producing gold mines and three other distinct gold deposits - the former Norlartic, Kierens and Marban mines and the North-North, North and Gold Hawk Zones.
There is a NI 43-101 compliant resource estimate of Indicated resources of 598,000 ounces gold in addition to Inferred resources of 361,000 ounces gold for the Marban Block:
- The gold resources are defined along a three kilometer segment of a regional gold mineralized fault zone
- Known deposits are reasonably close to the surface and can be accessed by a ramp
- The access provided by the old mines drifts and adits means a much lower cost and shorter timeline to production startup
- To date NioGold’s Marban Block Project has been drilled to a maximum depth of 500 meters. Most major deposits on this belt have been mined at 1,000 meters or more
- NOX’s current deposits are open at depth
- NioGold’s has an existing resource of 960,000 oz’s gold across all categories. This resource includes open pit as well as underground resources and both have very good potential to expand at depth and near surface - joint venture (JV) partner Aurizon plans on funding 200,000 meters of drilling over the next 3 years
Marban has an indicated resource of 181,000 ozs of gold and an inferred resource of 114,000 ozs of gold. The Marban gold system has traced over 1.4 kilometers, there is substantial lower grade gold mineralization within the upper 250 meters of the gold system at Marban. With today’s higher gold prices this area needs to be reevaluated. Historic drilling data has also indicated that the geologic features that were the foundation for the Marban Mine are also present in areas around the mine.
Kierens has an indicated resource of 101,000 ounces of gold and an inferred resource of 99,000 ounces of gold.
Norlartic has an indicated resource of 316,000 ounces of gold and an inferred resource of 148,000 ounces of gold.
A good portion of the Norlartic / Kierens resources are near surface mineralization potentially amenable to open pit mining.
In 1989, Aur Resources estimated the North Zone had over 136,000 tonnes of resource grading 6.86g/t gold for 30,000 ounces of gold. The Gold Hawk Zone veins 1 and 2 had over 254,000 tonnes of resource grading 8.57g/t for 70,000 ounces of gold and estimated the North-North Zone had over 754,000 tonnes of resource grading 2.85g/t for 70,000 ounces of gold.
JV Deal
In July 2010, NioGold successfully negotiated an important partnership with Aurizon Mines Ltd. (TSX: T.ARZ, Stock Forum) to further develop the Marban Block property gold resources. A three-year $20M drilling program (200,000 meters) on the Marban Block is currently underway with a $5.9M program approved for the first year.
Aurizon must incur expenditures of C$20 million over three years, of which C$5 million is a firm commitment to be spent in the first year. Aurizon must complete an updated NI 43-101 compliant mineral resource estimate, and must make a resource payment equal to the sum of C$30 (or C$40 if the price of gold is then above US$1,560) multiplied by 50% of the number of total gold ounces in the Measured and Indicated resource categories plus C$20 (or C$30 if the price of gold is then above US$1,560) multiplied by 50% of the number of total gold ounces in the Inferred resource category.
Aurizon can then increase their stake to 60% by delivering a feasibility study, and by a further 5% (cumulative 65%) by arranging project financing for capital expenditures estimated by the feasibility study to place the project into commercial production.
NioGold will be the operator during the initial earn-in period but Aurizon will become the operator after it earns its 50% of the project. The work program at Marban will be prioritized towards increasing the resources that can potentially be mined by open pit.
“The Joint Venture deal between Niogold and Aurizon deal assures minimal dilution to NioGold for development of the Marban block - they are fully carried to production. All the costs required in delivering an independent feasibility study are paid for by Aurizon and Aurizon also arranges the financing for NOX’s cost of production.
When you consider that the Marban block is only 10% of NioGolds holdings, Aurizons $20 million in expenditures, NioGold gets paid on a per oz basis and ARZ is carrying NOX to production, it seems, to this author, to be a very good deal for NioGold shareholders.
Management
NioGold has a very strong management team that combines the; business and financial strengths of Mike Iverson, the geological strengths of Vice-President Rock Lefrançois and the advice in strategic and corporate business development from Simon Ridgeway.
Conclusion
Because NOX hasn’t given up all their exploration potential in the area they just might be better positioned than others in this historic mining camp for the next major discovery. Remember NOX only joint ventured 10% of their properties leaving them enormous blue sky potential.
Is the NioGold Mining Corp. TSX.V - NOX joint venture with Aurizon and its 2011 exploration plans in the Abitibi Greenstone Belt on your radar screen?
If not maybe it should be.
Disclosure: Richard Mills does not own shares of NioGold Mining, which is an advertiser on Richard’s website www.aheadoftheherd.com.