The California Gold Rush began in January 1848. While the official “rush” ended seven years later, by no means did this indicate that all of the gold was gone. Instead, as the surface prospectors moved on looking for new opportunities the mining companies moved in.
In the 1 ½ centuries since California originally became a prospector’s mecca, gold mining has been a robust component of mining activity in the state. The bulk of gold mines and gold-mining companies congregated along a broad swath running northwest to southeast across the north-central portion of the state.
This prolific gold-mining district was dubbed the Mother Lode Gold Belt, based upon both the large volumes and high grades of gold which were present along the Belt. Between 1849 and 1945 alone, more than 50 million ounces of gold was mined in hundreds of different mining operations which sprang up in the district.
Now California Gold is seeking to capitalize on the rich gold-mining tradition of this state and the still-robust mining opportunities present within these gold-bearing ores. California Gold Mining Inc. (TSX: V.CGM, OTCQX: CFGMF, Forum) is a Canadian junior mining company with operations which have been focused on the State of California since the Company acquired its flagship Fremont Project in 2013.
While mining for gold in the “gold rush” state is almost stereotypical, the Company’s management team is not. CEO Vishal Gupta began his career as a geologist. That part of his career path was conventional. However, Gupta decided early on that he wanted to broaden his knowledge and skill-set, and become conversant with all aspects of mining as a business.
To “go back to school”, Gupta turned toward capital markets, eventually becoming a research analyst for Dundee Capital. While at Dundee, he learned to look at mining companies from a different perspective, adding an understanding of balance sheets and raising capital to the knowledge base he already possessed from his years as a geologist.
Gupta is not the only atypical member of California Gold Mining’s management team. Director of Exploration for CGM is Alexandria Marcotte. As a geologist, Marcotte is a seasoned professional. The credits on her resume include working for notable names like Messina Minerals, Canadian Zinc, Klondike Gold, as well as Glencore Canada. While Marcotte works in a profession where 95% of her peers are male, female geologists are nothing new to this management team. Both Gupta’s wife and sister are also geologists, turning upside-down the notion that geology is “man’s work.”
The Company’s 3,351-acre property is located in Mariposa County, one of the more pro-development regions of the state. Overall, California is a very amenable jurisdiction for mining operations, with several new mines permitted for operation in recent years.
CGM holds a 100% ownership interest in this Project. Formerly known as the Pine Tree-Josephine property, the land package has had a considerable amount of historical development via a previous owner, Goldenbell Resources.
During the 1980’s, Goldenbell drilled 150 holes on the property, prepared its own resource estimate, and in 1989 completed a feasibility study on the commercial potential of the project. Due to prevailing low gold prices, that company never moved forward on developing the Pine Tree-Josephine property. However, with much higher gold prices today, the commercial viability of the project has once again made it attractive to develop.
California Gold Mining is committed to moving the Project to production. The Company’s first step in this direction was to bring in drill rigs for some preliminary drilling, aimed at both confirming historical results and expanding upon known mineralization on the property. In two rounds of drilling, CGM encountered consistent mineralization in its drilling. Highlights included 56.1 meters of 2.47 g/t gold and 62.5 meters of 1.82 g/t gold.
This reinforces management’s belief in the bulk-tonnage potential of the project. At the same time, historically, mines in the district have yielded average grades of between 5 – 10 g/t gold. This leads the Company to suspect that it will encounter even higher grades of gold as it continues exploration at Fremont.
Along with this, in 2014 management conducted Preliminary Economic Assessment (PEA) level metallurgical testing of the gold mineralization at Fremont, and the results were very encouraging. Highlights from the batch metallurgical testing include:
- Gold concentrate grade of 139 g/t (4.5 oz/t) and recoveries of 94% achieved through a combination of gravity and flotation for the Quartz-Hosted Sulphide composite sample;
- Gold concentrate grade of 58 g/t (1.9 oz/t) and recoveries of 86% achieved through a combination of gravity and flotation for the Sulphide Replacement composite sample;
- Gold recoveries of 93% achieved over 10 days through a coarse bottle roll cyanide leach test on a minus 25mm (~1 inch) Oxide Cap composite sample.
The Company also had other work to do. In the previous resource estimate prepared by Goldenbell Resources, that company established a resource base of 2 million ounces of gold. However, because of the historical nature of the work, that resource estimate is not NI 43-101 compliant.
The Goldenbell resource estimate was comprised of two portions: a near-surface “pit” resource and a somewhat deeper underground resource. In the intervening decades, some of the older workings on the project had collapsed. This has made it problematic for CGM to attempt to verify the underground resource. Doing so would require extensive (and costly) drilling, and management made the decision that this level of investment was not cost-effective at the present time.
Instead, the Company targeted the open pit resource. With this part of the deposit much more accessible, CGM was able to compile sufficient data for a NI 43-101 compliant resource estimate for this portion of the deposit with a minimal investment of capital.
California Gold Mining’s maiden resource estimate for the Fremont Project is comprised of 515,000 ounces of gold in the Indicated category and an additional resource of 364,000 ounces in the Inferred category. While this is not a large resource by the standards of an operating mine, completing the resource estimate satisfied several objectives.
The Company confirmed a substantial portion of the historical resource compiled by Goldenbell. While the underground portion of the resource has not been verified, the existence of that gold is not open to doubt, only the exact quantity of gold present. Meanwhile the upper levels of mineralization have not only been delineated but also more precisely defined in geological terms. When combined with previous metallurgical testing which CGM completed in 2014, this data has provided management with the confidence to move forward aggressively with project development.
In the immediate term, the Company is bringing in a drill rig for further exploration of the Fremont Project. CGM has planned a 6 – 10 hole campaign which will be focused on the Queen Specimen Succedo mineralized zone.
Along with this, CGM is planning a property-wide geophysical and soil survey of the Fremont Project.
With this additional data, management is confident they will be able to expedite the selection of targets for future drilling campaigns as well as obtaining a better overall grasp of the Project’s geology and mineralization potential.
While California Gold Mining plans to move forward aggressively at Fremont, this is not the only property in the Company’s portfolio. CGM’s original land package was the Dingman Project, which it has held since its inception. The Dingman property has also benefitted from extensive historical development via Noranda Exploration Company Ltd.
Between 1986 and 1988, Noranda drilled 115 holes on site. Based on that work, CGM produce a NI 43-101 compliant resource estimate, as well as a 43-101 Preliminary Economic Assessment (PEA). That work resulted in a resource of 401,000 ounces of gold at an average grade of 0.95 g/t. Based on that resource, the PEA produced a model for a five-year mine life for the project.
At the time that this PEA was prepared (2013), the price of gold (in Canadian dollars) was no longer high enough to justify moving forward to production. However, with the Canadian-dollar price for gold once again above $1,600/oz, CGM is closely monitoring the Canadian dollar exchange rate and Canadian dollar price for gold. Should these factors become even more favorable, management will re-evaluate the commercial potential for this project.
California Gold Mining is moving forward on its Fremont Project, looking to build upon its NI 43-101 compliant resource and identify and explore new targets on this very prospective property as it seeks to bring this Project to production. With $700,000 in cash, the Company is funded to complete its immediate operational priorities.
As CGM continues to unlock more mineralized ore and commercial potential at Fremont, the Company is a reminder to investors that “the California Gold Rush” has never really ended. Investors can find additional information here.