Since the middle of 2011, conditions have been very difficult for the junior mining sector. Market issues affecting precious metals miners have been especially challenging. Many of these junior companies went largely dormant during these years, unable to continue to raise capital to advance their projects. Some simply didn’t survive.
Alexandria Minerals Corp. (TSX: V.AZX, OTCQB: ALXDF, Forum) has been an exception to this trend. Like The Little Train That Could, this junior gold mining exploration company has persevered through these challenging times, managing to quadruple its resource base, expand its land holdings and continue to build shareholder value.
AZX boasts a large portfolio of high-potential mineral exploration properties in the provinces of Quebec, Ontario, and Manitoba. However, Alexandria’s flagship project continues to be its 35 kilometer-long Cadillac Break Property Group, located in Quebec’s world-class Val d’Or Gold Camp. Since the early 1900’s, the Cadillac Break fault zone has produced more than 100 million ounces of gold.
The Company has been aided in its development through a large core of strategic and institutional investors which have continued to acquire and hold shares in AZX, despite the bear market conditions for precious metals. Most notable among these shareholders is Agnico Eagle Mines Limited (TSX: AEM, Forum).
This well-respected senior gold miner presently holds slightly under 10% of Alexandria’s issued and outstanding shares. With Agnico Eagle’s Goldex Mill and processing plant located directly to the west of Cadillac Break, AEM’s interest in Alexandria is more than just that of a friendly neighbour.
Current mineral reserves at Goldex provide Agnico Eagle with enough ore feed to fill their mill to roughly 50% capacity. Enter Alexandria Minerals to help fill that processing facility to greater capacity.
In January 2014, AZX sold its Akasaba West gold-copper property to Agnico Eagle for $5 million. This parcel consisted of 14 mining claims located in the Bourlamaque and Louvicourt Townships, Quebec. The sale came after the Company established an NI 43-101 compliant Inferred resource of 332,074 ounces of gold and 61,255,885 kilograms of copper. Alexandria retains a 2% Net Smelter Return royalty on the land package. In addition to the lump sum payment and 2% NSR, the following terms apply to the transaction:
- Agnico retains the right to purchase ½ of the royalty (1%) by paying to Alexandria the sum of $7,000,000, and also retains the right of first refusal with respect to the other 1% NSR
- Alexandria retains the right of first offer to re-acquire the claims following mining and reclamation for the sum of $1
With AEM’s significant and continuing investment in Alexandria Minerals, management continues to look for opportunities to build upon this strong relationship with this senior gold mining company. While the Company was selling off this highly prospective land package to Agnico Eagle, it followed this transaction by buying Murgor Resources, acquiring ounces-in-the-ground at only $3.50 per ounce of gold.
Alexandria has been equally cost-effective in organically developing its own resources. The Company boasts one of the lowest costs of gold discovery in the sector, with all-up exploration costs of $18 per ounce discovered. With respect to the West Zone (purchased by Agnico Eagle), its discovery costs were only $0.69 per ounce. These strong operational results are no accident.
Alexandria Minerals’ experienced management team is led by President and CEO, Eric Owens. Dr. Owens is a co-founder of the Company and has 27 years of experience in mineral exploration in North America. Prior to founding AZX, he held positions with companies which are household names in the mining sector, such as Newmont Mines, BHP Minerals and Phelps Dodge.
The Company’s Vice President of Exploration is Philippe Berthelot. Berthelot obtained his degree in geology in 1984 at the University of Quebec. Since 1986, he has worked as a full-time geologist with a primary focus in the province of Quebec. His credits include participating in the discovery of the Langlois Mine, building the Desjardins Discovery Deposit, the Lac Peletier Gold deposit and the Jolin Gold deposit.
Mary Vorvis is the Company’s Vice President of Corporate Development and Investor Relations. She has more than 20 years of experience in both the resource and tech sectors, building strategic relationships with financial institutions, fund managers, and brokerages.
The Company’s management team has certainly been putting their exploration experience to good use at Cadillac Break. To date, AZX has drilled more than 170,000 meters on its Val d’Or properties. Alexandria’s most recent exploration initiatives are detailed below.
Based upon the drill results and data accumulated over the past few years; the Company is presently targeting two particular zones in the Cadillac Break Property Group: Orenada and Triangle Too. Following their reinterpretation of the geology, management now believes that Orenada and Triangle Too have the potential to host high-grade veins of gold mineralization, in addition to the large, lower-grade, bulk tonnages which the Company has established in its previous exploration activities.
At the Orenada Zone 4; management now believes that the geology hosts “stacked vein sets” of higher-grade mineralization. Previous drilling has already provided indications of these high-grade veins including 17.03 g/t gold over 3.4 meters and 131 g/t gold over 0.4 meters (April 2015), as well as 9.48 g/t gold over 1.3 meters (Nov 2016).
While the Company is very excited about the additional potential at Orenada, management is also increasingly enthusiastic about the Triangle Too Zone. AZX is presently planning a 6,000-meter drill campaign which is focused on Orenada and Triangle Too, and the Company is already considering expanding on that drill program if initial results are encouraging.
As Alexandria continues to grow shareholder value through continued development of the Cadillac Break Property Group, it also has added additional assets to the Company’s portfolio of prospective properties through its March 2015 acquisition of Murgor Resources.
The two principal assets acquired through the Murgor transaction are the WIM and Hudvam projects, located in the world-class Snow Lake-Flin Flon, Manitoba, mining district. This district hosts gold-rich copper-zinc deposits, with 27 past and present mines in the district, including three active mines operated by HudBay Minerals.
The acquisition of Murgor added approximately 1 million gold-equivalent ounces to Alexandria’s total resource base, more than compensating for the decline in resources following AZX’s $5 million sale of the West Zone to Agnico Eagle.
Of the Company’s 1.5 million ounces of gold resources at Cadillac Break, most of this resource has been established at Orenada, where the Company’s current focus is. However, AZX also has Current Resources at both its Akasaba and Sleepy deposits. Located 10 km and 20 km east, respectively, of the Orenada deposit.
Of course it costs money to fund all this activity. On November 23, 2016; the Company announced that Sprott Private Wealth LP has agreed to broker up to $5 million private placement on behalf of AZX. As Alexandria moves to close this financing, this will fund its extensive drilling operations through 2017.
A central factor in the long-term value of the Cadillac Break Property Group is the plethora of active mills and mining operations which surround this land package. Not only is this mining camp rich in infrastructure, but five of these operational mills are presently operating below capacity. As the owners of these mills look for new ore to feed these mills, it’s hard not to notice AZX’s massive land package.
While the Company has already established 1+ million ounce resources at its two principal projects, Alexandria also boasts other prospective properties in established mining districts. In Ontario, AZX holds three properties: the Wydee and Matachewan Gold Properties (Matachewan area), the Gull Rock property in the Red Lake Mining Camp, and the Mishibishu gold property near the River Gold Mine in northwestern Ontario. In Quebec, the Company holds three exploration properties near Chibuogamau, Quebec, and has a 30% JV interest in a property with Metanor Resources, in addition to a JV with Osisko Mining on the Siscoe East property northwest of Val d’Or.
Over the past couple of years, Alexandria has maintained its exploration focus on its flagship Cadillac Break properties by selling or optioning off some of its non-core properties. These transactions include selling its 40% interest in the Golden Arrow Property to Victoria Gold Mines, while retaining a 2% NSR. In March 2016, the Company optioned its Matchewan properties (Ontario) to Prosper Gold Corporation, allowing Prosper to earn up to a 90% interest in that project. In May 2016; Alexandria optioned its three Chibougamau properties (Quebec) to Quinto Real Capital Corporation, allowing Quinto to earn up to a 70% interest in that land package.
Most recently, AZX just announced a new joint venture with Probe Metals Inc. Under the terms of the JV, Probe can earn up to a 70% interest in the eastern one-third of the Cadillac Break land package. This portion of the Cadillac Break Group is a grass-roots stage exploration property, with little to no prior exploration activities over most of it. The deal provides the Company with a risk-free means of adding further shareholder value to Cadillac Break.
To earn a 70% interest in the eastern third of Cadillac Break within the six-year term of the agreement, Probe is required to:
- Spend up to $7.0 million on exploration
- Complete a pre-feasibility study on the property, with a mineral resource of at least 1 million ounces of gold.
As the Company continues moving forward at Cadillac Break West, management has noted the geological similarities with porphyry gold-copper mines. Such porphyry deposits host some of the world’s largest gold/copper mines: operating porphyry mines average 7.4 million ounces of gold and 691 billion pounds of copper. The largest such mine is Chile’s famed Escondida Mine, which boasts 89 million ounces of gold and 6.9 billion pounds of copper.
Alexandria Minerals’ Cadillac Break Property Group may not host 89 million ounces of gold. However, for a junior gold mining company with a present market cap of only $15.6 million, the upside potential for shareholders should be enough to capture the interest of any mining investor.
The junior mining sector has lived through some very hard times in recent years. However, for The Little Train That Could, these issues haven’t managed to slow down the growth of Alexandria Minerals Corp. Further information is available here.
FULL DISCLOSURE: Alexandria Minerals Corp. is a paid client of Stockhouse Publishing.