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Canadian Gold Stock Sees Exciting Numbers from Global Mines

Stockhouse Editorial
1 Comment| April 13, 2022

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(Image via Mandalay Resources Corp.)

“Grade is king” is a phase that many mining investors live by. It’s all in the numbers. Higher grade ore equals more ounces (or pounds) of metal produced for each tonne of rock extracted from the Earth. All other things being equal, this translates into higher potential margins.



In the current conditions that span most mining sectors, this is especially true. Generally, only high-grade deposits can attract sufficient investor (and market) support. One gold mining company that has been diligently developing a very high-grade resource is Mandalay Resources Corp. (TSX: MND, OTCQB: MNDJF, Forum).

The Canadian-based natural resource company has producing assets in Australia (Costerfield gold-antimony mine) and Sweden (Björkdal gold mine). The company is focused on growing its production and reducing costs to generate significant positive cash flow.

Deep resources:

The company recently provided investors with an updated Mineral Resources and Reserves estimates for its Costerfield gold-antimony mine in Victoria, Australia and its Björkdal gold mine in Skellefteå, Sweden as of December 31, 2021.

Highlights:

Costerfield:
  • Proven and Probable Mineral Reserves for contained gold increased by 24%, net of depletion for 2021 production; and
  • Extended mine life by two years to 2027, net of depletion for 2021 production.

Björkdal:
  • Maintains long mine life until 2030;
  • Improved geological understanding allowing for upgrade to higher confidence Measured Resources and Proven Reserves; and
  • Increase to Measured and Indicated gold Resources of 59,000 oz net of yearly depletion.

Click to enlargeThe company’s Chief Executive Officer, Dominic Duffy explained via a media release on this news that Mandalay’s exploration efforts in 2021 yielded significant success.

“We made major additions of Mineral Reserves at Costerfield through the successful discovery of the Shepherd zone below the Youle deposit and discovered significantly higher gold grades to the east at depth at Björkdal.”

He went on to add that as of 2021 year-end, Mandalay’s total Proven and Probable Mineral Reserves totaled 854,000 ounces of gold and 19,600 tonnes of antimony, compared to 799,000 ounces of gold and 21,800 tonnes of antimony at 2020 year-end. These Mineral Reserves were added at an exploration cost of $30.79 per gold equivalent ounce; further evidence of the cost effectiveness and sustainability of the company’s exploration programs.

“To date, five continuous high-grade veins have been discovered within Shepherd and it is expected to be an area of substantial Mineral Resources and Reserves growth over the coming years. During the 10 months from discovery to data cut-off in 2021, Shepherd has already added 296,000 tonnes of ore at a grade of 12.4 g/t gold and 1.0% antimony into Mineral Reserves. This significant contribution in a short timespan highlights the richness of the Costerfield mineral system. Currently, the Shepherd veins are open and will be the focus of ongoing exploration efforts at Costerfield.”

Due to Björkdal’s current long mine life of approximately ten years, the exploration focus was not on Mineral Reserve addition, but on identifying areas that could potentially add higher-grade mine feed. This program was extremely successful with the discovery of the high-grade zones to the east at depth of the Main and Central zones.


(Image via Mandalay Resources Corp. Click to enlarge.)

CEO Duffy stressed that most of the significant results for this area were recovered after the data cut-off point for this Mineral Resources and Reserves update, hence the success of this program and the significant potential in upgrading the overall grades will be better reflected in the following years and will be a continued exploration focus at Björkdal during 2022.

“Looking forward into 2022, alongside the continuation of growth projects around Shepherd and the Eastern Extension projects, Mandalay is advancing several highly prospective areas at both properties. At Björkdal, exploration continues north of the Aurora orebody as well as the commencement of surface drilling on regional Björkdal style and multi-element targets. At Costerfield, the potential of further Youle and Shepherd style targets will continue to be explored in parallel with renewed efforts on satellite deposits within 2 km of the mining activities.”

Björkdal Eastward mine extension drilling programs:

Work completed at the beginning of the year at the eastern extension drilling programs at Björkdal saw veining with visible gold, supported by excellent grades.

New Drilling Highlights:

Central Zone Extension Infill
  • 47.7 g/t gold over 11.7 m (Estimated True Width (ETW) 5.85 m) in MU21-052:
    • Including 1,056.0 g/t over 0.40 m;
  • 47.5 g/t gold over 6.4 m (ETW 4.11 m) in MU21-047:
    • Including 716.0 g/t over 0.31 m; and
  • 507.0 g/t gold over 0.45 m (ETW 0.23 m) in MU21-051.
Central Zone Extension Testing
  • 45.5 g/t gold over 2.3 m (ETW 1.15 m) in MU21-028;
  • 83.1 g/t gold over 0.4 m (ETW 0.39 m) in MU21-029;
  • 8.4 g/t gold over 5.7 m (ETW 5.35 m) in MU21-030; and
  • 5.1 g/t gold over 8.0 m (ETW 6.13 m) in MU21-031.
Central Zone – Lake Zone Link
  • 13.2 g/t gold over 1.0 m (ETW 0.94 m) in MU21-028; and
  • 19.3 g/t gold over 0.4 m (ETW 0.35 m) in MU21-029.


(Perspective view of the Björkdal Mine looking towards the SSW highlighting the interaction of the veining (Red) Marble (Blue) and Björkdal fault (Yellow). Drilling of the latest Central Zone extension programs is also shown. Image via Mandalay Resources Corp. Click to enlarge.)

These recent drilling programs have supported the initial finding with some of the best grades seen at Björkdal. Following the success of the Main and Lake zone extension programs, CEO Duffy said that Mandalay diverted its focus to this high potential area. He added that the intercepts had been interpreted to be direct extensions of the Main and Central zone veining, however, the grades recovered from the Central Extension drilling show a distinct upgrading down plunge.

“The increasing grades within the extensions of the Björkdal deposit at depth to the east mark a significant development in the multifaceted efforts to lift ore grades produced from the mine and will be a major focus of our production in the years to come. The Main, Lake and Central zones are all open to the north-east and those drilling results are showing higher grades the deeper and further to the east we drill. This is very exciting, and this drilling will continue to be one the primary exploration focuses over the course of 2022.”

A mining concession application is in motion, which was submitted to extend the current mining license area to cover this eastward extension of veining.


Looking ahead:

At Costerfield, the focus is on increasing the mine’s life and the team is exploring successfully at depth. While the mine has been known historically to have a short life, CEO Duffy boasted that it currently has its longest mine life since Mandalay took ownership in 2009, sitting at least 5 years. This is in large part due to the commitment in exploration programs by increasing its budget every year for the last three years, with this year substantially higher than in the past.

“We anticipate adding additional mine life to this asset. It is extremely high grade. So, any material we add, is profitable for the company. On its exploration front, we also will be drilling deeper holes as well.”
Click to enlarge
One facet of their exploration program is the search for a higher grade and wider Swan lode-type of deposit at depth, that is currently being exploited at the neighbouring Fosterville operation. Like the Fosterville mine, Costerfield’s geology share several key similarities. CEO Duffy pointed out that the main difference being Fosterville encounters on average wider veins, so they take greater advantage of the full grade, Costerfield’s veins are actually on average higher in grade than Fosterville, but they're narrow, resulting in higher dilution.

At Björkdal, the main focus will be increasing its gold production over the next three years. This is expected to be accomplished by mining the lower levels and higher gold grade areas of the Aurora zone and bringing into the mine plan the higher grades currently being defined to the east of the central and main zones. The company will continue with its ramp up of its underground mining with the intended goal of 1.2 million tonnes per annum, while also focusing on processing its higher-margin ore. Following discoveries in the Central Zone, which is a comparably higher-grade deposit – historically, Björkdal’s processing has been around 1.3 grams per ton gold – could potential lift the site’s future production profile. This central zone has been intercepting multiple veins over 50 grams per tonne.

Once the company is granted permits for a mining extension later this year, it can set up the mine so and take immediate advantage of these high grades areas leading into 2023.

“We could have very substantial impact on our production on annual basis, but we don't know how significant because we haven't drilled it out enough yet. But it continues to grow. It continues to be a higher grade. We hope to change this operation from a high tonnage, low grade mine to a high tonnage, medium grade mine, with no increase in costs as well. It's very exciting. That's why I say Björkdal has a potential to become the more significant cash flow generator for the company going forward.”

More generally, after a long trough in the gold mining industry and with the current price of gold riding a solid rally, the high grades of both projects provide a comfort zone for shareholders, Mandalay Resources provides a very attractive development opportunity for investors positioning themselves in this sector.

That’s just one branch of the company’s tree. Coming up in Part 2, we will look at the company’s record-setting 2021 performance and how they plan to build upon it moving into 2022.

In the meantime, visit mandalayresources.com for full details on the company.



FULL DISCLOSURE: This is a paid article produced by Stockhouse Publishing.



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