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DAILY NEWS Nov 15, 2012 4:35 PM - 0 comments

Temex buys blue sky

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Mergers and acquisitions are heating up in the mining-friendly province of Ontario with Iamgold’s (IMG-T) acquisition in June of Trelawney Mining and Exploration and the proposed friendly takeover of Queenston Mining (QMI-T) by Osisko Mining (OSK-T) announced earlier this week.  

One company that is picking up more ground in the area is Temex Resources (TME-V). Today, the junior explorer announced that it has acquired a large block of claims surrounding Goldeye Explorations' (GGY-V) Juby gold project, including Goldeye’s 40% stake in the claims making up the Juby joint-venture property, in which Temex holds a 60% interest.

Temex’s 1.8 million oz. Juby project is 45 km southwest of AuRico Gold’s (AUQ-T) Young Davidson mine and about 70 km east of the Cote Lake deposit that Iamgold recently acquired when it took over Trelawney. Juby, about 100 km southeast of Timmins, sits on the southwestern extension of the Larder-Lake Cadillac Fault Zone.  

The transaction with Goldeye increases Temex’s 100%-ownership in the ground around Juby tenfold, from 1,343 acres to 14,423 acres, and will allow it to carry out exploration more efficiently and aggressively.

“It’s a major consolidation and we’ve been hoping to get it done for a long time,” Ian Campbell, Temex’s president and chief executive explained in a telephone interview. “It’s a big deal for us. We’ve added tremendous blue sky exploration potential, as well as consolidated our ground around our main Juby resource, so we can accelerate expansion drilling.”

Currently, the Juby Main Zone contains indicated resources of 22.3 million tonnes grading 1.30 grams gold for 934,645 oz. of contained gold and 28.2 million tonnes grading 1 gram gold for 905,621 contained oz. of gold in the inferred category. The cut-off grade used was 0.40 gram gold.

Campbell says Temex has a budget of about $7 million for exploration between now and the end of next year that will be spent on aggressively growing resources both at Juby and at its Whitney project, a 60-40 joint venture with Goldcorp (G-T, GG-N) in the heart of the Timmins camp.  Two drills are mobilizing to the Juby project area to begin a 10,000 metre drill program, which will include infill and expansion drilling on the Juby Main Zone resource, on the Juby lease property, and the Golden Lake property, as well as exploration target testing. The program will carry on into next year.

Some of the new ground Temex has acquired around Juby lies on the Tyrrell Structural Zone (TSZ) — a major structural feature similar in many geological respects it says to the Cadillac-Larder Lake fault zone, the company says. Major gold zones 4-5 km on strike west of the Juby main zone on the TSZ include Big Dome and Hydro Creek.

Drill intersections at Big Dome have included 217.50 grams gold over 2.10 metres; 13.10 grams gold over 3 metres and 80.70 grams gold over 2.10 metres. At Hydro Creek, notable intercepts have included 5.89 grams gold over 12.50 metres; 3.58 grams gold over 20.20 metres and 4.28 grams gold over 14 metres.

The Juby main zone deposit is wide open at depth and along strike to the west on the Golden Lake property, where Temex recently reported drill intersections of 0.74 grams gold over 129 metres; 1.21 grams gold over 31 metres; 3.24 grams gold over 8.29 metres and 34.31 grams gold over 1.5 metres.

Meanwhile, about 100 km northwest of Juby at its Whitney project, Temex and joint-venture partner Goldcorp have carved out a resource on the Upper Hallnor deposit of 3 million tonnes grading 2.44 grams gold for 234,300 oz. of contained gold in the measured category; 8.8 million tonnes of 1.97 grams gold for 555,900 oz. of gold in the indicated category; and 4.1 million tonnes grading 1.82 grams gold for 241,000 oz. gold in the inferred category at a cut-off grade of 0.30 gram gold.

The Whitney property contains the past-producing Hallnor, Broulan Reef and Bonetal mines.(The Hallnor mine was the highest grade gold mine in the Timmins gold camp, having produced 1.7 million oz. gold at an average grade of 13.71 grams gold.)

Ongoing exploration at the 872-hectare Whitney includes further resource definition drilling within the curren open pit outline and to the west of the proposed pit, where the mineralization is still open. A 10,000-metre program will focus on the Upper Hallnor/Bonetal mines. Temex is also planning a 25,000 metre drill program on the Broulan Reef and C Zones.

In addition to Whitney and Juby, Temex’s Gowganda silver project has an indicated resource in tailings piles of 1.94 million tonnes grading 47.5 grams silver per tonne for a contained resource of 2.96 million oz. silver in the indicated category. The junior also is earning a 100% interest in the Croxall property, in the west Timmins gold district, which covers 3 km of the Porcupine-Destor Fault Zone. Lakeshore Gold’s (LSG-T) Thorne property is to the west of Croxall. Thorne hosts the Gold River Zones that trend eastward onto the Croxall property.

Temex is well financed for the next 12-24 months after an equity financing raised $8.9 million. And the junior has added heft to its boardroom with the appointments in June of Greg Gibson and Ron Goldsack. Gibson was president and chief executive of Trelawney Mining when it was acquired by Iamgold and Goldsack has been active in the investment business for decades and currently acts as a consultant to companies on corporate finance and M&A..  

Institutional investors include Sprott Inc. (16.4%), Pinetree Capital (8.5%), and Libra Advisors (5.2%). Other major shareholders are Goldcorp. (2.6%) and Teck Resources (2.1%).

At presstime, Temex was trading at $0.26 a share within a 52-week band of $0.10-0.36.

Craig Stanley of Stifel Nicolaus, who initiated coverage of the company last month, has a 12-month target price on the stock of $0.75. Siddharth Rajev and Nicole Engbert of Fundamental Research have a 12-month target price of $0.82.

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