VANCOUVER — Any investor on the lookout for a junior explorer offering base and precious metal exposure via emerging in-situ metal resources and strategic land positions, might take a second glance at Balmoral Resources (TSX: BAR; US-OTC: BALMF). The junior is just such a dual threat, thanks to a pair of discoveries on a land package that exceeds 700 sq. km across the Detour trend in west-central Quebec.
The company is in the midst of a 20,000-metre drill program that encompasses its Grasset nickel-platinum group metals project and Bug Lake gold project, and it hopes to have resources out for both deposits next year.
Balmoral had been mostly a gold play due to its Martiniere property, which hosts shear-fault style mineralization at its Bug Lake and West zones typical of gold deposits throughout the Abitibi region of Ontario and Quebec.
The Bug Lake trend — discovered by the company in 2012 — features several subparallel gold-bearing zones along an early, frequently activated north–south fault system. Like deposits throughout the Abitibi, the discovery is characterized by higher grades, variable widths and silica-carbonate alteration.
“The big shift for us has come in terms of making a decision on how to allocate our resources. We’ve been really fortunate to stay well financed and active,” said president and CEO Darin Wagner, who helmed West Timmins Mining before Lake Shore Gold (TSX: LSG; NYSE-MKT: LSG) aquired it for $424 million in late 2009.
“This decision has evolved as we determine whether to focus on high-grade gold, or the fairly rare beast that is our nickel sulphide discovery. We’ve opted to be more aggressive in the nickel space, because you look at the backdrop and see how few large projects there are in good jurisdictions with strong infrastructure,” he said. “We love our gold portfolio, but there is simply more competition with good gold projects, and we think we can move nickel faster so that the dollars in the ground generate better returns.”
Exploration through early 2015 at Grasset has outlined a “significant zone” of nickel-copper-platinum-palladium mineralization at the southern end of the 16 km long Grasset ultramafic complex (GUC). Balmoral has drilled 35,000 metres at the project over the past 18 months, and outlined the promising Horizon 3 (H3) zone that remains open to depth.
The company recently wrapped up an infill and expansion drill initiative at Grasset that includes nearly 6,000 metres of drilling. The program initially focused on the outer margins of H3, though testing below previously defined lower margins has confirmed that the zone is open to depth, with “several broad intervals of sulphide mineralization” intercepted.
Assays released in early September increased the down-plunge extent of H3 by over 30%, and hint at higher base and precious metal grades at depth within the larger system. Two holes drilled along the projected plunge of H3 cut nickel sulphide mineralization over down-hole widths of 119 metres and 86 metres.
Highlights include: 43 metres grading 1.1% nickel, 0.1% copper, 0.2 gram platinum per tonne and 0.49 gram palladium per tonne from 477 metres deep in hole 15-87; and 23 metres of 0.98% nickel, 0.1% copper, 0.16 gram platinum and 0.41 gram palladium from 562 metres deep in hole 15-90a.
“It’s a traditional nickel sulphide system, so Grasset is akin to what you would see in the Raglan and Thompson belts,” Wagner said. “In terms of resource work the focus has really been on drilling out the edges, but we’ve also had good luck down underneath the core expanding the zone deeper. If we had 30 to 40 metres less overburden at H3, I don’t doubt we’d be looking at an open-pit mining scenario. At the moment, however, you’re likely dealing with a larger-tonnage underground, with good long-hole potential.”
The other priority at Grasset is metallurgical testing to determine the logistics and marketability of a polymetallic bulk concentrate, though Wagner wouldn’t rule out a separate, gold-rich concentrate due to the gold-bearing vein systems in the hanging and footwall. The property also hosts the lower-grade Horizon 1 (H1) zone, though the company’s initial resource will focus on the higher grades at H3.
Balmoral isn’t turning its back on its exploration heritage, however, and will hunt for more ultramafic-hosted targets along the GUC, since nickel sulphide discoveries like Grasset “rarely occur in isolation.” The company has drilled 1,400 metres to test more targets northwest of H3 and H1.
Assay results are pending on three holes collared on a coincident magnetic and electromagnetic anomaly at the northwestern end of the Grasset trend on Balmoral’s Jeremie property, while another two holes were drilled on other geophysical targets.
“We already know that 8 km away along trend from the infill area at H3 there are a cluster of nickel, copper and platinum group occurrences of similar metal tenure that indicate part-and-parcel the same magmatic system,” Wagner said.
“We drilled six holes up there … and we’ve actually seen some sulphide mineralization in historic holes that weren’t sampled. Clearly that’s the next target area for us, and we’ve done the airborne and ground geophysics, so it’s set up for drilling. Once things are frozen it’s a nice, quick and cheap program to run,” he continued.
Balmoral hasn’t lost its taste for gold either, and has completed a 5,000-metre drill program at Martiniere focused on the infill and expansion of the shallow part of four principal sub-parallel high-grade zones that comprise the Bug Lake gold trend.
Highlights from that work included 38 metres of 4.16 grams gold per tonne from 74 metres deep in hole 15-184 and 9 metres of 17.7 grams gold from 119 metres deep in hole 15-188.
Balmoral will test several geophysical targets that share similarities with the Bug Lake zones and the nearby Detour gold deposit. The work will follow up on a gold discovery in late 2014, 2 km northwest of Bug Lake.
“We have two projects under delineation, but we’ve stuck to our guns to keep 10% of the budget towards exploration,” Wagner said. “We refuse to give up on it, because we came up with the premise that on pretty much every major gold break on the Abitibi belt, there is at least one 5 million oz. high-grade deposit. If you look at similar geological settings around Hemlo and Red Lake, and even into Australia, that’s just the reality. We control so much ground up there that we have to keep the elephant hunt going, given the probability for discovery.”
Balmoral has stayed busy despite tough markets partly because of Quebec’s “super flow-through” financing program. Provincial legislation gives investors up to a 150% deduction for certain qualifying exploration expenses. In late 2014 the company completed a $10-million private placement, issuing 5.9 million flow-through shares priced at $1.70 per share.
Wagner says operating in Quebec offers a “huge advantage,” since the financing system gives Balmoral access to capital and controls dilution. He adds that the flow-through placements also help the company get shares into “more stable hands,” compared to traditional forms of equity financing.
“We have at least two significant shareholders who are attached to the gold side of the equation, and long-term that’s definitely where we have the most upside, given where we are in the Abitibi,&rdquo
; Wagner said. “We can satisfy that desire and offer exposure with the precious metals, but we also have this base metal discovery that can drive value. It hasn’t taken a lot of money to advance Grasset, and if you look at the economics in terms of discovery costs for metal in the ground, the return has been really good.”
Balmoral has traded within a 52-week window of 49¢ to $1.64, and closed at 51¢ per share at press time. The company had $7 million in working capital at press time, and has 110.4 million shares outstanding for a $56.3-million market capitalization.