VANCOUVER — Orex Minerals (TSXV: REX; US-OTC: ORXIF) has struck a letter of intent (LOI) with Agnico Eagle Mines (TSX: AEM; NYSE: AEM) on the junior’s Barsele gold and base-metal property in Sweden’s prolific Skelleftea mining district, 600 km north of Stockholm.
Under the LOI, Agnico would acquire a 55% interest by paying US$10 million, and another 15% by completing a prefeasibility study on the project.
“Our intention was to entice a major mining company to get involved,” vice-president of exploration Ben Whiting told The Northern Miner during an interview. “And before we even had the chance to bring the deposit up to its full potential, Agnico came knocking on our door.”
Orex acquired Barsele in 2011, and since then the company has almost doubled the resource to 14.1 million tonnes at 1.2 grams gold per tonne for 547,000 indicated oz. gold, and 20.2 million tonnes at 1 gram gold for 627,000 inferred oz. gold (with a 0.6-gram-gold cut-off).
Whiting points out that the resource model extends from surface to 300 metres deep for an open-pit, but drilling shows mineralization reaches at least 450 metres. One such intercept includes 0.6 gram gold over 110.6 metres to 472.9 metres deep.
“We haven’t even hit the bottom,” he said. “So Agnico will need to decide how far they’ll take exploration before it goes into production.”
The granodiorite-hosted orogenic gold deposit is divided into three high-grade zones — Central, Skirasen and Avan — that span over 300 metres wide and 9 km long.
Farther north is the company’s volcanogenic massive sulphide (VMS) Norra zone, which has indicated resources of 110,000 tonnes grading 3.1 grams gold, 30.27 grams silver and 0.5% copper for 11,000 oz. gold, and inferred resources of 310,000 tonnes grading 1.62 grams gold, 12.69 grams silver and 0.3% copper for 16,000 inferred oz. gold (with 0.6-gram-gold cut-off).
Whiting adds that the 300 sq. km property falls on the intersection of two regionally trending, metallogenic belts named Gold Line and Skelleftea.
Gold Line is an underexplored northwesterly striking belt of orogenic, intrusive-related gold deposits hosted within a variety of deformed hosts. One such example includes Dragon Mining’s (ASX: DRA) operating Svartliden gold mine, 45 km south of Barsele.
Svartlinden has proven and probable reserves of 410,000 tonnes grading 2.2 grams gold, and measured and indicated resources of 793,000 at 3.1 grams gold (using a 1.3-gram-gold and 3-gram-gold cut-off for open pit and underground). The mine reached production in 2004, and operates at an average cash cost of US$982 per oz. gold.
The Skelleftea belt strikes east across northern Sweden and is known for its gold-rich VMS deposits. The prospective domain got its start with the world-class Boliden deposit — the European Union’s richest gold mine — located 60 km northeast of Barsele. Boliden was mined until 1967 and produced over 4 million oz. gold at average grades of 15 grams gold, along with copper, zinc and silver.
“Agnico also sees big potential for VMS deposits on the property,” Whiting says. “Their interest shows that our properties have value, and their top-notch technical team and experience with working in this part of the world will drive the project forward.”
Orex shares have traded with a 52-week window of 21¢ to 43¢, and closed at 23¢ at press time. The company has 101.9 million shares outstanding for a $23.9-million market capitalization.