For emerging Canadian gold mining company Monarch Gold Corporation (TSX: MQR), 2020 has been anything but a slow period. While other sectors in the mining industry have seen their operations disrupted by the Covid-19 pandemic, the team at Monarch have used the last few months to solidify their business plans, secure new capital and continue the momentum needed to grow from being an explorer/developer to becoming a 100-200,000 ounce per year gold producer.
The company has a series of properties located in the Abitibi greenstone belt of western Québec, and had already spent several years working to advance those various projects prior to the pandemic shutting the economy down. However, according to Monarch’s president and chief executive officer, Jean-Marc Lacoste, the lockdown helped them focus their energies and turn negatives into positives.
“We wanted to keep the momentum going for us,” says Lacoste. “This was very important, because Monarch has six advanced projects, we’ve got $25 million in the bank, and we will be moving forward in the next year on two main fronts: the re-start of the Beaufor Mine and the final permitting phase for the Wasamac project.”
The Beaufor Mine, located about 20 kilometres northeast of the Québec town of Val-d’Or, is 100% owned by Monarch. Acquired in 2017, commercial gold production at Beaufor actually began in the 1930s. In the decades since, the property has produced approximately 4,854,000 tonnes of ore, grading 7.5 g/t, for a total of 1,169,000 ounces of gold. Today the underground mine’s proven and probable mineral reserves total 30,600 ounces of gold.
On May 7 of this year, Monarch announced the signing of a $5 million (all figures CAD) agreement with institutional investor Caisse de dépôt et placement du Québec (CDPQ). The agreement gives the CDPQ a 3% net smelter return on royalty on gold production from the mine.
The CDPQ investment will support Monarch’s goal of re-opening the mine, which was temporarily shuttered in 2019. The company has already commenced an extensive drilling program at the Beaufor site. And, according to Lacoste, Beaufor can be production-ready within 90 days’ notice.
Building on the CDPQ’s investment in Beaufor has been the interest in Monarch’s flagship development project, Wasamac. Located just west of Rouyn-Noranda, Wasamac is another of Monarch’s wholly-owned properties and includes three mining concessions and 54 mining claims covering 21.8 square kilometres. The project is currently in the permitting phase.
Monarch’s feasibility study for the Wasamac project highlights annual average gold cash production at 142,000 ounces over 11 years. It also predicts a low production cost of $720/oz (US$550/oz), with all-in-sustaining costs of $826/oz (US$630/oz.).
This led Monarch to enter into a memorandum of understanding (MOU) with Glencore Canada (US-OTC: GLNCY) for the potential use of Glencore’s Kidd concentrator in Timmins, Ontario, for the treatment of ore to be mined at Wasamac.
Though there will need to be some upgrades to the mill to process Monarch’s ore, Lacoste says that using the Kidd concentrator will significantly reduce costs for Wasamac.
“It will shave $230 million from the original capex,” he says. “This a reduction of almost 50%. That is huge.”
Following on the Glencore MOU announcement came the news on June 11 that Monarch had closed a private placement of just over $5.4 million. This included a $4.2 million investment from Yamana Gold (TSX: YRI; NYSE: AUY), $720,000 from Alamos Gold (TSX: AGI; NYSE: AGI), and $500,000 from other sources.
For Lacoste, closing these deals in the midst of the pandemic is proof that the company has found a way to work through the difficulties created by remotely working, and bolstered their intention to become a gold producer.
“Yamana is a great partner to have, and this has created more opportunities for us,” Lacoste says. “The big players out there need ounces on their balance sheets to grow. They need to have ounces underground. And that’s what Monarch has to offer.”
At press time, Monarch’s shares were trading at 43¢ on the TSX, a 52-week high that is up 46% from this time last year, and the company’s market cap is just under $116 million.
— The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by Monarch Gold, and presented in co-operation with The Northern Miner. Visit www.monarquesgold.com for more information.