Alamos Gold (TSX: AGI; NYSE: AGI) has spent $1.9 million for an 11% stake in Red Pine Exploration (TSXV: RPX) on an undiluted basis and 19.99% on a partially diluted basis.
The investment was part of a private placement of flow-through and non-flow through units that Red Pine closed on Dec. 31.
The proceeds will be used for exploration on the junior’s Wawa gold project, 2 km southeast of the town of Wawa, Ont., and 40 km southwest of Alamos Gold’s Island mine.
Quentin Yarie, Red Pine’s CEO, said the addition of Alamos as a strategic investor was a “major step in validating” the project “as a top-tier exploration property.
“Alamos Gold was interested in Red Pine’s Wawa gold project given its proximity to its Island gold mine, acquired via its $936-million acquisition of Richmont Mines in November 2017, which has become a major expansion project for Alamos with significant discoveries at depth,” Yarie says in an email to The Northern Miner. “The prolific gold-producing region has been a focus amongst intermediates and majors of late following the growth in Wesdome Gold Mine’s ($1.4-billion market capitalization) Eagle River complex and Newmont Goldcorp’s Borden mine (acquired for $526 million from Probe Mines in January 2015), which began commercial production in October 2019.”
Alamos has three operating mines in North America: Young-Davidson and Island Gold in northern Ontario, and Mulatos in Mexico’s Sonora state. Its development-stage projects span Canada, Mexico, Turkey and the United States.
Alamos completed several site visits to the Wawa project during 2019, including by senior members of its technical and exploration teams, Yarie notes. “We have also been working closely with Alamos to plan our ongoing exploration program to better understand the geological potential of the project and test new targets, including those at depth, where our peers in the region have had tremendous success.”
Red Pine increased its stake in the Wawa project from 60% to 64.5% in mid-December. Red Pine’s joint-venture partner, Citabar, owns the remaining 35.5% stake.
The property has hosted numerous gold mines with historic production of more than 120,000 oz., but the mines were owned by different operators and were never geologically connected.
The largest gold deposit found at the project so far is Surluga, which contains 1.2 million indicated tonnes grading 5.31 grams gold per tonne for 205,000 oz. gold and 2.36 million inferred tonnes averaging 5.22 grams gold per tonne for 396,000 ounces. Surluga is open along strike, and depth and vein thickness range between 3 and 30 metres.
The Minto mine south deposit has 105,000 indicated tonnes grading 7.5 grams gold for 25,000 oz. gold and 354,000 inferred tonnes grading 6.6 grams gold for 75,000 ounces. It occurs in shallow, narrow, high-grade veins and shears outside the Surluga deposit envelope, and mineralization remains open in all directions.
In addition to the two deposits, Red Pine has found six gold-bearing structures on the property that combined form the Wawa gold corridor, a structure that extends for more than 6 km on the property. The gold-bearing structures include Cooper (1 km northeast of Surluga); Hornblende; the Grace mine; Minto B; Parkhill #4-Minto Lower; and the southern extension of the Jubilee shear zones.
In November, the company announced the discovery of three gold zones. Highlights include a discovery east of the Surluga deposit (in the footwall) of 2 grams gold per tonne over 11 metres starting from 144 metres in drill hole 19-282 and 6.13 grams gold over 3 metres from 153 metres in drill hole 19-283, and a discovery west of Surluga (in the hanging wall) of 4.72 grams gold over 3 metres in drill hole 19-276 starting from 88 metres’ depth and 5.13 grams gold over 2 metres from 218 metres in drill hole 19-277.
In addition, drill hole 19-282 returned 5.21 grams gold over 1 metre from 313 metres. This assay was intersected below the Surluga deposit.
Red Pine’s private placement consisted of 25.9 million flow-through units and 82.1 million non-flow-through units of the company — both at 3.5¢ per unit — for $3.8 million in gross proceeds.
Each flow-through unit was made up of one flow-through common share of the company and one-half of one non-flow-through common share purchase warrant. Each non-flow-through unit comprised one common share (issued on a non-flow-through basis) and one whole warrant. A full warrant is exercisable for one common share at 5¢ per share for two years after the Dec. 31 closing date.
“Alamos’ participation in Red Pine’s private placement demonstrates their belief in the Wawa gold project’s potential and adds technical merit to a project we have long believed had untapped resource-expansion opportunities,” Yarie says. “Red Pine now has the funds required to complete a detailed exploration and drilling campaign in 2020, testing several high-quality targets along strike and at a depth below 350 metres, where little drilling has been completed to date.”
At press time, Red Pine was trading at 5¢ within a 52-week range of 2.5¢ to 8¢.
The junior has 477 million common shares outstanding for a $24-million market capitalization.