Shares of Balmoral Resources(BAR-V, BALMF-O) surged nearly 40% in the three trading days after the junior explorer reported results on Aug. 16 from its summer drill program at its flagship Martiniere property in Quebec’s Abitibi region, up near the border with Ontario.
The first results from the ME-series of holes discovered a new bonanza-grade, gold-bearing structure in the footwall to the Bug Lake zone, the company reported. The footwall discovery returned 272.79 grams gold per tonne over 3.9 metres across the width of the mineralized structure on an uncut basis. Adjacent intercepts of 1,530 grams gold over 0.55 metre and 409 grams gold over 0.50 metre were included in the interval.
“The markets have been awfully tough on everybody for the last twelve to eighteen months, and there have been good results from a lot of companies that haven’t moved the needle, so we were very happy to see the market respond as it did to what is obviously an exciting intercept,” president and CEO Darin Wagner said in an interview.
“I think part of it is that we’ve had ninety-odd holes over the last twelve months that told everybody Martiniere was a good gold system, but this last set of holes really said, ‘OK, this might just be an exceptional one’ . . . this thing looks like it will continue to grow, and can obviously produce phenomenal grades.”
The new footwall discovery was intersected 40 metres beneath the western contact of the recently discovered Bug Lake zone, at a vertical depth of 120 metres. The Bug Lake zone lies between Martiniere’s high-grade West zone and the ME-16 gold discovery.
So far Balmoral has had “phenomenal success” at Martiniere, Wagner says, with 10 different zones or significant occurrences, all of which could report to one central mill. The company has traced the Martiniere gold system for over 1,500 metres, and it remains open in all directions. The system is 2 km north of the Sunday Lake deformation zone, which hosts
Detour Gold’s (DGC-T) Detour gold deposit 45 km west. The Detour Lake gold mine is expected to start production in the first quarter of 2013. (The former Detour Lake mine, operated by Placer Dome, produced 1.8 million oz. gold between 1983 and 1999.)
“When we began evaluating and collecting these assets in the Detour belt, we looked at the size of the system at Detour where there are twenty million to twenty-five million ounces sitting there, and then along the next one hundred kilometres of the same belt virtually nothing, that’s not how these Archean gold belts behave,” Wagner says. “Conceptually, there had to be a lot more gold in this belt than just Detour Lake. That was the concept we started with, and it’s a concept that has proven correct. There is a lot more gold along this trend, and much like elsewhere in the Abitibi, it’s good grade.”
Wagner says it is a question of time and drill holes, and letting the system demonstrate how good it is, and how big it can be. “To this point we can’t define the edge of the system,” he adds, “which is a really good thing to say as an explorer.”
Wagner notes that multiple high-grade gold zones like those at Martiniere are the principal hallmark of all of the large gold systems in the Abitibi region of Ontario and Quebec, and that these types of systems can host a number of individual gold deposits stretching to vertical depths of more than 1,000 metres. He also points out that it is rare for a single company to control an entire system, as Balmoral appears to be doing at Martiniere.
To date the Martiniere system is showing traits “not dissimilar to those associated with large gold mining complexes in Val-d’Or, Timmins and Kirkland Lake,” he asserts. It has a “similar system of mineralization, the same controls as you see in major multi-million ounce camps down there, and its grade characteristics are similar.”
Balmoral’s huge land position in the Abitibi greenstone belt — a belt of ancient rocks that stretches through Quebec and eastern Ontario that has produced more than 130 million oz. gold — stretches for over 82 km along the Detour-Sunday Lake deformation zone (DSDZ), one of the principal gold-bearing fault systems in the Abitibi.
When asked why this part of the Abitibi greenstone belt has been so underexplored, Wagner chalked it up to three principal reasons: the area is covered by overburden with no outcropping, providing little for prospectors and early miners to work with; historically, access to the area has been poor with few roads, making exploration expensive; and the relatively high-cost historic underground operation at Detour was not much of a drawing card, when gold was selling at US$350 per oz.
Other factors that allowed Balmoral to get control of such a large land package in the area included fallout from the financial crisis of 2008. “Difficult market conditions like the ones today or in 2008 put companies under stress, and create some pretty good opportunities that are not available otherwise,” he explains.
And with a bit of time, patience and drill dollars, there is potential to discover another Martiniere — or two, or three — along the trend, he declares. “It speaks to really how underexplored the whole area is up there, and the potential of the belt to work itself into a camp like Timmins or Kirkland,” he says. “Obviously Detour is going to be a big magnet, given the scale of that operation, for things going forward. But if there are a few more Martinieres out there, it’s going to be a pretty special place to be. It’s sort of the final frontier for discoveries in the Abitibi of that magnitude.”
Wagner, a 20-year veteran geologist, is not to be underestimated. After spending the first decade of his career at Noranda, now Xstrata (XTA-L, XSRAF-O), and Cominco, now Teck Resources (TCK-T, TCK-N), Wagner went on to New Millennium Metals, which merged with Platinum Group Metals in 2002. In 2005 he became president of Sydney Resource, and in 2006 engineered its merger with Band-Ore Resources to form West Timmins Mining. The Thunder Creek discovery on the West Timmins project in Timmins led to the sale of the company in late 2009 to Lake Shore Gold (LSG-T, LSG-X), in an all-share deal worth $424 million.
So far Martiniere has been broken down into various zones: Martiniere West, the Central zone, the Bug Lake zone and the ME-16 zone. Balmoral says most of the 9.5 by 7 km property remains untested.
The mineralization at Martiniere is typical of gold deposits in the Abitibi region, Wagner emphasizes, noting that it exhibits a strong element of shear-fault structural control; is gold dominant with minor associated silver; demonstrates strong association with lithologies and lithological contacts; and so far shows vertical continuity. According to the company, the vertical dimensions of the large gold deposits in the Abitibi can exceed their horizontal dimensions by a factor of 3 or 4 to 1. Indeed, several deposits in the region, Balmoral says, have been mined to vertical depths of more than 1,000 metres at average grades of 7 or 8 grams gold per tonne.
In June the company reported drill results from its winter drill program at the Martiniere We
st gold zone. Highlights include 7.1 metres of 4.38 grams gold per tonne from hole 12-53, and 2.5 metres of 5.65 grams gold from 12-59. The Martiniere West zone extends over 375 metres along strike, over 250 metres vertical depth and over 340 metres down-plunge.
South of Martiniere is the former producing Selbaie deposit that produced 53 million tonnes of 1% copper, 1.9% zinc, 41 grams silver per tonne and 0.6 gram gold. Last year Balmoral discovered a volcanogenic massive sulphide deposit (VMS) on the Martiniere property, and recently reported a second potential VMS discovery almost 6 km east from the property’s principal gold zones. So far the initial discovery has proven predominantly iron (as pyrite), but drill hole 11-09 returned a 0.5 metre intercept of 74.60 grams gold and 1,390 grams silver, along with strongly elevated copper, zinc, cadmium and tungsten. The recent discovery returned over 25 metres of anomalous zinc mineralization, which the company says is encouraging.
At press time Balmoral was trading at 93¢ per share within a 52-week trading range of 49.5¢ and $1.30 per share.
Eric Lemieux, a mining analyst at Laurentian Bank Securities, has a “speculative buy” rating on the stock, with a target price of $1.50 per share. “We continue to believe that the initial assay results are indicative of an expanding gold system,” he wrote in a research note on Aug. 17.
Lemieux initiated coverage of the junior in January, and says his net asset valuation of the company at $132 million, or $1.49 per share, is mainly based on Balmoral’s extensive land position on the Quebec side of the DSDZ, and a 1.6 million oz. potential mineral gold resource he sees emerging at the Martiniere property.
In addition to Martiniere, Balmoral has four other principal properties in the northern greenstone belt of the Abitibi: Fenelon, Detour East, Grasset and N2. All of them, with the exception of N2 in Ontario, are located along the Detour-Sunday Lake trend — which stretches through northwestern Quebec and northeastern Ontario — and Balmoral controls about 82 km of strike length of this DSDZ on the Quebec side, Lemieux points out in a 20-page report on the company in January.
“The company is in the midst of aggressive exploration programs in a potential emerging gold district that has seen sporadic exploration,” he wrote in the report. “Detour Gold’s nameplate world-class mine being built on the Ontario side of the border along the trend is testament to the area’s reassessed and raising potential.”
Lemieux adds that while the junior was founded in 2010, it has already “assembled — in a relatively short time span — an extensive land package within the DSDZ, the most northern structural break that has seen lesser exploration.”
The company’s Fenelon deposit, to the east of Martiniere, hosts a 40,000 oz. high-grade lode-gold zone north of the DSDZ, and Balmoral holds an option to purchase a 100% interest. Its early stage Grasset property is to the east of Fenelon, near a fault splay of the DSDZ, and the Detour East project is on the border between Quebec and Ontario along the Detour Gold eastern border, a few kilometres east of the Detour Gold deposit.
The Northshore property (N2) is 30 km southeast of Matagami, Ont., and located along the Casa Berardi-Cameron fault zone. It is adjacent to the recently commissioned Vezza gold deposit of North American Palladium (PDL-T, PAL-X).
N2, near Schreiber, is Balmoral’s only asset in Ontario. The property is undergoing drill testing, with exploration funded by partner GTA Resources and Mining (GTA-V).