Just four months after reporting a 3.1-million-oz. gold resource from three open-pit zones at its flagship Golden Highway project 100 km east of Timmins, Moneta Porcupine Mines (ME-T) is back in the news with drill results from a fourth zone suggesting potential for a single open-pit configuration stretching 2.5 km in length, with strong gold potential at depth, the company’s president and CEO says.
Drill results from the fourth zone, or Gap zone, could indicate a near-surface link between the Southwest zone and the Windjammer South zone, says Ian Peres, who left a career in merchant banking to join the company in August 2008.
There are another seven zones on the property less than 1 km apart that have strong exploration potential, and Moneta Porcupine has four other projects in Timmins proper that have yet to see many exploration dollars, because the junior has been advancing the Golden Highway project.
“Moneta has the fourth-largest land position in the world-class Timmins gold mining camp after existing producers Goldcorp, St Andrew Goldfields and Lake Shore Gold,” Peres says. “Our projects are located either on the Destor-Porcupine fault or on splays -associated with the Destor, and that is where the bulk of the 75 million oz. mined in the Timmins Camp have been found over the last 100 years. I left merchant banking because I saw this as a tremendous opportunity with a company that had an extensive land package, with substantial untested potential.”
The Golden Highway project has 33.5 million tonnes grading 1 gram gold per tonne for 1.07 million contained oz. gold in the indicated category and 47.8 million tonnes averaging 1.35 grams gold for 2.07 million contained oz. gold in the inferred category, at cut-off grades of 0.35 gram gold per tonne in-pit and 2 gram gold per tonne out-of-pit.
Highlights from the most recent drilling in the Gap zone at the Golden Highway project include 1.04 grams gold per tonne over 55 metres with 5.52 grams over 4 metres in hole 295A, 1.14 grams gold over 39 metres with 1.99 grams gold over 6 metres and 1.17 grams gold over 46 metres, with 2.61 grams gold over 2 metres in hole 301. Hole 303 returned 0.99 gram gold over 14 metres and hole 304 cut 0.89 gram gold over 35 metres, including 29.11 grams gold over 0.4 metre.
Mineralization in the Gap zone is similar to that in the Southwest zone and the Windjammer South zone, and continues along strike within a corridor that is more than 150 metres wide in the hangingwall sediments of the banded-iron formation along its southern contact.
The latest drilling demonstrates the strength of the near-surface mineralization, Peres says, which extends over a strike length of 500 metres within the Gap zone. It also illustrates converged gold resources in the Gap and Windjammer South zones.
The results show northwesterly gold mineralization and is characterized by increased brecciation and veining. The mineralized structure strikes northwest within a southwestern dip, cross-cutting the iron formation near the centre of the Gap zone.
“We continue to focus on the Gap zone to improve overall drilling density, and if we continue to have success it is conceivable that Windjammer South and the Gap zone will be one substantially larger pit,” he says. “And our internal modelling confirms that the resource domains connect. There is strong potential to connect Windjammer South with the Gap zone and the Southwest zone.”
Peres also notes the 55 zone — 1,000 metres west of the Southwest zone — could be extended to the west and east.
The initial resource estimate was based on 274 diamond drill holes over a 4.5 km strike of the Golden Highway project’s 55 zone, Southwest zone and Windjammer South zones, and included drilling from 1994 to 1997 by past operator Lac Minerals, a subsidiary of Barrick Gold (ABX-T, ABX-N), and by Noranda Exploration from 1983 to 1989.
Moneta Porcupine Mines is one of the longest continuously listed mining companies on the Toronto Stock Exchange. It was founded in 1910 and developed an underground mine in Timmins after discovering a large quartz vein near-surface. The Moneta mine produced 150,000 oz. at 15 grams gold per tonne between 1939 and 1943, and extended down six levels to 1,450 feet.
The mine is still part of the company’s holdings today and sits on what Moneta Porcupine now calls the Kayorum property in the Porcupine Camp. Drilling last year identified significant grades in and around the old mine workings, and it remains a significant exploration and development target for the company.
After the Second World War the company’s land package was put on care and maintenance and Moneta Porcupine stayed relatively dormant until 1986, when it began assembling claims in the Golden Highway project. A series of acquisitions up to 2009 — and other staking over time — helped build the company’s large land position.
The most significant historical drill program at Golden Highway was a joint-venture with Barrick Gold. The gold major drilled 35,000 metres before returning the project to Moneta in good standing. Moneta resumed significant drilling in 2010 and has completed more than 60,000 metres so far.
This year Moneta is planning a minimum 20,000-metre drill program within and adjacent to existing modelled pits to expand the National Instrument 43-101 gold resource, and update it before the end of the year.
Moneta’s Golden Highway project covers 100 sq. km, including 12 km of a volcanic and sedimentary belt along two branches of the prolific Destor Porcupine fault zone. The project also benefits from excellent infrastructure, Peres says. Power lines run through the project — which is less than 4 km from a major, paved highway — and the area has an abundance of skilled labour.
The project is also centered between two operating mills 25 km east and 35 km west. Lake Shore Gold’s (LSG-T) adjacent Finn-Gib project is a few kilometres northwest, and Northern Gold Mining’s (NGM-V) Garrcon project is located 5 km northeast.
In terms of its capital structure, insiders have a high stake in the company. Peres, his management team and board of directors all hold a significant number of shares in the company. “We all have skin in the game,” he says. “It’s unusual for insiders to have such a significant stake in a junior.”
He also points out that institutional investors hold 36 million shares and include Sprott Asset Management, Royal Bank of Canada, Sentry Select, Bank of Montreal and Goodman Funds.
When Peres joined the company, one of the first things he did was place large blocks of stock in close hands by taking out the large blocks held by companies such as Newmont Mining (NMC-T, NEM-N) and his previous employer Augen Capital, among others.
Killian Charles, an analyst at Industrial Alliance, initiated coverage of the company in late April with a “speculative buy” rating and a 12-month target price of $1 per share. “Moneta currently trades at a $10 per oz. valuation [roughly $14 per oz. in-pit],” he writes in an April 26 report. “For companies with deposits north of 3 million oz., the average is approximately $75 per oz.
“Moneta could be acquired by large regional producers, including Detour Gold, Osisko and Goldcorp,” he continued. “These three companies all have proximal operations and are looking for near-surface, bulk-tonnage deposits similar
to the Golden Highway project. Average acquisition cost per oz. was $95. This represents roughly a 0.6x multiple of the current in-pit, in-situ valuation.”
Mining analyst Michael Fowler of Loewen Ondaatje McCutcheon also has a “speculative buy” rating on the stock and a 12-month target price of 95¢ per share. “Moneta trades at an enterprise value of $11 per oz. gold, has a market capitalization of $37 million and is undervalued, given its resource base and large property position in the Timmins camp,” Fowler writes in a May 2 research note to clients.
The junior closed at 21¢ per share within a 52-week range of 13¢–39¢. The Toronto-based company has 168 million shares outstanding.