Most people know Nexus Gold (TSXV: NXS; US-OTC: NXXGF) from its portfolio of five gold projects in Burkina Faso, in particular its flagship near-surface Bouboulou orogenic gold deposit.
But security risks in West Africa in recent years, including an attack last year on Semafo’s Boungou mine in southeastern Burkina Faso that left 39 people dead and wounded 60 others, underscored the importance of diversifying the company’s risk, its chief executive says.
“Although we love working in this area of the world, there are jurisdictional and geopolitical issues you have to deal with when running operations there,” Alex Klenman said in an interview. “As good as West Africa is in terms of mining opportunities, it has roadblocks in terms of attracting North American investors. Of greatest concern is the increase in attacks by Islamist insurgents on mining operations in the region.”
That’s why Nexus Gold started to look for projects in other jurisdictions like Canada.
“In late 2018 and early 2019, we started to seek out Canadian-based assets that would allow us to hedge against more bad news coming out of West Africa as well as opening up our investor base,” Klenman said.
Ultimately the company ended up in the Red Lake region of northwestern Ontario with the acquisition in February 2019 of the McKenzie gold project, a 13-sq.-km property that hosts nine documented historical gold occurrences and had seen only limited exploration.
The company quickly got down to work, collecting about 60 grab and chip samples last summer that yielded assays including 135.4 grams gold per tonne and 9.3 grams gold per tonne on the northern portion of the property.
Buoyed by these results, the company engaged Rimini Exploration & Consulting as geological consultants on the project and tasked them with gathering historic data on the property.
In the fall of 2019, Rimini provided Nexus with a compilation of datasets comprising regional geological and geophysical data.
The compilation revealed multiple historic grab samples previously unknown to the company. These samples included high-grade assays ranging from 16.65 grams gold per tonne to 680.3 grams gold per tonne.
The findings aligned with assays from several high-grade historical grab samples already reported by the company, Klenman said, which returned gold values ranging from 9.37 grams gold per tonne to 331.14 grams gold per tonne.
Rimini’s report also included historical intercepts from a drill program conducted by the previous owners in 2005.
The highlights included 8 metres grading 7.49 grams gold per tonne and 6 metres grading 2.1 grams on the southern section of the property, and 1 metre grading 1.89 grams gold and 1 metre grading 1.97 grams gold on the northern part.
Rimini’s data also indicated that little to no exploration had been conducted under the lake portion of the property. However, the regional geological data suggests that several northerly trending geophysical trends extend below the lake itself.
A preliminary review of historical lake sediment sampling from 1989 indicate anomalous gold values of 5.45 grams gold, 5.28 grams gold, and 3.98 grams gold.
“The additional data from Rimini provided us with a much better understanding of the project,” Klenman said. “The wealth of high-grade historical samples and drill results indicated high-grade gold mineralization present in multiple locations on the project.”
In the fall of 2019, Rimini undertook a further 60-chip sample ground reconnaissance on the property, which traced the mineralization to the eastern boundary, and more precisely determined the areas of interest in the south of the property.
The company then used the historical data and the findings from the two prospecting programs to verify and prioritize drill targets for an initial drill program.
In May this year, the company acquired two additional claims located in the property’s immediate vicinity, adding 0.5 sq. km to the western portion of the McKenzie Island area of the project. The new property now covers approximately 14 square kilometres.
“A number of the historical samples were from McKenzie Island,” Klenman said. “By increasing our land position on the island, we could potentially add further value to the project.”
The company commenced a 1,000-metre drill program in June, with a plan to drill up to 10 holes to depths between 100 and 200 metres.
The drill program, Klenman said, was designed to test the mineralization potential of several gold targets occurring within an east-west trending corridor along the property’s southernmost section.
“We were keen to test areas that had historically shown high-grade gold mineralization as well as assessing additional targets in the immediate area to increase the initial drilling campaign,” Klenman said.
In July, the company decided to double the size of the drill program to 2,000 metres after seeing visible gold in a number of the drill samples.
Doubling the drill program “was a bit of a gamble,” Klenman said, “but that’s what exploration is, particularly at the early stage of a project. We weren’t wildcatting as we knew there was something there.”
The company reported assays results for the program’s first six holes on Aug. 17.
The highlight was drill hole 2020-006, which intersected 3 metres grading 13.25 grams gold starting from 69 metres downhole, including 1 metre grading 36.20 grams gold.
“It’s an excellent start and we’re pleased with the initial drill results,” Klenman said. “It’s always exciting to see visible gold in core samples, and the further we get into the drill program, the more interesting the assays become.”
Holes 2020-005 and 2020-006 were drilled from the same location, and both successfully intersected the same blue-grey vein, he said.
Hole 2020-005 intersected 1 metre grading 3.42 grams gold from 46 metres downhole, including a higher-grade core of 1 metre grading 5.27 grams gold.
All six holes from the initial phase one program returned elevated gold assays with the last three holes, 2020-004, 2020-05, and 2020-06, reporting visible gold mineralization, Klenman noted.
“So far, we’ve only received around results 700 metres of the 2,000 metres program,” he said. “We’re keen to find out what the other seven holes will return, the assays from which we expect to receive in the next week or so.”
Based on the results from the first six drill holes, the company now plans a followup program by year-end to identify additional targets, and hopes to complete an additional 2,000 metres to 4,000 metres of drilling.
At press time in Toronto, Nexus was trading at 11¢ per share within a 52-week trading range of 3¢ and 14¢. The company has 169 million common shares outstanding for an $18.7-million market capitalization.