Amex Exploration Has A Unique High-Grade Gold Project In Quebec
I’m excited to report that Amex Exploration is a new sponsor at Rocks And Stocks News. I originally started following them upon their discovery holes at the Perron project in Quebec. Initially what caught my attention was the high-grade gold in their discovery holes.
Since then, I have continued to be impressed with the exceptional continuity of high-grade gold at their High Grade Zone (HGZ). We often hear mining people say Grade is King. If a project has patchy distribution of high-grade gold it will struggle to become a profitable mine. What is needed is continuity, so the reality is that Grade + Continuity are King. The image below shows the remarkable continuity of the high-grade gold in the HGZ and the nearby Gratien zone.
A highly respected expert on orogenic gold systems, Damien Gaboury, co-authored a scientific paper about Amex’s HGZ. Noting that it had unique high-grade gold continuity. The abstract of the paper begins with, “The Perron deposit, located in the northern part of the Archean Abitibi belt, bears some of the highest gold-grade mineralization for orogenic-vein-type deposits worldwide (High-Grade Zone: HGZ).”
Right beside the HGZ is the Denise Zone which is an open pit deposit. What makes Denise so impressive is that for an open pit deposit, it has a very handsome grade that is significantly higher than many open pit gold mines currently in production.
Another added benefit to the HGZ and Denise zones being right beside each other is that the Denise Zone could be accessed through an open pit that, as it is mined, gives easy access to the HGZ. In addition, it appears that the deeper Amex drills in the Denise Zone, it is vectoring towards the HGZ. That potential intersection is very exciting as it could have been the pathway that the mineralizing fluids followed up from deeper making its way into both the Denise Zone and the HGZ.
Orogenic gold systems have very deep roots that come from the heat engine for the gold mineralizing system. There is compelling evidence that there is a very large and powerful heat engine to the entire system.
One key piece of evidence is the Denise Zone and HGZ, one is a high-grade open pit gold target and the other is a high-grade underground style gold zone with exceptional continuity. Further evidence is that they have found a group of 13 gold zones in close proximity. This suggests the potential that there is a single very powerful orogenic gold heat engine that has pumped the fluids into the zones.
They have drilled hundreds of thousands of metres with a dual focus. One is to drill enough into the key zones to include them in a maiden resource. Secondly, doing exploration drilling with a focus on finding new discoveries. They have been very successful with both of these goals.
Pending Developments
They are currently working on a maiden resource estimate that, although a snapshot in time, will give investors details of what has been estimated from the current drilling that has drill hole density to make it into a resource estimate.
When I look at a resource estimate, there are three key details I focus on. The ounces in the resource is one, while I keep in mind that at some point in the drilling they have to cut off the holes that go into it so they can prepare the resource. It is the initial estimate and base case from which to build. I also want to understand the drilling that can increase the size and move ounces from inferred into measured and indicated categories. It is the beginning of the process to estimate how big things are and can be.
Another important detail is the cut-off grade. If it is low, it is the first indication about the economic potential of the project. Some of the factors that go into the cut-off grade take into account the potential costs to mine, which can be affected by the style of deposit, the mining method and how close it is to mining infrastructure. The lower the better and I have a feeling it will have a low cut-off grade due to the geology, and it being within a few minute drive from a nearby mining town with a long mining history called Normétal. The town was built for the Normétal mine and this is where the Amex team stays and where their core shack is located.
Another crucial detail is the average grade. If there is a big gap between the cut-off grade this is the first indication that the project has the potential to be a mine with a high internal rate of return (IRR). Low cut-off and wide margin to the average grade is what leads to a profitable gold mine that quickly pays back its capex.
Many times during my career, I have seen plenty of resource estimates that then take many years to have economics wrapped around them. This happens because there are issues with the quality of data that went into the estimate and how extensively they were drilled and the realistic numbers used for size, cut-off grade and average grade.
I’m always impressed when a company plans to quickly move to a preliminary economic assessment (PEA). I call this moving to a PEA while the ink is still drying on the MRE. When that happens, it tells me management has high confidence in the quality of the data in their MRE and that it will look very good when the economics in a PEA are wrapped around it.
The company has mentioned that they are concurrently doing both a PEA and MRE. First the MRE will come out, likely in September, followed within a couple months with the PEA.
This is a very rapid progression from MRE to PEA, it is rare that companies do it on a rapid timeline like they are working on. It tells me that the MRE won’t be an arm waving resource estimate, it will have realistic constraints on it that the company is confident will pass the test when they do the PEA.
In addition to the work to complete an MRE and PEA, they have not stopped their aggressive drilling to grow the size of the known zones and also explore for new discoveries.
In Closing
Since making their initial discovery of high-grade gold a few years ago, the progress they have made is impressive. They have shown the exceptional continuity of the high-grade gold in the HGZ, have found an open pit deposit with high-grades for this style of deposit and they are right beside each other.
Plus, they have found an impressive group of new discoveries in close proximity to the HGZ and Denize Zone.
Now they are getting ready to produce a MRE that will be closely followed by a PEA.
I am always on the hunt for big discoveries that can show the potential to be future mines. There are not nearly enough due to long-term under investment in exploration that has resulted in success finding important gold discoveries.
The major mining companies are struggling to increase production and replace what they mine due to the insufficient success in exploration. Perron fits the bill of what the gold miners need which is why they have already received a strategic investment from Eldorado Gold.
Another issue that is faced by explorers is jurisdiction and access to their projects. Perron is in Quebec which is one of the best mining jurisdictions in the world. Additionally, it is located within a few minutes drive from a nearby mining town and has road access. It is so good that you can drive in a car right to the project and have cell phone coverage.
When I look at all the various factors on the Perron project, it stacks up as a rare gold project that is just what larger gold miners need and are on the hunt to buy.
All the best,
Allan Barry Laboucan
Disclosure
Amex Exploration is a sponsor of Rocks And Stocks News, content creation about them is for the benefit of the company. Sponsors also benefit readers of the reports as it makes content creation possible for no charge to readers.
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