Could Newfoundland Be The Next Abitibi
In this report I discuss New Found Gold, Dryden Gold, Exploits Discovery, McEwen Mining, Canadian Gold Corp., Sokoman Minerals and Galantas Gold.
The Abitibi Mining Camp in Canada, is one of the most prolific gold mining camps anywhere in the world. Mining began in this camp in 1901, and since then there have been 100 mines that have collectively produced around 170 million ounces of gold.
A key geological characteristic of the camp is that the mines are found within the Abitibi Greenstone Belt, which is estimated to be 2.6 to 2.8 billion years old. These are very old rocks that play a key role in orogenic gold systems.
Two examples of orogenic gold systems that made for spectacular mines are the Red Lake Mine in Ontario and the Fosterville Mine in Australia. These two mines were company makers for Goldcorp in Red Lake and Kirkland Lake Gold at Fosterville. There is much to learn from these mines that are important when looking at any orogenic gold system.
In Red Lake and at Fosterville they struggled for many years mining within the first few hundred metres below the surface. Then they went deep into their respective mines to find the bonanza-grade gold zones of their orogenic gold systems. Mining at depth were company makers for both Goldcorp and Kirkland Lake Gold.
In the early production in these two mines, they were focused on the top of the orogenic gold systems. Yes, there was high-grade to bonanza-grade gold near the surface, but the issue was continuity. In a gold system if the gold is sporadic with a little here and some over there, but with waste rock in between, you don’t get to just mine the gold you also have to go through the waste rock. When that happens, you have a struggling mine.
The game changers at Red Lake and Fosterville were when they went deeper into those orogenic gold systems to find the bonanza-grade gold portions of the systems. Why this happens is that as you get deeper, you get closer to the heat engine where the temperature and pressure is right to drive the gold upward. In orogenic gold systems, that heat engine can be very deep, thousands of metres.
When you get deeper into an orogenic gold system, a couple key things happen. At the top of the system, there is often fine grained gold and as you go deeper the gold gets more coarse. I remember years ago going to the PDAC and Goldcorp would bring samples of rock to display from deep in the system. It was amazing. It looked like it was half quartz and half gold.
Fine grained gold and coarse grained gold are both considered visible gold as you can see them. This is important to keep in mind when looking at an orogenic gold discovery because it helps you understand if they are high in the system or getting closer to the heat engine that caused the gold mineralization.
In orogenic systems at the top of the system, they can have very high-grade gold with no visible gold or in gold that is fine grained in little specks of gold. It’s when the gold gets coarse in an orogenic gold system that things get really exciting. Later in the report, I will show you an image of coarse grained gold.
If you want to get a little gold fever, do a Google image search for Goldcorp and Fosterville gold specimens. That coarse gold is what dreams and extremely profitable gold mines are made of.
Another important thing to think about when trying to understand an orogenic gold system is how the gold makes its way from the deep heat engine up to closer to the surface. Deep crustal faults, or as I prefer to call them cracks in the earth, are the path that gold makes its way from the heat engine up toward the surface.
When it gets close to the surface, secondary faults or cracks are very important. The gold can be in the deep crustal crack or in the secondary cracks. New Found Gold has done important seismic work that sort of gives you a CAT scan of the rocks going down very deep. When I talk about them later in the report, I will share images that will help you see the role crustal cracks and secondary cracks play in their orogenic gold system discoveries.
Understanding the basics of an orogenic gold system can give investors a checkbox of what goes into finding the bonanza-grade gold zones in an orogenic gold system. One is you need very old rocks. Another is that you need deep crustal faults cutting through the old rocks because they are the cracks in the earth that the gold bearing fluids use as a path of least resistance to make their way from very deep in the crust upward.
As those gold bearing fluids travel along the deep crustal cracks and get near to the surface, secondary cracks in the rocks become important as does folding in the rocks and dilations in the rocks.
These traps are important because it is where the rocks open up to create gold zones that can be mined. It is where the rocks are well prepared to allow the gold bearing fluids to pool up into zones that are spectacular to mine.
When Goldcorp and Kirkland Lake Gold were mining their respective bonanza-grade zones, they both had low costs of mining, extreme high-grade gold, with very high margins that generated remarkable free cash flow.
They dramatically outperformed their peers due to being low cost producers of extreme high-grade gold. This is something investors should pay attention to when looking at any gold miner. Low costs of production of gold that generates a lot of free cash flow is where investors can find outperformance. If the cost of production is low, and the grades are high, it leads to remarkable free cash flow, which is the ultimate test of a great mine.
The production in the near the surface portions of the Red Lake Mine and Fosterville are instructive in understanding why it takes more than just grade. They had high-grade near the surface, but the problem was that it was patchy.
If you have high-grade gold that is spread out with gaps of low-grade to no grade between the high-grade zones, you will have a struggling mine. Which emphasizes that you need grade and continuity. So the old saying in mining that grade is king should also include continuity. In reality, grade and continuity are truly king.
One of the first things that I try to determine when looking at an orogenic gold system discovery is whether or not the company is focused on the depth potential. It is easy for an exploration company to get enamored with the near the surface portion of an orogenic gold system.
They see high-grade gold that they can reach with relatively short drill holes. Drilling deep is not cheap and this becomes a bigger issue when going through a bear market in gold stocks like the one we have recently gone through.
I do believe that with gold making new record highs against every global currency, including the US dollar, that we are about to see a more bullish market for gold stocks. This will be a relief for the underfunded explorers.
Another issue for exploration of an orogenic gold system for investors to understand is that they are found in narrow, steeply dipping veins. They are small zones in the grand scheme of gold mining, but with the high-grade gold in those small zones when you find a mine they can be cash cows.
I get the issues for explorers of orogenic gold systems and completely understand why they can get focused on the near the surface gold mineralization. One is that they can hit high-grade gold near the surface with shallow drilling, which is much cheaper than chasing the depth potential.
Plus, they are trying to follow narrow, steeply dipping, high-grade veins that can go through twists and turns underground. Drill in slightly the wrong direction and you could easily miss the gold vein. It doesn’t mean it stopped, it does mean you may have only been a few metres beside it. Report a miss and investors punish the stock, even though they are most likely still in the ballgame of trying to find an important orogenic gold system.
That is one of the reasons exploration is such a tough game. You are dealing with Mother Nature, it takes time, money and patience to figure out any discovery. But, investors, especially in a bear market, have little patience and want perfection.
I do believe that we are at the cusp of a healthier market for gold exploration and that due to the prize of what can be found in the depth potential of an orogenic gold system, although challenging, is worth chasing. It should make it so that companies can get the money to do the right job and be given the time to find what they are looking for.
This is where I want to give some examples of orogenic gold discoveries that I follow closely. One in particular, New Found Gold, has recently released geophysical data that could help them unlock the depth potential at their Queensway project in Newfoundland.
The work they are doing is not just important to understanding their discoveries, but it is also helpful in understanding other important orogenic gold discoveries.
The image above comes from New Found Gold’s March 4, 2024 news release. An image tells a story and this one is very good at showing them the pathway to unlock the depth potential and possibly find a series of extreme high-grade gold zones. It is also helpful for investors when they are looking at other orogenic gold discoveries.
At the top of the image is the surface. Then below that in the background is the seismic data that shows sort of a CAT scan of the rocks. In red are three crustal faults, Appleton, Appleton Parallel and Keats-Baseline faults. In yellow are interpretations of a series of secondary faults. In light purple are high-grade gold veins they have drilled into.
One thing I would point out is that their drilling is limited to the first few hundred metres of the surface, but it looks like they haven’t even reached the exciting part of the system yet. In reality, I think that they have only scratched the surface.
Another thing that is readily apparent is that the network of faults is very complex, which is exactly what you want to see in an orogenic gold system. It doesn’t make it easy to drill them, but it is what you see in important orogenic gold systems.
When it comes to the gold veins, the first one that stands out to me is the Keats vein that is vertical for a good distance, and is lined up exactly with a yellow line. Then it takes a turn and follows the Keats-Baseline Fault, then changes direction again in two spots.
Just think about how challenging that is to drill. If you drill an angled hole and come in from the wrong direction, you could miss it entirely. Or come in from another direction and think it stops. They have done an impressive job hitting what they have before seeing the seismic data.
I can imagine they will want to drill below the vertical part that lines up with the yellow line. Plus, keep drilling deeper along the Keats-Baseline Fault. Another important target that stands out to me is right below the point where there are two veins that change direction coming off the Keats-Baseline Fault. Right below there is a yellow line that could be important for extending what is just above.
Another target that stands out to me is the vein right underneath the word Cokes. I’m not positive, but pretty sure there is a structure just beside it that is vertical and cuts through the Glenwood Shear. It looks like that vein stops, but it could be that there is a secondary fault there that is the source, not the red line that it seems to be following.
A deeper target that stands out to me is on the Keats-Baseline Fault where there are three yellow lines right below it. The intersection of where deep faults and secondary faults cross is a good area where the rock preparation is ideal for finding gold zones.
You can see a bunch of points where the secondary faults in yellow crosscut each other; those are also great places to drill for veins. The image above is just one slice looking at a small portion of their large land package. The next image is another slice.
In this image, the Monte Carlo veins are very interesting. It looks like there are three coming together into one that just stops. You have to remember that the gold mineralization starts very deep and comes up. That one vein has to go somewhere. There could easily be a vertical secondary fault right at the end that is the path to follow.
The Lotto vein is very exciting as well, it looks like two veins that come together into one. When they come together they seem to be following one secondary fault, then it drops straight down lining up with another secondary fault.
At the time they put this image out, they had only interpreted about half of it. They still have a lot more interpretation work to do, but it clearly shows they have pathways to follow the veins deeper into the orogenic gold system. When they do, I think the gold will get substantially more coarse.
The first two images are of the seismic data from just a few of the veins they have drilled into. The third image is a plan view showing all the veins they have drilled into.
The seismic survey covers their entire property. It is clear from all the drilling they have done that this is an extremely large system with potential to find multiple mines. That kind of a situation doesn’t come along very often, they were so early to realize the potential for orogenic gold systems here that they have a land package that would be enviable if in the Abitibi Camp.
I’ve heard some commentary arguing that they should move toward doing a resource estimate on what they have found so far. I don’t agree as resource estimates have a way of capping a project for investors, plus it puts them in the early part of the development discount window of the Lassonde Curve.
Even more surprising is that some think they should move toward mining the near surface deposits. This would be a very risky bet, in the recent past we have seen Novo Resources and Pure Gold rush their projects into production with disastrous outcomes. They could very easily fall into the problems that Goldcorp had in the early days of mining in Red Lake and at the Fosterville mine.
Now that they have the seismic data to help them target deeper to see if they have bonanza-grade gold mines like Goldcorp did and at the Fosterville mine they could be very close to absolutely hitting it out of the park with what could be the most important orogenic gold discovery ever found worldwide.
Dryden Gold has an intriguing orogenic gold exploration project near Dryden, Ontario which is not far from Red Lake, Ontario. At the PDAC, I met with Maura Kolb their President, she is a structural geologist, Anna Hickens a geochemist and their Chairman Trey Wasser. Then recently I had an interview with Maura Kolb and Trey Wasser. I learned some exciting stuff in those two meetings.
When I sat down to chat with Maura and Anna at the PDAC, I was really impressed with all the homework they had done at the Red Lake mine while working for Goldcorp and on their project near Dryden. They have an exceptional understanding of orogenic gold systems from working for Goldcorp. They also found a lot of gold for them using their respective knowledge of structures and geochemistry.
While I was interviewing Maura and Trey recently, something kept coming to the top of my mind. I knew the history of how deep Goldcorp had to go, 1000 metres and lower, to find the bonanza-grade portion of their orogenic gold system. But, on Dryden Gold’s ground, past drilling had hit bonanza-grade gold within the first 100 metres.
The coarse visible gold in that drill hole is spectacular, it reminds me of the samples Goldcorp used to bring to the PDAC for investors to see. It is certainly not little specks of visible gold that can often cause investors to get worked up.
The past drilling on the project hit that less than 100 metres from the surface, usually in an orogenic gold system you need to go much deeper to see that kind of coarse gold. So a natural question is why was it so close to the surface?
A possible answer is that erosion could have removed the top of the system and brought that coarse gold really close to the surface. There has to be an explanation, ultimately it will be answered with the drill rig. Figuring that out can be done with relatively shallow drill holes which will help them keep their drilling costs down.
I get the feeling that Maura and Anna have a lot of confidence they are sitting on an exciting orogenic gold system. Actions speak louder than words and they haven’t been taking incremental steps with the drill rig. They are taking 100s of metres step outs, in an orogenic gold system and hitting high-grade gold. That is no small feat as orogenic gold veins are narrow and steeply dipping.
Before making the step outs, they compiled all the data from the project, and then picked their drill locations and hit gold. What that tells me is that their assessment of where to drill is pretty bang on, and therefore the system is predictable. They seem to have a good handle on the road to follow to find gold. As they drill they further refine their target selection as they learn more.
Maura’s expertise in structural geology and Anna’s in geochemistry, combined with their experiences in Red Lake is a heck of a combination. Deep crustal faults and secondary faulting are the cracks that the gold mineralization needs to make its way closer to the surface. Geochemistry helps vector into where you are close to the mineralization from identifying certain important chemical signatures. Using the combination of structural and geochemical analysis helps vector into the guts of the system.
They started trading in early January of this year and actually were busy with drilling prior to going public and since. They have pending assay results and will be doing a lot of drilling this year.
I like the potential that they can drill several shallow holes to get a good understanding of the gold mineralization with plenty of targets to drill.
Exploits Discovery Corp. has the ground to the immediate north of New Found Gold. They benefit from the big seismic survey that New Found Gold did because they also extended the survey to include Exploits’ ground.
Recently Exploits completed a small drill program on their ground. If you look at the New Found Gold map you will see in the north part of their claims the Everest, Honeypot and Jackpot veins that go right to the claim boundary with Exploits’ claims.
Exploits was drilling on their side of the claims to see if the Honeypot and Jackpot veins extend onto their project. The drilling only got sniffs of gold mineralization that is probably because they only hit veinlets of quartz as can be seen in the image below.
My guess is they likely are above the more quartz dominant portion of the system. I would love to see them get a hole 50 to 150 metres below what is in the images above.
They recently received the seismic data and can now start getting interpretation of the data to generate drill targets. I hope they publish the data, I suspect there are some interesting structures immediately below what is in the core pictures.
For the past couple of years, McEwen Mining has been getting a lot of attention for the 47% interest in McEwen Copper, which owns the Los Azules copper project. Rightfully so, as Los Azules is an exceptional undeveloped copper mine. But, not as much attention for moving in the right direction to increase production and bring down costs of production. Additionally, they are getting exciting results with their exploration drilling on their gold mines.
Their drilling at the Stock project has caught my attention. They have hit high-grade over nice intersections in their step out drilling looking for new zones to mine in the future. They are even hitting high-grade gold in rocks that were previously not considered prospective for gold mineralization. Now they are planning to sample more of that rock as it has been reclassified as prospective rock.
Looking at the gold distribution in their holes at Stock and the model of the gold mineralization in their steep plunge and shallow plunge zones, to me it looks to be screaming to be drilled deeper.
It reminds me of what Goldcorp did when they drilled deeper into their Red Lake mine. I would love to see them drill deeper because I think it could be a game changer.
Canadian Gold Corp. has the Tartan gold project in Manitoba and their major shareholder is Rob McEwen. Tartan had a couple years of mining, the price of gold went down and they struggled and had to shut it down. Only minimal drilling was done below the mine workings, but it showed that the high-grade orogenic gold system continued deeper.
In the image above, the historical mine workings are in gray. All the black dots represent the drill holes. I would point out that inside the mine workings are purple and red colours that represent the high-grade portion of the system.
You can see a line that represents the limits of the resource estimate in 2017. There were only a handful of historical holes below that line, one hit high-grade gold of 23.8 g/t over 12.6 metres. Since Canadian Gold Corp. got their hands on the project, they have drilled below that and hit 20.6 g/t gold over 5.7 metres.
They drilled another handful of holes lower in the system and collectively show that the gold system continues deeper. To go after the depth potential, they are using a mother hole and then wedging off that to keep the costs down as they don’t need to drill a thousand metre or more holes from the surface.
They have more holes pending and are drilling now, so they should have lots of news flow from drilling at Tartan.
Sokoman Minerals is in Newfoundland, west of New Found Gold. They were actually an earlier mover into gold exploration in Newfoundland. They also have an orogenic gold discovery that they have been drilling for several years.
Most of their drilling has been within a couple hundred metres of the surface. They have found a lot of high-grade gold, including plenty of holes with visible gold, but so far haven’t really tapped into the depth potential.
I’ve said in the past that if they figure this system out, they could be sitting on a heck of an orogenic gold discovery. My hope is that they consider doing a seismic survey on their project. I think it would light up a lot of targets deeper into the system. Especially, if they overlaid the extensive drill hole data onto a seismic survey map.
Dynasty Gold has an orogenic gold discovery with very high-grade gold right beside Dryden Gold. They have two key targets on their project, one is a near surface zone and the other is the depth potential.
They sort of vacillate between focusing on the near the surface zone and the depth potential. My hope is that they focus their near term drilling on the depth potential. The grades they have hit without seeing visible gold is very impressive. Which suggests to me that they are still very high in the orogenic gold system.
I’m looking forward to their upcoming drilling program. I will be watching closely for where they plan to drill and how deep they plan to drill.
Galantas Gold is in Ireland, I have only picked one other gold explorer in Ireland which was Dalradian. I started covering Dalradian early in their drilling when they were at around 25 cents and kept reporting on them until they were taken over. It was a very successful pick in my reports, so I have a soft spot in my heart for Ireland gold exploration.
Galantas has an orogenic gold system; they have hit several holes with high-grade gold. The key zones they have drilled are right beside a deep crustal crack that goes east to west. While the gold zones are north to south. As mentioned earlier in the report, the deep structures are important conduits for the gold mineralization to make its way from very deep in the crust up to near the surface where the secondary faults also play an important role.
They have found that situation at their project with the deep crack going one direction and the secondary cracks perpendicular. Another interesting thing about the project is they have seen a series of dilation zones in their drilling.
The dilation zones are important for two reasons. One is they form an opening in the rock where the gold mineralization can sort of pool up. Another important reason is that they are formed in a certain pattern that allows them to help target the deeper portion of the system. They seem to be associated with the deep crustal crack.
The project has mining permits and underground workings, so they tried to bring it back into production, but they ran into issues. Not with the mineralization, but with getting enough workers from Ireland to operate the mine. Which was mandatory for them to do, but there hasn’t been a lot of mining in Ireland, so they don’t have a big workforce of miners to tap into. To work around this problem, they have hired a contract miner from Ireland that has the people to mine the project.
My hope is that they focus most of their attention on exploration. Small contract mining is not going to get a lot of investor interest. Sure it will help pay the bills and cover some of the costs of deep drilling. If they go deeper into the system and tag high-grade gold, I think it will bring in a lot of investor interest and funding for drilling deeper into the system.
At the end of the day, I can see they have all the geological hallmarks to have an important orogenic gold exploration project. Plus, they have an underexplored high-grade gold-copper VMS project in Scotland to drill as well. The two projects give them exposure to two of my favourite metals, gold and copper.
In Closing
I’m a big fan of orogenic gold exploration and wanted to provide a report on a group of companies with this style of gold exploration that I follow closely.
All the best,
Allan Barry Laboucan
Disclosure
Dryden Gold is a sponsor of Rocks And Stocks News, and Allan Barry Laboucan is a shareholder. Exploits Discovery Corp. is a sponsor of Rocks And Stocks News. Sokoman Minerals is a sponsor of Rocks And Stocks News. Galantas Gold is a sponsor of Rocks And Stocks News, and Allan Barry Laboucan is a shareholder.
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