Newfoundland resurgence awaiting its Valentine

At the start of the decade, Atlantic Canada was one of the hottest exploration destinations on the planet as the success of Atlantic Gold at Moose River in Nova Scotia was followed by a string of high-grade gold intercepts by New Found Gold, which continue to this day, and the promise that the Appleton Fault Zone would become a major gold production centre.

A land grab saw a plethora of junior explorers flood the region, but interest has since waned as the challenge of exploring orogenic gold systems, characterised by a lack of grade continuity and nuggety gold, bit. So did the challenges of developing projects, as St Barbara found after taking ownership of Moose River, and as Marathon Gold shareholders found to their repeated dilution at Valentine Lake.

St Barbara bought Moose River in 2019 for C$722 million, but the 4Moz of resources that came with it have been difficult to extract. It initially mined the Tourquoy and Beaver Dam open pits. Production at Tourquoy in 2018 was 90,531oz. In 2023, St Barbera reported 44,000oz of production from its Atlantic operation.

Cost overruns took their toll on Marathon Gold, which, vulnerable to having to raise money again, was snapped up by Calibre Mining in early 2024 for a 31% premium 80-85% below its September 2021 peak share price of C$3.64 per share.

Valentine's day

Valentine is due to produce 145,000ozpa and pour the first gold in the June quarter of 2025. As of May, Valentine is 64% complete and detailed engineering is 98% complete.

Project optimisation, derisking, and acceleration of part of the phase two expansion increased initial capital costs by C$145 million to C$653 million, with a C$279 million cost to complete. The company has C$400 million of cash and cash flows from operations.

The successful development of Valentine could reignite interest in the Atlantic provinces. "If Calibre manages a smooth build and start up at Valentine, that shines a light again and de-risks people's view of the province," said Adshead-Bell.

Calibre sees a lot of potential on its 250km2 land package to grow Valentine in a similar way that it has grown its gold production operations in Nicaragua, and it is undertaking an exploration programme with a similar scope to that deployed in Nicaragua to find it.

"Drilling in 2024 will include resource expansion and discovery drilling. We are also doing high-definition property-wide geophysics and lidar surveys, like we did in Nicaragua," said Calibre Mining VP strategy and growth Tom Gallo, during the company's March quarter results call.

With a mine and plant, Calibre could fast-track and discoveries into production.

New Found Gold

New Found Gold does not have that ability, however.

The company has drilled 516,263m along the Appleton North Corridor at its Queensway project in Newfoundland through the end of 2023, as part of a 650,000m drilling programme.

It has yet to release a resource estimate, with many in the industry of the opinion that it is seeking to replicate the trajectory of Great Bear Resources, which was bought by Kinross Gold in 2022 for C$1.8 billion before issuing a resource estimate on the Dixie project in Ontario, Canada.

The logic of delaying the issuance of a resource estimate is that it keeps the upside potential alive. The market expected more than the 2.7Moz indicated and 2.3Moz inferred Kinross published as the maiden resource on Great Bear in February 2023.

New Found Gold presumably does not want to have a similar experience, so it keeps drilling. In April, it did release initial metallurgical testing results that showed gold recoveries of 90-96%.

New Found Gold management did not respond to requests for an interview. The company has, however, been busy acquiring more ground to explore. In April, it agreed to pay C$20 million in stock to buy the neighbouring Kingsway project from Labrador Gold to add the district-scale potential of its Queensway project. Kingsway contains over 12km of presumed strike length along the Appleton Fault Zone.

The Queensway discovery sparked an exploration land rush, which has since died down as gold explorers, in general, have lost investor favour, but the extended time New Found Gold is taking to deliver a maiden resource may also be curbing enthusiasm.

The market downturn has hit the Atlantic provinces hard as exploration programmes have been curtailed due to lack of funds, and people have been laid off. Point Rousse shut in 2023, and Rambler Metals, unable to raise funds, filed for voluntary liquidation in April 2023.

Rambler was bought by Australia's AuTECO Minerals in October 2023, which then changed its name to FireFly Metals. Rambler's main asset was the Green Bay copper-gold project in the Baie Verte peninsula of Newfoundland.

However, with exploration activity slowing in the region, costs have improved for those with the means to continue exploration, such as Sokoman Minerals, whose Moosehead project is adjacent to Queensway. "When New Found Gold got going, the financial resources drawn into that area made it more difficult for other companies.

It was impossible to get geologists. Now, assay times are down to two or three weeks from three to four months," said Adshead-Bell.

Hard times

Atlantic explorers have been falling thick and fast. In Nova Scotia, Aurelius Minerals reported a May 2022 resource of more than 500,000oz in all categories, but its financial difficulties saw the Canadian authorities file a cease trade order for failure to file its 2022 annual financial statements. Aurwest Resources terminated option agreements on the Paradise Lake and Miguels Lake properties in Newfoundland.

Signal Gold, which sold Point Rousse to Maritime Resources, began a strategic process in March to evaluate alternatives for its Goldboro project in Nova Scotia, including joint venture transaction, sale or merger. Goldboro has a 2021 feasibility study to produce 100,000ozpa for 11 years from an open pit, with an initial capital expenditure of $271 million.

In 2022, it received approval for its environmental assessment, allowing the company to commence permitting processes. Earlier this year, it consolidated the Goldboro district, increasing its exploration license area to over 27,200 hectares.

To avoid possible financial armageddon in the future, Labrador Gold took the radical step of selling its main asset, Kingsway, to Newfoundland Gold, as mentioned above, after having spent some C$32 million on exploration.

The transaction means Labrador Gold would have a C$18.7 million market capitalisation, about C$7 million in cash and C$20 million in marketable securities. Its shareholders will vote on the transaction on June 27.

"We were coming to the end of our planned 100,000m of drilling and ended 2023 with $7 million in cash. We decided not to continue drilling as, with the difficulty of raising capital, we decided to put Kingsway on the shelf and look for a distressed asset for an acquisition. We would like to level up and buy an asset with resources rather than go back to early-stage exploration," Labrador Gold chief executive Roger Moss told Mining Journal.

Another Atlantic company whose plans have stuttered is Maritime Resources, whose restart of the Hammerdown mine in the Baie Verte mining district of Newfoundland and Labrador continually seems to be two years away.

The 2020 Hammerdown PEA outlined a nine-year mine life with initial production of 70,000ozpa for the first five years from an open pit operation to exploit 4.5gpt material, following a C$75 million initial capital cost. "Permitting is complete, we have a tailings storage facility, we are construction ready, and we are looking at financing," chief executive Garrett Macdonald told Mining Journal.

Since completing a feasibility study, the company has bought the Point Rousse plant from Signal Gold, which could allow it to shave $10-20 million from Hammerdown's capex. "The plant was running a year ago, and so it doesn't need as much refurbishment as our other plant. We want to optimise it with leach tanks and flotation cells," said Macdonald.

With a construction time of six- to nine- months, Macdonald says the mine could be in production in early 2025, subject to financing.

The company's financing plans include seeking shareholder approval for a 10:1 share consolidation to bring its share count below 100 million. It is also looking to raise money for 5000-7500m of exploration at nearby mine and mill targets on the ground acquired from Signal to boost resources.

"There is a lack of interest in the junior space, but it is starting to improve. People realise what we have done in putting together a complete mining project. The only thing holding us back is financing," said Macdonald.

Base metals

With investors going cold on gold in the Atlantic provinces, some juniors have pivoted to explore its base metals potential. Canterra Minerals is drilling its Victoria copper and Lemarchant critical minerals projects in Newfoundland.

Matador Mining, in which B2Gold owns a 9.9% stake, recently announced an option to acquire the Blue Cove copper project in Newfoundland and intends to change its name to AuMega Metals to better reflect this new focus. FireFly Metals is exploring the Green Bay copper-gold project in the Baie Verte peninsula of Newfoundland.

"Blue Cove has all the hallmarks for multimillion-ounce gold deposits, and the copper potential has not been explored before. Firefly is having a lot of success. It is in an area with infrastructure and so it could rapidly turn into a development story. The government and population have made positive noises and are pro-development," Matador Mining director Nicole Adshead-Bell told Mining Journal.