Perspective: Expanding the universe of exploration capital

Issue Sixteen - October 27, 2016

NexGen 2.0

trentBy: Trent Mell, President and Head of Mining

IsoEnergy Ltd began trading on the TSX-V on October 19 under the ticker ISO.  Despite tough macro conditions for the uranium market, NexGen rightly concluded that a spin out of its portfolio of properties in the eastern Athabasca Basin was the best way to surface value for them.  ISO remains a majority owned subsidiary of NexGen, with Leigh Curyer serving as Chairman and Craig Parry as President and CEO.

IsoEnergy is focused primarily on its wholly-owned Thorburn Lake Project and the Radio Project, in which it can earn a 70% interest.  These eastern Athabasca Basin properties were the core focus for NexGen prior to the discovery of its world class Arrow deposit.  Results from ISO’s summer drill campaign on its Radio property are expected in the coming weeks.

ISO will have to be patient given the state of the market but this company can afford to do so given the early stage nature of its properties.  Uranium is having its worst year in a decade.  U3O8 is down by a third in 2016 with the weekly spot Ux U3O8 price at $21.25 as of October 17.  The long term price, where most of the uranium is sold, has fallen below $40/lb.

Haywood attributes the decline to an absence of non-discretionary buying from utilities combined with an over-supplied market, which continues to add to global inventories.  Five years after the Fukushima accident, 12 Japanese nuclear reactors are being decommissioned while 26 have applied to restart, with only three currently generating power.  Nuclear power is also in retreat in other developed markets.  German Chancellor Angela Merkel announced plans to phase out nuclear power by 2022 and France, which relies on 58 plants for more than three-quarters of its electricity needs, has begun a program to reduce its reliance to 50% of its power needs.

Other nations are going the other way.  China currently has 20 reactors under construction, India is building 5, Russia is building 7 inside the country and another 2 in Belarus, the UAE has 4 underway and more are planned in the Middle East.  Prime Minister Theresa May recently gave the go-ahead for a $24 billion nuclear power station at Hinkley Point after years of uncertainty.  This will be Europe’s biggest energy project and the UK’s first nuclear project in decades.

Recent reports state that some utilities have been back in the market and more are considering purchases.  FNArena stated that activity could pick up in the fourth quarter.  What that means for uranium pricing is far from certain.  BMO warns that, over the short term, overcapacity and high global inventory levels will offset any demand growth.  As utilities can afford to be patient, a sudden spike in pricing is not expected.

By some estimates, reactors currently under construction (mostly in China) will increase the global uranium demand by a 20%.  Announced projects not yet underway will add to the demand equation.  If we are at the bottom of the market for uranium, this could be an opportune time for the patient investor to take positions, but time will tell.  We know from experience that commodity markets can turn quickly.


PearTree Spotlight

October 4-6, 2016: We were pleased to attend AEMQ’s 41st Xplor convention in Montreal, Québec’s mineral exploration industry rendez-vous. PearTree’s Eric Lemieux moderated a capital markets session (Markets and Perspectives) with Elif Levesque of Osisko Royalties, while Trent Mell presented “A financing solution proven to benefit investors: charity flow through financing.”

Attendance was encouraging (over 1,150 attendees) and sentiment generally appeared more upbeat and optimistic as compared to 2015.

Congratulations to this year’s 2016 AEMQ Award Winners:

Discovery of the year – Sirios Resources, Cheechoo Project

Entrepreneur of the year – Falco Resources

Services Company of the year – InnovExplo

e3 Plus – Canadian Malartic Partnership

Hector Authier Award – Robert Wares, Osisko

Leadership in Economic Contribution – Sean Roosen, Osisko

Jean Descarreaux Award – Sarah Janes Barnes, UQAC

Nicolas Denys Medals – Frank Guillemette


Analyst Notes


By Eric Lemieux, Mining & Exploration Analytics

Below are a few of the Canadian exploration and development companies we follow at PearTree. For more Analyst Notes please click here.

Industry News – Canadian Exploration and Development



Integra Gold Corp. (ICG-V)

Advancing several targets on Lamaque – On October 19, 2016, ICG disclosed that it commenced a 2,500m drill program on the first Gold Rush Challenge targets on the Lamaque Gold Project in Val-d’Or, Québec. A sixth diamond drill rig was recently added at Lamaque to test this compelling target (Sigma East Extension). The target, identified through a compilation of geophysical data and drill hole information, corresponds to a sizable magnetic anomaly that straddles the previous properties’ border and hence was not explored. The target is located some 750m directly east and along strike of the historic Sigma Mine which produced over 4.5M oz. during its 70+ years mine life and compares to the steeply dipping shear zones associated with pyroclastic volcanic and dioritic intrusive units, a geological setting similar to both the Sigma Mine and Triangle mineralization.

ICG also reported additional assay results from 14,550m of drilling conducted in 2016 with a robust intercept of 19m @ 19.81 g/t Au (17.5m @ 8.31 g/t Au true width and capped) from the C4 structure at Triangle.  Results included 9.7m @ 18.58 g/t Au and 5.95m @ 27.10 g/t Au, from the near surface C2 structure. These results support gold zone continuity with infill drilling generally intersecting significantly higher grades and wider intervals than anticipated and previously reported. 6 drill rigs are currently active on the Lamaque Gold Project, including 4 at the Triangle deposit and one testing the Lamaque Deep target (current drill hole depth at >1,596m). As of October 11, 2016, 325m of lateral development at Triangle had been completed on the exploration decline with the current position ~300m away from the western limit of the C1 and C2 structures.



Nighthawk Gold Corp (NHK-V)

Continuing to prove distinct high-grade domains at Colomac – On October 12, 2016 NHK reported more results (8 holes) from the 2016 drill program on its Indin Lake Gold Property in the Northwest Territories suggesting continuity of mineralization down plunge at depth. NHK completed an 8,390m drill program (34 holes) testing for other higher-grade ore shoots within the Colomac and Goldcrest sills. Drilling focused on delineating high-grade gold mineralization at Zone 1.5 and succeeded with an intercept of 50m (true width) @ 5.58 g/t Au (including 17.8m @ 17.72 g/t Au) (C16-03B). This intercept, 100m down plunge from a previous hole, confirms the ability to define high-grade domains within the Colomac mineralized system. Zone 1.5 is up to 125m long, 30 to 40m wide, extends from surface to 260m vertical depth and remains open. Similarities have been made between Colomac and Kalgoorlie in Western Australia, one of the world’s largest Archean gold camps. This analogue is hosted by a fractionated mafic intrusion with gold concentrated within the silica-rich upper portions, as is Colomac. Kalgoorlie hosts higher grade gold zones, but at Colomac the existence of similar zones had never been previously explored or documented by companies such as Royal Oak Mines.  NHK has also advanced several other highly prospective targets throughout its vast Indin Lake land package.



Osisko Mining Inc. (OSK-T)

More robust values at Windfall – OSK announced on October 12 and 25, 2016 new results from its ongoing 150,000m drill program at the 100% owned Windfall Lake gold project located in Urban Township, Québec. The current program combines expansion and definition drilling above and below the Red Dog intrusion and exploration drilling on the overall property. A total of 14 new drill holes (7 and 7 respectively) show significant results such as 5.7m @ 20.9 g/t Au over 5.7 metres (cut) (DDH OSK-W-16-720), 6.6m @ 13.8 g/t Au (DDH OSK-W-16-708-W2), 7.7m @ 7.57 g/t Au (DDH OSK-W-16-706-W3), and 4.6m @ 11.8 g/t Au (DDH OSK-W-16-309-W3 which is a new zone within the Caribou corridor), as well as 2.9m @ 15.5 g/t Au (OSK-W-16-704-W1).  These results demonstrate the continuity and robustness of the gold mineralization (average grade x true thickness metric of 25.73 g/t Au per meter and 18.14 g/t Au respectively) and the high potential for significant new mineralization near the known Windfall resources. The main zones are hosted within 3 broad corridors of mineralization trending WSW – ENE. These are the Underdog corridor (FW 0 to FW 4 zones) hosting all zones below the Red Dog intrusion, the Zone 27 corridor, and the Caribou corridor (including the Caribou Zone, Wolf Zone and the new Wolf 2 Zone). With continued aggressive definition and exploratory drilling, we expect the mineral inventory to materially increase.



Radisson Mining Resources Inc.  (RDS-V)

Potential new targets along the fertile Cadillac – On October 5, 2016 RDS announced the commencement of a 10,000m drilling program at its O’Brien gold project in the Québec Abitibi. The project is located along the Larder-Lake Cadillac fault over more than 4.5km, halfway between the Laronde and Lapa mines owned by Agnico-Eagle Ltd. In December 2015, a PEA was published for the 36E and Kewagama areas. The main focus of the drill program is to increase the existing resources of the areas where over 90 drilling targets have been identified as potential extensions of ore shoots.  Following the 2016 results, with $2.7M in treasury, RDS aims to increase the inferred resources located from surface to a depth of 500m. RDS is completing historical data digitization and reviewing the historical drilling (15,000m of unassayed and unreviewed core) within Pontiac Group sedimentary rocks located to the south where gold mineralization potential may not have been recognized at the time. Phase I drilling in winter 2016 by RDS observed visible gold in several intersections such as 1m @ 12.73 g/t Au (DDH 16-3 (OSP5-4)) within Pontiac Group sedimentary rocks composed mainly of greywacke interdigitated with argillite and associated millimetric to decimetric sized veinlets and veins systems consisting of quartz-carbonate with disseminated arsenopyrite and pyrite.



Rubicon Minerals Corp.  (RMX-T)

Phoenix rising? – On October 20, 2016 RMX announced that George Ogilvie, P. Eng., will assume the role of President and CEO.  This is subject to the completion of a refinancing and recapitalization transaction involving an equity raise of $45M and the reduction of outstanding obligations. RMX also announced that it obtained an order for a stay of proceedings pursuant to the CCAA (Companies’ Creditors Arrangement Act). Mr. Ogilvie has an extensive background in high-grade, narrow-vein underground mining and a track record of improving mining operations. He was previously CEO of Kirkland Lake Gold Inc. where he and his team turned around the operations at the Macassa Mine and, before that, at Rambler Metals and Mining PLC where he guided the evolution of that company from grassroots exploration to a profitable junior producer. The objective is to restart exploration activities at the Phoenix Gold Project over the next 24 months. The project should eventually see extensive diamond drilling, drift, sampling, and test mining in the F2 gold deposit main mineralized zone.

On implementation of this restructuring, RMX shareholders shall, in aggregate, retain ~5% of the equity interest.  ~$68.4M principal outstanding to CPPIB Credit pursuant to an existing secured loan facility shall be reduced to $12M, in exchange for a 29% equity interest in the reorganized RMX and a cash payment of C$20M on implementation of the transaction. A Gold Stream Facility with Royal Gold shall be exchanged for a 6% equity interest in RMX as well as a 1% NSR Royalty on all of RMX’s land holdings in Red Lake, Ontario, (including the Phoenix Gold Project, subject to a maximum 4% NSR on any one property), a 2.5% NSR on the Nevada/Utah properties, and an assignment of RMX’s rights to acquire any portion of an existing NSR, subject to certain provisions. RMX plans to commence Phase 1 of a comprehensive exploration program (~23,500m of drilling, drifting and bulk sampling the F2 main zone) with the goal of gaining a better understanding of the geology of the F2 Gold Deposit and potentially grow the mineral resources.



Eastmain Resources Inc. (ER-T)

Working on Eau Claire – On October 24, 2016 ER announced initial drilling results (9 holes totalling 3,003m) from the ongoing 63,300m program at the Clearwater Project in the James Bay area of Québec. Highlights from selected holes include up to 13.5m @ 11.5 g/t Au (ER16-584) and 1m @ 10.2 g/t Au (ER16-583) from the Eau Claire deposit (450W zone). ER is in the midst of a resource definition program at Eau Claire and is focused on expanding its understanding of the distribution of the mineral inventory. Recent drilling has targeted SE extensions of the 450W zone from surface to a depth of 300m. Gold mineralization at the Eau Claire gold deposit is generally located within structurally-controlled, high-grade en-echelon quartz-tourmaline vein sets and adjacent altered rocks. The vein system is predominantly hosted within a thick sequence of massive and pillowed mafic volcanic flows, interbedded with narrow intervals of volcanoclastic sedimentary rocks intruded by multiple phases of felsic and porphyry dikes.

Drilling also confirmed mineralization at the Snake Lake target located 1.8km east of the Eau Claire deposit with1.5m @ 12.2 g/t Au and 2.1m @ 4.89 g/t Au (ER16-592). The target is located along a deformation zone which extends east along the southern boundary of the Clearwater Project and the newly acquired Lac Clarkie claim block (see September 2, 2016 Analyst Note).



Midland Exploration Inc. (MD-V)

Investigating some pujuq in the Labrador Trough and NW Abitibi  – On October 18, 2016, MD announced the commencement of a 1,200m drill program on its Pallas PGE project in the Labrador Trough of Québec in partnership with JOGMEC (Japan Oil, Gas and Metals National Corporation). The phase 2 6-hole drill program aims to investigate at depth several 2015 and new 2016 showings defining potential mineralized corridors (reefs) rich in gold and platinum group elements (PGE). The Pallas project is composed of 631 claims covering a surface area of more than 28,600ha. Since the acquisition of the project in July 2013 and JV agreement in February 2014, Midland and JOGMEC have demonstrated mineralized potential for PGE in the Labrador Trough (see September 3, 2015 and August 4, 2015 Analyst Notes). Select grab samples on the Ceres claim block include: up to 29 g/t Pd; 1.6 g/t Pt and 0.4 g/t Au at the Ida showing; 3.6 g/t Pd, 1.4 g/t Pt, and 0.2 g/t Au at Ceres South; 2.8 g/t Pd, 1.9 g/t Pt, and 0.25 g/t Au on the Cynthia showing, as well as the recent new mineralized 3km-long corridor, Apophis, which returned selected grab values up to 3.1 g/t Pd, 0.9 g/t Pt, and 0.1 g/t Au. Channel sampling on the Hektor showing returned 0.5m @1.5 g/t Pd, 1.6 g/t Pt and 7.2 g/t Au, and 0.5m @ 0.9 g/t Pd, 1.0 g/t Pt and 0.2 g/t Au.

Also, on October 5, 2016, MD reported the acquisition, by map designation, of 3 new properties (La Peltrie East, Mistaouac, and Turgeon) totalling 553 claims (30,400ha) in the northwestern Abitibi region, near the regional Lower Detour and Casa Berardi fault zones on the foot-steps of Detour Gold’s Burntbush project (2 groups of contiguous mining claims totaling 3,105 claims for 49,400ha) in northeastern Ontario. MD intends to complete airborne geophysical surveys in early 2017, and now holds a total of 13 active projects covering a surface area of more than 112,000ha in the vicinity of the strategic regional Casa Berardi, Lower Detour, and Sunday Lake fault zones.



Khalkos Exploration Inc.  (KAS-V)

On the Malartic trend – KAS reported on October 5, 2016 results from a surface sampling program undertaken on the southern part of the bloc Révillard of its Malartic property. The property is composed of 82 contiguous claims covering ~10km of favorable geological segments in the Malartic mining camp, 30 km NW of the city of Val-d’Or, Québec and 11km WNW from the Canadian Malartic mine. Four chosen samples of materials originating from an ancient excavation yielded gold grades of up to 28.6 g/t, 26.8 g/t, 16.9 g/t, and 7.8 g/t respectively. In addition, two samples from outcrops graded up to 8.72 g/t Au and 2.25 g/t Au. Historical documents suggest that the site was already, in the 40s, the subject of a bulk sampling program and few drill holes to a vertical depth of at least 100m, such as 2.4m @ 32.6 g/t Au. The presence of high grade auriferous mineralization in sedimentary rocks confirms the excellent potential of all the geological units on the property.  KAS intends to undertake shortly other surface fieldwork in order to specify the geological context of this high grade auriferous system.



Balmoral Resources (BAR-T)

The anastomosing Bug Lake – On October 17, 2016 BAR reported additional results (8 holes) from the summer/fall drill program on its wholly-owned Martinière Property in northwestern Québec. 5 holes were completed on the Bug South deposit area and 3 in the Bug Southeast Zone. Results at Bug Southeast Zone extend the strike length of the gold mineralized system along the Bug Lake Gold Trend by 200m to the SSE with 17.16m @ 1.74 g/t Au (MDE-16-225). Results were also highlighted by the discovery of a new high-grade gold bearing vein zone in the hanging wall to the Bug South gold deposit. This discovery, with separate intercepts of 6.8m @ 10.89 g/t Au and 2.8m @ 15.89 g/t Au in hole MDE-16-121, is located ~90m above the Upper Bug Zone of the Bug South deposit. This forms an E-W trending anastomosing zone (vs. the NNE-SSW strike of the Bug Gold Trend) of relatively low sulphide veining.

Of note, a drill testing program on the Detour East property has also commenced with 6 holes planned on 4 target areas that include potential extensions to the Lynx and Rambo gold zones. Recall the Detour East property stretches for ~20km east from the Ontario-Quebec border and straddles 2 regional deformation zones that host the Detour Lake gold deposit and the Lower Detour’s Zone 58N (see July 29, 2016 Analyst Note – Detour Gold Corp.).

On October 19, 2016 BAR reported that it has been advised by partner GTA Resources and Mining Inc. (GTA-V) that the Phase 2 summer 2016 drill program on the Northshore Gold Property near Schreiber, Ontario, has been completed. Also on October 19, BAR reported the completion of the Fenelon Gold Mine Property sale to Wallbridge Mining Company Limited (WM-T) with the receipt of the final cash payment of $2.5M.  Recall BAR received, in total, $3.5M in cash, ~2.38M shares of WM, and a 1% NSR royalty (see May 26, 2016 Analyst Note).


Equity Research


Pure Gold Mining Inc. (PGM-V)

Avanzando solidamente on Madsen – On October 3, 2016, we attended the PGM analyst site visit in Red Lake, Ontario. This one-day trip enabled us to review the Madsen Mine project in the prolific Red Lake gold camp of Northwestern Ontario. Flying from Winnipeg to Red Lake, then a 20min. ride to Madsen, we were able to complete a thorough review of all aspects of the project, from mine site to drilling rig to core shack, mill and tailings. PGM is focused on advancing a high quality asset hosting probable key traits of economic mines and is located with access to infrastructure, grade, scope and size in a mining-friendly jurisdiction. The Madsen property encompasses over 246 mining claims (4,380ha) that hosts 2 significant former gold producers – Madsen Mine (~ 2.51 M oz. Au) and Starratt-Olsen (0.4M oz. Au). A $19M (~77,000m) exploration program is in progress with up to 4 drills. The results will be used to update the 2015 resource estimate by mid-2017 and to complete a prefeasibility study by H2/2018. Recall PGM completed a PEA in April 2016 that provided a base case assessment for developing a portion of the mineral resource within 600m of surface by utilizing existing mining infrastructure including a permitted mill (500tpd) and tailings facilities at Madsen. The existing McVeigh portal is ~1km from the mill and could provide quick ramp access to the top 150m of the mine workings. With ongoing drilling, we anticipate the mine plan to be reassessed and increased in scope with successful results.

For more details on Madsen:


10-17-2016 | Pure Gold Mining Inc. (PGM-V)
Avanti on Madsen!

Event: Site visit on October 3, 2016 at the Madsen and Starratt-Olsen projects in Red Lake, Ontario. Overview of the 2016 work program and activities.


Stornoway Diamonds Corp (SWY-T)

SWY inaugurates the first diamond mine in Québec – On October 19, 2016, SWY officially opened the Renard diamond mine site in the James Bay region of north-central Québec.  The ceremony was held in the presence of Mr. Pierre Arcand, Quebec’s Minister of Energy and Natural Resources and Minister responsible for the Plan Nord, as well as Chief Richard Shecapio, Chief of the Cree Nation of Mistissini and Mr. Jean Boucher, member of the Québec National Assemby for Ungava. Mrs. Manon Cyr, Mayor of Chibougamau, and Mr. Steve Gamache, Mayor of Chapais, gave speeches highlighting the culmination of about 20 years of work to bring the Renard Project from a green-field exploration concept to a fully operating ‘top notch’ diamond mine.  Current and former SWY staff members, project stakeholders, local community members from the Cree nation of Mistissini and Chibougamau-Chapais, analysts, lawyers and members of the financial and mining communities were also present. A total of 7 flights were chartered to the Clarence & Abel Swallow Airport near the Renard mine site (see August 17, 2016 Analyst Note), with 3 from Montreal and the remaining from Toronto, Québec City, Chibougamau and Timmins. Recall the Renard Diamond Project is located ~250 km north of the Cree community of Mistissini, ~350km north of Chibougamau, and is road and airplane accessible. Processing of ore commenced on July 15, 2016.

Our main takeaway is that SWY has built a solid operation that has capacity to be a long term quality diamond producer. SWY reaffirmed that it is on schedule to achieve commercial production by the end of the year.

Selected pictures from the Renard site on October 19, 2016:




Photo credit: EBL Consultants Enr.


This newsletter is dedicated to providing insight and analysis on Canadian mineral exploration and development stories. We welcome your feedback.

PearTree Securities is the largest provider of mining flow through capital in Canada. As an exempt market dealer and portfolio manager, PearTree Securities has approximately $250 million available for investments annually.

Upcoming Events

PearTree Securities is looking forward to attending and seeing our colleagues at these upcoming conferences and events.

Precious Metals Summit in Zurich, Switzerland – November 2-3, 2016

MMFA Museum Ball in Montreal – November 5, 2016

VGH UBC Hospital Foundation’s A Night of a Thousand Stars Gala in Vancouver – November 5, 2016

Mount Sinai Foundation’s Dinner with Scientists in Toronto – November 21, 2016



Arcus Development Group Inc. (TSX-V: ADG)

On October 24, 2016, ADG announced the closing of a non-brokered financing in which Goldcorp Inc. acquired 19.9% of issued and outstanding stock. PearTree is pleased to have provided the capital for the flow through units issued.

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Marianne Jenkevice
Vice President, Business Development

416.613.3848 x435

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