TICKERS: AEM, , , , CLQ; CLQMF, ELO; ELRRF, GZZ, , K; KGC, , , MAT; MRHEF, NMX; NMKEF, OSK, , RNX, WDO, WTG
Mining Boom in Quebec: Alain-Jean Beauregard
Source: Brian Sylvester of The Gold Report (12/23/11)
While many jurisdictions are working hard to prevent mining or mineral exploration, the province of Quebec is encouraging it. In this exclusive interview with The Gold Report, Alain-Jean Beauregard, founder of Geologica Inc., a geological consulting firm based in Val-d'Or, talks about the shining future of gold mining in Quebec.
Alain-Jean Beauregard: Like forestry, mining has traditionally been a region developer in the province of Quebec. Native land issues have already been settled for large parts of the province. Mining is an important job creator—one of the most important in the province. It's good income for the province because of revenues from taxes. Quebec is happy to have mining companies in the province. The highest salaries are now in mining. Mining regions have the lowest unemployment in the province and a lot of young graduates are back from the larger cities to their families, to the great satisfaction of their parents. Also, a large world-class, web-accessible Quebec Ministry of Natural Resources geoscientific database, SIGEOM, has been in place for several years.
TGR: There are a couple specific incentives Quebec offers that other provinces don't. You can get up to 50% of the money back that you spend on exploration from mineral deposits. You also have government-sponsored investment funds and, perhaps most notably, a large web-accessible database. Tell us a little bit about those things.
A-JB: The stimulations ultimately encourage companies to reinvest in more exploration, which will bring about more discoveries, more jobs and more wealth to the province. Companies can have a tax credit varying between 30% and 50%, depending on the remoteness of the projects.
The database that the province has put together is an important one. All companies are obliged to file their statutory work reports and make that information available for the other players in the province so that they can benefit from strategic acquisitions and understand the geology better. Moreover, they don't have to repeat the same exploration surveys or drill the same targets because the information is available. It increases the efficiency of the exploration companies quite significantly. In Quebec, flow-through funds for surface exploration work after tax cost less than 50% of the original investments. This type of financing is the most generous for investors in all of Canada. Several discoveries were stimulated by these programs in the past 30 years.
TGR: Have you ever used that geoscientific database?
A-JB: We constantly use SIGEOM when reviewing statutory work reports to complete our compilations. Also, when relogging and resampling old core, it is always enlightening to help recognize typical rock alterations and associated typical mineralizations. The geologists then understand and look for the right metallogenic environments favorable for future potential discoveries.
TGR: That database helped Osisko Mining Corp. (OSK:TSX), which at the time was Osisko Exploration, find the Canadian Malartic deposit.
A-JB: When relogging the available in situ core, low gold values were found disseminated all over the porphyritic host rock. The potential for a large-volume, low-grade deposit then became obvious. After seeing how well Kinross Gold Corp. (K:TSX; KGC:NYSE) was doing from its Fort Knox deposit in Alaska, which is a low-grade deposit in northern climatic conditions, people here were inspired, particularly Bob Wares and his Osisko team. The more persevering and persistent they were, the more the price of gold was going up, making their dream possible.
TGR: Quebec has a government-funded mining company called SOQUEM Inc. Have you ever worked with SOQUEM on any projects?
A-JB: Yes. SOQUEM's mission is to help the provincial mining exploration industry particularly during low periods and bad cycles, as well as to keep opening up potential areas to stimulate mining and joint venture partnerships with their geoscientific research and compilations. It was good to have SOQUEM around and several of their joint venture partners feel very fortunate to have their support.
TGR: With gold around $1,600/ounce (oz), what is business like for Geologica these days?
A-JB: The price of gold permits us to collaborate on projects we really like. Gold is our main field of activity. However, rare earth minerals, lithium and other industrial minerals, as well as base metals projects, are challenging mandates for us as well. We have been around for 30 years and we are well advised and prepared to serve our clients in Quebec and on at least three continents.
TGR: Val-d'Or and the Cadillac Break have produced about 45 million ounces (Moz) gold over the previous 80 years. Many people thought the camp was finished, but with gold around $1,600/oz and new technology being developed, there is something of a renaissance happening in Val-d'Or. Can you tell our readers about some of the recent success stories?
A-JB: Besides Osisko and Agnico-Eagle Mines Ltd. (AEM:TSX; AEM:NYSE), companies like Alexandria Minerals Corp. (AZX:TSX.V), Aurizon Mines Ltd. (ARZ:TSX; AZK:NYSE.A), Integra Gold Corp. (ICG:TSX.V), White Tiger Gold Ltd. (WTG:TSX.V), Wesdome Gold Mines Ltd. (WDO:TSX), Alexis Minerals Corp. (AMC:TSX; AXSMF:OTCQX), Eloro Resources Ltd. (ELO:TSX.V) and Golden Valley Mines Ltd. (GZZ:TSX.V) all have very interesting gold properties and mines near Val-d'Or.
White Tiger Gold (previously Century Mining) was able to gather some 2 Moz gold at the old Sigma-Lamaque mine. It's another example of a project that can do well with good prices of gold.
There are also Wesdome Gold Mines' Kiena and Wesdome mines, which have approximately 300 thousand ounces (Koz). It is underground mining, which is a bit more difficult, but it has developed the expertise and holds a large property sitting on important favorable metallotects of the Val-d'Or camp. Moreover, Wesdome has recently made a new gold discovery on its property, which will certainly ensure mill feed for the next few years at its Kiena mine.
Agnico-Eagle, with its Goldex mine, also has had good success mining its large-volume, lower-grade deposit underground using a shaft and its approximately 10,000-tons-per-day mining facilities.
TGR: But it has shut down that operation recently because of underground instability and some water-related issues.
A-JB: That is right. Goldex did have some problems with rock stability and water infiltrations. Agnico-Eagle is presently reviewing all of this with several engineering firms. I'm sure the solution will soon be found and the mine should resume this coming year. It's a project near the Cadillac Break, where rock mechanics change when moving outside the competent host mineralized rock, such as massive granitic and dioritic intrusions. The mine is also in close proximity with sheared volcanic rock. Studies are being done now to find solutions that will lead to start the mine next year.
Since 2003, about 25 Moz gold was discovered in the Val-d'Or and Malartic gold camps. There is still a lot of potential. The Val-d'Or, Malartic and Cadillac camps have been at work for the past 80 years, and I think they will be successful for another 80 years if the price of gold keeps up.
TGR: Earlier this year, you prepared an NI 43-101 technical report for Integra Gold Corp.'s Lamaque property, which is near the past-producing Lamaque mine. That mine produced more than 4.75 Moz, but it hasn't been in production since the 1980s. The Sigma gold mine is northeast of Integra's Lamaque property. It remains in production and has around, I believe, 5 Moz in resources and reserves.
A-JB: Concerning the old Lamaque property, that was operated by Teck Hughes Gold Mines Ltd. at the time. Teck Hughes closed that operation in the 1980s. It had been at work since 1927. It produced close to 5 Moz.
Together, Sigma and Lamaque produced 9–10 Moz in a period of about 60 years. Integra Gold's Lamaque property is very well located in respect to the old Lamaque mine. When we took that project about two and a half years ago, we had about 400 Koz of gold. With about two and a half years of drilling with one drill, sometimes two drills, and about 35,000–40,000 meters, we were able to bring that resource up close to 700 Koz of gold. We're pretty proud of having had the honor to work on that project for which we have a very special interest since I was mine geologist at the nearby Sigma mine between 1981 and 1985 for Placer Dome.
TGR: You probably need to triple that resource to get a mine into production. Do you think there's that much gold there?
A-JB: If we keep on working the lateral and depth extensions of the already known mineralized zones, we should be able to improve the resources to the 1 Moz level. The strategy is to find altered fractured intrusions, just like in all the zones that brought the mineralization up to date. The Forestel zone, the Parallel zone, the Triangle zone, the Sixteen zone all have similar patterns of mineralization, typical of mesothermal vein-type deposits. Some make sizeable ellipsoidal vein clusters, and we'll be able to bulk mine some of them. We could perhaps start an operation even before we reach the 1.5 Moz number that you were talking about because we have high-grade zones such as at the Triangle zone and the No. 4 Plug as well. Several unexplored targets remain to be tested yet.
TGR: What are you looking at in terms of head grade? What's the average head grade?
A-JB: It varies. We have zones with an average of 18 grams (g). We have others that make 4–5 g. No two zones are the same, and some are obviously richer than others. We'll have to take into account all these variations and see how the mining of these zones independently or together will be done. Will the ore be blended or will the deposits be mined individually? This is all part of our future studies.
TGR: Is it more likely to follow the model of a Goldex and an underground bulk-tonnage operation, or is it more likely to be a pit?
A-JB: Some zones will be open-pittable because they're close to surface and the overburden is not thick. Other zones will need to be mined by underground bulk tonnage methods, preferably ramps, which are cheaper than shafts. We already have some infrastructure on the property. There are four or five old shafts, which could permit access to deeply located zones such as the No. 4 plug, for example, which is of higher grade. All options have to be considered.
TGR: Last question on Integra. In terms of gold recovery, have tests been done to date on recovering the gold? Is it easy to recover?
A-JB: The past historical mining by Teck and Placer Dome has proven to give good recovery. When the Lamaque and Sigma mines operated, they went well above 90% recovery by using simple, conventional gravimetric and cyanidation methods. Recovery is not a problem here because we're dealing with quartz-tourmaline veins with low pyrite (1—2%) content or any other types of sulfides. There are very little sulfides associated with the veins.
It's very simple at Lamaque. The history speaks for itself. Both Sigma and Lamaque have operated for 60 years with very nice gold recovery (94%) success with substantial economic benefits. I'm not worried at all for Integra thanks to Integra's management team, shareholders' continuous support, perseverance and successful financing.
TGR: Geologica has done some work on a rare earth elements (REE) project in the area. What do you know about Matamec Explorations Inc.'s (MAT:TSX.V; MRHEF:OTCQX) Kipawa REE project?
A-JB: We haven't worked on that project. With a solid partner such as Toyota, Matamec should be promised a successful future. Our involvement with rare earth minerals was and is with Quest Rare Minerals Ltd. (QRM:TSX.V; QRM:NYSE.A) on the Strange Lake deposit.
TGR: Where is this?
A-JB: The project is located at the Labrador border between Newfoundland and Quebec, approximately 150 km NNW of the town of Schefferville. It was discovered by Iron Ore Company of Canada in the 1970s. Quest Rare Minerals was able to drill anomalous till and soil geochemistry anomalies, which correspond with TREO-rich peralkaline intrusions.
TGR: Are people talking about REEs in the camp now that Matamec has a REE deposit and a solid partner in Toyota? Aurizon Mines has a property that's contiguous to Matamec's Kipawa deposit; are people talking about that?
A-JB: Matamec, although in Quebec, is in the Témiscamingue area. It's closer to the Ontario border, and the geology there is favorable for rare earth minerals discoveries. There is a big interest and a lot of activity around rare earth and lithium. The Quebec Lithium deposit of Canada Lithium Corp. (CLQ:TSX; CLQMF:OTCQX), located near Val-d'Or (approx. 35km), will be into production next year. In the James Bay area, Lithium One Inc. (LI:TSX.V) and Nemaska Exploration Inc. (NMX:TSX.V; NMKEF:OTCQX) are also advancing their projects at a fast pace toward production.
TGR: Do you believe there will be more of these kinds of deposits discovered in western Quebec?
A-JB: I think so. It's just a matter of being able to constantly fund the research and exploration programs. The province of Quebec is huge. It's five times the size of France, and there are still a lot of places to explore. Iron ore is attracting large companies as well on the Labrador Trough. As for base metals, Royal Nickel Corp. (RNX:TSX), in the Amos area, is planning to open up a huge nickel open-pit deposit. Royal Nickel is talking about 80–100 thousand tons of ore extraction per day, which is twice what is being mined presently at Osisko. There is a lot of action in mining. We don't have much time to take a break but we like it better that way.
TGR: I guess that's good.
A-JB: If you have the passion for what you do, you will have fun doing it. We don't see a significant slowdown in the short- to mid-term.
TGR: You did some technical work for a Montreal-based company called Malaga Inc. (MLG:TSX). What did that involve?
A-JB: Malaga has the unique Pasto Bueno tungsten deposit in Peru, which is the only one in South America. We had the pleasure to work on this epithermal vein type deposit. The Pasto Bueno deposit is busy with 350 employees. We prepared an evaluation report and gave some advice on the exploration approach to bring a better understanding of the veins and help find more mineralization. It is a very interesting deposit, which is associated or hosted within a "greisen," a type of mineralization associated with altered fractured quartz monzonite stock intrusions, a bit like the tin occurrences in Bolivia. The mineralization consists of quartz veins with scheelite, hubnerite and ferberite minerals. There are several minerals and crystals that contain tungsten, but in the case of Pasto Bueno, it's mainly hubnerite, ferberite, some scheelite and wolframite. More than 75 epithermal veins were found at surface and the mine is presently developing and mining a dozen veins using only adits and underground mining methods such as cut and fill and shrinkage.
TGR: The management of Malaga is on record as saying it would like another tungsten mine in addition to Pasto Bueno. Do you think there is sufficient tungsten in the area to support a second mine?
A-JB: Definitely. What the management is talking about is on the same property but across the valley. That tungsten-rich zone such as the Consuzo Manto in the southern part of the Pasto Bueno property was found at the contact between the sedimentary rocks and the intrusion. The zones are very wide and rich, but haven't been fully evaluated. Malaga has to do some diamond drilling and more exploration, but the resource potential growth is significant for the future of the company.
TGR: Do you expect this run that started 9–10 years ago to continue for a while?
A-JB: As long as the world markets' metal demand is there, as long as China has internal demand and emerging countries such as Brazil, India and Russia need metals.
TGR: How would you sum up the Val-d'Or camp?
A-JB: The whole Cadillac Break between Val-d'Or and Timmins at one time was the second or third largest producer of gold after South Africa. There are still lots of discoveries to be made. At present prices of gold, there are a lot of interesting, favorable host structures with projects that are going to be revived again. I'm confident of that. Some say the best place to look for a mine is near another mine.
TGR: Thanks for your insights.
Alain-Jean Beauregard is founder, shareholder, director and administrator of Geologica Groupe-Conseil Inc., Val d'Or, Quebec, a geological consulting firm that includes management, project supervision, property evaluations and geoscientific compilations at the national and international levels. He holds a Bachelor of Science in geological and mining sciences from Concordia University and a Certificate in Business Administration from Université du Québec.
Want to read more exclusive Gold Report interviews like this? Sign up for our free e-newsletter, and you'll learn when new articles have been published. To see a list of recent interviews with industry analysts and commentators, visit our Exclusive Interviews page.
1) Brian Sylvester of The Gold Report conducted this interview. He personally and/or his family own shares of the following companies mentioned in this interview: None.
2) The following companies mentioned in the interview are sponsors of The Gold Report: Aurizon Mines Ltd., Integra Gold Corp., Matamec Explorations Inc., Quest Rare Minerals Ltd. The Energy Report sponsors: Nemaska Exploration Inc., Lithium One Inc. Streetwise Reports does not accept stock in exchange for services.
3) Alain-Jean Beauregard: I personally and/or my family own shares of the following companies mentioned in this interview: None. I personally and/or my family am paid by the following companies mentioned in this interview: None. I was not paid by Streetwise for participating in this story.