Golden Share Resources -- Berens River project
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UPDATE: -- Sept 2nd, 2020 - Golden Shares signs LOI to sell Berens River to Midex Resources Ltd.
Here is the news release -- Berens Sale
Details of Binding LOI:
Tranche 1, cash consideration of CA$200,000, which was received.
Tranche 2, cash consideration of CA$300,000 to be paid on or before December 1, 2020.
Tranche 3, the issuance of 2 million Midex common shares at a price of CA$0.25 per share to be issued on the date of the first anniversary of the LOI.
Tranche 4, the issuance of a further 2 million Midex common shares at a price of CA$0.25 per share to be issued on the date of the second anniversary of the LOI.
Who is Midex?
Midex Resources Ltd. is a private Ontario junior natural resource company focused on northwestern Ontario. Midex owns 100% interest in 10,000 hectares surrounding the Berens River Mine project as well as 100% interest in 18,000 hectares in the Sturgeon Lake area. Midex is led by an experienced, successful junior mining team.
The deal closes on or about Sept 15th, 2020.
For GSH - This is a great deal that brings in some coin into the treasury while leaving some leverage into Berens River. Shareholders of GSH will now need to follow the evolution of Midex.
For Midex - Looks like they are consolidating the land position and with the existing 10,000 hectares, they will now not only have access to Berens River...but it also comes with a decommissioned (2007) airstrip right at site. That is another win for them.
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Commodities:
Gold (Au), Silver (Ag), Lead (Pb), Zinc (Zn)
This is a project 200 km's north of Red Lake that has had a long history including a period of profitable mining producing a significant amount of the commodities listed above. Since the last piece of metal was milled, around 73 years ago, there have been sporadic amounts of exploration from various companies.
To set the stage, the year is 1980 and gold is going crazy. Companies are able to raise some dollars to do some drilling and that is exactly what happened in the early 1980's on this project.
Now imagine being the geologist to show up at site and this is what you see:
This photo is taken in 2013, but it does shed light on the early 1980's report.
Here is the report -- 1981 Report
"Some dumped drill core and boxes were found south of the trenches in June 1981. Examination of pieces of core indicated that stringers of sphalerite and galena had been intersected by the drillhole. Some metagabbro was also seen in this drill core."
So not only is information about the project spread out over time, over several companies....it also apparently is spread out over the property itself.
There is a significant history that this blog could share, but that doesn't make much sense since it is nicely done up in a 2013 technical report with year by year information that goes back to the year 1887 when someone named A.P. Low recorded some related geology in the region. There might have been history before that, but that was the first written down history.
The technical report is here -- 2013 Report
The history here is a bit overwhelming, so we must look at an individual piece of it and consider the perspective at the time of that information.
Shaft #1 and Vein #1 were the heart and soul of the operation from 1938 to 1948. The numbers during that time do need to be put into context. During that time there were 560,607 short tons milled. This included 157,696 ounces of gold, 5,796,177 ounces of silver, 6,105,872 pounds of lead, and 1,797,091 pounds of zinc. The mill recovered 96.4% for Gold and 80% for Silver. That is an excellent recovery for gold and even though the silver appears significantly lower, it too is actually an excellent recovery in the context of trying to mill silver out of ore. The head grade for gold sat at 0.28 oz/t ...which is probably on the low side for the period and it is obvious that the silver/lead/zinc made up a big portion of making the mine economic. When running the numbers in today's value, it would be silver that would be doing some heavy lifting. The mine had 10 times more silver than Gold.
If that material were valued today, the answer would be CAD$433 million in Gold, CAD$195 million in Silver and CAD$7 million in Lead/Zinc.
All that metal was extracted from Vein #1 and came through Shaft #1.
This is what Shaft #1 looks like today with a cement slab for safety:
That shaft above was sunk 623 metres into the ground and an internal winze was sunk from the 558 metre level down to the 1,071 metre level. Production in the mill was recorded to have only come from level 518 metre level, so one must wonder exactly what they saw below that level and down to over 1 km into the earth. There is reference to drilling and a reserve calculated for the mine in those lower levels.
Between 762 metres and 990 metres below surface a company called MPH Consulting did a calculation as per the following:
75,000 short tons with an average grade of 0.21 oz per tonne of Au and 10.20 oz/t of Ag.
In addition to Shaft #1, there was another shaft called Exploration shaft #2. This one made it down to 168 metres and was used to access Vein #3. A station was developed at 58 metres and levels were developed at 104 and 150 metres. 267 metres of horizontal development was completed No material was extracted form this area and sent to the mill. A further exploration drift from the Shaft #1 access on the 475 level was developed toward vein #3 and that involved 252 metres of horizontal development in addition to 1,013 metres of drilling.
In 1947, the available reserves at site and the current price made the mine uneconomic and the mine was shut down. That was the last of production coming from the mine.
Let's take a stop and look at the reserve -- 75k short tons at 0.21 oz per ton Au and 10.2 oz/t of Ag. The average head grade for gold was 0.28 oz per tonne. This material was below that value and never became economic. This was an operating mine and even though the reserve here is non-43-101 compliant...the reason we have NI43-101 is for clear disclosure of the results and all assumptions are laid out and that they are reasonable. Basically to prevent people from promoting pumped up numbers. From the perspective of an operating mine and trying to determine if this material is economic....it wouldn't make sense to promote these numbers much higher as they would have just gone and mined them. So, from that perspective, the numbers should be close to being realistic That being said, we can find a hard in the ground number as more then just a rough number on the back of an envelope. Let's do the numbers...and why not include mill recovery.
75k short tons * 0.21 oz * 96% recovery = 15,120 ounces gold
75k short tons * 10.2 oz * 80% recovery = 612,000 ounces of silver
A quick aueq calculation:
0.32 oz/short ton.
convert to metric tonne = 0.36 oz/metric tonne
convert to grams = 11.2 gpt ...this was an uneconomic grade in 1947, but you don't have to look far in today's commodity market to understand what a significant value that represents. That represents roughly CAD$1k per tonne of value. Gold and Silver do not make a mine...profit margin makes a mine and the costs of underground mining are materially less than $1,000 per tonne.
That pretty much sums up Vein #1 and Shaft #1 as we know it today. Let's move onto Shaft #2 and fast forward a couple of decades.
In 1966, the Shaft #2 was deepened to 232 metres, a new station was developed at 187.5 metres and a level developed at 225 metres (113 metres of horizontal development on level 225 and 174 additional metres on level 150) Over an 8 year period, significant amount of drilling was completed from surface and underground. 24 holes (7,195 metres) from surface and from underground a total of 3,295 metres was drilled.
A lot of information over that period of time was brought to the office to figure out if anything was economic. The answer was no, but it did lead to some calculation and reserves of the area being calculated. At that time, the gold was price a set fixed price (standard) and it wasn't until the early 1970's that it disconnected from the US Government. Again, did they have any reason to try and promote the reserve numbers higher or did they try their best to be reasonable and came up empty handed on the profit margin analysis. From the perspective of that period, it is probably safe to assume the latter in the previous sentence. Let's run the numbers on those reserves.
460k short tons * 0.17 oz * 96% recovery = 75,072 ounces of gold
460k short tons * 6.2 oz * 80% recovery = 2,281,600 ounces of silver.
460k short tons * 5% lead zinc = 23k short tons of lead zinc or 46 million lbs
A quick aueq calculation:
0.29 oz/short ton
convert to metric tonne = 0.32 oz/metric tonne
convert to grams = 9.95 gpt ....in the 1960's when the price of gold was pegged at US$35 per ounce, this was clearly uneconomic. At today's prices it gives a rock value of approximately CAD$880 per tonne. Again, profit margin is king in this industry and that on the face of it, is a hefty profit margin.
At this point again, the mill stopped running in 1947, so all this material that is represented on paper, would theoretically still exist in the ground.
The 1970's brought a bit of work here and there on this project, but nothing too significant. Fast forward to a crazy gold price environment and that brings the 1980 to 1981 program where Vein #3 was concentrated for drilling and an additional 41 drillholes totally 6,100 metres was completed. In addition to the surface work, some underground work involved accessing levels 225 and extending horizontal drifting by another 350 metres. 26 more drillholes were completed from the underground totaling 9,450 metres.
There was an attempt in this program to go back into history and do a bunch of reconnaissance like trying to find and re-log previous core or trying confirm the collars of previous holes. It had mixture of success and failure, and made things a bit fuzzy. However, with the new drilling and information, the company at the time did release a pre-NI43-101 reserves/resources that included classifying to an inferred level.
Here are the numbers:
1983: (Vein 3)
891,048 metric tonnes grading 8.75 g/t Au, 150 g/t Au, 0.77% Pb and 1.12% Zn.
A quick AUEQ = 11.2 gpt ...and maybe when the price of gold was steady over $400 per ounce in 1982,it had potential...but that pulled back to the $300's following that mini-boom.
Following that period an additional 10 holes were drilled in 1986/87 and further reserve work was completed.
1988 had further drifting from the 225 metre level and another 6 drillholes were completed.
In 1989 a report was completed that had year another calculated resource to show the potential of Vein 3. The numbers are -- 175,158 tonnes at 7.72 g/t Au, 175.22 g/t Au. About 9.75 AuEQ gpt.This did not include lead or zinc.
In 1989 the property was handed over to the crown. After that a few samples and other drill programs were completed, but nothing too significant. Golden Share acquired the project in 2010 and some airborne surveys were completed in 2011 and the main technical report gathering all this history was issued in 2013. The year the industry went into another slump.
2020 has really changed the junior market and a project like this is probably being looked at from multiple eyes.
The numbers above show veining on #1 and #3 in the area of 10 gpt AUEQ upwards of 1 million tonnes. Rock value in the CAD$850 to CAD$900 range. Gives an in the ground value of close to a CAD$1 billion in potential for both Vein #1 and Vein #3. The potential happens when the price of gold per ounces goes from US$400 in the 1990's to US$2030 today.
This project needs a lot of 'smart' geological work on the data followed by strategic diamond drillholes to enhance the value. The history above is limited to vein #1 and Vein #3, but that by no means indicates limited potential. There is potential on the project and area beyond those two veins. Several surveys were done between 2016 and 2018 and there many anomalies that need further investigating.
Here is a map from 1993 that shows beyond just Vein 1 and 3.
This is only 1 of 4 primary projects on Golden Share's plate and this is 1 of 2 that are gold related. With the focus on Gold, this project and the other 'Band-ore' project should be getting a lot more attention.
Golden Share's main website has some good images of the anomalies that are being looked at.
Here is a link to their site -- https://www.goldenshare.ca/berens-river
The aim of this information above is to try and sort through the history and find some key bits of information that hopefully be put into context with today's gold price market on the significant potential it could bring to existing shareholders and stakeholders in the area. One of the key bits is clearly the % of Silver that just adds to the gold material. Silver is not a minor part of the story, but a major contributor.
Disclaimer: What do you want to see in here? Yeah, there are some calculations above that lead to $$'s in the ground value. Companies are not allowed to publish that information and I strongly agree that any companies that pay other firms to skirt around this issue should not be able to publish this information either. I am a one person blogger and I get paid zero dollars from any company in anyway. I do not provide services to any company in any manner. I do due diligence on companies and once I find something I like, I invest in it and I like to share that information as I see it to other stakeholders in the world. They can take it or leave it. I also get zero advertising from any of my blogs.
