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NioGold Mining is Riding the Golden Highway

A picture, allegedly, is worth a thousand words.  Well the map below certainly tells a lot at a glance about NioGold Mining Corporation’s business case for its projects in the Malartic/Val d’Or mining camps.  

·    NioGold has a large landholding - 115 square kilometres in fact, making it the largest in the district - which is located along a number of major geological faults.

·    The landholding is located along the Trans Canada Highway 117, on a stretch dubbed the Golden Highway, as it links a large number of current and historic gold mines, gold development projects and gold milling facilities.  In total 45 million ounces of gold has already been produced along this section of the highway and there are known to be a further 15 million ounces of reserves.

·    There are a number of towns close by including Malartic (population 3,600) and Val d’Or (population 31,000) which has an auspicious name as it is French for ‘Valley of Gold’.



While the map does not show it directly there are also a number of other important facts to understand about the location of NioGold’s projects in order to understand the potential of the company.  Firstly the properties lie on the two and a half billion year old Abitibi Greenstone belt, which at 270km in length is one of the world’s largest archean greenstone belts and which has already yielded 170M ounces of gold over the last century, yet only 10% of it to date has been explored.  A second advantage is that the local infrastructure is excellent, with full-service towns nearby and access to road, rail, power, water, telecommunications gold milling facilities and an experienced labour force, all of which enables exploration and development to be cost effective. Thirdly the properties are in Quebec which is very supportive to mining. 

In fact Quebec has been rated the best place in the world for mining investment according to each of the last two annual Surveys of Mining Companies conducted by the Fraser Institute, an independent research organisation.  Respondents like Quebec because of the favourable geology, knowledgeable policy makers, a commitment to development, a supportive policy environment which provides stability, certainty and an advantageous tax system (whereby NioGold receives up to 38% in tax credits for work performed in the field, allowing the company to use tax credits for refinancing with no dilution to the share structure). 

A further advantage about the location is that NioGold’s landholding includes both undeveloped gold zones and three historic mines which were mined in the 1960s and 1980s, producing 600,000 ounces at the time, and so these are known gold deposits which offer the opportunity to rapidly define resources.  Moreover the known deposits at the project are reasonably close to the surface and so can be accessed by ramp.  To date however the landholding has only been drilled to a maximum depth of 500 metres yet neighbouring properties have considerable mineralisation at depth, so there may be further blue sky potential at depth.  


Background and Current Projects

NioGold’s strategy has been to get the best possible real estate, to drill, drill, drill, and then to define as many ounces as possible on its property.  Ultimately it will find a ‘big brother’ to help to JV the development into production.

To date all has been going to plan. NioGold acquired its first mining claims in the Abitibi district in 2004 at a time when the gold price was still relatively low.  It was able to extend its holdings, raise $4.9M private capital and begin drilling in 2006.  In 2007 it raised a further $7.6M of private capital and proved its first resource estimate of 340,000 ounces of gold on the Marban block of the property.  In February that year it also took an option to acquire 100% interest in the early-stage Pump Lake copper/gold/uranium project, some 200km south-east from Val d’Or from Ressources Maxima Inc.

During 2008 NioGold further expanded its property portfolio, acquiring 50% of the Siscoee East claims in Val d’Or. It also drilled 67 holes taking the cumulative total by the year end to 50,000 metres of drilling in 160 holes. The results to date have been encouraging with the best intercept in 2008 yielding 78.9g/tonne over 3 metres.  Several of the assays produced gold values of between 6 – 12 g of gold per tonne over intervals of 1 -2 metres while others produced results of 1 – 3g of gold per tonne over much longer intervals.  NioGold also has historic data on previous drill holes on the project. 

The current situation is that the company holds:

·    115 square kilometres of land in Malartic/Val d’Or mining camps of which roughly two thirds is 100% owned and the remaining third held under a number of JV and option arrangements. The first N43-101 resource estimate published in June 2007 on the Norlartic and Kierens deposits has high grades of around 2.7g/t.

Norlartic and Kierens Deposits Resource Estimates, June 2007
(at cut-ff grade of 1g/t for 0.200m depth and 2.5g/t for 200-600m depth)

·    186 square kilometres at the early stage Pump Lake project which lies 50km north of the Mount Laurier uranium district.  Pump Lake displays characteristics comparable to the Iron Oxide-Copper-Gold (IOCG) class of mineral deposits. These are typically large polymetallic systems hosting ores of iron, copper, gold, silver, uranium, niobium and rare earth elements (REE).


Current and Future Work Programme

By February 2009 NioGold had completed the terms of the earn-in agreements with Teck Cominco and Thundermin Resources to earn 100% interest in the Marban Block Property as it had spent $7m on exploration and development, completed a N43-101 resources investment on Norlartic and Kierans and undertaken 45,000 metres drilling.  The drilling to date at Marban has mostly been infill resource drilling and NioGold is now hoping to release a new resource estimate within a month. In February the corporate research company, Objective Capital, opined that the mineralised zone at Marban is “significantly larger than previously believed. At least ten easterly-striking, moderately-dipping mineralised zones are present within an area measuring 1,200 metres long and 350 metres wide, including three newly-recognised features to the north of, and above, the Marban mine”.

Meanwhile the 2009 drilling programme has begun, including 5 holes for 2,500 metres drilled on Siscoe East under an option to acquire a 50% interest from Alexandria Mineral Corp.  The best intercept here was a very high grade 43.67g/t over 1.9m.  6 holes have also been drilled on the Malartic properties though no results have been released as yet.  The plan to is target the NW extension on the Norbenite-Marbanite fault zone.  At present the company has C$2m in cash.

The big picture is that the company will conduct an aggressive 100,000 metre exploration drilling programme over 2 years to further explore and extend the resource along NioGold’s significant landholding along the Norbenite-Marbanite fault.  Ultimately the plan will be to attract a major partner to develop a mine. At Pump Lake NioGold have recently completed an airborne gravity study and it will next follow up on anomalies identified. 


The biggest risk, according to CEO, Rock Lefrancois, is that the company does not find more gold.  However he feels that the statistics are stacked in NioGold’s favour given the location of known deposits to the west, south and east.  As he told Proactive investors, “If we keep on drilling then we should plug into another deposit if we do the job right”. 

He cites for example, Agnico Eagle’s 3 neighbouring mines with reserves of 7.6million ounces and another immediate neighbour Osisko, who drilled 500,000 metres to define Canada’s largest gold reserve of 6.3M ounces which is being developed as an open pittable operation to come onstream in 2011. Fortunately the company has not faced any bottlenecks on its drilling programme even when the boom was at its height.   There are unlikely to be any gold milling capacity problems either with 7 mills within a 50km radius none of which are close to full capacity.  The closest is just 3km.

NioGold thus holds a large landholding at a great address in the heart of one of Canada’s most active mining camps in a favourable jurisdiction with excellent infrastructure and with interesting and successful neighbours.  The share price currently values the company at C$15m, but the company is seeking to drive this up both by a marketing campaign to spread word about the company in the US and Canada and by intensive drilling to increase resources.