The Urban-Windfall District in Quebec Heats Up on February 6th
Kitco Commentaries | Opinions, Ideas and Markets Talk
Featuring views and opinions written by market professionals, not staff journalists.
Several of the world’s largest gold and base metal deposits were found in Eastern Canada’s Abitibi Greenstone Belt (AGB). The AGB is an established gold mining district, which extends from Wawa, Ontario, to Val D’Or (Valley of Gold) in Quebec. This highly prolific mining territory boasts over 100 mines and production of 170 million ounces of gold since 1901. Mining in the region experienced resurgence between 2000-2010 when Osisko and Detour Gold invested heavily in two areas, Malarctic and Detour Lake.
This district has multiple benefits for miners that explore in the AGB besides the recent high-grade discoveries that have been made by a plethora of mining companies. For over 25 years, the government of Quebec has provided a low corporate tax rate along with subsidies and grants to miners exploring the district. To say this is a mining friendly district is an understatement. The government of Quebec routinely mails out checks to exploration companies thereby subsidizing miner drill programs. Furthermore, very good infrastructure is in place allowing exploration companies easy access to skilled labor, drilling companies, and assay labs, thus cutting down the costs of drilling their properties.
On August 25th of last year, Osisko Mining Corp. (OSK.TO) made a major discovery on the AGB at their flagship Windfall property. This significant discovery lies in the Urban Township of Quebec between Val-d'Or and Chibougamau. The area is known for its gold and copper production and excellent infrastructure for exploration and mining. Gold was initially discovered in the Urban-Windfall District in 1937 along the south shore of Lac Rouleau.
During the following September, Osisko Mining began a series of large capital raises as management turned its focus to this very promising deposit. I was in attendance on September 15th, during the company’s presentation at the Precious Metals Summit in Beaver Creek, Colorado, when they unveiled their plan to concentrate specifically on this new discovery at Windfall. Management informed the audience they believed there could possibly be a 5 million oz. gold deposit at Windfall and they were going to focus on this deposit with a major drill campaign.
Then, in late December, the company announced a 250,000 meter drill program at Windfall as they continued to hit high grade intercepts on the property. On February 6th, the company announced a C$30M bought deal equity raise, which was immediately bumped up to C$52M. This was the company’s fifth financing since the aforementioned August discovery of last year. They also increased the drill program to 400,000 meters. This series of events led to a sudden explosion in interest in the Urban-Windfall District.
On the very same day of February 6th, two micro-cap exploration companies, which are on trend of the Osisko Windfall deposit, announced financings. BonTerra Resources (BTR.V) announced a C$6M bought deal, which was increased not once, but twice! The next day the company announced a larger deal at C$9M, which was upped yet again to C$12.9M a few days later. Osisko Mining has taken 10% of this finance and billionaire mine financier Eric Sprott has participated for an undisclosed amount as well. BonTerra owns two high-grade gold deposits in the area and both contain 43-101 calculations. The company’s Gladiator Project lies just south of Osisko’s Windfall deposit and the proceeds from the financing will fully fund an aggressive drilling campaign.
The other micro-cap exploration company at Urban-Windfall to announce a finance on February 6th was Secova Metals (SEK.V), which is run by the very same team responsible for making the original discovery at the now Osisko Windfall deposit. Eagle Hill Exploration Corp., under the guise of the now Sekova CEO Bradley Kitchen, was the company which discovered Windfall at the peak of the last gold bull-run in November 2011. Eagle Hill was eventually combined with three other exploration companies at the tail end of the vicious four year miner bear in June of 2015. This new company, Oban Mining, which one year later was changed to Osisko Mining, now owns the Windfall deposit. Secova now controls two projects in the same area as Windfall. The recently acquired 4,354-hectare Eagle River gold deposit is on trend and just south of Osisko’s Windfall project which management is intimately familiar with. The company is planning its initial exploration program based on historic drilling information from the site which was also recently acquired along with the claims.
Not to be left behind, there is a third micro-cap player in this saga which also happens to own a large land package adjacent to the Windfall property. Beaufield Ventures (BFD.V) announced a C$4M bought deal finance on February 8th, which was upped to C$6M the very next day. On the same day of the announced bought deal, Beaufield issued a press release stating they will increase the ongoing drill program at Urban. The company’s ET target is surrounded on three sides by Osisko Mining's Windfall property and is located less than 2 kilometers from the Windfall gold deposit. A magnetic geophysical anomaly that appears identical to the magnetic anomaly at Windfall-Caribou will be drilled with at least two starter holes to assess potential. The property will remain the principal focus of the corporation’s exploration activities for 2017.
Over the past week, nearly C$75M has been raised to explore the Urban-Windfall District by four exploration companies. This is a significant amount of capitol to be invested in such a concentrated area. I strongly believe that if Osisko does indeed prove up 5 million high grade ounces of gold at Windfall, the whole district has a very good chance of eventually being acquired by a major global miner.
Full Disclosure: I personally own shares in all of the companies mentioned and recently participated in the Secova Private Placement. Please do your own due diligence before purchasing shares in any of the companies mentioned in this article.
By David Erfle Contributor to Kitco News
David Erfle is a 52 year old self-taught mining sector investor. He stumbled upon the mining sector in 2003 as he was looking to invest into a growing sector of the market. After researching the gains made from the 2001 bottom in the tiny gold and silver sector he became fascinated with this niche market. So much so that in 2005 he decided to sell his home and invest the entire proceeds from the sale into junior mining companies. When his account had tripled by September, 2007, he decided to quit his job as the Telecommunications Equipment Buyer at UCLA and make investing in this sector his full time job. He personally survived two bear markets, witnessed incredible sector changes and had to alter his investment philosophy numerous times in order to adapt to changing market conditions."