Sunday 23rd September 2018

Resource Clips

Old School

Upper Canyon Isn’t Waiting For a 43-101 Estimate to Mine Gold in Quebec

By Ted Niles

Full credit to Tom Thomsen for saying one of the more shocking things we’ve heard lately. When asked if he intends to produce an NI 43-101 resource estimate for the Brosnor Gold Project, the President/CEO of Upper Canyon Minerals Corp replies, “Not even interested.” Be he madman or genius, Thomsen’s reasons for flying in the face of orthodoxy and mining Brosnor, as he puts it, “old school,” are compelling.

Thomsen believes he has 100,000 ounces gold at his 923-hectare flagship property, located 30 kilometres east of Val d’Or, Quebec. Following a 5,700-metre confirmation drilling program (which will be 43-101 compliant), his plan is to bulk sample Brosnor, custom mill the ore locally and, hopefully, reap the rewards. No resource estimate, no preliminary economic assessment, no prefeasibility study. Says Thomsen, “I have exactly enough cash on hand to finish our current program plus permitting: $700,000. We have outstanding warrants at a dime, and my job right now is to get those warrants exercised. That will put enough money in my till to do what I need to do. Even if I only have 50,000 ounces, given today’s market and how low my costs are, there’s $30 million to $40 million of profit there.”

Upper Canyon Isn't Waiting For a 43-101 Estimate to Mine Gold in Quebec

Thomsen is not opposed to NI 43-101 per se. He explains, “I understand why it was put in place. But companies are spending way too much money having to prove up ounces to be able to raise money. You’re causing an environment where these small deposits—under 200,000 ounces, not big enough for the majors—are dead because the shares of the companies that own them are too low because they raised a crap-load of money trying to prove up those ounces in the first place.”

Brosnor may not have a compliant resource estimate, but it’s not as if Thomsen has no idea of what’s there. In 1982, then-owner Noranda came up with a reserve for the Adelemont and Norcourt zones: 251,747 tonnes grading 4.08 grams per tonne and 31,164 tonnes at 4.5 g/t, for a total of 40,000 ounces gold. Also, Brosnor is within easy distance of Val d’Or, a major mining town, and a quarter-mile by road off a major highway. The infrastructure, Thomsen enthuses, “is something you dream about. If I need a geologist to go out and look at the property, I make a phone call and he’s there. Mining crews can sleep in their own beds and drive to the property. There are mills that are very close; there’s power right there. There’s everything you need without a huge amount of expense.”

And there’s a decline, as well, dating from 1986. “It is about 700 metres long and goes down to the 100-metre level,” Thomsen reports. “Brosnor would not have been attractive to me, if the decline wasn’t there. It would cost me $8 million to put in now and just wouldn’t be profitable.”

In 2008, Upper Canyon reported Brosnor assays as high as 3.15 g/t gold over 5.7 metres, 4.35 g/t over 3.3 metres, 4.33 g/t over 2.6 metres and 30.93 g/t over 1.6 metres. But more important to Thomsen is the border it shares with Richmont Mines’ Monique property. Richmont announced assays this month including 3.02 g/t gold over 15.2 metres, 4.25 g/t over 17.1 metres, 8.07 g/t over 10 metres and 6.76 g/t over 12.9 metres. “It’s pretty insane to believe that those numbers would stop right at the boundary,” Thomsen argues.

Go in, custom mill it, and take your profit! With gold at this level, the profit margin is way too attractive – President/CEO Tom Thomsen

To Thomsen, Richmont proves his point about resource estimates. He explains, “They put their [Beaufor] mine into operation in 1996, right before 43-101 came in. If they tried to do it a year later, it never would have got off the ground! I think you may as well go after the ounces you’ve got, and once you’re underground, mine it when it’s there. Just like Richmont did. That’s the way it used to be done.”

He continues, “The beauty of Brosnor is that it’s not labour intensive, and it’s not costly, because I’m basically hiring everybody. I have no desire to go through permitting on my own. Go in, custom mill it, and take your profit! With gold at this level, the profit margin is way too attractive.”

Thomsen estimates it will take six months to complete the permitting process and another three to open up and dewater the decline. Then Upper Canyon starts pulling ore.

Does Thomsen worry that investors might be leery of so unconventional a plan from a company that, at press time, has a share price of $0.09? He responds, “I’m not telling people to buy stock today. As I told my kids, I believe that if you buy it to 20 cents, within a year it will be worth three times that. The reason why is, after everything is said and done, if I have every single warrant exercised, I’m going to have $60 million in the bank and less than a 100 million shares outstanding.”

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