Monday 29th December 2014

Resource Clips


La Belle Providence

Aurizon Produces Low-Cost Quebec Gold

By Greg Klein

Ten projects notwithstanding, there’s no mistaking Aurizon Mines’ TSX:ARZ focus. They’re all funded by the flagship Casa Berardi Gold Mine, and they’re all in the same province. Speaking from his Vancouver HQ, the company’s Australian President/CEO talks about why he likes working in Quebec. Yes, it offers some of the world’s cheapest electricity, but George Paspalas gets to the heart of the matter, “People in Quebec generally understand how important mining is, and they embrace it.”

Paspalas adds, “The province has a very onerous regulatory process, but it’s a jurisdiction where, if you’ve done everything thoroughly, you get a permit. And then there’s the historic mining activity—which means there’s gold in the ground.”

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That’s especially true when you’re located in the bountiful Abitibi region, as are most Aurizon projects. Casa Berardi’s share of that gold in 2010 came to 141,116 ounces, an amount projected to hit 165,000 this year. The underground operation now produces the stuff at a cash cost of US$497 an ounce and, over the first nine months of 2011, created a cash flow of $72.3 million and net profit of $22.1 million, up 220% and 217% respectively over the same period in 2010. Up to 12 rigs are now expanding the underground resource as well as open-pit potential and have extended the mine life from 2016 to 2020. The next resource/reserve update is scheduled for 1Q 2012.

Aurizon’s hopes for its Joanna Project, however, have met with delay. Originally slated to begin producing an annual 100,000 gold ounces in 2013, Joanna’s feasibility study stalled last August due to higher-than-anticipated capital and operating costs. Nevertheless, the project’s Hosco Deposit boasts an in-pit resource estimated at 2.25 million ounces measured and indicated and 309,000 ounces inferred. Aurizon believes Hosco has underground potential, too. Three kilometres away, the Heva Deposit’s resource is estimated at 270,000 ounces indicated and 480,000 inferred. Drilling continues on both deposits, while Hosco’s feasibility is now scheduled for 2Q 2012 release.

After Joanna comes Marban. Located in Abitibi’s Malartic Mining Camp, it’s a joint venture with project operator NioGold Mining TSX:NOX. Aurizon is currently earning a 65% interest. Marban has a 2009 open-pit resource of 303,000 gold ounces indicated and 179,000 ounces inferred. Its underground resource comes to 296,000 ounces indicated and 182,000 inferred. An updated resource is expected by year’s end, while another 34,000-metre drill program begins this month.

Marban assays reported September 19 included one especially high result:

  • 906.23 grams per tonne gold over 2.9 metres
    (including 2,610 g/t over 1 metre)

Paspalas emphasizes that the uncapped grade has to be treated with caution. “Sometimes you hit a narrow vein or structure that’s carrying a whole bunch of gold like that, and you have to be very careful how you treat it,” he says. Even so, “Geologists just love this because it enables them to build up a structural model around how the fluids flowed and all that sort of stuff. They’re good numbers, but more importantly, structurally, it says there could be something there that fed this vein, that fed this structure. If you could find that, it would be rather exciting.”

If we want to build another mine, we’ve got the people. Casa Berardi was built on budget, on time, and the people who did that are still with the company —George Paspalas

Marban assays reported November 16 included:

  • 9.8 g/t gold over 5.8 metres
  • 8.3 g/t over 4.6 metres
    (including 30.5 g/t over 1.1 metres)
  • 1 g/t over 36 metres
    (including 5 g/t over 2.1 metres)
  • 1.5 g/t over 22 metres
    (including 1.8 g/t over 12.1 metres)

Just 10 kilometres north of Joanna, in the Destor-Porcupine Break, Aurizon is paying its way to another 65% interest. The project is the Fayolle Property, and the partner is Typhoon Exploration TSXV:TYP, which has two rigs drilling both infill and new targets to produce an initial resource estimate.

Aurizon has seven other Quebec projects, all nascent, either in the earn-in stage or subject to a letter of intent prior to earn-in. “These are very efficient, small exploration companies,” Paspalas says. “They’re very effective at good-value drilling. So we’ve been able to manage all these joint ventures without tying up our own resources.”

How does Aurizon choose its partners? “In a lot of cases they come to us,” he explains. “We’re known for being a pretty respectful partner, so we get a lot of people knocking on the door with opportunities.

“Our goal is to earn 65% by doing a feasibility study,” he adds. “Then, with a positive study, we decide where we want to go—do we go to 100%; do we want the partner to fund? In a lot of cases, these are small companies that would have trouble finding money to build a mine. We ask the partner, ‘Do you want to be part of this? Can you be part of this?’ And then we go from there.”

Paspalas joined the company last August, having served as COO for Silver Standard Resources TSX:SSO after holding senior positions with Placer Dome. “What attracted me to Aurizon is the potential for growth but also the people,” he declares. “They’ve got a lot of experience, and they’ve stayed with the company a long time. If we want to build another mine, we’ve got the people. Casa Berardi was built on budget, on time, and the people who did that are still with the company.”

This human resource, not to mention the mineralized resource and the mining-friendly jurisdiction, add up to some tangible figures. “We’ve got a very good asset with at least 10 more years of mine life. It’s making gold for sub-$500 an ounce, so it generates very good cash flow. We have a squeaky clean balance sheet, no debt, no hedging and $175 million in cash,” Paspalas concludes.

At press time, Aurizon had 163.02 million shares trading at $6.28 for a market cap of $1.02 billion.


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