Wednesday 23rd September 2020

Resource Clips

How Big Is Big Enough?

Cap-Ex Could Be Canada’s Next Major Iron Ore Player

By Ted Niles

Brian Penney has no doubt Cap-Ex Ventures TSXV:CEV will be the company to take the Block 103 iron property to production. Indeed it is for this very purpose that the Chairman of Operations was brought to the project in December 2011—when Cap-Ex entered into a management agreement with merchant bank Forbes & Manhattan. An alumnus of the Iron Ore Company of Canada (a subsidiary of Rio Tinto), Penney says, “That’s the expertise I bring to this picture.”

Penney continues, “I’m a metallurgist, and my whole career has been on the operating side of iron ore rather than the exploration side. That’s one of the reasons why Cap-Ex joined with Forbes & Manhattan. I am myself a Forbes employee. We understand the blueprint in terms of removing the risk to allow us to get to production, and that’s what we’re here to do.”

Cap-Ex Could Be Canada's Next Major Iron Ore Player

Besides Penney, the arrangement with Forbes saw François Laurin appointed President and CEO. As the CFO of Consolidated Thompson Iron Mines—itself a Forbes company—Laurin helped develop from scratch the Bloom Lake Iron Ore Mine which, like Cap-Ex’s Block 103, is located in northern Quebec’s Labrador Trough. It was for Bloom Lake that Cliffs Natural Resources acquired Consolidated Thompson in January 2011 for $4.9 billion, and Cap-Ex also hopes to succeed in the region. “The group that led the 2011 program [at Block 103] did a very good job recognizing the potential and staking the claims that they have,” Penney notes. “[But] from a resource perspective and the requirements to get into production, I think they realized that they needed some help at this stage because of the immensity of the project. That’s where Forbes can bring their expertise.”

The Labrador Trough extends through northern Quebec and Labrador and produces 99% of Canada’s iron ore. The 7,175-hectare Block 103 property is located 30 kilometres northwest of the town of Schefferville, Quebec. While the property does not yet have a resource estimate, it finds itself strategically situated between the LabMag and KéMag deposits currently being developed by New Millennium TSX:NML in joint venture with Tata Steel Limited—the 10th largest steel producer in the world. With a feasibility study underway, the LabMag deposit has measured and indicated resources of 4.59 billion tonnes grading 29.45% iron and 1.15 billion tonnes at 29.32% inferred; KéMag has 2.45 billion tonnes at 31.27% measured and indicated and 1.01 billion tonnes at 31.15% inferred.

Penney comments, “New Millennium seems to think there’s a mineralization zone extending between KéMag and LabMag, and if so—and this is supported by our drill holes in the area as well—it will run right through Block 103. Based on the magnetic signature, based on the history, and based on the geology in the area, we think the possibilities for Block 103 are limitless. I’ve seen enough iron ore to know that there’s plenty there.”

Cap-Ex undertook a 6,000-metre drill campaign in 2011; February 7 results from the Northwest zone include

  • 30.6% iron over 148.4 metres
  • 31% iron over 118.9 metres
  • 31.5% iron over 91.4 metres

January 26 assays of the Greenbrush zone include

  • 30.9% iron over 204.2 metres
  • 29.9% iron over 194.2 metres
  • 30.3% iron over 128 metres
  • 30.1% iron over 152.4 metres

Penney remarks, “The assays are consistent with almost every assay we’ve put out to date, which is very positive for Block 103. The grades are fairly consistent with New Millennium’s results from a magnetite deposit—pretty typical 30% iron, delivering the Davis Tube quality concentrate at 68% iron. We were going approximately 200 metres from surface, and at times the drill holes ended in mineralization. It’s just an indication of how much potential resource is there.”

Based on the magnetic signature, based on the history, and based on the geology in the area, we think the possibilities for Block 103 are limitless. I’ve seen enough iron ore to know that there’s plenty there —Brian Penney

Given the size of the project, Cap-Ex finds itself with an enviable problem. “The question is, how big is big enough?” Penney says. “Block 103 is 18 kilometres long and 9 kilometres wide, so if we want to drill the entire extent, even at an inferred level, we will be many years doing so.” Cap-Ex has planned a 15,000- to 20,000-metre drill program for 2012, to begin mid-May, and it will focus on the Northwest and Greenbrush zones. The company’s maiden resource estimate will be based on the Greenbrush drilling and is expected to be released 4Q 2012. Penney reports that to mitigate the problem posed by the property’s size, “What we’re also doing in 2012 is bringing on the engineering program. We’ll commence that within the next month or two, and that will really detail the timeline to production. We hope by the end of 1Q 2013 to issue our preliminary economic assessment.”

Cap-Ex will also conduct a 5,000-metre drill campaign this year at its Redmond property, located 10 kilometres south of Schefferville and on strike with Labrador Iron Mines’ TSX:LIM property of the same name. Labrador Iron Mines’ Redmond deposits produced, during the 1970s and early 1980s, roughly 35 million tonnes of direct shipping ore (DSO) grading between 52% and 54% iron.

Formerly a mining town, Schefferville ceased operations in 1982, and while it has rail access to the Port of Sept-Îles, Penney acknowledges that significant infrastructural improvements will be necessary. However, between the advantages of Quebec’s abundant and cheap hydro power, federal investment in a new deep-water port at Sept-Îles and the Quebec government’s $80-billion Plan Nord infrastructure development program Penney declares that Quebec is “quite possibly the best province in Canada from a resource development perspective.”

He concludes, “I’m very excited about 2012. It’s going to be a big year for Cap-Ex. And in 1Q 2013, with our PEA release and our maiden resource, you’re going to see [our] market cap increase significantly. I think we’re going to prove up a deposit that will be comparable to New Millennium’s.”

At press time, Cap-Ex had 57 million shares trading at $1.09 per share for a market cap of $62.1 million. In January, it closed a $10.2-million private placement. The company’s other projects in the Labrador Trough are Lac Connelly, Redmond, Porky Lake and Snelgrove.

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