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Posts tagged ‘QMX Gold Corp (QMX)’

QMX Gold president/CEO Francois Perron on his company’s plan to re-activate Manitoba’s Snow Lake mine

May 2nd, 2013

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From Flin Flon to Timmins

April 29th, 2013

Great Northern and Temex report gold news from Manitoba and Ontario

by Greg Klein

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Great Northern Gold Exploration’s TSXV:GGE Wekusko property hasn’t always delivered the grade. But four holes reported April 29 have ended a 2,133-metre Phase I program on a high-grade note, extending the McCafferty zone at depth and offering encouragement to the project in northern Manitoba’s Flin Flon greenstone belt. The results show:

  • 14.6 grams per tonne gold over 1.5 metres, starting at 49 metres in vertical depth
  • 1.52 g/t over 1.25 metres, starting at 92 metres
  • 9.19 g/t over 1.15 metres, starting at 56 metres
  • 5.98 g/t over 1.2 metres, starting at 90.5 metres.

True widths were estimated around 80%. The company labelled the second result a poor sample recovery due to broken and ground-up core.

Another five exploration holes, however, failed to find expansion potential. Of 11 previous holes reported March 13 from the same one-kilometre by three-kilometre grid, 10 didn’t show significant gold but one hole produced intervals of:

Great Northern and Temex report gold news from Manitoba and Ontario

Great Northern Gold’s winter drill campaign extended
its McCafferty zone at depth with high-grade assays.

  • 131.1 g/t gold over 0.3 metres, starting at 85.5 metres
  • 3.73 g/t over 0.5 metres, starting at 85 metres.

True widths weren’t available.

A non-43-101 in-house estimate by a previous operator suggested McCafferty holds 16,761 tonnes averaging 13.89 g/t for 7,483 gold ounces. An historic, non-43-101 estimate for Wekusko’s Gold Dust zone suggested 58,356 tonnes averaging 14.06 g/t for 26,361 gold ounces. Another non-43-101 estimate for the project’s past-producing Ferro mine suggested 73,760 tonnes averaging 15.31 g/t for 36,111 gold ounces.

While the estimate “is modest in size,” concedes Great Northern’s May 2012 technical report, “the grade is relatively high and, in aggregate, the tonnage and contained ounces exceed [what] was mined successfully from the adjacent Rex-Laguna past-producer. It should also be noted that the erratic distribution of gold in these zones as indicated in drill intercepts makes ore resource estimation difficult.”

Summer exploration will venture beyond the McCafferty grid to include soil sampling, mapping and prospecting on other parts of the property.

The company holds an option to earn 100% of the 8,880-hectare Wekusko as well as a separate 100% option on the nearby 60-hectare Ferro mine. The package lies 23 kilometres southeast of Snow Lake, home to HudBay Minerals’ TSX:HBM Lalor mine and QMX Gold’s TSX:QMX Snow Lake mine, a past-producer that QMX plans to re-open.

Great Northern opened April 29 at $0.06, half a cent over its previous close, then ended the day at $0.065. The stock’s 52-week high and low were $0.18 and $0.05. With 20.22 million shares outstanding, the company’s market cap came to $1.31 million.

In other April 29 gold news, an option adjacent to its 100%-held Juby property allowed Temex Resources TSXV:TME to substantially increase its resource estimate.

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QMX Gold president/CEO Francois Perron on gold’s sudden sell-off

April 24th, 2013

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In times like these

April 23rd, 2013

QMX Gold searches for Snow Lake financing, watches Lac Herbin output

by Greg Klein

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Maybe as much as anyone, QMX Gold TSX:QMX president/CEO Francois Perron knows the challenges of the industry today. His company’s Lac Herbin gold mine in Val-d’Or has yet to meet expectations. A “broken market” has stalled plans to re-open the Snow Lake past-producer in Manitoba. The yellow metal’s sudden price plunge has only added anguish to angst. Still he soldiers on, with a confidence born of long-term perspective.

“People are freaked out by short-term factors,” he insists. “I think the longer term is amazingly bullish for gold. I’m still in the gold business and I’m glad to be there.”

QMX Gold searches for Snow Lake financing, watches Lac Herbin output

After a disappointing 2011, QMX Gold’s Lac Herbin
operation reached its 2012 production target.

He bases much of his optimism on Snow Lake, a northern Manitoba operation that gave up 1.44 million gold ounces up to 2005. With surface infrastructure including a mill, the mine still has gold to offer, according to 2010 figures that show a proven reserve of 900 gold ounces and a probable reserve of 451,000 ounces.

Those reserves are included in the measured and indicated categories of a resource estimate that shows 1,000 ounces measured, 727,000 ounces indicated and 336,700 ounces inferred. Snow Lake exploration continued throughout 2011, totalling over 42,000 metres of drilling.

A 2010 feasibility study used a 7% discount rate to project a pre-tax net present value of $100.8 million and an impressive 80% internal rate of return. Initial capital costs came to $39.7 million for a reactivated underground mine that would produce 415,600 gold ounces over a five-year lifespan. Payback was set at 1.7 years.

Now, nearly three years later, QMX estimates the initial capex closer to $45 million. “Some of the numbers have moved around but some of that is pure inflation,” says Perron. “We have been optimizing the feasibility study. The initial study had cash costs of $640 an ounce. With a larger camp and a different format for financing equipment, we expect $825 an ounce.”

Snow Lake remains on care and maintenance, with a closure plan in place and dormant but renewable permits. It could be pouring gold in 12 to 14 months and ramp up to commercial production within 21 months. All that’s holding it up is a currently very elusive commodity—money.

“The initial approach was to finance through the public markets,” explains Perron. “By now we all agree that the public markets are broken. We have the advantage of having a project that’s been through the bankable feasibility process. On that basis I’m looking at private equity partners or some kind of strategic alternative like that.”

In May 2012 Credit Suisse agreed to lend the company, then known as Alexis Minerals, $45 million over 4.5 years for Snow Lake development. Contingent on the loan is a requirement that the company raise additional equity. The actual figure, says Perron, “depends on the amount of hedging that we put into it. I’d say they’re probably looking for $10 million to $15 million to backstop the project.”

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Bear attack

April 15th, 2013

What people are saying about gold’s sudden sell-off

by Greg Klein

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Just last Thursday, some headlines still forecast bullish news for gold. That changed suddenly on Friday and, by Monday, even more dramatically yet. Here’s a roundup of explanations, blame and even some optimism expressed on April 15.

“Fundamental explanations” don’t cut it

The Globe and Mail dutifully blamed the usual suspects before quoting Julian Jessop of Capital Economics. He pointed to “aggressive selling by speculative traders, rather than any change in the long-term or fundamental drivers.”

What people are saying about gold’s sudden sell-off

The G&M stated, “The ‘fundamental explanations’ for the plunge that are being tossed around simply don’t hold up, [Jessop] said, citing the fact that it’s not yet known whether Cyprus will in fact sell [its gold] and that the latest economic readings in the United States don’t signal a pullback by the Federal Reserve on its stimulus measures.”

“The hallmarks of a concerted short sale”

Ross Norman of the Sharps Pixley bullion brokerage noted that Friday began with “a monumental 3.4 million ounces (100 tonnes) of gold selling of the June futures contract … in what proved to be only an opening shot. The selling took gold to the technically very important level of $1,540,” which was last year’s low and “in many traders’ minds it stood as a formidable support level—the line in the sand.”

The initial sell-off was, he wrote, “rumoured to have been routed through Merrill Lynch’s floor team.” Two hours later came “a further 10 million ounces of selling (300 tonnes) over the following 30 minutes of trading. This was clearly not a case of disappointed longs leaving the market—it had the hallmarks of a concerted short sale….” The ploy pressured others to join the dumping frenzy.

Norman also stated, “The value of the 400 tonnes of gold sold is approximately $20 billion but, because it is margined, this short bet would require them to stump up just $1 billion.”

“Now so much depends on the algorithm”

Kitco News asked three veterans of the 1980 plunge for comparisons. Their responses show much has changed since then, at least in tactics.

Once dumping starts, electronic trading creates its own momentum, explained Peter Thomas, VP of INTL FCStone Precious Metals North America. “There’s no one to stop it as it goes into a freefall,” he told Kitco. “The computer lights up all red and the selling goes on until the computer changes colour. Now so much depends on the algorithm.”

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Turnaround Time

January 24th, 2012

Alexis Hopes Manitoba Gold Will Fund Abitibi Expansion

By Greg Klein

(Update: On July 5, 2012, Alexis Minerals Corp began trading as QMX Gold Corp TSX:QMX.)

At first glance, a company that loses money on an Abitibi gold mine might not seem the ideal spot for a CEO’s career move. But when François Perron joined Alexis Minerals TSX:AMC a year ago, he had his eyes on the main prize—the company’s Snow Lake Gold Project in Manitoba. That, he maintains, is the key to reviving the Lac Herbin Mine and finding others in Quebec’s Cadillac Break’s largest land holding.

“Snow Lake is the jewel, and that’s why I joined Alexis,” Perron says. “There’s this huge opportunity to unlock a lot of value with that project.” In operation from 1995 to 2005, it comes with a mill and other surface infrastructure intact. Below the surface lie proven and probable reserves averaging 4.04 grams per tonne for 451,900 gold ounces, which are included in measured and indicated resources of 728,000 gold ounces averaging 4.14 g/t. The inferred resource estimate is 336,700 gold ounces grading 4.43 g/t. The estimates date to December 2010.

Alexis Hopes Manitoba Gold Will Fund Abitibi Expansion

An October 2010 feasibility study for Snow Lake’s Main Mine and #3 zones projected a pre-production capex of $39.7 million with a sustaining capital cost of $35.2 million. The two zones would produce an average 83,000 ounces a year at a cash cost of $640 an ounce for a mine life of five years. The payback period was estimated at 1.7 years.

More recent studies project Snow Lake’s capex to be closer to $47 million. “That’s still very, very low because I have a mill that was working in 2005,” he emphasizes. “The mine is there; the shaft is already there; it’s a pretty dry mine. So we’re in a very good position. Most of the capital goes to developing new areas which we’ve identified.”

Exploration results from Snow Lake’s Dick Zone released January 12 include:

  • 14.04 g/t gold over 4.6 metres
  • 6.74 g/t over 5 metres
  • 5.19 g/t over 4.2 metres
  • 4.01 g/t over 4.1 metres
  • 3.77 g/t over 3.3 metres

January 12 exploration results for the Ruttan Zone include:

  • 6.17 g/t over 4 metres
  • 3.74 g/t over 7.6 metres
  • 2.79 g/t over 2.1 metres

January 12 exploration results for the Bounter Zone include:

  • 3.55 g/t over 1.5 metres
  • 4.6 g/t over 0.5 metres
  • 1.59 g/t over 1.3 metres

“The old mine was run on a very, very small footprint,” Perron emphasizes. “The camp that we’ve consolidated now is more than 90 square kilometres. There’s a large part of the belt that’s never been explored, very easily truckable to the existing mill. I have a five-year mine life from the old feasibility study. I’ve done another $8 million worth of drilling this year to add to it, and we’re just getting started. The key objective is, let’s get that mine into production. If I have that producing cash flow, I can start to fund some serious exploration and continue to add some serious value.”

With 1,000 square kilometres, we are the largest landholders on the Cadillac Break. That’s not moose pasture. There are more than 20 producing mines there —François Perron

In search of that cash flow, Perron focuses on financing. Alexis announced January 5 bridge financing of $10 million to fund working capital and repay a $2.1-million convertible debenture. “Debt financings take a bit longer than I would like,” Perron says. “But the bridge financing will give me the extra couple of months needed to do the other one properly. There could have been faster ways to fund, but I’m trying to make sure I get a good deal for the company.”

Perron estimates that once financing has been secured, Snow Lake will take 12 to 18 months to achieve commercial production. “Safe to say we’ll be exiting 2013 in production,” he declares.

As for Lac Herbin, Perron says, “The bleeding has stopped.” An anomaly of the sort not normally found in Abitibi, the mine managed to lose money. It opened in December 2008 after a feasibility study projected 80,000 gold ounces a year. The mine met production goals in 2009, but its 2010 output dropped to 24,900 ounces. By 4Q 2010, Lac Herbin’s cash cost came to $2,020 an ounce, helping explain the company’s 2010 net loss of $48.5 million.

“Historically, in the Val-d’Or district, mineralization behaved in a certain way. But we didn’t get the behaviour that exists elsewhere in the camp. We had one very wide structure called the S3 Zone, which we thought was going to carry further down. Now what’s left in the reserve are much narrower veins where the old approach of mining didn’t work. When you have a very unpredictable deposit, it doesn’t mean it’s not there. It means you have to adapt to it.”

Lac Herbin’s turnaround plan is three-fold. More stopes will be added, allowing miners greater flexibility “to adapt to an always-changing deposit,” Perron says. A mill upgrade will try to increase recovery from the former level of 89.3%, although he concedes the goal of 92% has proved elusive. Ongoing drilling aims to further explore and define the mineralization, with an updated resource estimate scheduled for release in the coming months.

On January 20, Alexis announced 2012 production guidance of 18,500 ounces to 20,500 ounces—modest, but a substantial increase over last year’s 9,000. The company also announced that 4Q production was 3,726 ounces, for a 2011 total of 10,197 ounces.

Looking ahead to a future when Lac Herbin has redeemed itself and Snow Lake is producing serious cash flow is what really inspires Perron. “With 1,000 square kilometres, we are the largest landholders on the Cadillac Break. That’s not moose pasture. There are more than 20 producing mines there. Over time, with effort, our objective will be to unearth other big mines. If you look at the Abitibi mines that have opened up in recent years, they have been below 200 metres. But 80% of the database that we have of the old Noranda stuff doesn’t drill further down than 200 metres.”

At press time Alexis had 593.6 million shares outstanding at $0.045 a share for a market cap of $26.7 million.