Mega Precious Sees Mega Gold in Manitoba
By Ted Niles
Mega Precious Metals’ acquisition of the Monument Bay Project in December 2010 was, in Jim Rogers’ reckoning, a bit of a coup. Discovered in 1986 by Noranda, the project—located in northeastern Manitoba—eventually came into the hands of Bema Gold. Bema, Rogers says, “proceeded to spend a lot of money and do a lot of really good work. I think they were looking to move it forward, but then they were taken out by Kinross for their Russian asset [i.e. the Kupol Project]. At the time, Kinross felt Monument Bay was too small, so they rolled it out into a smaller company, Rolling Rock Resources, which is the company that we just took over in December.” Mega Precious Metals’ President and CEO believes that Monument Bay contains in the range of five to 10 million ounces of gold.
When Mega Precious acquired the 6,692-hectare property for $10 million, $28 million had already been spent on it. The company went to work straight away on an infill drilling program, and on June 27 announced an updated resource of 592,093 ounces gold in the measured and indicated categories and 1.19 million ounces inferred—an 47% increase. By the end of 2011, Rogers aims to grow the resource by a further 500,000 to 600,000 ounces. “At that point,” he says, “we’d have a total of over one million ounces measured and indicated, and we’d be able to put together a very good preliminary economic assessment. That will likely come January or February 2012.”
Mega Precious has drilled more than 15,000 metres at Monument Bay. Its summer/fall program will add another 15,000. August 3 assays include 3.27 grams per tonne gold over 15 metres (including 38.49 g/t over 0.7 metres), 7.91 g/t over 5.2 metres, 4.32 g/t over 8.7 metres (including 26.14 g/t over 0.8 metres), 1.44 g/t over 21 metres (including 11.45 g/t over 1 metre) and 2.06 g/t over 10 metres. Rogers comments, “Those are great widths. People think Monument Bay is just narrow veins, but it’s a big gold system. A lot of the initial work focused on the veins, but there’s more than that. Some of them will be mined as vein stopes, but others can be mined as large bulk mineable stopes, at say three to six grams. There’s awesome economics on that.”
Monument Bay is twice blessed in Rogers’ view. He believes the top 500 metres of the deposit contain in excess of two million ounces, and that its western part may be ideal for open-pit mining. He also sees considerable potential underground, so he plans to keep both options open. “If we find that we’ve got great numbers in the pit, we may step back and do more drilling there in the New Year. We’re planning to go underground next year. We’re submitting our advance exploration permit by the end of this month, and we’ve got our mine closure plan done. We’re doing everything we need to bring heavy equipment on a winter road, so we can do our test mining by, say, May or June next year. That would involve a ramp going underground about 160 to 180 meters and driving along some of the ore bodies to make sure that they’re actually lining up the way we hope they do.”
Rogers adds, “The thought that there’s a pit there basically doubles the project’s potential. You could grab 4,000 tonnes a day at 2 or 2.5 grams and 1,200 tonnes a day at seven to eight grams, and that would give you 170,000 to 200,000 ounces a year. That’s kind of our target model.”
Monument Bay is “infrastructure challenged”— accessible only by air, Rogers admits. He adds, however, “There’s a lot of incentives for roads to be built. The local First Nations have their reasons as well. And we’re 60 kilometres from a power line and already working with Manitoba Hydro to move that forward. Electricity is cheap in Manitoba.”
People think Monument Bay is just narrow veins, but it’s a big gold system —Jim Rogers
Rogers is philosophical regarding production. “If we get taken out along the way, that’s fine. But I think we have to be aggressive; we have to move it forward. I’m a production guy, and COO Glen Kuntz is a production guy. You have to do as much as you can as fast as you can; there has to be a sense of urgency to make it happen.”
Mega Precious is undervalued, according to Rogers. “At current prices, we’re at about $30 an ounce,” he argues. “Our peers are at $120.” He says the company has been undermarketed but declares this is about to change. “Things are coming together. We’ll have some regular news releases and a resource update in September. The news flow is going to be good, and I think people will start to see that Monument Bay is a big system with high production potential.” He concludes, “We are entertaining a few mid-tiers, and hopefully if one of them invests in us that will also show the market that we’re real.”
At press time, Mega Precious had 76.6 million shares outstanding at $0.83 for a market cap of $63.9 million. The company also has projects in Nunavut and Ontario’s Red Lake Mining district.