The Abitibi gold belt in Canada is one of the most famous mining hotspots on the planet with the first mines developed early last century. The area has produced over 190 million ounces of the yellow metal but geologists reckon there is more to come, estimating that the belt could host over 300 million ounces.
Recent discoveries have backed up this potential and one company tapping into the area is Vanstar Mining Resources Inc (CVE:VSR). The junior explorer holds five gold projects in La Belle Province, Quebec, namely: Nelligan, Felix, Amanda, Frida and Eva. Its flagship Nelligan project is an earn-in option/joint venture agreement with IAMGOLD (NYSE:IAG), with Vanstar owning 25% and the major holding 75%.
Proactive recently caught up with Vanstar’s chief executive JC St-Amour to find out more about the company and its growth story.
PROACTIVE: Can you please give us a brief history of Vanstar and how the company came into being?
JC St-Amour (JC): The company was founded in 2008 as an exploration company out of Montreal, Quebec, with properties focused on northern Quebec. As part of its exploration package, the company had the Nelligan property, which had some showings on it and did some exploration on the property with some decent results. Somewhere along the way IAMGOLD came along, I think, in that period where most mining companies or exploration companies were having a hard time raising money and the company took advantage of the opportunity with IAMGOLD to allow them to earn into the project and formed a joint venture with them. And as part of that agreement, and IAMGOLD’s exploration, the deposit was basically discovered and grown into what it is today, which is a 3.2 million ounce deposit and growing.
PROACTIVE: You mentioned IAMGOLD there. Can you outline what having a partner like that means for Vanstar’s development?
JC: For us, it’s very positive in the sense that they have the funds to advance the project. They’re the operator and they have the expertise to do it. Also, from our perspective, we are carried all the way to production, so we don’t have to put any money up to advance the project, which means that our shareholders don’t need to be diluted along the way to bring this project into production.
PROACTIVE: There appears to be a lot of interest in Canadian gold exploration at the moment. Can you account for this?
JC: Well, there have been some gold discoveries recently, so with people seeing successes, that obviously attracts investors - everyone wants to participate in the next discovery. And so, as a result of that, I think we’ve been able to attract capital for exploration in general. For example, AMEX Exploration (CVE:AMX) has a nice discovery with their Perron project in northwestern Quebec, and likewise, Great Bear Resources (CVE:GBR) in Ontario, has made a large discovery as well. So I think, with that type of success, interest in Canadian exploration definitely increases and companies like Vanstar benefit by having the ability to advance its own exploration assets.
PROACTIVE: And is there renewed interest in older camps, which have been producing in the past and where new exploration techniques/ technologies can be brought to them?
JC: Absolutely, for example Amex, proved that … the area that they were drilling was well known as a VMS (Volcanogenic Massive Sulfide) area – was explored for that in the past – there were some VMS deposits or showings, and you know, they obviously came across a gold deposit and have had a lot of success with that. That whole belt is actually very active these days with basically drilling all over that area including at our Felix project. That project was historically explored for iron ore and our focus now is drilling iron formations for gold that is potentially entrapped within them.
PROACTIVE: What are you expecting in terms of newsflow from Nelligan this year?
JC: I think we’ll be in a position to announce, in the next few weeks, that IAMGOLD is ready to go on that project and they do plan on drilling this summer. And, depending on how quickly turnaround times are for assays, we should see assay results, say late summer/early fall. And then their intention, as well, on top of this program is to update the resource later this year based on the results that they find in this program. The drill program will continue to delineate the deposit itself as well as step out and see how much more they can add along strike here as well.
PROACTIVE: What sort of activity are we likely to see at your other assets?
JC: Our other assets are earlier stages exploration projects. The most advanced of those is our Felix project, which we are drilling. We’ve drilled five holes to date, we’ve got another five to ten holes planned. We’ve just paused here for Spring break-up but the drill should be back there in the next couple of weeks. And we are anticipating some results from those first five holes any time now. I would say in the month of May sometime we should get something. And then the results from the next phase of the drill program will be coming sometime in the summer as well.
The first five holes tested an area where there was a historical hole that had been sampled for gold. The project in the 1970s was explored primarily for iron ore and gold was not the focus at the time. But there was one historical hole that was sampled, there were nine samples taken from it, more or less systematically, one and a half meter intervals each. And each one of those samples came back with gold grades, ranging from 0.9 to 1.8 grams per ton (g/t). So, the first five holes we drilled were in that area, essentially, to confirm those results. The next five holes will be in other areas on the property that are more related to the iron formations themselves, where they’re folded and faulted. And try to target gold-in-iron formation type deposits.
PROACTIVE: What sets Vanstar apart from your peers/others in the sector?
JC: I think we’re a low-risk exploration play. And I say that because Nelligan itself is a world-class discovery. It’s a large project, it’s has a good chance to be a mine at some point in the future. So in that sense, it’s largely de-risked relative to most exploration projects. And I think our value in the market is more than supported by the value of Nelligan. And so investors get all other exploration for free. Shareholders can benefit from any upside that we get from exploration success. There’s limited downside. If we’re not successful, we still have a strong cash position, well-capitalized, we don’t have to go to market anytime soon to move on to the next exploration targets.
I think investors are buying it (the stock) for Nelligan and any exploration success is gravy, basically.
PROACTIVE: What happens longer term, if Nelligan does go into production?
JC: There’s a few things that can happen. IAMGOLD may or may not decide to buy the project outright. Whether they do or not, we can also look at other projects that we can acquire and advance ourselves. So we are looking at M&A opportunities. For the right project, for the right deal, we wouldn’t shy away from doing something that can create value for shareholders. Obviously, you don’t want to do a deal for the sake of doing a deal, you want to make sure that it can create value. But if something comes along, with a project that can become another flagship project for us that we can control and we can advance at our own pace, we’ll definitely look at that.
If it (Nelligan) goes into production without being acquired, likewise, we can continue that strategy. We are funded to production and therefore will be cash flowing. At the same time we can continue to find areas to create value for shareholders through acquisition, and or exploration, or whatever the case may be.
Contact the author at [email protected]
Story by ProactiveInvestors
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