Shares of Balmoral Resources (BAR-V, BALMF-O) surged nearly 40% in the three trading days after the junior explorer reported results on Aug. 16from its summer drill program at i ts flagship Martiniere property in Quebec’s Abitibi region, up near the border with Ontario.
The first results from the ME-series of holes discovered a new bonanza- grade, gold-bearing structure in the footwall to the Bug Lake zone, the com – pany reported. The footwall discovery returned 272.79 grams gold per tonne over 3.9 metres across the width of the mineralized structure on an uncut basis. Adjacent intercepts of 1,530 grams gold over 0.55 metre and 409 grams gold over 0.50 metre were in- cluded in the interval.
“The markets have been awfully toughoneverybody forthelasttwelve to eighteen months, and there have been good results from a lot of com- panies that haven’t moved the needle, so we were very happy to see the mar – ket respond as it did to what is ob- viously an exciting intercept,” president and CEO Darin Wagner said in an interview.
“I think part of it is that we’ve had ninety-odd holes over the last twelve months that t old everybody Martin – iere was a good gold system, but this last set of holes really said, ‘OK, this might just be an exceptional one’ . . . this thing looks like it will continue to grow, and can obviously produce phe- nomenal grades.”
The new footwall discovery was inter – sected 40 metres beneath the western contact of the recently discovered Bug Lake zone, at a vertical depth of 120 metres. The Bug Lake zone lies between
Martiniere’s high-grade West z one and the ME-16 gold discovery.
So far Balmoral has had “phenomenal success” at Martiniere, Wagner says, with 10 different zones or significant oc- currences, all of which could report to one central mill. The company has traced the Martiniere gold system for over 1,500 metres, and it remains open in all directions. The system is 2 km north of the Sunday Lake deformation zone, which hosts Detour Gold ’s (DGC-T) Detour gold deposit 45 km west. The Detour Lake gold mine is ex- pected to start production in the first quarter of 2013. (The former Detour Lake mine, operated by Placer Dome, produced 1.8 million oz. gold between 1983 and 1999.)
“When we began evaluating and col- lecting these assets in the Detour belt, we looked at the size of the system at Detour where there are twenty million to twenty-five m i llion o unces sittin g there, and then along the next one hun- dred kilometres of the same belt virtually nothing, that’s not how these Archean gold belts behave,” Wagner says. “Con – ceptually, there had to be a lot more gold in this belt than just Detour Lake. That was the concept we started with, and it’s a concept t hat has proven correct. There is a lot more gold along this trend, and much like elsewhere in the Abitibi, it’s good grade.”
Wagner says it is a question of time and drill holes, and letting the system demon – strate how good it is, and how big it can be. “To this point we can’t define the edge of the system,” he adds, “which is a really good thing to say as an explorer.”
Wagner notes that multiple high- grade gold zones like those at Martiniere are the principal hallmark of all of the large gold systems in the Abitibi region
of Ontario and Quebec, and that these types of systems can host a number of individual gold deposits stretching to vertical depths of more than 1,000 metres. He also points out that it is rare for a single company to control an entire system, as Balmoral appears to be doing at Martiniere.
TodatetheMartiniere systemisshow- ing traits “not dissimilar to those associ – ated with large gold mining complexes in Val-d’Or, Timmins and Kirkland Lake,” he asserts. It has a “similar system of mineralization, the same controls as you see in major multi-million o unc e camps down there, and its grade charac – teristics are similar.”
Balmoral’s huge land position in the Abitibi greenstone belt — a belt of ancient rocks that s tretches through Quebec and eastern Ontario that has produced more than 130 mil – lion oz. gold — stretches for over 82 km along the Detour-Sunday Lake deformation zone (DSDZ), one of the principal gold-bearing fault systems
in the Abitibi.
When asked why this part of the Abi – tibi greenstone belt has been so under – explored, Wagner chalked it up to three principal reasons: the area is covered by overburden with no outcropping, providing little for prospectors and early miners to work with; historically, access to the area has been poor wit h few roads, making exploration expen – sive; and the relatively high-cost his – toric underground operation at Detour was not much of a drawing card, when gold was selling at US$350 per oz.
Other factors that allowed Balmoral to get control of such a large land pack – age in the area included fallout from the financial crisis of 2008. “Difficult market conditions like the ones today
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target price of $1.50per share. “We con- tinue to believe that the initial assay results are indicative of an expanding gold system,” he wrote in a research note on Aug. 17.
Lemieux initiated coverage of the jun- ior in January, and says his net asset valuation of the company at $132million, or $1.49 per share, is mainly based on Bal – moral’s extensive land position on the Quebec side of the DSDZ, and a 1.6million oz. potential mineral gold resource he sees emerging at the Martiniere property.
In addition to Martiniere, Balmoral has four other principal properties in the northern greenstone belt of the Abitibi: Fenelon, Detour East, Grasset and N2. All of them, with the exception of N2 in Ontario, are located along the Detour-Sunday Lake trend — which stretches through northwestern Que – bec and northeastern Ontario — and Balmoral controls about 82 km of strike length of this DSDZ on the Quebec side, Lemieux points out in a 20-page report on the company in January.
“The company is in the midst of ag- gressive exploration programs in a po- tential emerging gold district that has seen sporadic exploration,” he wrote in the report. “Detour Gold’s nameplate world-class mine being built on the On – tario side of the border along the trend is testament to the area’s reassessed and raising potential.”
Lemieux adds that while the junior was founded in 2010, it has already “assem – bled — in a relatively short time span — an extensive land package within the DSDZ, the most northern structural break that has seen lesser exploration.”
The company’s Fenelon deposit, to the east of Martiniere, hosts a 40,000 oz. high-grade lode-gold zone north of the DSDZ, and Balmoral holds an option to purchase a 100% interest. Its early stage Grasset property is to the
or in 2008 put companies under stress, and create some pretty good opportun – ities that are not available otherwise,”
And with a bit of time, patience and drill dollars, there is potential to dis- cover another Martiniere — or two, or three — along the trend, he declares. “It speaks to really how underexplored the whole area is up there, and the potential of the belt to work itself into a camp like Timmins or Kirkland,” he says. “Ob – viously Detour is going to be a big mag- net, given the scale of that operation, for things going forward. But if there are a few more Martinieres out there, it’s going to be a pretty special place to be. It’s sort of the final frontier for discov- eries in the Abitibi of that magnitude.”
Wagner, a 20-year veteran geologist, isnottobeunderestimated. After spend- ing the first decade of his career at Noranda, now Xstrata (XTA-L, XSRAF- O), and Cominco, now Teck Resources (TCK-T, TCK-N), Wagner went on to New Millennium Metals, which merged with Platinum Group Metals in 2002. In 2005 he became president of Sydney Resource, and in 2006 engineered its merger with Band-Ore Resources to form West Timmins Mining. The Thun – der Creek discovery on the West Tim- mins project in Timmins led to the sale of the company in late 2009 to Lake Shore Gold (LSG-T, LSG-X), in an all- share deal worth $424 million.
So far Martiniere has been broken down into various zones: Martiniere West, the Central zone, the Bug Lake zone and the ME-16 zone. Balmoral says most of the 9.5 by 7 km property re- mains untested.
The mineralization at Martiniere is typical of gold deposits in the Abitibi region, Wagner emphasizes, noting that it exhibits a strong element of shear- fault structural control; is gold dominant with minor associated silver; demon –
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strates strong association with litholo – gies and lithological contacts; and so far shows vertical continuity. According to the company, the vertical dimensions of the large gold deposits in the Abitibi can exceed their horizontal dimensions by a factor of 3 or 4 to 1. Indeed, several deposits in the region, Balmoral says, have been mined to vertical depths of more than 1,000 metres at average grades of 7 or 8 grams gold per tonne.
In June the company reported drill results from its winter drill program at
the Martiniere West gold zone. High – lights include 7.1 metres of 4.38 grams gold per tonne from hole 12-53,and 2.5 metres of 5.65 grams gold from 12-59. The Martiniere West zone extends over 375metres along strike, over 250 metres vertical depth and over 340 metres down-plunge.
South of Martiniere is the former producing Selbaie deposit that pro – duced 53 million tonnes of 1% copper, 1.9% zinc, 41 grams silver per tonne and 0.6 gram gold. Last year Balmoral discovered a volcanogenic m assive sulphide deposit (VMS) on the Mar – tiniere property, and recently re – ported a second potential VMS dis – covery almost 6 km east from the property’s principal gold zones. So far the initial discovery has proven pre – dominantly iron (as pyrite), but drill hole 11-09 returned a 0.5 metre inter – cept of 74.60 grams gold and 1,390 grams silver, along with strongly ele – vated copper, zinc, cadmium and tungsten. The recent discovery re – turned over 25 metres of anomalous zinc mineralization, which the com – pany says is encouraging.
At press time Balmoral was trading at 93¢ per share within a 52-week trading range of 49.5¢ and $1.30 per share.
Eric Lemieux, a mining analyst at Lau – rentian Bank Securities, has a “specula – tive buy” rating on the stock, with a
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N2, near Schreiber, is Balmoral’s only
asset in Ontario. The property is under – going drill testing, with exploration funded by partner GTA Resources and Mining (GTA-V).
east of Fenelon, near a fault splay of the DSDZ, and the Detour East project is on the border between Quebec and Ontario along the Detour Gold east – ern border, a few kilometres east of the Detour Gold deposit.
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The Northshore property (N2) is 30 km southeast of Matagami, Ont., and located along the Casa Berardi-Cam – eron fault zone. It is adjacent to the re- cently commissioned Vezza gold de- posit of North American Palladium