A Simple Plan with Smart Technology Makes Canagold’s New Polaris a Promising Cash Cow
15th October 2021
Remember VCRs? Cassette tapes? Those worked well in their day, but today’s technology is faster, better, more cost effective, and offer more efficient audio and video systems today with digital streaming services. That is a good analog to what Canagold Resources (CCM.T) is applying to its New Polaris high grade deposit in Northwestern B.C.
Firstly, the big draw at New Polaris, from its early beginnings in the 1930s is its high-grade gold, more than 10 grams per tonne (gpt) gold (Au). From the 1930s to 50s nearly 250,000 ounces has been mined, processed to a concentrate, and barged. That all worked well until one of the barges sunk in 1951. The asset remained idle until geologist and entrepreneur Bradford Cooke, also founder of Endeavour Silver, acquired the project in the early nineties from a private owner. More than 1,000 drill holes later the company produces a resource estimate of one million ounces gold (1.6 mt at 10.8 gpt for 586k oz Au Indicated, 1.5 mt at 10.2 gpt for 485k oz Inferred).
More recently, in May of 2020 Canagold announced the results of a robust, cash-generating preliminary economic assessment (PEA). That PEA spells out 80,000 ounces of gold per year for 8.7 years with an after-tax IRR of 56% and payback within 1.9 years. The capital costs estimated at only US $111 million are a third of its NPV(5%) of US $333 million. Because of the high grade that PEA mine plan calls for an underground mine with a 750 tonnes per day (tpd) mill and requires a small footprint. The capital cost calls for only USD$111 million. What’s truly impressive are the low all-in sustaining cash costs of US $530 per ounce…and that’s where the secret sauce resides.
Today’s technology is the game-changer. Back to our cassette tape-to-streaming service analog, what Canagold did was to switch its game plan and apply modern day technology to its processing. Instead of shipping a concentrate, the company intends to pour gold dore bars right on site. How is that achieved? Through the use of bio-oxidization, or BIOX, which essentially oxidizes the gold concentrate with the use of bacteria (bugs!). BIOX has been around for a couple of decades, but you could still consider it recently new. Long-producing gold mines in South Africa, Brazil, Ghana, China and even extreme cold/hot climates such as Kazakhstan are using BIOX as key component to their ability to produce gold dore bars. Kirkland Lake’s Fosterville in Australia is probably the most well-known.
New Polaris is in a unique location. Just an hour south of Atlin B.C. near the Yukon border, the entire operation is remote but not isolated. It’s also nearer to sea-level, so it does not have the extreme temperatures that are associated with operations in BC’s Golden Triangle where drilling is seasonal. The entire operation at New Polaris is fly-in and fly-out and company is currently in the midst of a 24,000 metre 47-hole drill program, and intents to extend the program throughout the winter months—because it can drill year-round and could ultimately be mined year-round. All this is doable because the grade is so high, and the costs are so low. From a permitting standpoint, a remote location and small footprint is in its favour, and after all, it’s been mined there before. Nearby operating mines include Hecla’s Greens Creek mine and Coeur Mining’s Kensington on the Alaska side to the west and Coeur’s Silver Tip mine to the northeast.
Here’s where the investment opportunity gets interesting: The purpose of the current drill program is two-fold, firstly to upgrade the inferred resource to the indicated level with infill drilling. Secondly to expand the resource below the current 600 metre depth by marching the resource down dip. The other unique element to New Polaris is that while it has the same host rocks to those of the Golden Triangle, it has a very different style of mineralization. Its mineralization more akin to Ontario’s Red Lake district, a Greenstone belt with structurally controlled, steeply dipping quartz veins that can run as deep as two kilometers as is the case in Red Lake, Timmins and Kirkland Lake.
Canada’s Mesothermal Gold Deposits
By expanding the resource by 10%-20%-30% or more the company is targeting a revised plan that could reach 100,000 ounces a year for a 10 year mine life, a benchmark that would hold New Polaris to a new level. This could be achieved by bumping up the down-dip resources and, and tweaking the mine plan’s production rate towards 1,000 tpd. The current drill program has already produced some of the highest grade gold intervals in the history of the project, including 24.2 gpt Au over 6.6 m and 15.8 gpt Au over 13.0 m. What’s most exciting is that the drilling is expanding a parallel zone, not in the current resource with a recent intercept of 17.1 gpt Au over 8.4 m in the hanging-wall known as the C10 Vein, parallel to the C-West vein where the bulk of the current resource is.
Having reported only 12 of the 47 planned drill holes so far, Canagold should be providing a continuous stream of high grade gold newsflow for investor to eat-up. In fact, that should continue to extend and accelerate throughout winter as the company is topping up its till with a current $5 million financing and will have better access to B.C.s assay labs while other projects are on-hold throughout winter. These are truly interesting times in the life of New Polaris that could lead to ‘streaming’ of different sort.