With intersections of up to 65 grams gold per tonne over more than 13 metres, it’s easy to understand why mining analysts are taking a shine to the Hope Bay project in northern Nunavut, as well as to 50% owner
Mike Jones of Canaccord Capital describes Hope Bay as “one of the most important Canadian gold exploration projects currently under way.” Accordingly, the analyst issued a “speculative buy” recommendation for Cambiex, whose main asset is the prospective land package in Nunavut. The junior also has mineral projects in Quebec, French Guiana, Peru and Chile.
Cambiex currently trades at about 41 in a 52-week range of 57 and 23. It has 81.6 million shares outstanding (118.3 million fully diluted). The junior was incorporated in the early 1990s as a vehicle to hold the exploration assets of
Cambiex is about 21%-held by Cambior, which has been struggling with a heavy debt-load brought about by a disastrous hedging strategy. The gold and base metal producer has been selling assets at fire-sale prices to stay afloat, and more sales are expected in the months ahead.
Cambiex picked up its ground in Nunavut last summer, when it paid US$20.3 million to the previous owner, a unit of Broken Hill Proprietary. The Australian company had previously spent US$85 million exploring and developing gold deposits in a major greenstone-hosted gold system with a strike extent of about 80 km.
This work led to a resource of 4.3 million oz. gold contained in two of 17 drill targets. This calculation is supported by 177,350 metres of diamond drilling, 6,127 metres of overburden drilling, 2,341 metres of underground workings, and 16,761 tonnes of bulk sample. A prefeasibility study of the project included metallurgical and environmental studies.
Later in 1999, Cambiex sold a 50% stake in Hope Bay to
In his research report, Jones notes that the current program is focused on the Boston deposit in the southern portion of the mineralized greenstone belt, and on Doris, to the north. “The aim at Boston is to move at least half of the currently defined 2.4 million oz. resource (1.6 million oz. within reach of a decline) into measured and indicated, without chasing any strike extensions. At Doris, at the far northern end of the belt, BHP developed a combined surface and underground resource of 1.2 million oz. The current program is designed to support a feasibility study for a high-grade open pit and underground operation.”
BHP had tried to develop a stand-alone mine for the Boston deposit at the south end of the belt, some 80 km from tidewater. “Cambiex, on the other hand, has developed a belt approach, with a 4 million oz. hurdle,” writes Jones. Existing deposits already reach this threshold, he adds, “and there are a further 14 areas between these major deposits which have been lightly drilled and returned significant economic mineralization.”
The current program is aimed mostly at infill drilling, and Jones notes that some holes drilled beyond the margins of existing resources have returned mineralization. “Furthermore, these holes contain some very impressive grades, with the highest grade reported from this phase of the program being 148.7 grams gold over two metres, and the longest high-grade intersection being 13.5 metres of 65.3 grams.
The existing deposits are also open at depth, including Boston, where resources have been calculated down to about 350 metres below surface (thought to be the lowest limit of economic access by decline). The mineralization here consists of three large, continuous en echelon sub-vertical quartz vein systems, each of which contains several quartz-carbonate veins in discrete zones with widths of between 10 and 40 metres.
The Doris deposit consists of a steeply dipping quartz vein system in folded and metamorphosed basalts. Much of the existing resource is above a diabase dyke that cuts through the deposit at a depth of between 250 and 350 metres, though Jones notes that good intersections continue below it.
The goal here is to provide information for a feasibility study for a high-grade open pit (on the land side) and an underground operation where the deposit dips under the lake.
While the Doris deposit was thought to be an eroded anticline with two parallel quartz veins, Cambiex and Miramar now believe it is a hinge structure. “The presence of such a hinge zone, which is essentially flat-lying, thick and high grade, obviously augurs well for improving the economics of the project by allowing early exploitation in the original BHP resources,” Jones states. He adds that if the new interpretation proves to be correct, “we would expect that the Doris resource would be significantly increased.”
On the metallurgical front, prefeasibility work at Boston showed recoveries of 95% with a gravity-cyanide leach circuit. Metallurgical recoveries at Doris were more than 95%, with 50% coming off in a gravity circuit.
Jones concludes by describing Hope Bay as “one of the most significant gold finds in North America since Eskay Creek, but in a much different resource market to that of the late 1980s.
“Cambiex exists in a very small peer group of really high potential exploration projects, including those of Cumberland and Goldcorp,” Jones adds. “In different market conditions, Cambiex would have far more extensive coverage than it is currently receiving.”
Jones speculates that, based on a 3-million-oz. resource model with cash costs of US$150 per oz. and capital costs of about US$100 million, Cambiex’s capitalization “is less than half of that which we would expect for such a major, high-grade gold discovery in North America.”
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