Update: Drilling at Martiniere boosts Balmoral

Shares of Balmoral Resources (BAR-V, BALMF-O) surged nearly 40% in the three trading days after the junior explorer reported results on Aug. 16 from its summer drill program at its flagship Martiniere property in Quebec.

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 company reported. The footwall discovery returned, on an uncut basis, 272.79 grams gold per tonne over 3.88 metres across the width of the mineralized structure. Included in that interval were adjacent intercepts of 1,530 grams gold over 0.55 metres and 409 grams gold over 0.50 metres.

“The markets have been awfully tough on everybody for the last twelve to eighteen months and there have been good results from a lot of companies that haven’t moved the needle so we were very happy to see the market respond as it did to what is obviously an exciting intercept,” president and chief executive Darin Wagner said in an interview.

“I think part of it is we’ve had 90-odd holes over the last twelve months that told everybody that Martiniere was a good gold system, but this last set of holes really said, okay, this might just be an exceptional one…This things looks like it will continue to grow and can obviously produce phenomenal grades.”

The new footwall discovery was intersected about 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 zone and the ME-16 gold discovery.

So far Balmoral has had “phenomenal success” at Martiniere, Wagner says, with ten different zones or significant occurrences, 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 about 2 km north of the Sunday Lake deformation zone, which hosts Detour Gold’s (DGC-T) Detour gold deposit, about 45 km to the west. The Detour Lake gold mine is expected to start production in the first quarter of 2013. (The former Detour Lake mine, operated by Placer Dome, produced 1.8 million oz. of gold between 1983 and 1999.) 

 “When we began evaluating and collected this set of assets in the Detour Belt, we looked at the size of the system at Detour where there are 20 million to 25 million ounces sitting there, and then along the next 100 kilometres of the same belt virtually nothing, that’s not how these Archean gold belts behave,” Wagner says.  “Conceptually 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 that is proven correct. There is a lot more gold along this trend, and much like elsewhere in the Abitibi, it’s good grade.”

Now Wagner says it just a question of time and drill holes and letting the system demonstrate just 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 zones of gold 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 down to vertical depths of more than 1,000 metres. He also points out that it is rare for a single company to control the entirety of a given system, as Balmoral appears to have at Martiniere.

To date the Martiniere system is showing traits “not disimilar to those found in association with the large gold mining complexes in Val d’Or or Timmins or Kirkland Lake,” he asserts. It has a “similar system of mineralization, the same controls as you see in major multi-million ounce camps down there, and its grade characteristics are similar.”

Balmoral’s huge land position in the Abitibi greenstone belt — a belt of ancient rocks that stretches through Quebec and eastern Ontario and has produced more than 130 million oz. of gold — stretches for over 82 kilometres along the Sunday/Detour Lake deformation zone, one of the principal gold-bearing fault systems in the Abitibi.  

When asked why this part of the Abitibi greenstone belt has been so underexplored, Wagner chalked it up to three principal reasons: 1) the area is completely covered with overburden with no outcropping, providing little for prospectors and early miners to work with; 2) historically access to the area has been poor with few roads, making exploration  expensive; and 3) the relatively high-cost historic 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 package in the area included fallout from the financial crisis of 2008. “Difficult market conditions like the ones today or in 2008, put companies under stress and create some pretty good opportunities that are not available otherwise,” he explains.

And with a bit of time, patience and drill dollars, there is potential to discover 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. “Obviously Detour is going to be a big magnet, 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 and it’s sort of the final frontier for discoveries in the Abitibi of that magnitude.”

Wagner, a 20-year-veteran geologist, is not to be underestimated. After spending the first decade of his career at Noranda, now Xstrata (XSRAF-O, XTA-L), and Cominco, now Teck (TCK.B-T, TCK-N), Wagner went on to New Millennium Metals Corp., which was merged with Platinum Group Metals in 2002. In 2005 he became president of Sydney Resource Corp., and in 2006 engineered its merger with Band Ore Resources to form West Timmins Mining. The discovery of the Thunder Creek deposit on the West Timmins project in Timmins led to the sale of the company in late 2009 to Lake Shore Gold (LSG-T) 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 the vast majority of the 9.5 km by 7 km property remains untested.

The mineralization at Martiniere is typical of gold deposits in the Abitibi region, Wagner emphasizes, noting that it exhibits a strong element of structural control (shear/fault), is gold dominant with only minor associated silver, demonstrates a strong association with certain lithologies or lithological contacts, and so far demonstrates vertical continuity. According to the company’s website, the vertical dimensions of the large gold deposits in the Abitibi can exceed their horizontal dimensions by a factor as much as 3 or 4:1. 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. Highlights included 7.10 metres grading 4.38 grams gold per tone from hole MDW-12-53 and 2.50 metres grading 5.65 grams gold from MDW-12-59. The Martiniere West zone extends over 375 metres along strike, over 250 metres vertical depth and over 340 metres down plunge.

Immediately to the south of Martiniere is the former producing Selbaie deposit that produced 53 million tonnes of 1.0% copper, 1.9% zinc, 41 grams
silver per tonne and 0.6 gram gold. Last year Balmoral discovered a volcanogenic massive sulphide deposit (VMS) on the Martiniere property and recently reported a second potential VMS discovery almost 6 km east of the principal gold zones on the property. So far the initial discovery has proven to be predominantly iron (pyrite), but drill hole MDE-11-09 returned a 0.50 metre intercept of 74.60 grams gold and 1,390 grams silver along with strongly elevated copper, zinc, cadmium and tungsten. The recent discovery returned over 25 metres of anomalous zinc mineralization, which the company says is encouraging.

At presstime in Toronto 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 Laurentian Bank Securities, has a Speculative Buy rating on the stock with a target price of $1.50 per share. “We continue 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 junior in January and says his net asset valuation of the company at $132 million or $1.49 per share is mainly based on Balmoral’s extensive land position on the Quebec side of the Sunday/Detour Lake Deformation Zone and a 1.6 million 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, Graset and N2. All of them, with the exception of N2 in Ontario, are located along the Sunday/Detour Lake trend, which stretches through northwestern Quebec and northeastern Ontario, and Balmoral controls about 82 km of strike length of this Sunday/Detour Lake deformation zone on the Quebec side, Lemieux points out in a twenty-page report on the company in January. “The company is in the midst of aggressive exploration programs in a potential emerging gold district that has seen sporadic exploration,” he wrote in the report. “Detour Gold’s nameplate world-class mine being built on the Ontario 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 “assembled in a relatively short time span an extensive land package within the Sunday-Detour Lake deformation zone (DSDZ), the most northernly structural break that has seen lesser exploration.”

The company’s Fenelon deposit, to the east of Martiniere, hosts a 40,000-ounce 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 east of Fenelon, near a fault splay of the DSDZ and the Detour East projecti s on the border between Quebec and Ontario along the Detour Gold eastern border, a few km east of the Detour Gold deposit.

The Northshore property (N2) is 30 km southeast of Matagami in Ontario and is situated along the Casa Berardi-Cameron fault zone adjacent to the recently commissioned Vezza gold deposit of North American Palladium (PDL-T, PAL-X). N2, near Schreiber, is Balmoral’s only asset in Ontario. The property is undergoing drill testing with exploration funded by partner GTA Resources and Mining (GTA-V).