Treasury’s Goliath: Canada’s next up-and-coming gold mine?

VANCOUVER — Treasury Metals (TSX: TML; US-OTC: TSRMF) is attracting attention with high-grade gold intercepts from drilling at its advanced-stage Goliath gold project near Dryden in northwestern Ontario.

“No one really knows who we are because we acquired the project later in its life and never had that big discovery hole,” Martin Walter, president and CEO, tells The Northern Miner during a phone interview. “But the phones are ringing now, and people are starting to notice that Goliath is a high-quality asset.”

The company drilled 3 metres of 24.2 grams gold per tonne from 293 metres deep, and 1 metre of 29.3 grams gold from 335 metres into a new, high-grade ore shoot positioned between two steeply plunging mineralization zones.

Using a 0.5-gram-gold cut-off, the deposit holds 810,000 indicated oz. gold within 9.1 million tonnes of 2.6 grams gold, and 900,000 inferred oz. gold within 15.9 million tonnes at 1.7 grams gold — more than double the resource since Treasury took over the project in 2008. 

Walter says a new resource estimate will be calculated within the next couple of months, though more drilling is needed to determine how the zone will influence the results. 

In the meantime, Treasury is charged with bringing the project up to feasibility. It has already submitted the 7,000-page environmental impact statement and is waiting for a formal review by the Canadian Environmental Assessment Agency.

“Best-case scenario, we could see some life on the permits within a year. We think we’re the next company in line for permitting a gold mine in Canada,” Walter says.

But it’s not just the high-grade intercepts casting a spotlight on the hopeful junior producer. Low-cost, small-scale mining projects have been the recent target of mergers and acquisitions, highlighted by Goldcorp’s (TSX: G; NYSE: GG) recent cash-and-share deal for Probe Mines (TSXV: PRB; US-OTC: PROBF), and Walter believes Goliath “is certainly positioned” to attract similar interest.

 “We are one of the very few quality assets left in Ontario that’s now moving towards production. Investors or major mining companies are looking for projects that are near-term, and that’s what we are,” he says.

The company envisages a combined open-pit and underground operation that would produce an average of 80,000 oz. gold annually over a 10.3-year mine life at a total cash cost of $700 per oz. gold. Capital expenditures amount to $92 million, with life-of-mine capex totalling $200.5 million. The after-tax net present value at a 5% discount rate is $144.3 million, and the study calculates a 32.4% internal rate of return.

Boosting the economics is the project’s excellent access to infrastructure. The property is 20 km east of the city of Dryden, and accessible by secondary roads that link up to the Trans-Canada highway. It’s near 115 kV power lines, natural gas pipelines and a workforce that Walter says can return home each evening “for a speck of dinner.”

He says the one thing the project lacks is more regional exploration over the remaining 49 sq. km property. Since 2011, 85% of the drilling targeted the project’s 2.3 km strike length, but reconnaissance surveys at surface show that gold anomalies and alteration extend another 5 km. 

“You’re not making money unless you’re drilling,” Walter says. “I’m a geologist that likes to drill, and the plan is to think outside of the resource and see what else is out there.”

Treasury is allocating $1 million towards exploration this year, and Walter notes that the feasibility program is fully funded.

Treasury has traded with a 52-week window of 25¢ to 50¢, and closed at 32¢ at press time. It has 76.4 million shares outstanding for a $23.8-million market capitalization.