Callinex CEO discusses 
VMS discovery at Pine Bay

VANCOUVER — Callinex Mines (TSXV: CNX; US-OTC: CLLXF) has caught the market’s attention with a deep discovery at its flagship Pine Bay polymetallic project in Manitoba’s historic Flin Flon mining district.

On Oct. 18 the company tabled results from drill hole 284-3-93, which cut 10.3 metres grading 6% zinc, 1.8 grams gold per tonne, 60.4 grams silver per tonne, 0.7% copper and 0.4% lead from 999 metres downhole. The company says the zinc, gold and silver values could represent the edge of a “long-lived and robust” volcanogenic massive sulphide (VMS) system. The intersection grades over 13% on a zinc-equivalent basis, and is highlighted by high silver grades.

Longitudinal section of the Cabin Zone Horizon and Callinex’s geophysical target. Credit: Callinex Mines.

Callinex’s claim package covers part of the Baker Patton felsic complex,16 km from Hudbay Minerals’ (TSX: HBM; NYSE: HBM) Flin Flon processing facility. The project has seen extensive exploration over the years, but it wasn’t until the company returned to historic work that it uncovered some of the richest precious metal grades ever found.

During the 1990s, Canadian miners including Placer Dome and Inmet Mining explored Pine Bay to define a large VMS deposit at depth. While reviewing historic work, Callinex found that several proposed drill holes into targets were never completed.

The company combed over the data and decided to extend holes previously drilled by Placer Dome. The company theorized that the Cabin zone horizon may not have been intersected at depth by historic drilling. Several historic holes, including 284-3-93 and 95-2, were selected for deepening as part of a 2016 drilling campaign.

“We had previously made our Pine Bay East discovery along strike, and that gave us a better stratigraphic understanding about the drill program, in terms of where the productive horizon was located,” president and CEO Max Porterfield said during an interview at Callinex’s Vancouver offices.

“Placer had drilled the most prospective part of the property, but they ended the hole in copper-bearing disseminated sulphides. They probed the hole, but the technology wasn’t as powerful at the time. We looked at this result and concluded they probably didn’t drill far enough,” he added.

Overview of Callinex’s property holdings in the Flin Flon VMS district in Manitoba. Credit: Callinex Mines.

Callinex’s experienced technical team hopes to uncover the next VMS mine within the prolific Flin Flon greenstone belt, where several smaller deposits are often found near a large alteration system within a major felsic volcanic centre. Historic and recent exploration has identified three VMS deposits, along with the new Pine Bay East zone, near the sizeable Baker Patton alteration zone.

“We’re fortunate to have patient shareholders who believe in the team and what we’re trying to do,” Porterfield continued. “This is systematic and focused exploration based on collective experience on VMS deposits globally. It’s not a shotgun approach here, and each time we complete a drill program we need to analyze the results to determine our next best steps.”

Callinex had previously outlined a structurally overturned 1,100-by-700-metre alteration zone. The massive sulphides associated with this mineralizing event could be preserved at depth, and the company’s geophysical target is modelled to have similar conductance as the discovery hole.

Drill core from hole 284-3-93 at a Callinex Mines’ Pine Bay East project in Manitoba. Credit: Callinex Mines.

“We’re looking at similar depths to mineralization that you’d see at many of the legacy operations in the Flin Flon camp,” Porterfield said. “That has always been our exploration thesis, and when you look at the average depth of drilling on our property, you see a similar profile. We’ve made the previous discoveries at Pine Bay East and our Sourdough target area, but the zinc-equivalent grades really stand out here.”

Over the past year Callinex has drawn institutional investment, including Resource Capital Funds and Adrian Day’s Europacific Gold Fund. The company closed a deal with Rick Rule and Sprott Private Wealth soon after announcing its discovery at Pine Bay. On Oct. 25, Callinex signed a term sheet with Sprott that outlines a $5-million, non-brokered private placement.

The offering includes 8 million non-flow-through units at 50¢ each, and 1.8 million flow-through shares for 55¢ per share. Units will consist of one share and one-half purchase warrant, exercisable at 75¢ within three years.

“It’s a great time for exploration because you’re not competing for drill rigs, and you can get more market awareness and better traction,” Porterfield said. “This was a really focused, strategic drill program for us born out of a lot of previous work. We’ve assembled one of the best geological VMS teams in Canada, and this discovery speaks to our strong technical work. It’s a vectoring approach, because these systems are often quite complex. This discovery is just the beginning of a really strategic land position in the district.”

Callinex shares jumped 21¢ after news of the Pine Bay discovery to a 54¢-per-share close at press time. The company had $5 million in working capital before the Sprott financing, and has 62 million shares outstanding for a $35-million market capitalization. Shares have a 52-week range of 22¢ to 69¢ per share.