Banks Island banking on quick-start gold mine

Vancouver — Recently-listed Banks Island Gold (BOZ-V) has hit more high-grade gold as it looks to expand the resource at the production-ready Tal zone on its northern British Columbia property.

Banks Island, which listed on the venture last October, has drilled roughly 4,700 metres in 36 holes since listing with drilling designed to upgrade the current resource on the Tal zone and expand it at depth. 

The most recent results from the program include hole 29 that hit 2.1 metres grading 50.8 grams gold per tonne and 43 grams silver per tonne from 201 metres downhole, and hole hole 32 that cut 1.8 metres grading 26.5 grams gold and 13 grams silver from 201 metres downhole. Both holes are estimated true widths, and, drilled at a minus 45 degree angle, intersected the mineralized zone below the resource at roughly 145 metres below surface.

Previous results from the drill program include hole 15 that returned 7.4 metres carrying 20.7 grams gold, 55 grams silver, 12% zinc, and 1.3% copper from 33.6 metres depth, and hole 13 that cut 1 metre averaging 64.4 grams gold, 35 grams silver, and 2.3% zinc. Both holes targeted the current inferred resource and also represent true widths.

The resource at Tal stands at 47,000 inferred tonnes grading 24 grams gold, while the nearby Bob zone hosts 55,000 inferred tonnes grading 20.9 grams gold and the Discovery zone hosts 13,000 inferred tonnes grading 25.3 grams gold. 

The 120-sq.-km Yellow Giant property that hosts all the deposits sits on Banks Island, which itself sits roughly 120 km south of Prince Rupert. The company optioned the property from Imperial Metals (III-T), and must spend $3.25 million over 4 years to earn 100%. Imperial Metals, which owns 5% of Banks Island’s outstanding shares, has the right to buy back 51% of the property after Banks earns into it for 2.5 times what Banks spends.

In November Banks Island outlined the potential of a small-scale, near-term mine on the Tal zone, envisioned as a 205-tonne-per-day operation that would last 24 months. The economics are helped by the gold mineralization, which, because it sitting between the sulphide grains can be separated quite effectively with gravity alone. Using a simple dense media plant the company expects recoveries of 85%.

With a very modest initial cash cost of $6.8 million and $2.3-million in sustaining costs, the mine would have an almost shocking 1.2-month payback. Based on US$1,360 per oz. gold, it would have a net present value, using an 8% discount rate, of $26.4 million and an internal rate of return of 414%.

But the company is looking to expand the mine life, both by adding to the Tal resource and eventually exploring elsewhere on the 11-km-long trend on the project. Banks Island also still needs to earn in fully to the project, with only about a million spent so far.

The company closed a $488,000 flow-through financing at the end of February at 55¢ a share and closed a similar financing of $425,000 at the end of December. The December financing was originally to be $2-million, but Salman Partners indefinitely postponed its $1.5-million portion. Banks Island still only has 16.3 million shares out, with insiders controlling 48% of the outstanding shares.

On news of the latest drill results Banks Island’s share price climbed 6¢ or 12% to 57¢ with 92,000 shares traded. The company started trading at around 30¢ in late October and has since hit a high of 80¢.