Sprott bets on Orefinders

Financier Eric Sprott is putting some of his money behind Orefinders Resources (TSXV: ORX) and the junior explorer’s properties in the Kirkland Lake district of Ontario.

Sprott has taken an 8.01% of the company’s issued and outstanding common shares on a non-diluted basis and about 11.64% on a partially diluted basis.

“He’s had tremendous success in the Kirkland Lake camp and that’s clearly what got his attention about us,” Stephen Stewart, Orefinders’ president and CEO, said in an interview. “He is obviously interested in our neighborhood.”

“Eric’s a seasoned investor who has seen it all, has lived through all the cycles, and understands it’s a long-term game, writes significant cheques and he brings eyeballs, which is important,” Stewart continued.

“He’s probably the best shareholder you can have, and it’s also nice to have money to execute on our plan.”

Over the last five years, Orefinders has quietly put together a portfolio of assets in the Kirkland Lake area that it believes can one day deliver “that billion-dollar drill hole.”

The company has followed a slightly different path than many other juniors in the business. Instead of raising money to drill, it took advantage of the downturn and the difficult capital markets to “buy other peoples’ drill programs from yester-year,” Stewart explained.

“That’s not always a sexy strategy because people like to see drill results,” he conceded, “but nonetheless that’s what we did.”

Just because it wasn’t drilling, however, didn’t mean the company wasn’t preparing. It was busy sifting through the data, zeroing in on interesting targets, and getting them drill-ready so that when markets pick up everything is ready to go.

That time has come. This year, Orefinders plans to focus its drill program on its Knight property, 110 km south of the Kirkland Lake-Larder Lake camp.

There are several targets on the Knight land package, all within a kilometre or two of each other: Porphyry Lake, Tyranite, and the Minto and other select breccia pipes.

Porphyry Lake is a high-priority target. It is a major untested IP high chargeability/low resistivity anomaly over 300 metres long and 250 metres wide under Porphyry Lake.

The mineralization is consistent with a mineralized porphyry system that has the potential of developing into a large, open-pittable deposit.

“We know it’s a sulphide system — the question is how rich is it in gold,” Stewart said. “It’s a very large target confirmed on MAG and three IP lines, and it’s within a well-endowed gold system so that’s a quick and easy target.”

The company’s Tyranite target on the northern part of the Knight property is a former producing underground mine, and Stewart described it as “a typical shear-hosted Abitibi deposit that has got really good widths and grades.”

“We’re confident that if we drill underneath the shaft we will continue to hit good grades, and we do have an interpretation on this,” he said. “There is 30,000 metres of historic drill core that we have re-logged and re-sampled and re-assayed.”

Tyranite was previously interpreted and mined as a simple fault-style deposit, Stewart noted, but Orefinders’ new interpretation is focused on the contact zones of the ultramafic units striking at right angles to the fault. Tyranite has never been drilled using this specific model.

“The contact zone between the ultramafics and our porphyry areas — that’s where we’re seeing some very interesting high-grade mineralization,” said Stewart, “but it has never been drilled with that theory in mind.”

Tyranite benefits from significant infrastructure, including 4,500 feet of drifts, two surface warehouse buildings, core handling and logging facilities, a dry building, a field office and an electric generator.

The third target consists of breccia pipes like the Minto breccia pipe. The Minto pipe is a cylindrical orebody that has been drilled down to a kilometre and ends in mineralization, Stewart said. “We did some geophysics and reinterpretations of MAG and found its signature, so we have applied that across the entire property and found a bunch of other geophysical targets that have those same characteristics, and there were about a dozen that outcropped with anomalous gold. We’re going to run one line of IP around the circular anomaly.”

Orefinders is planning a 4,000-metre drill program on Knight, and also intends to drill at its McGarry project, which abuts both the Kerr-Addison mine and Gatling Exploration’s (TSXV: GTR; US-OTC: GATGF) Chemini mine and Bear Lake deposits.

The Kerr-Addison mine produced about 12 million oz. gold at an average grade of 7.3 grams gold per tonne over 58 years.

The McGarry project, on 2.4 km of the Cadillac Larder-Lake Break, was put into operation (the high-grade 325 Zone) by previous owners after a 2013 preliminary economic assessment (PEA), and has infrastructure in place, including a shaft and hoist.

McGarry has a historic resource estimate consisting of 447,000 indicated tonnes grading 7.89 grams gold per tonne for 112,000 contained oz. and 157,000 inferred tonnes grading 5.83 grams gold per tonne for 29,000 ounces.

Orefinders believes there is a possibility of finding deep extensions of the Kerr-Addison deposit on the west side of the Armistic fault. It also notes that previous exploration of the McGarry deposit was significant in and near the existing mine infrastructure, but less exploration has been done outside the area of the shaft between the 1,250 and 2,250 ft level.

In addition, the property hosts the Barber-Larder deposit, which was mined as an open pit between 1987 and 1988 and production bottomed at about 46 metres depth. Orefinders says the deposit continues below that depth at similar grades and notes that there has not been significant exploration below the top 120 vertical metres.

The McGarry project offers a number of exploration targets not just around the McGarry and Barber-Larder mines.

The company is exploring a number of zones of interest, including Peninsula, Mill, Western, Dyke and the Arjon shear.

A drill hole into the Peninsula zone, immediately west of the Barber-Larder mine along the same package of deformed and altered rocks, returned 3.4 grams gold over 6 metres at 85 metres depth.

The Mill and Western zones, located in a north-east striking ultramafic unit, returned a drill intercept of 36.7 grams gold over 2 metres (Mill) and a trench assay returned a small mineralized shoot of about 15 metres in length, 2 metres in width, assaying 3.9 grams gold.

The Dyke zone, in the southeast of the McGarry property, extends for more than 300 metres and was sampled over about 100 metres, yielding an average grade of 7.25 grams gold over 1 metre.

Finally the Arjon shear zone, in the northeast of the property, extends onto the adjacent Kerr-Addison property. The target will be followed up for its potential for intrusion-hosted bulk mineable gold mineralization.

Stewart is excited about the drill program and thinks the company’s timing couldn’t be better.

“We believe investors are coming back to the junior space,” he said. “They’re not there yet, but with producers making a lot more money at US$1,650 per oz. gold, I do think M&A is going to bring back tension to the juniors.

“These things will take time to come to fruition, and we want to be prepared to come back with great drill results.”

Orefinders’ other projects include the Mirado mine property, 35 km southeast of Kirkland Lake. Mirado is a past-producing underground mine. Mirado is interpreted as a gold-rich VMS system with a gold-rich stringer footwall (South zone) overlain by a zinc and gold-rich bedded hanging wall (North zone).

Results from a PEA in January 2018 on an open pit in Mirado’s South zone points to a capex of $2.4 million, an after-tax internal rate of return of 158% and a net present value at a 5% discount rate of $20.5 million. The early-stage study envisions it as a toll milling operation, given the project’s close proximity to numerous mills.

In addition, Orefinders owns 25% of Mistango River Resources (CNSX: MIS), which is advancing its Omega project, 30 km east of Kirkland Lake.

Omega has two historical production shafts with a 2013 resource of 4.92 million tonnes of 1.39 grams gold in the indicated category and another 4.69 million tonnes of 2.43 grams gold inferred.

The deposit produced 217,500 oz. historically, and Orefinders believes there’s strong evidence of bulk mineable gold potential in syenite intrusions.

Stewart noted that Orefinders had a long drawn out proxy battle with Mistango in November and December last year, and that the company has “a lot of similarities with Orefinders in terms of assets and jurisdiction focus.”

Orefinders also owns 10% of PowerOre (TSXV: PORE), a spin-off, which owns the Opemiska copper complex in the Chibougamau region of Quebec. The property hosts two past-producing underground mines — Springer and Perry — both of which were operated by Falconbridge. Falconbridge operated Opemiska from 1953 to 1991, and produced 23 million tonnes grading 2.4% copper and 0.3 gram gold.

In addition, Orefinders owns about a third of Pacific Precious, a private company it plans to spin out in dividend shares in the coming months. “This is exactly what we did with PowerOre,” Stewart said. “We own 32% of the company, which equates to 10 million shares. We’ll dividend out 5 million of them to Orefinder shareholders and then Orefinders will retain the other five million shares for our balance sheet.”

Pacific Precious owns a large, early-stage epithermal gold project in Papua New Guinea on strike from the Porgera mine. Orefinders will assist the company with its initial public offering a few months from now.

“I don’t think people really understand the depth of our assets,” Stewart said. “We are a $7 million market cap company and have an awful lot going on.”