Gowest Gold advances
 Bradshaw deposit in Timmins

Gowest Gold (TSXV: GWA) is stepping closer to developing the next gold mine in Ontario’s Timmins gold camp, within the Abitibi greenstone belt. The belt has produced more than 172 million oz. gold, or half of the country’s total gold production. Gowest aims to add to that by bringing the Bradshaw gold deposit on its North Timmins Gold project into production in 2018.

In early August, the firm entered a non-binding letter of intent with investment firm Pandion Mine Finance for US$17.6 million to fund advanced exploration work at Bradshaw. As part of the deal, the companies will negotiate a prepaid forward gold-purchase agreement.

“They are going to loan us the money in advance. And they are going to give us grace until we get into production, before we have to pay back,” the company’s president and CEO Greg Romain says in an interview. Gowest would repay the loan over four years using a percentage of the gold generated from the Bradshaw mine.

As part of the advanced exploration, Gowest is completing detailed engineering work ahead of its 30,000-tonne bulk sample program.

The Pandion financing should close at the end of October. Once it does, Gowest will build the mine to start bulk-sampling, with Romain noting that the company has all the permits to do so.

“The really critical part for us is trying to get the portal built before winter sets in. In Timmins, you never know when that’s going to happen,” Romain jokes.

Gowest’s North Timmins Gold project sits 32 km north of the city of Timmins, the regional service and distribution centre for northeastern Ontario.

The executive anticipates the bulk sample would produce 10,000 oz. and take 12 to 15 months to finish, adding that the initial gold production should offset some of the development costs.

A June 2015 prefeasibility study prepared by Mississauga, Ont.-based Stantec Mining, estimates an underground mine at Bradshaw could produce an average 40,500 oz. gold a year, over an 8.5-year mine life, which includes 1.5 years of preproduction.

Capital costs are broken down into two parts, including US$21.5 million of initial capital and US$21.4 million of sustaining capital to develop the main ramp deeper into the mine over the life-of-mine, and access reserves.

Initial costs are low, as Gowest expects to use third-party mining, milling and refining. Despite the deposit being a greenfield project, it needs relatively little infrastructure to initiate production.

“What I have been told by the old-timers is that it’s the newest mine not to be built next to an existing shaft in the last 25 to 30 years,” Romain says.

In June, Gowest entered a negotiation with privately held Northern Sun Mining to use the Redstone mill, some 60 km from Bradshaw. The companies are working out the terms to help Gowest process up to 500 tonnes per day as part of its bulk sample and preproduction program. The final agreement, expected to close on Oct. 31, could also include a longer-term arrangement.

“It’s an opportunity for them, just  as it’s an opportunity for us,” Romain says, adding that it’s too early to comment further on the arrangement.

To lower mining dilution as well as transportation costs, the prefeasibility study includes the use of an X-ray sorter that would improve Bradshaw’s gold grade, and help the firm recover gold from development rock that is not classified as ore.

“When you look at our prefeasibility study the reserves are 277,000 oz., but we’re going to mine something like 305,000 ounces. We couldn’t call it ore, because it is not ore, it’s rock. But that’s why there’s a higher number,” Romain says.

Over the mine life, Gowest would process 1.78 million tonnes of reserves grading 4.82 grams gold and 666,253 tonnes of development rock at 1.31 grams gold to produce 305,058 oz. gold, using a 93% total gold recovery. Estimated all-in sustaining costs are US$891 per ounce.

The deposit remains open for exploration. The current reserves cover a 900-metre strike length and extend to 500 metres deep. However, the company has extended the deposit’s strike length to 1.3 km and has hit mineralization at 1 km deep.

The 190 sq. km North Timmins Gold project, where the Bradshaw deposit represents 0.5 sq. km, also contains several other promising exploration targets.

“There’s a lot of upside,” Romain says.