Mega Precious shines new light on Monument Bay

VANCOUVER — According to president and CEO Glen Kuntz and his team at Mega Precious Metals (MGP-V), a strong asset can carry a junior through turbulent times in the stock market. And they believe the company’s wholly owned Monument Bay gold-tungsten property, 340 km southeast of Thompson, Man., is just such an asset.

With a comfortable cash position stemming from a US$12.3-million private placement closed in March 2012, Mega Precious took a step back this past year to refine its geological model and study Monument Bay’s longer-term potential.

According to Kuntz — a native Manitoban who started his international geological career 20 years ago in the nearby Stull Lake camp with Noranda Exploration — it was a collaboration with a geological team from his alma mater at the University of Manitoba that shed light on the polymetallic nature of the shear-hosted mineralization at Monument Bay.

What Mega Precious found was a strong tungsten presence in the form of scheelite throughout its gold-bearing structures. After that insight, the company reassessed a large amount of historic core in a bid to determine potential for by-product credits in its gold resources.

“We went out with the ultraviolet (UV) lights at night and looked at our entire core library,” Kuntz explains during a phone interview, outlining how his team tackled over 100,000 metres of core during its UV testing. “It was literally shining all over the place, and so we knew it wasn’t just localized, but that these were actually quartz-arenite-sheelite veins. The tungsten crystals are quite large — unlike skarn deposits, where it’s relatively small and hard to recover — and tungsten is pretty interesting because it has almost the exact gravity as gold.”

Mega Precious then turned its attention to a large amount of historic data going back to the late 1980s. It expanded its mapping database and compiled it all to create an updated regional geological model. The company looked for the sheelite association in bedrock, as well as soils and sediment samples, and ended up identifying three main mineralized gold-tungsten corridors on its 371 sq. km property package that each run for 40 km.

“So we went from the regional geological framework where we started with six rock types to where we are today, with roughly twenty different rock types. Now that we better understand the geology we’re definitely planning on following up on that strong correlation between sheelite and gold in other areas that had not been tested previously,” Kuntz continues, pointing to satellite deposit discoveries at the AZ and Mid East zones as recent successes.

“We feel we now have the geological framework to get out and test in a variety of different regions to get better definition on mineralization,” he adds.

A tungsten discovery could trigger a significant rise in Monument Bay’s resource grades. Mega Precious has completed 5,000 metres of drilling so far this year, and tungsten’s presence in assays has increased the overall gold-equivalent grade in that core by an average 32%.

For example, hole 12-484 originally cut 94 metres of 1 gram gold per tonne, but the inclusion of 0.05% WO3 over the intercept increases the gold-equivalent grade to 1.5 grams. Similarly, an average grade of 2.26 grams gold over 41 metres in hole 11-390 turns into a gold-equivalent grade of 2.75 grams by adding a 0.05% WO3 credit.

“We don’t have enough tungsten yet to have the same sample density we do with our gold, so at this point it doesn’t really make sense to incorporate it into the resource from a classification point of view,” Kuntz adds. “We’re putting the tungsten through the lab as we speak, so towards the end of the year we will be in a position to have a true gold-tungsten resource. And at that point we can look at the overall economics of the project.”

Mega Precious expects to update the resource this quarter, with current resources totalling 13 million measured and indicated tonnes grading 2.5 grams gold for 1.05 million contained oz., and 14 million inferred tonnes grading 3.78 grams gold for 1.7 million contained oz. at a 0.4 gram cut-off.

The company will have 20,000 metres of new drilling to incorporate into its resource update, with most of its activities fleshing out a near-surface resource that could be mined by an open pit.

In-pit resources at Monument Bay total 8.7 million indicated tonnes averaging 1.59 grams gold for 447,550 contained oz., along with 3.4 million inferred tonnes grading 2.34 grams gold for 258,500 contained oz.

Kuntz says the company has also been outlining a “super pit” that could descend to 400 metres depth, and incorporate more of the resources that were previously in the underground category.

Mega Precious’ review of the old core is ongoing, and focused on converting in-pit waste into ore, and smoothing out anything that could affect economics and strip ratios.

“We’re going to continue reassaying the historic core, and we’ll also be forwarding the tungsten program. Right now our drilling is focused on a few areas: the area between the main Twin Lakes resource and Mid East deposit,” Kuntz comments, noting that he expects more inferred gold ounces to come out of Mid East in the next resource.

The company will also test targets along strike farther east towards the Ontario border, as well as look to expand the AZ zone.

And though Mega Precious shares were sitting at a 52-week low at 10¢ at press time, Kuntz says that things are looking up from a mergers and acquisitions point of view.

He cites six outstanding confidentiality agreements with majors as evidence that Mega Precious is drawing attention despite difficult stock markets, and he predicts Mega’s positioning as a potential takeover target could attract strategic investment dollars in the nearer term.

“Over the past year we’ve sort of gone from being affected by all the mystery surrounding Monument Bay, where people may have been asking why that asset wasn’t really going anywhere, to a point where we’ve got a good foundation and strong geological model to live on. Companies like us with good-quality assets that are delivering value are going to be really well positioned,” he concludes.

Mega Precious reported $5.8 million in cash at the beginning of March, and maintains 115 million shares outstanding for a $12.3-million press-time market capitalization. The company has traded within a 52-week range of 10¢ to 49¢ per share.