New Found Gold advances Queensway project in Newfoundland

Earlier this year New Found Gold (TSXV: NFG; US-OTC: NFGFF) said it plans to double its 2021 drill program to 200,000 metres and eight rigs at its flagship Queensway project in Newfoundland, 15 km west of Gander. Six drill rigs are now turning on the high-grade gold project and that number will increase to eight before the end of March.

The 1,500 sq. km project, adjacent to the Trans-Canada Highway, is divided by Gander Lake into Queensway North and Queensway South. Queensway North, the more advanced of the two, has high-grade gold targets along the Appleton and JBP faults, including the Keats zone, which the company discovered in November 2019 when its drillers intersected 19 metres grading 92.9 grams gold per tonne at a depth of 75 metres in hole NFGC-19-01.

New Found Gold identified a second gold zone at Queensway North in October 2020 called Lotto, about 2 km north of Keats. The Lotto discovery hole, NFGC-20-17, intersected 4.75 metres of 41.2 grams gold from 35.3 metres downhole, including 5.15 metres of 25.4 grams gold. Last month the company drilled about 60 metres below the Lotto discovery hole in drill hole NFGC-20-100, which cut 224.7 grams gold over 2.45 metres starting 118 metres downhole.

“It’s been spectacular,” says Craig Roberts, a mining engineer who joined the company as a director in January 2020 after the Keats discovery hole and took over as CEO in March. “The mineralization itself – the widths and grades – are extremely exciting, but when you put that in combination with where it’s located, off the Trans-Canada highway, 15 km out of Gander, it is an additional factor that makes this that much more compelling.”

One of the reasons New Found Gold was attracted to the project is that the company’s management team recognized that Queensway lies along what’s called the Dog Bay Line (DBL), a continental scale zone resulting from the ancient collision of the European and North American tectonic plates. This created the “plumbing” they say that allowed gold-rich magmatic fluids to travel from deep in the earth’s crust to surface and deposit high-grade gold in multiple directions along tens of kilometres of strike on these fault structures.

“We’ve got 100 km north to south along this suture, and that collision created very deep continental scale structures that run north-south along the property and it’s been the plumbing for the gold mineralized fluids and that creates the fundamental reason that we can have a district scale project that can potentially deliver gold discoveries over tens of kilometres along multiple points along that belt,” Roberts says. “I believe it’s what everybody looks for when they look for gold deposits and gold projects that can have very large scale.”

Targets on the two primary structures identified so far on Queensway North – the Appleton fault zone and the JBP fault, a parallel structure about 5 km to the east –  are the most advanced on the property. The company already has 12 drill-ready targets lined up along Appleton alone.

At Queensway South, the company has completed geophysics, mag and gravity surveys and an extensive gold in till geochemical survey that according to Roberts suggest that these primary geophysical structures continue right across the southern part of the property, and “was the reason they staked the ground” to the south.

“We have got six large, multi-kilometre geochem anomalies coincident with the Appleton and JBP faults down there and we’re doing closer spaced geochem and gold in till sampling to try to vector in on the source of the gold on the southern portion of the property,” Roberts says. “We’re getting very good counts of gold, which means they haven’t been transported very far; so the whole southern portion is early stage but we are very excited about it its potential given what we know about Queensway North.”

The drill campaign so far has focused on discoveries at the Keats and Lotto zones, although recently the company has also started drilling at its Knob target, about 2 km to the south of Keats, an area previously drilled by Noranda. (In 1994 Noranda reported a historic resource of 77,943 oz. gold at an average grade of 10.3 grams gold per tonne, but drilled only to a depth of about 50 metres, according to Roberts.)

On March 16 the company released another set of drill results, with drill hole NFGC-21-118 at Keats yielding an interval of 13.7 metres grading 61.8 grams gold from 211.15 metres downhole, including a one-metre intercept of 565 grams gold. “We’re very excited about the grades, widths and size that is developing at Keats,” Roberts says. “One of our objectives is to keep drilling at Keats to as big as it gets and to look for more along all the kilometres we have. Keats provides a really good model for us to use to go off after more Keats, along strike on these structures but there’s the depth dimension as well. These things can go very deep and there are possibilities of repetitions with depth.”

The exploration focus this year will be to accelerate its grid drilling program along 5 km of strike on the Appleton fault zone and test targets along 3 km of strike on the parallel JBP fault zone. So far the company’s drilling has been quite shallow — roughly 150 metres vertical depth at Keats and about 100 metres at Lotto.

Drill core from New Found Gold’s Queensway project. Credit: New Found Gold

Roberts reasons that with an average grade of about 25 grams gold, Queensway could be a lower cost mine if put into production. “If you work out any possible mining costs either open pit or underground and work that back to cost per ounce, it’s an extremely low-cost per oz. and at these grades you could produce a lot of gold at a small plant, which means low capital costs.”

The mining executive also argues that there is a strong analogy between the Queensway project, and the Swan zone of Kirkland Lake Gold’s (TSX: KL; NYSE: KL) high-grade Fosterville mine in Australia. “Comparison of the two has been made for many years before we came along – the age, the lithology, the metamorphic grade and mineralogy and overall genetic model – it’s very similar.”

He points out that most orogenic gold deposits globally are much older than Queensway’s and Fosterville’s, noting that the gold mineralization at Queensway is about 450 million years old. By comparison, many world class orogenic gold camps such as the Abitibi are more than two billion years old, and typically the high level or “epizonal” portion of the orogenic system has long been eroded away, he says. “But at Queensway as at Fosterville, the high-level epizonal level gold mineralization has been preserved. We believe the mechanism for emplacement of high grade gold at Queensway and Fosterville are very similar.”

Orogenic gold deposits form during collision/mountain-building events, he explains. During this process gold-rich magmatic fluids can accumulate at very high temperatures and pressures in the earth’s crust. “Occasionally, perhaps related to seismic activity, deep breaks or fractures can occur through which these fluids explosively rush to surface. As they do that, the fluid pressure and temperature drops very rapidly and the gold precipitates almost instantly often resulting in “pin-prick” visible gold in a quartz matrix and other features that are indicative of epizonal style mineralization. This epizonal event can result in accumulations of very high grade, near-surface gold.”

In addition to its similarities with Fosterville, Roberts adds, Queensway’s other attributes include its location in Canada and specifically in Newfoundland, which he says is pro-mining. “The permitting process has been, I’d say, relatively rigorous but still industry standard, and we haven’t had any trouble permitting; and the government is very supportive.”

The project’s close proximity to the city of Gander, with a population of about 20,000 people, is also a big plus, he says. “There are a lot of geologists and prospectors who live there so we benefit.”

The company, created in 2017, went public in August 2020. Major shareholders are Palisades Goldcorp (33%); Eric Sprott (16.9%); Novo Resources (11%); Rob McEwen (7%), and institutions (8%).

The company has working capital of $69 million. That should grow to about $84 million, once its closes a non-brokered private placement with Sprott announced on March 18. Sprott is acquiring an additional 2.85 million common shares at $5.25 apiece, which will increase his stake in the junior to 18.4%.

Over the last year New Found Gold’s shares have traded in a range of $1.24 and $4.90 per share and at presstime were trading at $4.84.

The junior has about 149 million common shares outstanding for a market cap of about $720 million.

Director Quinton Hennigh (L) and Collin Kettell (R), co-founder and executive chairman, fly over Queensway during a site visit in 2020.