New Found Gold may explore toll mill option for Queensway project

New Found Gold (TSXV: NFG; NYSE: NFGC) say it’s exploring the possibility of using an existing mill on the island of Newfoundland & Labrador for gold mineralization found at Queensway.

If the Vancouver-based company goes ahead with the plan, it will need to prepare a preliminary economic assessment, CEO Collin Kettell said by phone on Tuesday. The study would evaluate sending truckloads from the Queensway project in central Newfoundland to the idled Maritime Resources (TSXV: MAE) Pine Cove mill 250 km away, he said.

“We’re in the very early stages of looking at ways in which we can advance Queensway,” Kettell said. “This may include looking at relying on existing infrastructure on the island.”

New Found Gold has been reporting double-digit gold grams per tonne in scores of news releases all year as it wraps up an initial 500,000-metre drilling program. Its Keats West and Iceberg zones at Queensway are the nexus of a gold surge along the Appleton fault in Newfoundland. The region has attracted Sprott Asset Management, Labrador Gold (TSXV: LAB; US-OTC: NKOSF), Exploits Discovery (TSXV: NFLD) and Marathon Gold (TSX: MOZ) among others.

Studies and filing for a permit for using the mill have not yet begun, Kettell said.

Drill results

In October alone, the company reported Keats West drill hole NFGC-22-931 intersected 17.1 grams gold per tonne over 11.35 metres and 1.82 grams over 40 metres, while Monte Carlo drill hole NFGC-23-1690 cut 91.9 grams over 2 metres.

New Found and Maritime signed a preliminary agreement. The mill handled gold about a year ago. Queensway’s high grades protect the trucking option, the CEO said.

“A lot of toll milling operations don’t work because the grade doesn’t support it,” he said.

Last week, New Found raised $56 million in a share offering. It has $71 million in cash on hand, it said. Shares in New Found Gold fell 3¢ on Tuesday afternoon in Toronto to $5.09 apiece, valuing the company at $914.2 million. It’s traded in a 52-week range of $4.41 to $7.60.

The company says it plans to continue drilling next year with a focus on targets of prospective mineralization identified by this year’s 3-D seismic surveys.

“The hope is that that is going to outline several targets, deeper down and potentially periphery to the faults,” Kettell said. “We most certainly will not stop drilling.”

Company corrects: A previous version of this story contained more statements from New Found Gold CEO Collin Kettell. While the original version stated the company hadn’t completed a resource estimate or economic study on the Queensway project, the company would like to re-emphasize it. New Found Gold also says it is uncertain whether a resource estimate will be developed in the future, or if the Queensway project can ever be developed economically.