Orefinders acquires Abitibi property, spins out others

Orefinders Resources (TSXV: ORX) has acquired the past-producing underground McGarry gold mine and surrounding property in Ontario’s portion of the Abitibi greenstone belt. The company is focused on acquiring and consolidating property in the Abitibi that has a history of production or exploration.

“I don’t want to say I’m a deal guy, but I’m a bit of a deal guy,” Orefinders CEO Stephen Stewart says in an interview with The Northern Miner. “I’m always looking for something that makes sense. If it fits in our portfolio, if it checks those boxes, absolutely, we’re interested.”

Orefinders acquired the 6.8 sq. km McGarry gold property for 8 million shares. The property holds the past-producing McGarry gold mine and Barber-Larder open-pit gold mine, which sit on 2.4 strike km of the Cadillac-Larder Lake break near Virginiatown, Ontario. It comes with some infrastructure, including a shaft and hoist.

Kerr Mines (TSX: KER) — formerly Armistice Resources — previously owned the property. It didn’t install the shaft, but it’s responsible for its rehabilitation. Kerr also did a preliminary economic assessment on McGarry in 2011. The study outlined a historic resource of 447,000 indicated tonnes grading 7.89 grams gold per tonne for 112,000 oz. gold, and 157,000 inferred tonnes grading 5.83 grams gold for 29,000 oz. gold.

According to Orefinders, the Barber-Larder open-pit gold mine historically produced 70,000 tonnes of ore. Most of that tonnage was processed at the Kerr mill, which is part of the abutting Kerr-Addison mine that Stewart called “one of Canada’s best mines ever.”

Staff underground at the McGarry. Credit: Orefinders Resources.

“You can count on one hand the number of mines in Canada that had 10 million oz. gold,” Stewart says. “This one had 12 million over 50 years. And it was a beautiful orebody — steeply dipping. You could mine this thing super easily, and it was extraordinarily profitable.”

Stewart explains that the Kerr mine was characterized by two kinds of ore. One, the “real pay dirt,” was colloquially called “green flow ore.” This mineralization extends onto Orefinders’ McGarry property.

Despite having a healthy resource, Armistice ran into issues in the mill. Grades weren’t reconciling and the company was only getting 60% recoveries. It was operating on a tight budget in 2013, and had difficulty raising money. Around the shaft of the McGarry, it had trouble telling visually what parts of the rock were mineralized. It ended up mining barren rock.

“So the obvious question,” Stewart says, “is, well, what do you do about that?”

Armistice passed along 100,000 metres of core data to Orefinders. Some intercepts recorded via underground exploration by Armistice include 8.2 grams gold over 98 metres long and 1.5 metres wide, as well as 11.1 grams gold over 24 metres long and 1.7 metres wide. Stewart says Orefinders believes the property has seen more than $50-million worth of drilling.

“To us, that’s the gold mine — accumulating the data [and] looking at understanding the mistakes previous operators made,” Stewart says. “I’d rather be the tenth guy than the first on the project, compiling all that data into a single geological model that makes sense to us.”

Orefinders is also spinning off its silver-cobalt Mann mine and McMurchy nickel property into Power Ore, a new, battery metal-focused company.

Orefinders acquired the Mann mine and McMurchy properties — along with five other properties — in the Abitibi’s Shining Tree district from a private company called Premet in November 2017. The company also acquired two other properties independent of Premet, and together the nine properties formed Orefinders’ Knight project.

The past-producing open pit on the Mirado property. Credit: Orefinders Resources.

The Mann property hosts nine historic shafts and a ramp driven to the 64-metre level over 8.6 sq. km near Cobalt, Ont., in the Temiskaming silver area. It has produced intermittently throughout the 20th century. Historic production before 1987 is pegged at over 330,000 oz. silver.

McMurchy is located 25 km west of the Mann property. It was drilled by Creso in 2008 and returned assays that include 7.43% nickel over 1 metre. Drilling by Creso at Mann in 2011 was highlighted by 5.8 metres at 0.34% cobalt from 11.5 metres downhole and 5.2 metres at 978.5 grams silver from 35.9 metres downhole.

Stewart says Power Ore is fully financed and will be listed on the TSX Venture Exchange in May. Orefinders will get 10 million Power Ore shares. It will keep half and distribute the rest to its shareholders. Each shareholder will receive one free share in Power Ore for every 18 Orefinders shares.

“This whole transaction is about creating a pure-play, battery metal-focused cobalt and nickel company, with a similar strategy and business plan to Orefinders, but a different commodity,” Stewart says. “We’re going to buy — just like Orefinders — advanced-stage stuff, former producers, and we’re going to have this nice, big portfolio, and develop it that way.”

A headframe at the historic McGarry gold project in Ontario, which Orefinders is buying from Kerr Mines. Credit: Orefinders.

Orefinders also filed a preliminary economic assessment on its Mirado gold project near Kirkland Lake, Ont., earlier this year. The report suggests an open pit on the South zone would cost $2.4 million in preproduction expenses.

The study foresees a US$941 per oz. gold cash-operating cost with an all-in sustaining cost of US$969 per oz. gold over a three-year mine life, and six months of open pit pre-stripping. The project has a $20.5 million after-tax net present value at a 5% discount rate and a projected 158% after-tax internal rate of return.   

According to the study, the deposit has 559,000 indicated tonnes grading 2.61 grams gold for 46,900 oz. gold, as well as 382,000 inferred tonnes grading 2.66 grams gold for 32,700 oz. gold.

Stewart says his priority is to secure a toll-milling agreement for the Mirado project. Next is compiling all available data on the McGarry property so that Orefinders can roll out the drills when the time is right.

“It’s not right now because it’s too expensive,” Stewart says. “I’d have to give away 20% of my company just to do a drill program, and I’m not interested in doing that. There is going to be a time when exploration makes sense, and when that’s the case, you will see us go out and do a raise to bring in some exploration dollars.”

Shares of Orefinders are valued at 11¢ with a 52-week range of 4¢ to 17¢. The company has a $10-million market capitalization.

“It’s a question of risk [and] return on investment and dilution,” Stewart says. “We’re significant owners, so we think and act like owners.”