Sixty North shuns drilling, resource at old Mon mine

The next gold producer in the Northwest Territories could be a mom-and-pop operation small enough to mine without a resource or economic study while still earning millions a month.  

Dave Webb, a veteran geologist and CEO of Sixty North Gold Mining (CSE: SXTY), plans to have a new 100-tonne-a-day mill installed by August at the Mon mine that produced 20 to 40 grams gold per tonne in the 1930s-’40s, and around 11 grams a tonne in the 1990s. No NI 43-101-compliant resource is available for the property about 40 km north of Yellowknife.  

Lacking studies under Canadian regulations, Webb isn’t allowed to refer to the material as ore, mention revenue or cite cash flow at this stage. He does point out the vein’s historical grade from more than 80 years ago, gold’s price these days and his throughput target. It seems to add up to more than $500,000 (US$364,000) a day.  

“We can figure this one out, but I can’t tell you,” Webb said by phone from Yellowknife in May. “Our NI 43 101 report covers the geology, the history, the drilling, the production, the geochemistry, geophysics, everything that is supposed to and when it comes down to reserves and resources, it says ‘not applicable.’”

Depression-era

Getting a handle on the grade at Mon is complicated. In the 1930s and ’40s, Mon milled roughly 10,000 to 15,000 tonnes from narrow veins for an estimated 8,000 to 12,000 oz. of gold, implying average grades of nearly an oz. of gold per tonne.  

Between 1991 and 1997 the mine produced 3,100 oz. gold from 10,000 tonnes of ore for a recovered grade of 10.63 grams gold, according to a 2023 technical report.  

However, 1990s tailings grading 3.99 grams gold and an assumed 87% recovery would imply a head grade of about 30.7 grams gold, far above the reported production grade, the report shows.  

The historical production, recovery and tailings figures “cannot be reconciled,” according to the report, where Webb is the qualified person responsible for technical disclosures. However, historical Yellowknife mines often saw drilling understate mined grades. Cominco’s Con mine, now owned by Newmont (TSX: NGT; NYSE: NEM) and operated by Gold Terra Resource (TSXV: YGT; US-OTC: YGTFF), drilled assays showing 5.3 grams gold but mining returned a grade of 23 grams.  

Even at only 10.6 grams gold, Mon ranks as high by global standards, though the project’s small scale and variable mineralization cloud comparisons. The project nonetheless shows how brownfield sites, that may be too small for majors, can attract interest to capitalize quickly on the yellow metal’s 41% gain over the past 18 months, although it’s down 25 percentage points from its high in January.  

Regulation limits

“There are some companies out here that operate and produce gold without calculating and reporting resources,” he said, citing the Con mine’s final years and the Colomac mine in the 1990s. “The industry, the investors, your readership, they understand that NI 43-101 is an important thing, and that it’s a standard, but they don’t know what it means or how it works. I do because I write these things.”  

Webb, who has held the property since 1988, says he would rather get started on mining than spending millions on studies and difficult drilling.  

“It’s a tiny vein and it’s very nuggety,” he said. “It screams gold, but the last ounce came from 1,200 metres below surface so to drill off a million oz., I’m going to have to wail away with 2-km long holes aiming for a vein that’s five, six feet wide. That’s just silly. It’s not going to happen.”  

In one test, crews recovered a single 1-oz. gold nugget from a roughly quarter-tonne sample, underscoring the coarse, uneven distribution of gold at the site.

Permits

The project holds a land use permit and a water licence allowing the 100-tonne-per-day restart at Mon, including installation of a gravity-plus-flotation mill, tailings facility and related infrastructure.  

Even so, permitting remains a drawn-out process. The project requires 13 separate management plans under the Northwest Territories system, of which 10 have been approved, Webb said.  

The remaining plans – including a water management plan – have gone through multiple revisions under a public review process involving stakeholders. Webb said he submitted six versions of the water plan before handing it to engineering firm Tetra Tech last October.

“Some take 15 or 20 revisions, they’re constant,” the CEO said. “And if you talk to anyone operating up here, this is where you’ll see the level of frustration build.”  

Funding

Sixty North has financed the Mon restart through a mix of private placements, debt and warrants, including a $3.6-million loan package carrying 12% interest, a 2.5% royalty and 6.65 million warrants issued to Calgary-based lender Vesta Wealth Partners. Most of the warrants issued in recent financings are now in the money, Webb said, providing a potential source of additional capital as they are exercised.

Shares in Sixty North Gold have gained 40% this year to 34¢ apiece near press time, valuing the company at $25.8 million.  

Webb says most of his supplies are already paid for while he expects to lead a camp of less than 20 on the extraction. Crews transported the mill by ice road to the site by April and it should take 60 days to assemble, Webb said.  

“We blasted a rock outcropping, so we have a flattened area to put our mill on, on bedrock. In the past, we put it down on a muck pad, and it moves a little bit,” he said. “It’ll take us end of July into August, and we’ll be prepared to start testing it at that point.”