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Genesis hunts for high-grade gold at Chevrier

Recent discoveries, M&A in the Chibougamau mining district

By James Kwantes
Resource Opportunities

Genesis Metals is one of three Resource Opportunities sponsor companies.

The history of major metals discoveries is rife with stories of deposits that were only uncovered when geologists looked beyond existing mineralization systems, or considered new models. Sometimes the best discoveries occur when exploration takes place off the beaten path — even when there are gold ounces underneath that path. An open mind sometimes opens doors, to both new discoveries and greater shareholder value.

For example, Ivanhoe’s Kamoa-Kakula copper deposit in the Democratic Republic of Congo was already one of the world’s richest and largest copper discoveries when company geologists decided to look further afield. In March 2017 they drilled a new discovery — Kakula West — 4 kilometres west of existing mineralization, making an already world-class deposit even richer.

More recently, Discovery Group company Great Bear Resources (GBR-V) drilled the Bear-Rimini discovery at its Dixie project in Red Lake, Ontario. Great Bear had been intercepting plenty of high-grade gold mineralization at its Hinge and Dixie Limb Zones, with a very pleasing 1-year stock chart to match. But the company’s push beyond areas of known mineralization led Great Bear to hit pay dirt with Bear-Rimini, drilling multiple shallow high-grade intercepts a full 2.5 kilometres away from existing gold zones.

Genesis Metals (GIS-V) has a long way to go before being mentioned in the same breath as Ivanhoe or Great Bear. But the company is utilizing a similar exploration ethos at its Chevrier gold project in Quebec’s Abitibi Greenstone Belt, 35 km southwest of Chibougamau. Genesis, also part of the Discovery Group, is in the middle of a property-wide till geochemical survey at the claims package. It’s an exploration method that has paid off for IAMGOLD, which is drilling the nearby Monster Lake and Nelligan high-grade gold discoveries with its JV partners.

Genesis recently expanded its Chevrier holdings to 275 square kilometres. The goal of the program is to identify high-grade drill targets in new areas, with a secondary focus on increasing grade and tonnage at existing deposits. Genesis’s market capitalization of $7.45 million is underpinned by a resource estimate of 395,000 ounces Indicated grading 1.45 g/t gold and 297,000 ounces Inferred grading 1.33 g/t (0.5 g/t cutoff for open pit, 0.95 g/t for underground). Genesis geologists believe there is yet-uncovered high-grade gold mineralization at Chevrier. 

“The idea is to bring in fresh eyes to do systematic property-wide exploration, for the very first time,” said Genesis President Jeff Sundar, who was recently appointed CEO in a management shuffle that saw Adrian Fleming appointed chairman of the board (replacing Brian Groves). Fleming has been involved in discoveries around the world and was CEO and cofounder of Underworld Resources, which discovered and defined the White Gold deposit in Yukon. Underworld sold to Kinross for $138 million in 2010.

North Vancouver-based Vector Geological Solutions is running the property-wide soil sampling  program. Vector and partner IOS are using a track-mounted sampling machine to take soil samples at 200-metre lines across the entire Chevrier property. The Fancamp Deformation Zone, the belt that hosts Chevrier, used to be covered by glaciers. Knowing the direction of the ice sheets and interpreting the shape and nature of the gold grains in the till will be key to evaluating the survey results. Geological mapping, prospecting and geophysics will follow, along with a potential drill program later this year.

For years, Quebec has been recognized as one of the best mining jurisdictions, globally. The province is keen to maintain that reputation and has invested billions of dollars into Plan Nord, the extensive infrastructure plan designed to open up the province’s vast north to mining and industry. As for Chevrier, the project is located in a mining-friendly area near major highways and a rail line, with an airport nearby. That’s a tick in the infrastructure box.

Quebec’s support extends to financial assistance for companies doing mining exploration work in the province. The Genesis exploration program is being funded by a $520,000 private placement that closed on May 30. Three Quebec government-sponsored investment funds participated for $350,000 of that total.

The Chibougamau district is heating up along with the gold price, which is trading at about US$1,400 an ounce but has shown strength of late. Encouragingly, Vector’s exploration methodology mirrors tools used by other companies that have successfully identified high-grade gold discoveries nearby. Those include the Monster Lake gold deposit southwest of Chevrier, which already hosts 433,000 ounces of gold (Inferred) at 12.14 g/t Au. Operator IAMGOLD and JV partners TomaGold (45%) and Quinto (5%) continue to hit intercepts above 20 g/t at Monster. 

Vanstar’s Nelligan project, about 25 kilometres southwest of Chevrier, is also generating excitement. The latest assays at Nelligan, where IAMGOLD can earn up to an 80% interest, included 6 metres grading 56.5 g/t gold and 7.7 metres grading 7.02 g/t.

And there is an ongoing takeover battle between Osisko and Agnico Eagle that will result in a new neighbour for Chevrier. Osisko looks to have the upper hand: Chantrell Ventures, an Osisko vehicle that will be renamed O3 Mining, recently sweetened its bid for Alexandria Minerals. The move was in response to a hostile offer from Agnico, with both companies eyeing Alexandria’s Val d’Or land package. Alexandria also has the Fancamp property bordering Chevrier to the south and the Embry claims to the north.

Genesis has systematically built its land position and its latest acquisition was the Trenholme claims formerly held by Agnico Eagle. The gold mining company had hit mineralization there — including an intercept of 1.5 metres of 4.5 g/t gold — but shifted focus and let the claims lapse. Genesis picked up the block from a prospector who staked the claims after Agnico left.

Dan MacNeil, Vector’s founder and principal consultant, believes there is “probably some low-hanging fruit outside the resource.” MacNeil’s resume includes stints at Barrick Gold and Anglo American and his partner at Vector, Alan Wainwright, was a co-winner of the H.H. “Spud” Huestis prospecting award in 2013 for the exploration and development of Kaminak Gold’s Coffee gold deposit.

One of the other co-winners of the award was geologist Rob Carpenter, who is now a Genesis advisor. Carpenter co-founded and served as the first CEO of Kaminak Gold, which built the multi-million-ounce Coffee deposit and sold for $520 million to Goldcorp in 2016. Carpenter will be assisting Vector and Genesis in the hunt for high-grade at Chevrier.

People are key to any successful junior mining company and Genesis has a rock-solid roster. The Discovery Group has racked up several wins in a bear market, including Kaminak Gold (sold to Goldcorp), Northern Empire Resources (sold to Coeur Mining) and ongoing drilling success at Great Bear. Principals John Robins and Jim Paterson have come on as Genesis advisors and their impressive track records bode well for success. In addition to Carpenter, Genesis also added exploration geologist Garrett Ainsworth and engineer/financier Andrew Ramcharan as advisors late last year.

The company’s market cap of about $7.45 million is underpinned by the Chevrier resource, a majority of which is open-pittable. But it’s the prospect of high-grade gold intercepts on the expanded claims package — in a rich district with proven high-grade mineralization — that probably offers the most upside for Genesis shares.

Genesis Metals (GIS-V, GGISF-OTC)
Price: 0.07
Shares outstanding: 109.3 million (132.2M fully diluted)
Market cap: $7.45 million

Disclosure: Genesis Metals is a Resource Opportunities sponsor company and James Kwantes owns Genesis shares, which makes me biased. Genesis Metals is a high-risk junior exploration stock. All investors need to do their own due diligence and/or consult a qualified investment advisor.

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Genesis builds ounces, recruits top talent

New resource estimate shows 423,000 Au oz Indicated at 1.22 g/t Au and 303,000 Au oz Inferred (1.27 g/t) at Chevrier

Genesis Metals joins Discovery Group; John Robins, Jim Paterson come on as strategic advisors

By James Kwantes
Editor, Resource Opportunities

Genesis Metals is a Resource Opportunities sponsor company.

Chibougamau is Cree for “gathering place” and the First Nations hamlet in northern Quebec served as one long before French explorers and traders travelled the area in the 1600s.

Gold was discovered in 1903 and mining companies followed. Fast-forward 116 years and Chibougamau is now an important hub for the Quebec government’s Plan Nord, an economic development plan designed to open up the vast north of the province to new opportunities, particularly in mining. The initiative has elevated a jurisdiction that was already recognized as among the most mining-friendly in the world.

Genesis Metals’ Chevrier gold project is about 35 kilometres southwest of Chibougamau at the western end of the prolific Abitibi Greenstone Belt, a structure that has produced more than 180 million ounces of gold. Mining operations in the region include Stornoway Diamond Corp.’s Renard mine and the Monster Lake high-grade gold project, a JV between Toma Gold and IAMGOLD.

And Genesis continues to gather ounces at Chevrier, in the Abitibi’s Fancamp Deformation Corridor. An updated resource estimate published February 4 shows 423,000 ounces Indicated at 1.22 g/t gold and another 303,000 ounces Inferred at 1.27 g/t gold at the Main Zone and East Zone at Chevrier. Average grades have decreased because Genesis moved to a lower cut-off grade (0.3 g/t in-pit, 0.95 g/t u-g) for the resource update.

The resource update establishes Chevrier as a growing open-pittable deposit with higher-grade underground and discovery possibilities, says Genesis chairman and CEO Brian Groves.

“This resource is a significant milestone in the history of Chevrier. We have developed a robust model for gold mineralization in the Main Zone with multiple new targets elsewhere on the property,” Groves said. “With our recently strengthened technical team, we will now explore the potential for expansion of the mineralized envelopes as well as other targets on the 130-square-km property.”

Jim Paterson: key contacts

Joining John Robins’ Discovery Group should help Genesis tap into talent and open doors. Robins and Discovery Group principal Jim Paterson have joined Genesis as strategic advisors. The group, founded by Robins in 2005, has an impressive record of creating shareholder value in a dismal market, including:

  • the $520-million sale of Kaminak to Goldcorp in 2016;
  • the 2018 sale of Northern Empire Resources to Coeur Mining for $117 million;
  • Great Bear Resources has been a junior mining standout, with a 1-year return of more than 600% on bonanza-grade gold discoveries at its Dixie project in Ontario’s Red Lake district.

Paterson has already been key to helping Sundar build out the Genesis team. Paterson tapped into his extensive network to attract three experienced operators for the Genesis technical team: geologists Rob Carpenter and Garrett Ainsworth and engineer/financier Andrew Ramcharan. The trio joined the advisory board in November. Each should help unlock further value at Chevrier, including potential new discoveries.

Rob Carpenter, co-founder of Kaminak Gold, checks out Chevrier core. Carpenter is a strategic advisor to Genesis.

Carpenter and Ainsworth are familiar names to Canadian mining investors. Carpenter was a co-founder and the former CEO of Kaminak Gold and key to identifying the 5-million-ounce Coffee gold deposit purchased by Goldcorp. Among other ventures he is a director of White Gold, where he is helping legendary Yukon prospector Shawn Ryan explore the White Gold district between Coffee and the Klondike goldfields.

As for Ainsworth, the exploration geologist’s greatest accomplishments have been in the western Athabasca Basin. As VP Exploration for Alpha Minerals, Ainsworth discovered the Patterson Lake South uranium deposit now being advanced by Fission Uranium (which bought Alpha). Ainsworth then spent four years at NexGen Energy as VP Exploration and Development, a period that saw NexGen’s shares soar from 30 cents to above $4.00 as it expanded the ultra-high-grade Arrow uranium deposit in Saskatchewan.

Andrew Ramcharan, an engineer and graduate of the Colorado School of Mines, was Managing Director of Project Evaluation for debt and equity financings at Sprott Inc. He also worked with IAMGOLD on M&A. Stephen Williams, a metallurgical engineer who is Vice-President of Corporate Development and Investor Relations for Bluestone Resources, has also joined the Genesis board of directors. He previously worked for Canaccord Genuity as a director of the metals and mining investment banking team.

Quebec has earned a reputation as one of the world’s best mining jurisdictions. Now, the province’s Plan Nord has opened up Quebec’s vast north, providing linkages to already exceptional infrastructure in Chevrier’s immediate neighbourhood (the Abitibi’s Fancamp Deformation Corridor). The Genesis gold project is near major highways and a rail line, and has a regional road running through it, as well as an airport nearby. The solid infrastructure in a safe jurisdiction tick off two of the main boxes for both investors and potential suitors.

Jeff Sundar, the president of Genesis, is younger than most mining execs. But he has been working in the sector long enough to see cycles come and go. Sundar has also experienced M&A success, in both 2010 and 2018. He was a director of Underworld Resources, which was acquired by Kinross for $138 million in July 2010 for its White Gold deposit in west-central Yukon (now owned by White Gold Corp). More recently, Northern Empire Resources — where Sundar was on the board — and its Sterling gold project was acquired by Coeur Mining for $117 million.

But the years between those takeovers were mostly punishing, for Genesis and the whole sector. Genesis completed a successful 10,000-metre drill program in 2017 that firmed up the resource at the Main Zone and identified new target areas. But the company received little recognition for it in the market, even though most intercepts were within 150 metres of surface. The final assays, announced Jan. 22, 2018, included some of the best mineralization yet:

  • 21.35 metres of 8.73 g/t gold including 3 metres of 37.97 g/t;
  • 22.6 metres of 3.59 g/t Au;
  • 19.4 metres of 4.26 g/t Au including 7.8 metres of 8.99 g/t.

The program helped Genesis develop a new geological model that laid the foundation for the resource update. Company geologists followed up this past summer with a surface prospecting and mapping program that defined extensions to Main Zone mineralization and identified new target areas. The work was funded by Quebec investment funds that provide assistance to active junior exploration companies in the province.

As for the price of gold, Sundar believes the timing could be right. Gold equities have seldom been cheaper relative to the price of gold, he pointed out.

XAU (the gold miners index) to gold ratio, 1984-present

“Generalist interest is returning to the space,” Sundar said. “People are starting to look at gold and gold equities again. With new team members providing a fresh look at our Chevrier deposit, including the potential for new discoveries, Genesis is well-positioned to capitalize.”

Genesis shares sank as low as 6 cents during tax-loss selling season in December. The stock has since rebounded to the 8-cent level, giving Genesis a market capitalization of about $8.15 million.

Genesis Metals (GIS-V)
Price: 0.08
Shares outstanding: 101.8 million (137.7 million fully diluted)
Market cap: $8.15 million

Disclaimer: James Kwantes owns Genesis shares and Genesis Metals is a Resource Opportunities sponsor company. Readers are advised that this article is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. The information is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data.