Article originally published on August 24, 2022 on CEO.CA (under @bardown). Post on CEO.CA can be found here: https://ceo.ca/@miningperspectives/wallbridgemining-all-in-on-developing-a-quebec-gold-mining-camp-wm
I am back again to provide an update and some more details on the ongoing operations of Wallbridge Mining. You may remember my last article written for PDAC CEO.ca research article contest (link here: https://ceo.ca/@bardown/wallbridge-mining-when-finding-too-much-gold-becomes-aproblem). The overall process of researching, writing, and publishing that article was enjoyable and the feedback I received was quite positive!
I am now motivated to continue writing more research articles on mining companies, starting first with a follow up on Wallbridge Mining. In the future I plan on writing articles about other compelling investments within the mining industry so stay tuned! Let’s get into it!
All-in on Gold
While a few news releases have been published by Wallbridge Mining (Wallbridge) since June, it has not been a quiet summer for the company as significant updates on business and operational objectives have been announced. Most notably on the morning of July 13, 2022, Wallbridge halted stock trading to announce the spin-out of all their nickel assets, including the Grasset nickel project adjacent to Fenelon, through Archer Exploration Corp. (Archer) [1], [2]. Wallbridge will acquire Archer shares for a total consideration of $53.6 million and upon completion of the transaction will own 19.9% of Archer while the remaining Archer shares will be distributed to Wallbridge shareholders at a ratio to be determined in the near future. Wallbridge is also retaining a 2% net smelter royalty (NSR) on any future production less the amount of existing royalties on the Grasset Project. Wallbridge and Archer also entered into an Exploration Cooperation Agreement where Wallbridge will be allowed to explore for Gold within the Grasset Project area. This Exploration Cooperation Agreement has the built-in condition where a joint venture between Wallbridge and Archer will be formed if either Wallbridge or Archer produce a resource estimate. If the resource estimate primarily contains gold mineralization, Wallbridge would control 70% where Archer would control the remaining 30%. Conversely, if a resource estimate is published primarily of non-gold mineralization, then a joint venture would be formed where Archer controls 70% and Wallbridge would control the remaining 30%. This exploration agreement has a five-year duration. Wallbridge’s recent exploration at Grasset highlights upside gold potential at Grasset as per the company’s news release from March 30, 2022, where regional exploration drilling intersected high grade gold following drill testing of interpreted structures (See Figure 1 below).
Figure 1: Regional map of the Fenelon-Grasset area from the March 30, 2022 news release.
Furthermore, it was announced on August 16, 2022, that Magna Mining Inc. signed a definitive agreement to acquire Lonmin Canada [3]. From Wallbridge’s most recent financials, the company is noted to have a 17.8% interest in Lonmin Canada [4]. The total purchase price of Lonmin Canada is $16 million where Wallbridge should receive approximately $2.8 million. After the deposition of Wallbridge’s nickel assets to Archer and the subsequent sale of Lonmin Canada to Magna Mining, Wallbridge only controls gold assets within Quebec (except for the Grasset NSR).
Community Relations and the Bigger Picture
Beyond economic implications for the sale of Wallbridge’s nickel assets to both the company and its shareholders, there are significant social impacts on the local communities adjacent to the Grasset and Fenelon projects that should be considered. Ultimately, Wallbridge’s goal is to develop Fenelon and Martiniere into producing mines, and as a result, the company must be cognizant of indigenous and local community socioeconomic impacts. The nearest community to Grasset and Fenelon is Matagami, Quebec where Fenelon is about 75 km west-north-west of Matagami [5]. Matagami has had a storied history with mining as the mining camp has produced a significant amount of zinc, copper, gold, and silver since the first mine opened in 1963 [6]. However, in June of this year, the last major mine in the area, Bracemac-Mcleod, operated by Glencore ceased operations [7]. With renewed exploration and development of Grasset by Archer, there is the potential for more demand of local contractors and businesses. This demand will likely not replace the contributions made by Glencore to the local economy, however the Grasset nickel spin out is a “win-win” for Wallbridge and its shareholders, for the local indigenous communities, and for the residents in Matagami.
Wallbridge’s effective indigenous communication and engagement was highlighted in a recent news release from August 3, 2022, where Wallbridge announced the signing of a Pre-Development Agreement with their Cree Nation partners [8]. This is an important step in the hopeful development of a potential mining operation along the Detour-Fenelon Trend. As noted in the news release, Cree Nation partners and Wallbridge have agreed “to cooperate in the preparation of all necessary environmental and social impact assessment studies relating to the Fenelon project.” The news release went on to highlight how the “[Pre-Development Agreement] contemplates the completion of an Impacts and Benefits Agreement upon the demonstrated economic viability of any project along the Detour-Fenelon Gold Trend”.
While Wallbridge is working on expansion of mineral resources in support of economic studies for a mine, they have committed economic resources to improving local infrastructure. As announced in 2021, the Government of Quebec granted $5 million where Wallbridge committed an additional $1.5 million, to upgrade the road access to the Sunday Lake fault with the goal of creating a development hub for mining in Matagami [9]. As per Wallbridge’s 2021 Sustainability Report, the road improvement project should begin in 2022 with the planned project route pictured in Figure 2 [10].
Figure 2: Planned Sunday Lake Fault Access Road.
Wallbridge’s sustainability report also highlights the progress of their ongoing environmental studies. While the company is not in any active environmental assessments for mine approval (they need to submit a project description to the provincial and/or federal governments which requires a pre-feasibility or a feasibility study), environmental baseline studies and consultation activities have continued through 2021 and are planned to continue through 2022 [10]. As I previously wrote in my last article, Wallbridge halted the permitting process for their small-scale mining operation due to the expansion of gold mineralization at Fenelon [11]. A new mining project scope will be required to be submitted to the appropriate regulatory authorities prior to the continuation of the environmental and social impact assessment. The scope of the environmental baseline studies and consultation activities have likely expanded in size to accommodate a larger mining operation, the scope of which is unclear today but should become apparent to shareholders upon completion of the forthcoming economic studies. With these studies presumably complete before submitting a defined project scope to the provincial and/or federal regulators, it may be possible to decrease permitting timelines once the proposed mining plan is submitted to the appropriate regulator(s).
Fast Tracking Fenelon to Production
As mentioned in my last article, the original 2022 plan for Wallbridge was to expand the known gold mineralization footprint at Fenelon and Martiniere which would culminate in updated resource estimates and to complete a smaller regional exploration drilling program as detailed in the news release from January 10, 2022 [12]. Wallbridge has periodically updated the success of the company’s core resampling program from previously drilled holes (see news release from June 7, 2022 for further details) and have highlighted successful results from the expansion drill program at Fenelon (see news release from July 26, 2022 for further details) [13], [14]. In July 2022, a corporate update was released on Wallbridge’s YouTube channel featuring, CEO Marz Kord [15]. Within this update, Marz noted that the company’s near-term focus was to shift their efforts to Fenelon to “achieve some key milestones”. As a result, all drill rigs have been moved to Fenelon to expedite resource drilling (hopeful to complete by the end of Q3) for inclusion in the next mineral resource update. The expedited resource drilling should reduce timelines for the subsequent mineral resource estimate and economic studies leading to future potential production at Fenelon. These operational changes align well with the expanded ongoing environmental baseline studies and consultation activities, the Pre-Development Agreement signed with Wallbridge and their Cree Nation partners, and the Government of Quebec’s development plan for Matagami, amongst other synergies.
Financial Update
As of June 30, 2022, Wallbridge had a cash balance of $38.7 million (Q2/22 financial statement) (excluding the expected $20 million of tax credits to be received by the end of 2022) and a market cap of about $146 million (as of August 24, 2022). The current resource estimate for Fenelon and Martiniere can be roughly estimated using a price per ounce of gold in ground for inferred and indicated of $20 USD and $30 USD respectively [16]. Using an exchange ratio of $1.30 USD/CAD (as of August 24, 2022), Wallbridge’s current mineral resource estimate value is approximately $149 million. These calculations do not consider the upside of the spin out of the Archer shares from the nickel asset sale.
While the past few months have been rough (to say the least!) for investors in the junior mining sector, it has been good to see Wallbridge making noticeable progress at Fenelon on multiple fronts. I look forward to resource expansion news at Fenelon and Martiniere, the spin out of Archer shares, and ultimately the updated mineral resource at Fenelon and timeline regarding forthcoming economic and engineering studies.
Disclosure: I have a beneficial long position in the shares of one or more of the companies discussed in this article, either through stock ownership, options, or other derivatives. I wrote this article without external assistance, and it expresses my personal opinions. I was not compensated for this article, and I have no business relationship with any company whose stock is mentioned in this article. I am not a registered investment advisor; readers are encouraged to complete their own due diligence and talk to their own licensed investment advisor(s) before making any investment decisions.
References
[1] Wallbridge Mining Ltd., “Wallbridge Announces Agreement to sell Nickel Assets via Spin-Out Transaction with Archer Exploration Corp.,” 13 July 2022. [Online]. Available: https://www.newswire.ca/news-releases/wallbridge-announces-agreement-to-sell-nickel-assets-via-spin-out-transaction-with-archer-exploration-corp–827063867.html. [Accessed 21 August 2022].
[2] Archer Exploration Corp., “Archer Exploration to Acquire the Grasset Nickel Deposit and Other Nickel Assets from Wallbridge Mining Creating a Leading Nickel Exploration and Development Company,” 13 July 2022. [Online]. Available: https://www.newswire.ca/news-releases/archer-exploration-to-acquire-the-grasset-nickel-deposit-and-other-nickel-assets-from-wallbridge-mining-creating-a-leading-nickel-exploration-and-development-company-837273990.html. [Accessed 21 August 2022].
[3] Magna Mining Inc., “Magna Mining Announces Signing of Definitive Agreement to Acquire Lonmin Canada Inc. and Announces a Private Placement Offering of up to C$20 Million of Subscription Receipts,” 16 August 2022. [Online]. Available: https://www.newsfilecorp.com/release/133955. [Accessed 21 August 2022].
[4] Wallbridge Mining Ltd., “MANAGEMENT’S DISCUSSION AND ANALYSIS (MD&A) Wallbridge Mining Company Ltd.,” 30 June 2022. [Online]. Available: https://www.sedar.com/GetFile.do?lang=EN&docClass=7&issuerNo=00010252&issuerType=03&projectNo=03419349&docId=5258313. [Accessed 21 August 2022].
[5] InnovExplo, “NI 43-101 Technical Report for the Detour-Fenelon Gold Trend Property, Quebec, Canada,” 23 December 2021. [Online]. Available: https://wallbridgemining.com/site/assets/files/3107/wallbridge_detour-fenelon_ni43101_final_withappendix.pdf.
[6] Canadian Mining Journal Staff, “Old mine won’t die,” 1 September 2010. [Online]. Available: https://www.canadianminingjournal.com/featured-article/old-mine-won-t-die/. [Accessed 21 August 2022].
[7] J.-M. G. Gagnon, “Matagami fragilisée par le départ définitif d’une minière étrangère,” 5 April 2022. [Online]. Available: https://www.journaldequebec.com/2022/04/05/matagami-fragilisee-par-le-depart-definitif-dune-miniere-etrangere. [Accessed 21 August 2022].
[8] Wallbridge Mining Ltd., “Wallbridge Signs Pre-Development Agreement With Cree Nation Partners,” 3 August 2022. [Online]. Available: https://wallbridgemining.com/news/wallbridge-signs-pre-development-agreement-with-cree-nation-partners/. [Accessed 21 August 2022].
[9] Société du Plan Nord, “Eeyou Istchee Baie-James – The Quebec government grants $5 Million to facilitate access to the Sunday Lake Fault,” 26 May 2021. [Online]. Available: https://www.newswire.ca/news-releases/eeyou-istchee-baie-james-the-quebec-government-grants-5-million-to-facilitate-access-to-the-sunday-lake-fault-802044958.html. [Accessed 21 August 2022].
[10] Wallbridge Mining Ltd., “2021 Sustainability Report,” 2021. [Online]. Available: https://wallbridgemining.com/site/assets/files/1/wm-sustainability-report-final-compressed.pdf. [Accessed 21 August 2022].
[11] Wallbridge Mining Ltd., “Demande de suspens l’Évaluation et d’examen des impacts sur l’environnement et le milieu social pour l’exploitation du projet minier Fénelon,” 17 December 2020. [Online]. Available: https://comexqc.ca/wp-content/uploads/2020-12-17_Lettre-Wallbridge_Fenelon-Demande-de-suspens-pour-projet-dexploitation.pdf.
[12] Wallbridge Mining Ltd., “WALLBRIDGE ANNOUNCES 2022 EXPLORATION PROGRAM AT FLAGSHIP PROPERTIES ON DETOUR-FENELON GOLD TREND,” 10 January 2022. [Online]. Available: https://wallbridgemining.com/news/wallbridge-announces-2022-exploration-program-at-flagship-properties-on-detour-fenelon-gold-trend/. [Accessed 23 August 2022].
[13] Wallbridge Mining Ltd. , “WALLBRIDGE IN-FILL SAMPLING PROGRAM SUCCESSFULLY ADDS NEW GOLD MINERALIZATION WITHIN FENELON MINERAL RESOURCE FOOTPRINT,” 7 June 2022. [Online]. Available: https://wallbridgemining.com/news/wallbridge-in-fill-sampling-program-successfully-adds-new-gold-mineralization-within-fenelon-mineral-resource-footprint-1/. [Accessed 23 August 2022].
[14] Wallbridge Mining Ltd., “WALLBRIDGE REPORTS SIGNIFICANT NEW EXTENSIONS OF KNOWN MINERALIZATION AT FENELON,” 26 July 2022. [Online]. Available: https://wallbridgemining.com/news/wallbridge-reports-significant-new-extensions-of-known-mineralization-at-fenelon/. [Accessed 23 August 2022].
[15] Wallbridge Mining Ltd., “Wallbridge Mining – Corporate Update July 2022,” YouTube, 26 July 2022. [Online]. Available: https://www.youtube.com/watch?v=SptPCjRZMwA. [Accessed 23 August 2022].
[16] Casey Research, “Valuing a junior miner’s gold in the ground,” 1 February 2010. [Online]. Available: https://stockhouse.com/opinion/independent-reports/2010/02/01/valuing-a-junior-miner-s-gold-in-the-ground.