What is it about Maple Gold Mines that makes it so unique?
Three things, really: its assets, its partner, and its valuation.
And they are not unconnected.
Maple’s core assets are the Douay gold project, the Joutel gold project and the Eagle Mine project, all contiguous land holdings forming a truly district scale 400 km² property package in Quebec.
Eagle is an inlier claim block within the Joutel property and is 100%-owned by Maple, but Douay and Joutel are both held in 50:50 joint venture with the multi-billion-dollar mining giant Agnico-Eagle.
And this isn’t just some recently engineered farm in.
Agnico has a long history in the area. In fact, it takes the second half of its name from the historical producing Eagle mine project, which was its first ever gold mine.
There’s been plenty of water under the bridge since then, of course. Agnico itself was founded more than 65 years ago, and it’s now more than fifty years since it merged with the original Eagle Mines back in 1972.
The merged entity went on to open up the Joutel mining complex in northwestern Quebec in 1974, from which it mined more than a million ounces from three main areas, the Eagle gold mine itself, Telbel, and Eagle West.
Back in those days, though, gold traded at a fraction of the price it trades at now, and after several successful years, Agnico moved on, to focus on the La Ronde and Goldex mines, which are still in production today and contribute to Agnico’s near 2mln ounces of annual gold production from the prolific Abitibi Greenstone Belt.
But was Joutel completely mined out?
Not by today’s standards.
Not at all.
Indeed, according to some lines of thinking there could be upwards of another two-to-three million ounces of gold to be had out of Eagle-Telbel when viewing what was historically extracted compared to the defined mineralization beyond. No hard resource number exists yet to back up that aspiration, but much of the early work and advanced work has been done in that regard.
Maple has just completed more than 7,000 metres of drilling at Telbel – the first drilling to have taken place in the Telbel mine area since the 1990s. The results have been highly encouraging, as the company announced on 6 June that it had hit semi-massive to massive sulfides in all holes, and that in one hole it had also encountered significant gold mineralisation at depth. The best intercepts ran at 3.5 grams per tonne gold over 4.8 metres and 3.9 grams over 4.5 metres, including grades up to 11.1 g/t gold more than 500 metres below the lowest level of historical mining.
This new data can now be combined with a plethora of old data - with Agnico on board, all of the original drilling and mining related data was previously converted from analogue paper format into a digital dataset that underpins a new 3D geological model.
Accordingly, Maple now has around 250,000 metres worth of historical drilling data to work off, a dataset which, according to a back-of-the-envelope type of reckoning might cost as much as C$75mln to put together from scratch in today’s dollars.
So, it’s big game hunting at a former producing mine, in partnership with one of the world’s largest companies which was the original operator who has a track record in the area. That’s not a bad start for an asset base.
But there’s more.
What originally brought Agnico to the table when it came to dealmaking with Maple was the nearby Douay project, which Maple held.
This system is already well-established, and big.
As it stands, Douay has 2.5mln ounces of open-pittable gold, of which two million are in the Inferred category and 500,000 Indicated ounces. There’s also just under 500,000 additional inferred ounces considered for future underground mining, but given that the average vertical depth of all drilling to-date is only around 300 metres, the potential for the mineralized system to extend significantly deeper represents a clear opportunity for resource growth.
The overall footprint of the Douay gold resource is around six by two kilometres, but it could yet go bigger. And deeper. The deepest established resource is at approximately 400 metres, and there’s plenty of potential for bigger numbers as drilling goes deeper. Douay’s potential draws parallels with one of Agnico’s largest gold mines, the geologically similar Canadian Malartic mine, where more recent drilling discovered the 6+ million ounce East Gouldie deposit at depth. Maple recently completed it’s first phase of deep drilling beneath the Douay resource as the Company starts the hunt for its own East Gouldie type discovery.
Maple Gold’s VP, Exploration is the JV manager, and the company also has access to all sorts of Agnico’s in-house expertise, including the institutional memory of how Canadian Malartic went from a small historical producer to become Canada’s largest gold mine.
“We believe that a five million ounce target is possible at Douay,” says Maple’s CEO, Matthew Hornor, and this targeted ounce count seems within reach given the number or prospective targets outlined beyond the current mineral resource and aggressive step-out and discovery approach being employed by the JV partners.
But if that five-million-ounce target is reached, what will happen then?
Here’s where another of Maple’s unique selling points comes in – valuation.
Currently, the company is capitalised at just over C$50mln on the venture exchange, which doesn’t look that aggressive for a company that’s already booked three million ounces on one project, and might go to five, and which is also aspiring to define additional high-grade ounces on another.
Sure, there’s a ways to go yet.
But on the other hand, there’s also a clear path forward. Matthew Hornor has no hesitation in describing Agnico as a great partner, and he points to various clauses in the joint venture agreement that allow for assistance in funding at suitable junctures. Will it come to that, or will Agnico buy out Maple before such technicalities really get tested?
Well, the agreement has been set up to allow another partner to come in place of Maple relatively easily. But given that Agnico is already in on a 50:50 basis, and that it also has equity in Maple, it may well be that in the end Maple shareholders are just paid to go away. In that event, it seems almost certain that the valuation will be a long way higher than C$50 million.
There remains, of course, the issue of Maple’s 100%-owned interest in the original Eagle mine project itself, which directly adjoins Telbel within the Joutel Project. Will it stay independent of all the other assets? Perhaps not, but for now it’s a nice strategic property for Maple Gold to control 100%.
Most importantly, Maple is a pure Canadian gold play with scale building at Douay, high-grade ounces to compliment from Eagle-Telbel with Canada’s largest gold producer funding and supporting the effort to establish one of Canada’s next gold camps in the heart of the Abitibi.
Surprisingly, Maple shares are still less than what they traded for at $0.17 when Agnico Eagle made its initial strategic investment at a premium of $0.24 a share. Notably, Maple has since drilled three of the top five intercepts ever at Douay, upgraded its mineral resource estimate to over 3 million ounces (Moz) with 21% conversion to the Indicated category, acquired the Eagle Mine and demonstrated the potential for high-grade mineralization at the property.
