No mining project comes ready to dig. At some point, a project starts merely as an area staked for exploration with hard yards starting many years before the asset goes into production.
There are, however, characteristics that point to potential success. Being in an area renowned for the metal or commodity you are looking for, tends to be a good start.
But then it’s no good making a world-class iron ore discovery if it’s stranded hundreds of miles from the nearest rail spur required to ship it across half a continent to an as-yet-undeveloped export terminal.
Similarly, we’ve seen occasions where intrepid firms have literally hit the motherlode only to see their asset expropriated.
In other words, geography and political stability are important - obviously not as crucial as the geology – but they are critical components for success.
Add experienced management and big company know-how and the mix looks even more appetising.
With this checklist in mind, it is worth looking at junior gold explorer Barsele Minerals Corp (CVE:BE), which trades on the Toronto venture exchange and is focused on mining-friendly Sweden.
The firm owns 45% of the property from which it takes its name, while joint venture partner Agnico Eagle (NYSE:AEM) has the rest.
For the uninitiated, Agnico is a big beast of the world of gold mining with assets in Canada, Finland and Mexico that helped it realise $2.2 billion in revenues last year.
It paid US$10 million for its holding and agreed to spend $7million over three years and has the option to increase its stake by taking the project to the pre-feasibility stage.
The total land package, which lies 600km north of Stockholm, encompasses around 83,700 acres. As well as the yellow metal, there is potential for silver and copper at VMS (volcanic massive sulphide) deposits. It has been the scene of exploration for three decades.
The goal is to define a gold deposit of between 1.5million and 2 million ounces.
Management has form
Barsele's management has form and the same team, led by chief executive Gary Cope, found Orko Silver Corp’s La Preciosa SilverGold deposit in Durango, Mexico.
Exploitation licences have been in place on the known area of mineralisation since 2007, which makes this a more advanced project than some.
Gold mineralisation mainly lies in an intrusion, where three major zones of gold have been identified - the Central, Avan & Skiråsen Zones.
The latest drill results, shared with the market in August and September, have unearthed grades above 4 grams of gold per tonne.
Barsele, in its latest presentation, said its partner continued to “aggressively explore” the project, having extracted almost 22,000 metres of the core material by the end of June.
The current resources include 193,000 ounces in the indicated category and 1.43mln inferred ounces.
"We are extremely pleased with the progress to date at Barsele," said CEO Cope in February, when the company updated the market with its new resource statement.
"This gold deposit continues to evolve, supported by the newly updated mineral resource estimate, that only focuses on the underground component of the Avan-Central-Skirasen zones.”
Also open pit data
Not included in the resource estimate was open pit data, a new discovery three kilometres to the east of the main discovery and a VMS target to the north.
It also should be pointed out the deposit remains open in all directions along strike and to depth. So, further drilling will undoubtedly add new ounces.
“At this stage, it is reasonable to believe that somewhere between 10 and 15 million tonnes at grades between 2.5 and 3 grams per tonne of gold may be added by drilling extensions of currently defined mineralised zones,” mining consultant InovExplo is quoted as saying of the Barsele property.