Vox Royalty Corp (TSX-V:VOX) said it has executed a binding royalty sale and purchase agreement with First Quantum Minerals (TSX:FQM) Ltd (FQM) to acquire rights to a portfolio of up to four Canadian royalties, for a total consideration of up to C$650,000.
Spencer Cole, chief investment officer of the returns-focused mining royalty company, said in a statement: "We are very excited to be expanding our Canadian royalty portfolio with the addition of up to four royalties in Québec and Ontario.
“The Estrades royalty adds fantastic longer-term potential to Vox shareholders as there are very few zinc-gold deposits globally which also contain gold grades in excess of 3 g/t. We look forward to seeing how the Estrades restart studies progress as well as seeing whether the Winston Lake deposit is incorporated into Metallum's future Superior Project mine plan."
The transaction is subject to the final acceptance of the TSX Venture Exchange, which Vox expects will be delivered during Q4 2022.
READ: Vox Royalty records preliminary quarterly royalty revenue of $2.976M
Pursuant to the terms of the purchase and sale agreement, on closing, Vox will issue C$525,000 of Vox common shares - 164,319 common shares at an issue price of C$3.1950 per common share -- for the Estrades and Opawica royalties.
Additional closings and cash payments of C$100,000 for Winston Lake and C$25,000 for Norbec & Millenbach will be due and payable following:
- the exercise of separate third-party option agreements;
- the issuance of the Winston Lake and Norbec & Millenbach royalties to FQM, and
- the assignment of the Winston Lake and Norbec & Millenbach royalties to Vox.
The portfolio covers:
- Estrades, in Québec, Canada, is operated by Galway Metals Inc (TSX-V:GWM). It is at the engineering studies stage and comes with a 2.0% net smelter royalty (NSR);
- Opawica, also in Québec, Canada, is operated by Imperial Mining Group Ltd (TSX-V:IPG, OTCQB:IMPNF) and is at the exploration stage and comes with a 0.49% NSR;
- Winston Lake in Ontario, Canada is operated by Metallum Resources (TSX-V:MZN, OTCQB:MTLLF) Inc and has a 2% NSR with a 1% buyback for C$3.0 million; and
- Norbec & Millenbach in Québec, Canada, is operated by Falco Resources Ltd (TSX-V:FPC) and has a 2% NSR.
Highlights of the deal include:
- The transaction provides exposure to the high-grade advanced stage Estrades, Gold Polymetallic Project, with substantial exploration upside at depth below the existing resource, along strike and via further exploration targets on the extensive land package;
- With a substantial around 27,000 metres (m) drilling programme carried out at Estrades in 2021, a further around 15,000m drilling earmarked for 2022, historical underground mine infrastructure still in place and ongoing environmental and engineering studies, Vox believes that Estrades is progressing well towards a future development scenario;
- Vox believes that the feasibility study completed in October 2021 at Metallum's Superior Zinc Copper Project indicates strong economics, and provides a potential pathway for the future inclusion of ore from the royalty-linked Winston Lake deposit, around 750m from the main Pick Lake deposit into the mine plan;
- Potential longer-term optionality from the Norbec & Millenbach royalty rights, which provide future upside to regional exploration and development activities in proximity to the Horne 5 Gold Project; and
- Exploration at the greenfield Opawica Gold Project has identified a 350m gold-bearing zone which has never been tested below the 150m level or along the additional 1.5 kilometres (km) strike extent of the geological structure to the west.
Estrades zinc-gold property
The 20,000-hectare Estrades zinc-gold property in the Abitibi region of western Québec and centered around the historical Estrades Mine, was developed by Breakwater Resources Ltd. (TSX:BWR), producing a total of 175,000 tonnes at a grade of 13% zinc, 6.35 grams per ton (g/t) gold, 1.1% copper and 172g/t silver.
The Estrades property hosts three primary mineralized horizons – the former producing, high-grade Estrades volcanogenic massive sulphide (VMS) mine where all the current resources are located, the Newiska VMS horizon to the south, and the Casa Berardi horizon (gold target) to the north.
The Estrades Deposit contains an indicated resource of 1.5Mt at 7.2% zinc, 3.6 g/t gold, 1.1% copper, 122.9 g/t silver and 0.6% lead as well as an inferred resource of 2.2Mt at 4.7% zinc, 1.9 g/t gold, 1.0% copper, 72.9 g/t silver and 0.3% lead.
Galway Metals Inc (TSX-V:GWM) carried out a total of 26,937m of drilling across the three mineralized horizons in 2021 and around 15,000m is planned for 2022, with key targets including drilling the deep IP/MT TITAN targets on the east and west sides below the resource in search of source vents and targets along the Newiska horizon looking for new deposit discoveries.
Galway also plans to continue the environmental and engineering studies, including metallurgical and ore sorting tests. This work includes evaluating alternative variations of long hole mining methods that could be applied to potentially reduce development and operating costs, materially improving project economics.
The Estrades royalty covers 86 claims and entitles Vox to a 2.0% NSR royalty on any ore mined.
The royalty area excludes the area covered by the original mining lease. The royalty covers a large proportion of the East Zone resource and Vox management estimates that the royalty claims cover around 25% of the total Estrades resource.
Winston Lake
Winston Lake forms part of Metallum's Superior Zinc and Copper Polymetallic Project located near the town of Schreiber, east of Thunder Bay, Ontario.
Inmet Mining (TSX:IMN), subsequently acquired by FQM, commenced development of Winston Lake in 1986 with production continuing for 11 years, with additional ore added from the Pick Lake deposit from 1995 until operations were suspended in 1998.
A total of 3.4Mt at 1.0% copper and 16% zinc was mined and processed with a current Indicated Mineral Resource at Winston Lake of 290,000t at 10.4% zinc, 0.7% copper, 0.9 g/t gold and 18 g/t silver.
Metallum completed a feasibility study over the Superior Project in October 2021, which contemplates accessing the Pick Lake deposit (not royalty-linked) via a decline from existing infrastructure at the royalty-linked Winston Lake deposit.
The feasibility study outlines an expected average production rate of 69.8 ktpa of zinc concentrate and 5.3 ktpa of copper concentrate, with a mine life of 8.5 years.
Whilst the feasibility was focused on the Pick Lake deposit, Vox management believes that there is potential for the remaining Winston Lake resource to be incorporated into a future mine plan.
Metallum has initiated discussions with multiple global metal traders regarding future offtake agreements linked to additional funding solutions.
The Winston Lake property is held by FQM and is subject to an option agreement dated February 9, 2018, whereby Metallum may elect to acquire the property in exchange for the grant of a 2% NSR to FQM and the assumption of liabilities related to the property.
Upon exercise of the option and grant of the royalty to FQM, FQM has agreed that the royalty will be assigned to Vox and Metallum will retain a right to buy back 50% of the royalty for a payment of C$3,000,000.
Vox management expects the option to be exercised in early 2023, subject to the discretion of Metallum's management team. The royalty covers the full extent of the Winston Lake resource and excludes the Pick Lake resource.
Opawica Project
The Opawica Project, 20km east of Desmaraisville, Québec, consists of 42 contiguous claims covering 23 square kilometers (km2).
The Imperial Mining Group is targeting gold deposits on the major regional NE-SW and E-W deformation corridors, which hosts several past producers such as Lac Shortt (2.7Mt at 4.6 g/t gold) and Joe Mann (4.8Mt at 7.56 g/t gold) as well as existing measured and indicated resources at Windfall (6.02Mt at 9.6 g/t gold) and at Bachelor-Moroy (893,000t at 5.58 g/t gold).
A 2020 drilling program was successful in intersecting gold mineralisation (3.11 g/t gold over 1.1m and 2.41 g/t gold over 2.8m) within a feldspar porphyry dyke within this Central Gold Zone. These results and findings will be used to guide future exploration.
The Opawica royalty was created pursuant to a property acquisition agreement dated May 14, 2009 and entitles Vox to an effective 0.49% NSR royalty (being a 49% interest in a 1% NSR royalty).
Kinross Gold Corporation (TSX:K) holds the remaining 51% interest.
Norbec & Millenbach
On June 30, 2021, Falco Resources Ltd (TSX-V:FPC) and FQM entered into an option agreement pursuant to which FQM granted Falco the sole and exclusive right to acquire the historical Norbec and Millenbach mining site (Mining Concessions 177 and 517), located around 11km to the northwest of Falco's Horne 5 Gold-Silver-Copper-Zinc Project in Québec.
Falco plans to use these two royalty-linked mining concessions as a surface tailings storage site for the Horne 5 Project.
Subject to Falco's decision to exercise the option, FQM will transfer the concessions to Falco and retain a 2% NSR, following which FQM has agreed to assign the royalty interest to Vox. Whilst the site is initially earmarked for tailings, Vox retains exposure to future exploration and development activities on these central mining concessions.
Contact the author at jon.hopkins@proactiveinvestors.com