After the publication of this article on 02 July, 2024, ESGold offered to compensate T$R for it. Since T$R accepted the compensation, this article is now compensated content. ESGold has expressed the intention of paying T$R for the creation of some content in the future. Please see the disclosure section for further details.
ESGold
An Undiscovered $3.5M Mining Gem With District Scale Exploration &
"Blue Sky" Mining Potential
Abbreviations & units (all units are metric unless otherwise specified):
- M = million (ex. 17M = 17 million)
- B = billion (ex. 1.08B = 1.08 billion)
- m = metres (ex. 2000m = 2000 metres)
- t = metric tonnes (ex. 17t = 17 metric tonnes)
- Mt = million metric tonnes (ex. 17Mt = 17 million metric tonnes)
ESGold’s Montauban property (120 km west of Quebec City & 80 km northeast of Trois-Rivieres). The discovery of the first lead-zinc mineralization occurred in 1910. The “Montauban deposit” was sporadically mined between 1911 and 1990 by many different companies.
ESGold’s project is now fully permitted for the processing of 6 historical tailings sites containing gold and silver. Processing 5 of 6 tailings sites could potentially generate an estimated ~C$83.7M (~US$61.1M) in revenue.
The property also has a near-surface historical resource (non-compliant NI 43-101) containing ~1.1Mt. Once approved, the processing of the historical resources could potentially generate an estimated additional revenue of ~C$427.1M (~US$311.8M).
Due to the property having changed hands many times and mainly focusing on base metal (zinc & lead) mineralization, it was not systematically mined and explored. There are many very promising untested drill targets (laterally & vertically) which were recently identified.
Following recent thorough review of the all data in the region which indicated it has the potential to host significant mineralization, the company suddenly acquired as many claims in the area as possible. The company currently has the largest mining claim package held by a mining company in the Montauban mining area.
With a ridiculously low-market capitalization of ~C$3.5M (US$2.5M), ESGold has tremendous upside potential. A hypothetical worst-case scenario estimates there’s potential upside between 672% – 1600% from the closing price of C$0.11 on 28 June, 2024.
The stage is set for ESGold to potentially become one of Canada’s next big junior mining success stories.
VMS Deposits
Volcanogenic Massive Sulphide (VMS) deposits are found worldwide along tectonic plate boundaries in areas of ancient underwater volcanic activity. VMS deposits often form in clusters (LePan, 2019). link
VMS deposits are one of the most common deposits. They are typically rich in base metals (typically copper, zinc & lead) and can also contain gold and silver which can help improve their economics.
VMS systems are typically associated with super continent assemblies over time. Since VMS deposits typically occur in clusters, the discovery of one in a new area typically triggers a claim staking frenzy due to the probability of finding more.
Based on current resource and historical production from 904 VMS deposits around the world, the average tonnage of a VMS deposit is said to be ~17Mt (LePan, 2019). link
The image below shows the distribution of VMS deposits in the world.
VMS Deposits in Canada
In 2007, it was estimated that out of the over 800 known VMS deposits worldwide (greater than 200,000t), 350 were located in Canada representing ~44% of the VMS deposits of the world. As of 2006, only 13 of the 350 VMS deposits in Canada were producing mines (Galley, Alan & Hannington, 2007). link
Canada hosts some of the largest VMS deposits in the world. Windy Craggy (297Mt – located in northwest British Columbia), Brunswick No. 12 (~230Mt – located in Bathurst district of New Brunswick), Kidd Creek (~181Mt – located in Timmins, Ontario) and Horne (53Mt was mined before mine closure in 1976 but there is currently 80Mt in mineral resources under the original Horne deposit called Horne 5 – located in Rouyn-Noranda, Quebec) are in the top 1% of VMS deposits in terms of total original reserves (Galley, Alan & Hannington, 2007). link
The image below shows the distribution of VMS deposits in Canada.
As of 2007, the province of Quebec hosted the most VMS deposits (33%) and had the 2nd highest total contained metals in Canada (Galley, Alan & Hannington, 2007). link
The Montauban deposit is located in the province of Quebec.
VMS Deposit Sizes in Canada
Averages & Medians
Although the 3 largest VMS deposits in Canada contain 297Mt, 230Mt and 181Mt, the image below shows the average and median VMS sizes in Canada based on lithological classifications. This will be referenced later in the article.
VMS Mining Districts in Canada
The Bathurst Mining Camp is said to have 96 occurrences and hosts 46 deposits. Out of the 46 deposits located in the region, there are 25 deposits that have reserves of greater than 1Mt!
Montauban Gold-Rich VMS Deposit
Since the Monauban Group (region where the Monauban deposit is located) has metasedimentary rocks associated with metavolcanic rocks, there has been some debate about whether deposits it hosts are SEDEX or VMS (SEDEX = Sedimentary Exhalative deposits. To know more about SEDEX deposits link & to learn about the differences between SEDEX & VMS deposits link).
According to recent Technical Reports on the property, the Montauban zinc-lead-gold-silver deposit is considered to be a gold-rich VMS deposit since its average gold content g/t is greater than the combined copper, lead and zinc grades (in wt%). A gold-rich VMS is a subtype of both VMS and lode gold deposits (Poulsen and Hannington, 1996; Hannington et al., 1999; Huston, 2000; Poulsen et al., 2000 as cited by Duplessis et al., 2023). link
“Additionally, the Montauban deposits are primarily associated with massive sulfides, meaning that zinc and silver minerals are present in high concentrations in specific areas rather than disseminated.” – ESGold news release on 29 May, 2024 link
Since the price of gold recently set a new record high and is expected to go much higher, gold-rich VMS deposits are extremely desirable due to the positive effect on the economics of a project.
In Canada, there are not many gold-rich VMS deposits. The gold-rich VMS deposits are mainly concentrated in the province of Quebec, Most of them are only ~480 km (~298 miles) from ESGold’s properties.
The map below shows the location of the gold-rich VMS deposits in Canada.
Montauban Project
Fully Permitted for Production
Once funding is secured, ESGold will become Canada’s next gold and silver producer.
In terms of production, the Monauban project currently consists of the following:
- Fully permitted to process the historical tailings (up to 1,000t/day)
- 16,000 sq ft building with a live Hydro-Quebec power line
- Hydro-Quebec transformer is adjacent to the building
- Building is expandable to increase output of the mill to 2,000t/day
- Acquired ~60% of the equipment required to operate the mill
Production could start as quickly as 6 months after obtaining the required financing.
The following is an image of the structure for the mill as well as the Anacon Lead 1 tailings site which is conveniently located next to it.
The following video shows the arrival or mining equipment for the mill.
Production Options
The following 2 production options (mill configurations) are available:
- Full production (1,000t/day) = requires ~C$17M
- Partial production = although the cost is not published, I estimate the cost will be 50% less than the cost of full production
- Profit from partial production could self-finance the cost to upgrade to full production
Production Financing
All financial options to resume production at the Montauban are being explored by ESGold.
Although the optics of the delay in obtaining the production financing may give the market the impression that the economics of the project are not good enough, this is not the case.
The Preliminary Economic Report (PEA) on the processing of the historical tailings (5 of 6 tailings sites) is robust even with the much lower metal prices used to calculate it. Although there is virtually little to no risk to financiers because of the PEA and ESGold’s particular situation, the much higher metal prices drastically improves the economics of the project.
The profit from the processing of 5 of the 6 tailings is significantly greater than the amount required to put it into production. Due to a quick payback period of only 1.8 years (amount of time it takes to recover the capital expenses required to put it into production), the after tax profit at the end of the 4 year mine life is ~C$10M (~US$7.3M) using much lower metal prices (US$1750/oz gold & US$21/oz silver).
Using recent metal prices at the time of writing, the estimated revenue from the PEA increases by an additional ~C$12M (~US$8.8M) from C$62.2M (~US$45.4M) to ~C$83.7M (~US$61.1M).
Once the processing mill is completed, the mining operation is one of the easiest and simplest in the industry. It consists of shoveling sand using an excavator or loader into a truck then dumping it by the pump box (plumper) near the mill where a loader then feeds it to the plumper. The main tailings site is conveniently located within rock throwing distance from the mill!
Reason for Delays in Obtaining Production Financing
In my first report on ESGold (formerly known as Secova Metals) in Jan 2022 (titled “A Socially Responsible & Environmentally Focused Cash Cow Mining Company in the Making”), I pointed out how ESGold resembled a reincarnated DNA Canada. DNA Precious Metals which spun out its mining assets into a private corporation called DNA Canada is the reason why the Montauban project is fully permitted for production and simply requires financing.
To make a long story short, the reason why it’s taking long to obtain the production financing is due to the connection between ESGold and DNA Canada.
The “mastermind” behind the technical logistics and plan to get the Montauban to production has been doing so since DNA Precious Metals acquired it in 2011. As part of the transaction to ESGold, DNA Canada received 50M shares (post-consolidation = 5M shares).
It is said that shareholders of DNA Canada need the share price of ESGold to attain the C$4 range in order for them to break-even (assuming a shareholder didn’t buy shares of ESGold on the open market to lower their overall average cost). DNA Canada shareholders fully understand the potential of the Montauban and most are patiently waiting for their conviction to pay off.
The more share dilution there is to put the Montauban into production and going forward, the more shareholders of DNA Canada get screwed over. DNA Canada basically gave the near-production ready project to ESGold on a silver platter so they expect the company to take their situation into consideration.
If ESGold didn’t care for its loyal long-term shareholders which essentially set it up for success, I strongly believe it would have raised the production financing through a dilutive share financing and would have been in production a while ago!
Luckily for shareholders of ESGold, the “mastermind” which has been working on this project for ~13 years is also a shareholder of DNA Canada and has an incentive as well as a vested interest to minimize share dilution.
Preliminary Economic Assessment
Historical Tailings
In 2023, ESGold released the following PEA on 5 of its 6 historical tailings:
click to view
Updated Tailings Revenue
PEA - Recent Metal Prices
Using recent metal prices and the amount of metals produced in the PEA, the estimated revenue from the potential processing of 5 of the 6 historical tailings is ~C$83.7M (~US$61.1M).
Potential Financial Support & Grants
Quebec Government
There exists potential financial support and grants from the government of Quebec which would further improve the economics of the project if obtained (not accounted for in the PEA).
The following financial support and grant are possible:
- “The Montauban project has the effect of reclaiming an orphan site therefore removing the environmental liability attributed to the Quebec Government. There are precedents in the province of Quebec where the government offers financial support to projects reclaiming orphan sites.” – ESGold NI 43-101 Technical Report on Mineral Resource Estimate & PEA of the Montauban Gold Project, Québec (2023) link
- “Due to the economic challenges in the region of Montauban it is possible that government grants be obtained to fund a portion of employee salary and training costs.” – ESGold NI 43-101 Technical Report on Mineral Resource Estimate & PEA of the Montauban Gold Project, Québec (2023) link
Community Support
The community of Notre-Dame-de-Montauban is rich in mining history due to the historical mining of the Montauban deposit.
Since it’s a small historic mining town (population under 1,000 people) which is geographically isolated, it’s economically challenged. Since many people work at mining projects outside the local area, ESGold has the ability to employ people that already have experience in the mining sector. Many eagerly look forward to being employed by ESGold instead of traveling great distances or being away from their families for long periods.
The abandoned historical tailings sites has been a major issue for the town. Some of the tailings are daily eye sores as they’re basically within city limits. Due to the town pushing the government of Quebec (owns all abandoned mining projects in its territory) to do something about the tailings, it offered C$19M in 2012 to simply bury 300,000t of toxic tailings containing gold and silver. Although this would have addressed the eye-sore issue, it wouldn’t have addressed the environmental toxicity issue.
The historical tailings are toxic and contaminates local water sources. It is said that the contamination is responsible for the death of some livestock in the local area.
Although ESGold is permitted to start the processing of the tailings, the town’s Mayor and the community are supportive of the company resuming production at the historical mine as it would properly neutralize the toxic tailings which has been a concern for many decades. The company would also restore the natural beauty of the environment with its reclamation plan. In addition, ESGold would create about 30 jobs and would also provide the town with badly needed revenue (company signed a formal agreement that gives the municipality a Net Smelter Return royalty of 1%).
The image below shows how close the toxic historical tailings are to residents of the town. Every time they drive out of the town on that highway, they’re visually reminded about it. The tailings are so toxic that the oldest tailings site has no vegetation growing on them after over 100 years.
Link to the list of contaminated industrial waste sites from the government of Quebec showing details of 2 historical tailings sites from the Montauban (unfortunately it is only available in French) Link
Link to a newspaper article with both the town’s Mayor and ESGold’s CEO discussing the project (unfortunately it is only available in French) Link
Montauban Deposit
Historical Production
The total production from the Tetreault-Anacon property (a base metal zone of the Montauban deposit) was 2,655,588 short tons (2,409,109t) of massive-sulphide ore containing 4.53% zinc, 1.54% lead, 0.02 oz/t (~62.2 g/t) gold and 2.50 oz/t (~77.6 g/t) silver (McAdam and Flanigan, 1976 as cited in Duplessis et al., 2023) link. In 1953 and 1954, a total of 100,309 short tons (90,999t) of ore containing 2.88% zinc, 1.03% lead, 0.01 oz/t (~0.31 g/t) gold and 1.00 oz/t (~31.1 g/t) silver was mined from the Montauban Zone (north of the Tetreault-Anacon Property) (Baldwin, 1961 as cited in Duplessis et al., 2023). link
The only company that focused on gold bearing zones (gold-silver) on the property mined 813,632t (assumption is metric tonnes as Canada was using the metric system at that time) containing 3.54 g/t gold and 12.36 g/t silver from 1983-1990 (McPhee, 1982; GM42953 as cited in Duplessis et al., 2023). link
When focused on base metal bearing zones (zinc-lead), the Montauban produced ~116,600t zinc, ~39,600t lead, ~56,876 oz gold and ~6,647,517 oz silver from 1913-1944 and 1948-1955.
When focused on gold bearing zones, the Montauban produced ~92,553 oz of gold and ~323,376 oz of silver from 1983-1990.
During the historical mining of the property, 5 tailings sites containing gold and silver were abandoned.
The image below shows the total amount of each metal produced at the Montauban.
The image below shows the different base metal zones and the gold zones of the Montauban.
click to view
The image below shows the different base metal zones and gold zones as well as the current and historical mining shafts in 1974.
click to view
The image below shows a different perspective of the deposit in 1993 (mining of the property ended in 1990).
click to view
The video below shows the 3D Model of the Montauban Gold and Silver Processing Plant.
Value of Historical Production
Base Metal Zones
Since the Montauban deposit is said to be a gold-rich VMS (a subtype of both VMS deposit and lode gold deposit) and due to how it was formed, it’s composed of 2 clearly defined deposit types (base metals and gold) which are very different in terms of composition.
Due to the possibility of discovering 1 of the 2 deposit types it hosts, calculations will be categorized as either base metal zones, gold zones and combined to account for the whole deposit.
Using recent metal prices, the value of the Montauban’s historical production when focused on the base metal zones (1913-1955) is ~C$1.08B (~US$786.7M).
Value of Historical Production
Gold Zones
Using recent metal prices, the value of the Montauban’s historical production when focused on the gold zones (1983-1990) is ~C$322.9M (~US$235.7).
Total Value of Historical Production
Both Base Metal & Gold Zones
Using recent metal prices, the total value of the Montauban’s historical production (both base metal zones & gold zones) is ~C$1.4B (~US$1.02B).
Montauban Deposit
Historical Drilling & Exploration
Below is every drill hole mentioned in the NI-43-101 (2023). All in-fill holes & holes drilled into tailings for a NI 43-101 were omitted.
- 1950/51 – 12 holes drilled totaling 2,437.8m to test anomalies revealed by resistivity survey
- 1951 – 2 holes were drilled totaling 724.8m
- 1951 – 4 holes drilled totaling 1,171.4m about 3.5 km NW of St-Thomas showing
- 1952 – 1 hole drilled in southern part of Lac Sainte-Anne (no longer exists in SIGEOM database)
- 1959 – 2 holes drilled totaling 353.6m
- 1962 – 14 holes drilled totaling 811.4m on D Zone
- 1962 – 6 short holes drilled (no totals given other than “short” holes)
- 1964 – 20 holes drilled totaling 1,421.6m south of South Gold Zone
1965 – 27 short holes drilled on North Gold Zone at 15.2m intervals (no totals given other than “short” holes) - 1975 – 21 holes drilled totaling 1,301.8m on North Gold Zone
- 1978/79 – 37 holes drilled totaling 2,030.9m mainly on North Gold Zone
- 1981 – 146 holes drilled totaling 5,253m
- 1984 – 2 holes drilled totaling 305m after a systematic high-resolution Mag-VLF Heli-borne survey was done over region surrounding the Montauban deposit
- 1986 – 170 holes drilled totaling 23,619m on South Gold, Marcor & A Zones (assuming depth is all the same gives an average of 139m)
- 1987 – 75 holes drilled totaling 13,296m as follows: South Marcor Zone (12 holes = 2,071m); S Zone (6 holes = 563m); A Zone (28 holes = 6,021m); C Zone (7 holes = 1,073m); Hanging wall Zone (17 holes = 3,032m); & Carbonate Zone (5 holes = 546m)
- 1988 – 121 holes drilled totaling 9,679m
- 1989 – 31 holes drilled totaling 4,134m on C Zone
- 1992 – 5 holes drilled totaling 915m
- 2000 – 18 holes drilled totaling 820.6m
- 2001 – 17 holes drilled totaling 529m on North Zone
- 2009 – 52 holes drilled totaling 1,505m in crown pillar of Montauban Mine
- 2010 – 22 holes drilled totaling 4,249m to test A, C, South Gold & Montauban zones
Although the historical data in the Technical Reports doesn’t say the depth of the holes, the average depth (total metres drilled divided by number of holes) indicates drill campaigns were not deep.
According to the historical work in the NI 43-101/PEA (2023), the deepest hole mentioned in the document is 1 that was drilled to a depth of 457.2m south of the South Gold Zone in 1964.
Montauban Deposit
Historical Resources
The property contains near-surface historical resources of ~1.1Mt which are all located immediately near old historical mining shafts (shown in image below).
Although drilling of many historical resources result in similar grades, the main reason why they’re considered non-compliant is because they haven’t been demonstrated or verified to the standards required for current mineral resources or mineral reserves.
Issuers have strict rules when it comes to the disclosure of information. Disclosure of historical resources is only permitted under certain situations. Issuers are not permitted to disclose the results of an economic analysis using a historical estimate. Even something that was prepared in accordance with NI 43-101 such as a prior economic analysis from a prior Technical Report is not permitted.
In order for the higher grade near-surface historical resources to be deemed NI 43-101 compliant resulting in significantly better economics of its PEA (2023), ESGold simply needs to drill it again using current NI 43-101 standards.
The image below is a slide from ESGold’s corporate presentation showing the locations, tonnage and grades of the near-surface historical resources.
Montauban Deposit
Estimated Potential Revenue
Historical Resources
Using recent metal prices, the estimated revenue from the potential processing of the near-surface historical resources could be ~C$427.1M (~US$311.8M).
Total Value of Montauban Deposit
Historical Production & Historical Resources
Using recent metal prices, the total estimated value of the Montauban deposit (historical production & historical resources) is ~C$1.83B (~US$1.33B).
Project Overview Video
Below is a video I created to provide an overview of the project.
"Blue Sky" Potential
Montauban Deposit
Potential for Vertical Zones & Extensions
The government of Quebec’s SIGEOM database contains the entire province’s geoscientific database collected over the past 150 years.
The map below from the SIGEOM database shows the locations of all the historical drilling in its database. One can view the details of each drill hole by clicking on it.
As mentioned in the historical drilling section above and having spent a lot of time physically verifying some of the drill data in the SIGEOM database, the Montauban property was not drilled deep as many holes were less than 100m deep, some extended to depths of 200m and there were very few holes that extended beyond a depth of 300m.
Although VMS deposits often contain near-surface mineralizated zones which are easy to find, mineralized zones can extended to great depths. The Kidd Creek mine (181Mt – Timmins, Ontario) is currently mining below a depth of over 2000m and LaRonde mine (230Mt – Rouyn-Noranda, Quebec) is currently mining below a depth of 3000m!
Since historical exploration didn’t drill deep, recent Technical Reports on the property have identified exploration targets that have the potential to be vertical extensions of the Montauban deposit. According to the recent Technical Reports, it has not been drilled since 2010.
The image below shows the vertical projection of the exploration targets from the 2014 Technical Report.
In summary, the Montauban has “blue-sky” potential as it was not drilled deep and new zones and extensions may exit below the historical mine (the 53Mt Horne mine stopped production in 1976 but decades later it currently has an additional 80Mt located below it called Horne 5).
Montauban Property
Potential for Lateral Zones & Extensions
In 2015, DNA Canada completed a 755.7 linear km helicopter-borne electromagnetic (VTEM) geophysical survey. It identified 22 geophysical anomaly drill targets. One of the recommendations from the recent Technical Report (2023) is to drill the known geophysical targets as many of the conductive zone anomalies have not been tested.
The image below is the result of the 2015 VTEM showing the identified geophysical anomalies which may contain minereralization.
In summary, the Montauban has “blue-sky” potential due to the possibility of finding new lateral zones and extensions on a property that was not systematically explored. Since VMS deposits often occur in clusters, there’s a potential that more deposits are found.
"Blue-Sky Potential Overview Video
Below is a video I created to show some of the “blue-sky” potential.
Important Info About Calculations Below
All potential revenue calculations are hypothetical and are simply to give a general idea of what the “blue-sky” potential might be if a such scenarios occur. Although T$R strives for accuracy, nothing in life is guaranteed to occur other than death and taxes. An inaccurate assumption can positively or negatively impact a calculation thus making it better or worse.
All the following potential revenue projections in the remainder of the article are based on the historical production of either base metal zones, gold zones or the total of both.
It assumes the average metal grade of new mineralization is the same as the historically mined grade for each metal in either base metal zones or gold zones. In reality, the average grade of new mineralization could be higher or lower.
The revenue calculations assumes the value of any additional tonnage is equal to the value of the same tonnage from the historical production values using recent prices (base metal zone, gold zone or total value of the deposit which includes both historical production & historical resources).
Although the operating cost for the processing of the historical tailings is known (C$29.4/t as per the PEA), the operating cost for hard rock is not known. For all applicable calculations, the operating cost used for the hard rock is C$44.10/t which is 50% higher than the cost to process the tailings. The reason why I used such a number is due to the operating cost of the Horne 5 deposit which is located ~480 km away from the Montauban deposit. In 2021, the Feasibility Study on the Horne 5 deposit calculated the operating cost was C$43.11/t (depth of the deposit is between 650m to 2,000m).
Since the depth and location of any new mineralization is too speculative, any additional cost (CAPEX) required to mine it such as an underground mine was not included in any calculations.
Examples:
- The value of an additional 1Mt from a base metal zone = the same value of 1Mt from the Montauban deposit’s historical production of base metal zones (using recent metal prices)
- The value of an additional 1Mt from a gold zone = the same value of 1Mt from the Montauban deposit’s historical production of gold zones (using recent metal prices)
- The value of another 1Mt deposit = the same value of 1Mt from the Montauban deposit’s total combined historical production & historical resources (using recent metal prices)
Montauban Deposit
Estimated Potential Revenue
Vertical & lateral Extensions
If new base metal zones are discovered (vertical & lateral extensions), the estimated potential revenue from the processing of the additional tonnage could be as follows (based on the amount of tonnage found):
If new gold zones are discovered (vertical & lateral extensions), the estimated potential revenue from the processing of the additional tonnage could be as follows (based on the amount of tonnage found):
District Scale Mining Potential
Potential for Deposits in New Claims
As mentioned in the VMS deposits section above, VMS deposits often form in clusters. Due to the way VMS systems are created, it can create mining camps like the Bathurst Mining Camp. As a reminder, the Bathurst Mining Camp has 46 VMS deposits of which 25 contain over 1Mt.
Below is a map showing the massive distribution of VMS deposits in the Bathurst Mining Camp. Notice the high concentration of deposits in a 100 sq km (~72 mile) area and throughout the region. Exploration in the Bathurst Mining Campt has discovered over 350Mt in resources and reserves.
It is often said that the best place to find new mines is near old mines.
In early March 2023, ESGold’s claims totaled 1,166.97 hectares. In the span of 2 months in 2024, the company acquired claims totaling 9,589 hectares!
Now totaling 13,116 hectares, ESGold currently has the largest mining claim package held by a mining company in the Montauban mining area.
“The decision to continue additional claims staking was based on the continued positive results of comprehensive and systematic geological surveys, including geophysical and geochemical analyses and preliminary exploration activities that have indicated significant potential mineralization within the region.” – ESGold news release on 29 May, 2024 link
The image below shows ESGold’s current claims.
According to the following 4 maps from the government of Quebec’s SIGEOM database which contains the entire province’s geoscientific database collected over the past 150 years, most of ESGold’s claims haven’t had much work done on them.
(Important – the SIGEOM database maps show all the claims so one must use the map above to know which ones actually belong to ESGold).
The SIGEOM database map below shows the historical drilling in the database
The SIGEOM database map below shows the results of historical geochemical tests in the database (identifies which elements were mainly identified).
The SIGEOM database map below shows the historical drilling in the database.
The SIGEOM database map below shows the results of historical geochemical tests in the database (identifies which elements were mainly identified).
The image below shows there are other known metallic deposits in the region.
click to view
In summary, ESGold has “blue-sky” potential due to the possibility of finding new deposits on some of its other claims. Since the area was not explored and VMS systems often create clusters of deposits in a region, there’s the possibility that more VMS deposits might be found on one or more of ESGold’s many claims.
Recent Technological Advancements
Help Find New VMS Deposits in the Region
“The project also hosts greenfield exploration potential as modern exploration techniques have not been systematically applied over the property” – NI 43-101 Technical Report Mineral Resource Estimate and Preliminary Economic Assessment of the Montauban Gold Project, Québec (2023) link
There are new technological advancements that allow to see at greater depths. In the last two decades or so, data integration using surface/sub-surface mapping, seismic, field data, structural analysis, lithology chemistry, etc. is being used to visualize and model things in a 3 dimensional view. This helps to better understand the geology, distribution of mineralization and how the deposit was formed. These tools assist in identifying areas that have the best potential to host mineralization or deposits.
Advancements in technology over the last few decades combined with the extensive historical data available should give a better interpretation of the VMS system which created the Montuauban deposit. This helps increase the odds of finding new extensions and zones of the Montauban deposit as well as new deposits in the region.
Since ESGold suddenly increased the total size of its claim package by an additional 9,589 hectares following “positive results of comprehensive and systematic geological surveys, including geophysical and geochemical analyses and preliminary exploration activities that have indicated significant potential mineralization within the region,” it sounds like the company may have used new data integration tools.
ESGold's Exploration Plan
The following are exerts from new releases about what the company plans to do in terms of exploration and mining:
- “It is also our goal to exploit these hard rock historical mineral resources, which will need additional work to comply with current NI 43-101 standards. Two underground sectors drilled in 2010 and 2011 are identified for potential near-surface bulk sampling. The Company has yet to apply for permitting to extract these short-term complementary potential mineral resources. We also intend to further explore the Property, as it is the first time that most of the key territory is owned by a single exploration company. This offers us tremendous potential and room for expansion from an exploration perspective.” – ESGold news release on 14 April, 2023 link
- “In short, we are not there for only four years. We will develop the camp in a manner that will respect of all stakeholders around our milling facility, but our priority is to reclaim the legacy tailings and restore the heydays of mining at Montauban.” – ESGold news release on 14 April, 2023 link
- “We are excited to embark on this phase of exploration as we believe it holds tremendous potential for uncovering valuable mineral resources.” By strategically staking claims and leveraging advanced exploration techniques, we aim to unlock the full mineral potential of the region while adhering to the highest environmental and social impact in the region. The acquisition of the additional claims solidifies ESGold’s Montauban Property bundle, while expanding its exploration and mining potential. These newly acquired claims are in line with the Company’s objective of low capital cost production targets while positioning the Company for continued growth with the Montauban Project. Procuring these claims will positively impact the Company’s long-term exploration program and enhance the value of these prospective claims,” said Jean-Yves Therien, CEO of ESGold Corp.” – ESGold news release on 04 April, 2024 link
- “One of the primary objectives of the company is to delineate the regional mineralization trends and identify potential targets for further exploration and development as well as to verify the immediate extension of the deposit at depth.” – ESGold news release on 29 May, 2024 link
Strategic Advantage
Market Doesn't Understand
Turning In-Situ Value into Revenue
Since ESGold currently has a ridiculously low market Capitalization of only ~C$3.5M (~US$2.5M) it indicates the market doesn’t fully understand the significance of its permits (Certification of Authorizations) and how it unlocks the value of any economic mineralization it currently has or finds on any of its claims.
When new mining permits are required, the lengthy process which includes environmental assessments can result in not obtaining a Certificate of Authorization. Some of the most valuable deposits in the world have issues obtaining mining permits or never receive any making multi-billion dollar deposits worthless (one of the world’s largest undeveloped copper deposit in the world located in Alaska has been trying to receive permits for a very long time).
Once fully permitted to mine something and a project evolves or changes, the only thing required in the province of Quebec is the approval of an addendum on the Certificate of Authorization.
Unless a company really does something stupid, approvals of addendums are said to be almost automatic.
It is said that the Montauban project is fully permitted for the processing of all the historical tailings which are currently estimated to be worth ~C$83.7M (~US$61.1M) (the original Certificate of Authorization was originally to process the Anacon Lead 1 tailings site).
As long as ESGold doesn’t change the processing method of the mill, no new permits are required. ESGold’s current Certificate of Authorization allows the mill to be able to process gold, silver and the by-product mica. In order to process base metals such as zinc and lead which were historically mined from the Montauban base metals zones, ESGold simply requires the approval of an addendum on the Certificate of Authorization allowing it be use a floatation process (the approval for a floatation process is the easiest one to obtain). Since the historical tailings and the historical resources don’t contain economic quantities of base metals, an addendum would only be required if the company finds new economic base metal zones that it wants to process.
ESGold’s current permits (Certificates of Authorization) opens the door for the following which simply requires the approval of an addendum:
- Mine the near-surface ~1.1Mt historical resource estimated to be potentially worth ~C$427.1M (~US$311.8M)
- Any new mineralized lateral or vertical extensions found at the Montauban deposit
- Any new deposits found on any of its other claims or future claims (mineralized rocks can be shipped by truck or rail which is less than 10 km from the site)
- Expansion of the building (it can be doubled in size)
- Increase production output to 2,000t/day
In summary, ESGold’s Certificates of Authorization allowing it to build the 16,000 sq ft structure and to process historical tailings are the golden tickets to turn any in-situ value of any economic mineralization it finds into revenue.
Total Estimated Potential Revenue
from "Known" Sources
Using recent metal prices, the estimated revenue from the potential processing of “known” sources of mineralization (historical tailings & historical resources) at the Montauban property could be ~C$510.8M (~US$372.9M).
Blue-Sky Potential
Mining Revenue
"Unknown" Sources
Potential Revenue if the Montauban Simply Becomes an Averaged Sized VMS Deposit
The Montauban contained a total of 4.37Mt (historical production & historical resources) which is significantly lower than the world average size of a VMS deposit (~17Mt) and lower than the average size of a felsic-siliciclastic VMS deposit in Canada (~9.4Mt average & 64.4Mt median).
Although the Montauban deposit has been extensively studied, its lithological classification described in the “VMS Deposit Sizes in Canada (Averages & Medians)” section above was not available anywhere on the internet. After literally spending almost a full day comparing every characteristic of the Montauban deposit to the possible lithological classifications, I came to the conclusion that it best resembled the felsic-siliciclastic type.
Since accuracy was important for my analysis, I contacted ESGold about it. The company replied back saying one of their geologists glanced at the attachment and believed the Montauban best resembled the felsic-siliciclastic type. Interesting, some experts refer to a felsic-siliciclastic VMS deposit as a Bathurst-type.
In 2005, Franklin et al. assigned the siliciclastic-felsic classification to all the deposits in the Bathurst Mining Camp due to their sedimentary and felsic volcanic host rocks and their volcanogenic. Also included in the siliciclastic-felsic classification of VMS deposits was the massive sulfides of the Iberian Pyrite Belt (Spain and Portugal), the Lachlan Fold Belt (Australia) and the Jebilet Massif (Morocco) (Franklin et al., 2005 as cited by Deakin et al., 2015) link. Rio Tinto’s Iberian Pyrite belt portion is the biggest VMS in the world with 1.535Bt of ore!
Although each VMS deposit in a specific lithological classification greatly ranges in size, the Montauban deposit possibly being in the same VMS lithological classification as the deposits in the world class Bathurst Mining Camp (total of over ~350Mt discovered in 46 deposits with the largest one hosting ~230Mt) and the same one as Rio Tinto’s Iberian Pyrite belt portion (biggest VMS deposit in the world ~1.535Bt) it could indicate there’s great potential to find new deposits in the Montauban region as well as expanding the Montauban deposit with the discovery of new extensions.
The scenario below shows the estimated potential revenue if newly discovered zones and extensions are found at the Montauban deposit and its total tonnage increases towards the average VMS sizes described earlier (17Mt world average & ~9.4Mt average in Canada for felsic-siliciclastic).
In summary, the Montauban has “blue-sky” potential because it was not systematically explored, wasn’t drilled deep (LaRonde mine is operating below a depth of 3,000M), it possibly belongs to the same VMS lithological classification as Canada’s largest VMS Mining Camp as well as the world’s largest VMS deposit and there is data indicating that new extensions and zones may exist so there’s a potential that only a fraction of the deposit has been discovered.
Estimated Potential Revenue
New VMS Deposit
Since VMS deposits can occur in clusters, there’s a potential that ESGold finds a new deposit on one of its many claims (as a reminder again, the Buthurst Mining Camp has 46 deposits in the region of which 25 of them are greater than 1Mt).
For every new VMS deposit found on any of ESGold’s claims, the estimated revenue from the potential processing of it is as follows (based on the amount of tonnage of the deposit):
Even the discovery of small near-surface deposits has the potential to generate substantial revenue.
In summary, ESGold has “blue-sky” potential because many of its claims have not been explored Since VMS deposits can occur in clusters, there’s the potential that it discovers more VMS deposits.
Side Note
As a side note, the LaRonde mine (98Mt bimodal-mafic VMS deposit) which is operating at a depth greater than 3,000m is only located ~480 km (298 miles) from the Montauban deposit.
A Growth Story in the Making
ESGold has the possibility to generate revenue from the following potential sources:
- Sale of gold & silver dore bars produced by its mill
- Sale of base metals if new sources are found
- Sale of mica (content is 6.2% of processed tailings)
- Sale of polymer construction material which are superior in strength & create zero carbon emissions (bricks, cinder blocks, paving stones, patio tiles, parking columns, highway jersey barriers used to define traffic lanes, etc.). A proprietary organic Polymer is used to bond neutralized processed tailings (Joint Agreement). link
- Carbon credits due to the ESG potential of the polymer construction materials (this is an emerging market)
- Additional low-cost mining projects that are put into production
- There are hundreds of abandoned mining projects that belong to the government of Quebec
- Although these are hard to acquire, once ESGold has successfully puts the Montauban into production the door is wide open to acquire more
- Some are said to be much better than the Montauban project
- There are hundreds of abandoned mining projects that belong to the government of Quebec
- Mill – depending on the economics of the ore at Montauban
- Can process higher grade ore from new projects in the region (can transport rock by truck or rail)
- Toll milling agreements to process the ore of other projects (once the Montauban area is depleted of economic ore or the remainder generates less revenue than a toll milling agreement)
Once the Montauban resumes production, ESGold will be have the ability to self-finance the acquisition of other similar abandoned low-capital expenditure projects and put them into production, it will also be able to self-finance exploration of its vast land claim package for potential deposits. Any economic mineralization could be processed to extend the life of the mine.
To shareholders, it means the company can execute its aggressive growth strategy with minimal to no share dilution resulting in a much higher stock price if it succeeds.
Hypothetical Worst-Case Scenario
Due to the current metal prices and the outlook for higher prices in the future, I believe it’s extremely unlikely that the Montauban doesn’t go into production. My original investment thesis on ESGold revolves around it starting production. As a result of my strong conviction on ESGold, I have my hard earned money where my mouth is.
Although ESGold is seeking the least share dilutive option to put the Montauban into production, there’s a chance that it doesn’t succeed and it must use a very share dilutive financing.
The calculations of the hypothetical worst-case scenario use the following assumptions:
- ESGold is unable to find a non-dilutive form of financing & does a very dilutive share financing at the price of C$0.12.
- Financing options:
- Partial production option
- Raises C$8,034,808 resulting in an additional 66,956,733 shares & 33,478,367 warrants
- Full production option
- Raises C$16,069,616 resulting in an additional 133,913,467 shares & 66,956,733 warrants
- Same scenario as the 2 above but without warrants
- Partial production option
- Partial production cost is 50% of the cost of full production from PEA (estimate)
- Partial production self-finances full production (less share dilution)
- Only revenue is from the “known” mineralization (historical tailings & historical resources)
- No additional extensions or zones are found at the Montauban deposit
- No new deposits are found on any of its other claims
- No additional abandoned projects are acquired
- No mill toll agreements are signed
- JV for the production of polymer construction material is cancelled
- Sale of carbon credits isn’t possible due to the cancelled JV above
- The mill & mining equipment is abandoned & not sold
- No financial support & grant is obtained from the government of Quebec
- Other assumptions used for the calculations:
- Recent metal prices remain the same
- An additional 10 million shares options is issued
- C$20M is spent trying to find mineralization before “giving up”
- No share consolidation
- All warrants & options are exercised
- Profit accumulates & isn’t spent on anything other than exploration
- No dividends are declared
- Market capitalization = cash on hand
- In bad markets, some juniors can trade for cash value giving zero value to all its assets
This hypothetical worst-case scenario results in the following potential share prices based on partial or full production::
- C$1.44 (~US$1.05) – partial production which self-finances full production (minimize share dilution)
- C$0.85 (~US$0.62) – full production from the start (maximum share dilution)
Due to the economics and potential of the project, there’s a high probability that it can be financed without giving any warrants.
This exact same hypothetical worst-case scenario without any warrants results in the following potential shares prices based on partial or full production:
- C$1.87 (~US$1.36) – partial production which self-finaces full production (minimize share dilution)
- C$1.17 (~US$0.85) – full production from the start (maximum share dilution)
Although this is a very specific hypothetical scenario which considers the worst-case scenario is massive share dilution is required to put the Montauban into production, it does potentially provide some insight about ESGold’s current market capitalization of only C$3.5M (~US$2.5M). If this hypothetical worst-case scenario and its assumptions are correct, it likely means there’s tremendous potential upside from current prices.
The Potential Investment Opportunity
With ESGold’s current market capitalization of only ~C$3.5M (US$2.5M), the market has currently priced in failure to find production financing, failure to attain production, failure to process the tailings worth an estimated ~C$83.7M (US$61.1M), failure to process the historical resource worth ~C$427.1M (US$311.8M), failure to expand the Montauban deposit and failure to discover any new deposits. The market has basically priced in complete failure of the company.
The market is currently valuing the company at less than the value of the 16,000 sq ft structure and processing equipment inside it.
Although investing in a speculative sector such as the junior mining sector is extremely risky and one can lose all their money, investing in the right company with the right amount of conviction can lead to life-changing returns. Proper due diligence increases the odds of success while minimizing risk.
ESGold’s golden tickets (Certificates of Authorization) almost guarantees it the ability to potentially convert the in-situ value (value of the metals in the ground) of any economic mineralization on its massive land claim package into profit with the approval of a simple to process addendum (two addendums if base metals will be processed).
ESGold is set-up for significant success if it discovers additional economic mineralization and it simply executes its business plan which involves an aggressive growth strategy.
Even if my worst-case scenario occurs, the share price could potentially increase between 672% & 1600% from the closing price of C$0.11 on 28 June, 2024.
Although rare, a golden opportunity in the junior mining sector is one that has little to no risk, the realistic worst-case scenario results in significant upside within a reasonable time frame and it has realistic blue-sky potential to provide life-changing returns in the right bull market.
In my opinion, I believe ESGold is one of these rare golden opportunities. If enough of the realistic “blue-sky” potential occurs, it has the potential to provide generational wealth to certain shareholders with the right amount of conviction.
Citations
Bruno Turcotte, Rémi Verschelden, Vincent Jourdain & Emond St-Jean, 2014, Technical Report for the Monauban Project. Link
Claude Duplessis, Daniel Dufort, Merouane Rachidi, John Langton, Edmond St-Jean, Claude Bissonnette, Francis Gagnon & Stephen Coates, 2023, NI 43-101 Technical Report on Mineral Resource Estimate and Preliminary Economic Assessment of the Montauban Gold Project, Quebec. link
Dan L. Mosier, Vladimir I Berger & Donald A. Singer, 2009, Volcanogenic massive sulfide deposits of the world; database and grade and tonnage models: U.S. Geological Survey Open-File Report 2009-1034 Link
Galley, Alan & Hannington, M.D. & Jonasson, Ian, 2007, Volcanogenic massive sulphide deposits, in mineral deposits of Canada: A synthesis of major deposit types. Earth Sciences Sector. 141-162. link
LePan, Nicolas, 2019, Everything you need to know about VMS deposits, Visual Capitalist. link
Michelle K. Deakin, Georges Beaudoin, Michel Malo, 2015, Metallogeny of the Nicholas-Denys Pb–Zn–Ag deposit, Bathurst Mining Camp, Canada, Ore Geology Reviews,Volume 66, Pages 1-24, ISSN 0169-1368 link
References
https://www.geologyontario.mndm.gov.on.ca/mndmfiles/afri/data/imaging/31F03NW2008/31F03NW2008.pdf
https://gq.mines.gouv.qc.ca/documents/examine/GM68974/GM68974.pdf
https://www.visualcapitalist.com/everything-you-need-to-know-on-vms-deposits/
https://minedocs.com/25/Montauban-PEA-03022023.pdf
https://gq.mines.gouv.qc.ca/documents/examine/GM67889/GM67889.pdf
https://silverspruceresources.com/site/assets/files/5585/vms-deposits-canada-review.pdf
https://www.geologyforinvestors.com/volcanogenic-massive-sulphide-vms-zinc-deposits/
https://pubs.usgs.gov/of/2009/1034/of2009-1034_text.pdf
https://emrlibrary.gov.yk.ca/gsc/current_research/1999-E.pdf
https://gq.mines.gouv.qc.ca/lexique-stratigraphique/province-de-grenville/groupe-de-montauban_en/
https://www.sciencedirect.com/science/article/abs/pii/S0169136814002698
https://cdnsciencepub.com/doi/10.1139/cjes-2022-0148
https://www.environnement.gouv.qc.ca/sol/residus_ind/resultats.asp
https://www.911metallurgist.com/blog/difference-between-sedex-vs-vms-deposits
https://www.geologyforinvestors.com/sedex-biggest-lead-zinc-deposits-world/
