Small mining companies hunt for fame and fortune in Atlantic Canada

Small mining companies hunt for fame and fortune in Atlantic Canada

Three junior mining companies try to beat the odds and strike it rich in the riskiest of businesses


That is how Sokoman Iron Corp’s president and CEO Tim Froude sums up whether his company’s promising Moosehead gold project in central Newfoundland will result in a mine being built there one day.

That is the harsh reality of executives like Froude who lead hundreds of tiny companies operating in Canada’s crowded junior mining sector. The landscape is filled with plenty of women and men like Froude, pitching their projects to investors and hoping to scrape together just enough cash to fund exploration in hopes of making that big discovery that turns into the next Voisey’s Bay.

Most companies never get that lucky. But a few do succeed, and their work eventually leads to mines being built and wealth and employment being generated, often in rural parts of the country where multi-million-dollar economic activity is hard to come by. What follows are three companies operating in Atlantic Canada who might be on to something big.

Sokoman’s gold bonanza
In June, Sokoman Iron Corp was just another junior mining company with big dreams and very little cash in its treasury to achieve them.

But on July 24, the Ontario-based company issued a press release announcing the results of a 2,000 metre, 15-hole drilling program on its Moosehead gold project in central Newfoundland and Labrador, 20 kilometres east of the town of Grand Falls-Windsor. The program had produced jaw-dropping results. One hole (18-01) had turned up a grade of 44.96 grams of gold per tonne in a mineralized zone.

The results caught the attention of the Canadian junior mining sector. Companies with names like Sunvest Minerals and Tasca Resources quickly started snapping up land near Sokoman’s Moosehead property, and its share price jumped from about four cents to as high as 58 cents after the release was issued. Tim Froude, Sokoman’s president and CEO, says the results suddenly made him a popular man after a few lean years where he was the only full-time company employee earning a salary. “We’ve had some pretty high-profile investors come on board since then and it’s padded our treasury considerably. But I was pretty lonely for a while. I felt like the Maytag repair man,” Froude jokes.

The highest profile investor would be Eric Sprott, a Canadian billionaire who made his fortune investing in gold and junior mining companies. On July 30, 2018, Sprott decided to invest $3 million in Sokoman. That infusion of cash will help Sokoman speed up exploration at Moosehead. With $3.7 million sitting in the bank, Sokoman embarked on a 10,000 metre, two drill exploration program at Moosehead in the fall.

“The first phase was very successful. Over half the holes intersected visible gold. A number of holes intersected considerable grades,” Froude says. “We need to keep making this thing bigger and find potential new zones of mineralization. There is a lot to do here. We could make additional high-grade discoveries.”

Froude is no stranger to discovering large gold deposits. Having logged over 30 years in the mining exploration business, he was responsible for the Valentine Lake gold discovery in central Newfoundland that Marathon Gold is currently advancing. But has he made an even bigger discovery at Moosehead? Froude knows nothing is guaranteed in exploration, but the initial drilling results at Moosehead have him excited about his company and its future.

“Not all of these ventures pan out or else there would be gold mines all over the place,” Froude says. “But all we can do is try, and trust me, we will give it our best effort to bear more fruit.”

Puma’s promising partnership
Marcel Robillard has struck a deal that could be a gamechanger for the junior mining company he runs.

The deal saw Robillard’s Puma Exploration Inc. close a strategic alliance in April 2018 with Trevali Mining Corporation―the company that owns and operates New Brunswick’s only operating mine, the Caribou lead-zinc-silver mine in Bathurst. Robillard is the longtime president and CEO of Puma Exploration, and he has designs on getting a zinc mine built in the Bathurst area as well. He says the alliance with Trevali will help his company get its prized asset, the Murray Brook deposit, into production.

“Puma is more of an explorer and Trevali is more of a developer and miner,” Robillard says. “That’s why the alliance is so great. We are going to keep doing the exploration. Trevali will have to mine it, which is its expertise.”

There is some work to do at Murray Brook before it gets to the mining stage, however. Puma completed a 5,000-metre drilling program in the summer of 2018. Robillard, who started at Puma Exploration as a geologist and project manager before being named president and CEO in 2010, says the drilling program is firming up the geology in the area and helping the partners determine whether Murray Brook will be economical to operate as either an open pit or underground mine.

Murray Brook was acquired by Puma Exploration in 2016. Robillard was attracted to it because he considers it one of the major undeveloped zinc plays in the Bathurst region―the company says there are over 600 million pounds of zinc there. It is also located 10 kilometres west of Trevali’s Caribou mine that includes a processing mill. The mill is a key reason why Robillard pursued an alliance with Trevali. While it gives Trevali a 75 per cent stake in Murray Brook with Puma Exploration holding a 25 per cent stake, Trevali has the cash to fund more exploration there and it also has a mill that can process any ore Murray Brook will produce. There will be no need to build that infrastructure at Murray Brook. Robillard says that will save Puma a lot of capital and it improves the chances of turning the property into a mine.

“We would need an investment of $400–$500 million to build a new mill and facilities there,” Robillard says. “By trying to build everything you lose time and cash, and most of the time you are not successful. I prefer to have 25 per cent of something really great than 100 per cent of something that won’t work.”

MegumaGold’s big bet
Regan Isenor is hoping lightning will strike twice in rural Nova Scotia for MegumaGold Corp.

Actually, the CEO and president of this company wants to strike gold, not lightning, and follow a similar path rival Atlantic Gold Corporation has travelled on the Eastern Shore of the province. Atlantic Gold’s Moose River gold mine went into commercial production in March of 2018 and has produced over 40,000 ounces of gold as of the second quarter of 2018. Isenor has dreams that some of the prospective land MegumaGold has in its portfolio may also be mined in the future.

“Traditionally gold has always been extracted from these high-grade, nugget-style, deep underground and high cost mines,” Isenor says. “Atlantic Gold has shown the low grade, high tonnage, disseminated gold model is viable. We think this type of stuff is very underexplored in Nova Scotia.”

Atlantic Gold has been able to make the disseminated gold mining model―where lower grades of gold are spread out over a large area― work at Moose River. Isenor thinks it can work for MegumaGold. It’s built up a large land base to work from. It has over 6,000 claims covering 106,000 hectares in the province. Some of that land is adjacent to other well-known gold deposits on Nova Scotia’s Eastern Shore such as Cochrane Hill, 15 Mile Stream, and Moose River. The company completed a large air geophysics program during the summer of 2018. Isenor says the company is interpreting the data to see what areas might be mineralized and worth exploring on. He says the company plans to do a reverse circulation drill program, fence off some potential structures, and then do a combination reverse circulation and diamond drill exploration program to get more detail on some of the more interesting zones.

The market is clearly interested in what MegumaGold is up to. The company raised $5 million in the spring of 2018. Isenor says that gives it the funds necessary to beat the bushes on its claims and identify promising areas to explore on. “It’s almost like trying to find a needle in a haystack,” Isenor says. “It’s a regional play and the structures are huge. You must be well funded to adequately drill it out. You have to narrow down where the viable areas are and put enough drill holes into it that you’re not missing it.”

Isenor concedes MegumaGold is a long way from developing its own gold mine in Nova Scotia. But its land base gives it lots of running room to find large disseminated gold structures that could become its version of Moose River in the future. “We are just scratching the surface now, but the work has been going well so far,” he says. “There is a lot of ground out there. Now we must be very careful and evaluate everything properly. That is the stage we are at.”

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