As steady demand for gold drives production calls higher, the need for majors to acquire new projects is becoming paramount.
In addition to the Romeo project, Hawkmoon is working to advance its Wilson property which is also near to existing mines
he price of gold has sat above US$1,800 for much of 2021, driven by increased investment demand, coronavirus (COVID-19) production disruptions and safe-haven interest.
As steady demand drives production calls higher, the need for majors to acquire new projects is becoming paramount.
According to a report from S&P Global, there has been a deficit of new gold projects over the last 10 years.
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“The severe lack of new major discoveries over the past decade is a result of companies focusing on advanced-stage assets and known deposits, rather than searching for new discoveries,” it reads.
In fact, as of June 2020 there had not been any major discoveries in more than three years, and only 25 for the last decade.
Add to that the natural aging and life cycle of current mines, and it is easy to see that exploration is fundamental for feeding the project pipeline and birthing the next generation of gold mines.
“Our Corporate Exploration Strategies annual series has long noted the industry shift away from risky grassroots exploration in favor for exploration at known deposits and around operating mines,” reads a June 2020, S&P Global report. “The share of gold exploration budgets devoted to grassroots exploration has fallen by half since the 1990s.”
This makes juniors with prospective deposits in favorable jurisdictions that have a historic mining community especially enticing.
The value of jurisdiction
Quebec is one such jurisdiction. Ranked sixth (out of 76) on the Fraser Institute’s 2020 annual survey of attractive jurisdictions for mining investment, the province, which is a hotbed of exploration activity, shot up the list from 19th spot in 2019.
The province also boasts the Abitibi Greenstone Belt, a prolific mineralization zone that has hosted more than 100 gold mines, producing more than 170 million ounces, historically.
Currently gold major Osisko Mining (TSE:OSK) is developing its Windfall project in the Greenstone Belt. Described as a world-class gold deposit hosting 6 million measured and indicated tons at 9.6 grams per ton (g/t) gold, for 1.9 million gold ounces (oz). Inferred resources add 16.4 million tons at 8 g/t gold, for an additional 4.2 million gold oz.
Adjacent to the Windfall project, is Hawkmoon Resources Corps’ (CSE:HM) Romeo project. Romeo is comprised of 53 claims equating to roughly 2,984 hectares. Extensive trenching on the eastern portion of the property led to the discovery of five shear zones.
Initial work began at Romeo in 2019 in two phases. A second work program was completed in 2020, which included soil sampling in the southwestern area as well as a trenching program in an area of mafic volcanics in the eastern area. This trenching led to discovering a series of five parallel shear zones in the eastern portion of the property.
“We chose Quebec for low jurisdictional risk, close proximity to deposits and mines. And quick turnaround on drill permits,” Branden Haynes, president of Hawkmoon Resources said in an interview with Proactive. “We got our drill permits for Wilson in three days.”
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According to the explorer, initial evidence appears to suggest a more than 40-foot shear on Romeo could represent a surficial expression of what Osisko has named ‘Bank Fault.’ Additionally, an outcrop just east of Romeo, on Osisko’s property, appears prospective. Hawkmoon seeks to trace this outcrop westwards on to its property.
“Romeo is surrounded on three sides by Osisko, it’s about 12 kilometers away from Windfall’s Lynx [deposit]. And with the recent discovery of the Golden Bear [deposit] through Osisko, that is about a kilometer away from us. Now they are looking to build a mine with Windfall, they are going to be going through the various PEA (Preliminary Economic Assessment) stages,” explained Haynes. “And for us, we’re excited because we could represent an easy purchase from them for even (as) an infrastructure buy for the property.”
In addition to Romeo, Hawkmoon is working to advance its Wilson property which is also near to existing mines.
“So should we have a resource definition there [Wilson] Osisko is also in that vicinity, and there’s a number of other companies that would probably want to buy it,” added the CEO of Hawkmoon Resources. “We would like to see ideally 200,000 to 300,000 ounces of inferred and therefore have an economic deposit that we can thereby sell and be able to pay a small dividend to key shareholders or investors.”
Hawkmoon has plans to progress quickly through the drilling and delineation phases, which falls in line with Haynes’ exploration mantra.
“Either drill it or kill it is the way you want to go with exploration,” Haynes remarked. “You don’t want to sit on a property forever and just kind of do these little programs. The market does not respond to it. investors want to see action. Exploration companies have to be fast; they have to be nimble and fast and be able to move. And so that’s why we are trying to, you know, be forward-thinking and, and look to really get an idea of what Wilson has to offer, so that we can keep drilling it or kill it.”
Hawkmoon’s presence in the Abitibi Greenstone Belt also increases its attractiveness to major miners. The Greenstone Belt which partially straddles the Quebec and Ontario border is estimated to contain 300 million ounces of gold that is both past produced (170 million ounces) and current reserves.
Add to that the favorable jurisdiction ranking and the expeditious permitting pace, and it’s likely just a matter of time before more large-scale miners set up operations there.
As the S&P Market Report explained, both pure explorers and producers have shifted their spending, with juniors increasingly focused on expanding projects where known deposits and operations exist. While producers have focused on exploring in their own backyard and expanding current projects with nearby resources.
“There is going to have to be a significant refilling of new projects across North America,” said Haynes. “And that requires more investment, more interest in the sector and more money obviously flowing in so that explorers can do their thing, bring up these deposits and give the next set of future mines to large scale companies.”
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