-- Published: Monday, 27 January 2014 | Print | Disqus
In these risk-adverse times explorers and investors alike are looking to hedge their bets as much as possible. Few companies provide greater low-risk exposure to exploration upside than prospect generators like Midland Exploration (TSX-V: MD | OTC: MIDLF). By quietly amassing a slew of quality early to mid-stage exploration projects in Quebec the company has been able to strike deals with an impressive range of deep-pocketed joint-venture partners. Looking forward, Midland seems set to keep exploring and making discoveries despite the downturn.
Since going public in 2007 the company has been keeping true to the prospect generator model, and the financial restraint that needs to go with it. The company has a stable balance sheet of no debt and close to $4.5 million in cash, which at its current spending rates will last for at least three year. And Midland is not one to raise money without a reason - it still has only 30 million shares outstanding, 12% of which is owned by management and another 41% held by institutions. The company's share price has been hovering around 75¢, and is generally lightly traded.
Most importantly, the company has projects, lots of projects. In the last quarter some 17 of the companies' properties saw some level of investment, while it has more claims and holdings sitting in the wings, waiting for some precious exploration dollars.
And sticking true to its strategy of diversified risk, the company dabbles in all sorts of metals. It has projects with platinum group elements, copper, iron, and other base metals, and even rare earths, though, with gold taking up about 70% of its portfolio, the yellow metal is the company's clear focus.
The only true singular focus for this Quebec City-based company is its geographic concentration close to home, limiting itself so far to the favorable mining-friendly jurisdiction of Quebec.
Map courtesy Midland Exploration
So far the company's focus has turned up a number of interesting projects that it has managed to joint venture. Midland's president and CEO Gino Roger told GoldSeek that the company's projects have allowed it to still find good partners.
"Since we have a good quality portfolio of properties, potential partners of different size are still approaching us for option deal agreements," said Roger, who pointed to the company's recent deal with Donner Metals as an example.
Midland signed a deal with Donner Metals on its Valmond gold property. The 35-sq.-km property sits in Quebec's Abitibi region and covers a gold-bearing structure with historic drill intercepts grading 2.3 g/t Au over 4.6 meters and 5.22 g/t Au over 1.6 meters. The company notes that the main showing has been traced for over 300 meters along strike, and that the whole structure, is characterized by an extensive hydrothermal alteration zone more than 70 meters wide, has seen very little exploration. The deal has Donner paying $250,000 cash and committing to $2.5 million in exploration spending over four years to earn 50% of the project.
And while Roger said it has been more challenging to sign deals with some majors since the gold price retreated, just three months ago Midland signed a deal with Teck Resources on its Patris gold project, covering 90 sq. km in the Abitibi region. Teck can earn a 50% interest in the project by spending $3 million on the project over four years, and then can eventually increase that interest to 65% for an additional $7.5 million in spending and $300,000 in cash.
Teck will be funding prospecting, soil geochemistry, trenching, and diamond drilling, though as operator it has discretion over how it spends the money. One of the main targets will be a strong, discrete, induced polarization anomaly at the northern contact of the Lac Caste sediments with mafic volcanic rocks, while the company will also be following up on a showing of 4.7 g/t Au over half a meter, and a drill hole that returned 17 meters grading 0.48 g/t Au. There's also a new gold showings discovered this past summer, with a 15.5 g/t Au grab sample, consisting of a network of quartz-pyrite/veinlets, with gold mineralization open in all directions.
Midland is particularly excited about the property because it covers the Manneville Fault over more than 8 km and the La Pause Fault for more than 10 km, both considered subsidiary faults of the Destor-Porcupine Fault zone. Midland notes that the geological setting is similar to the Malartic mining camp held by Osisko.
Photo courtesy Midland Exploration
The company continues with its long-standing partnership with Agnico Eagle Mines at its Maritime-Cadillac project, which the two have been working on since 2006. The property sits next to Agnico's Lapa gold mine property that hosts almost 400,000 oz. gold in reserves. Agnico holds 51% of the Maritime-Cadillac property, with Midland holding the rest. In 2013 the two companies completed a total of 2.4 km of drilling, largely drilled deep from within the Lapa Mine towards the Maritime-Cadillac project. The single surface hole drilled hit 19 meters carrying 1.5 g/t Au from 673 meters down hole.
At the company's Laflamme project, Midland is working the project with joint venture partner Maudore Minerals. The property covers about 365 sq. km and sits about 30 km east of the Sleeping Giant mine.
The company spent the summer running IP surveys, and found several new drill targets that it plans to test next year. Results from the property so far include a few encouraging showings such as 1 meter grading 9.7 g/t Au and 1.2 meters carrying 71.2 g/t Au.
The Jouvex property is one of Midland's wholly controlled properties. It covers 143 sq. km along the Casa Berardi-Douay-Cameron deformation zone, which also hosts the Casa Berardi mine 65 km west, and the 2.8-million-oz. Douay gold deposit 7 km southeast. A new VTEM electromagnetic survey found some new anomalies that historic airborne surveys failed to find, which, combined with some new ground-based IP anomalies have provided new high-priority drill targets for the property.
Photo courtesy Midland Exploration
The Casault project, another wholly-owned Midland project, covers 157 sq. km and sits about 40 km east of the Detour Lake gold deposit. The company discovered a new gold zone there last year with hole 12-07 that hit 1.5 meters grading 10.4 g/t Au, while in 2013 drilling hit two new anomalous gold structures. The company plans to do more IP surveys and drilling to check the extent of the prospective zones. Osisko Mining had spent $3 million on the project as it worked towards a 50% interest, but in the face of a dropping gold price the company dropped its option earlier this year.
In the James Bay region the company has its wholly-owned Éléonore project, spanning 128 sq. km. The project sits 30 km southwest of Goldcorp's slightly better-known project of the same name, and in a similar geological environment. The Éléonore project provides special inspiration for Midland, as it shows just what's possible for a prospect generator like itself.
Fellow prospect generator Virginia Mines discovered the Éléonore deposit in 2004. The company then sold the project to Goldcorp and starting next year Virginia should be reaping many millions a year from a sizable royalty on the mine.
Midland's Roger told GoldSeek that the company hopes to repeat the success of Virginia by holding on to and advancing some of its projects alone.
"We would like to repeat Almaden or Virginia successes by keeping at least one or two projects for ourselves like the Éléonore gold project. We will keep this one for ourselves as long as we can and try to maximize the value of this excellent gold project. Additionally, there will be a synergy with the opening of the Goldcorp Éléonore, the next biggest underground gold mine in Canada, well located along strike with our project."
Besides the company's gold properties the company has decided to start exploring platinum group elements in anticipation of a big price increase in platinum group elements. Midland now has the Pallas project in the Labrador Trough area, which covers 210 sq. km and includes a large, folded, ultramafic-mafic complex that the company says is known for its strong PGE exploration potential. The company has already found some interesting showings, including several grab samples returning more than 2 g/t PGE + Au and is planning follow-up work next year.
And the company even has a rare earth project called Ytterby, sitting in the Strange Lake glacial dispersal train. Midland has found a strong partner with JOGMEC as its joint venture partner. Together they've been conducting till and grab samples that show the presence of rare earths over 30 km. Midland notes that the likely source of the rare earths is the B-Zone and the Strange Lake deposits. The B-Zone currently hosts 278 million indicated tonnes grading 0.93% total rare earth oxides, plus another 214 million inferred tonnes grading 0.85%, while Strange Lake doesn't have an N43-101 compliant resource. The company is in talks with JOGMEC as to where to go next.
And on the base metals front, the company has acquired from Soquem the rights to base metals on the Lingwick deposit, which sits on the 125-sq.-km Weedon property. The property sits about 120 km south of Quebec City, and Midland now controls all mineral rights to the property. The project hosts a historic, non-compliant resource of about 350,000 tonnes grading 5.84%, 0.61% copper, 0.14% lead, and 0.35 g/t gold.
With a range of metals, projects, and partners, Midland has managed to diversify risk to a large degree. Roger said that with strong international expertise among the team at Midland they eventually plan to diversify their geographic base too. But with Quebec still one of the best jurisdictions for mining in the world and the company continuing to make exploration deals, it can't be in too big a hurry to change its strategy.
The prospect generator business model of Midland Exploration, combined quality management and prospective projects attracts interest from the right partners. They continue demonstrating this success with new deals. Combine this with an excellent share structure, they are able to invest in their future by exploring, getting closer to finding a significant discovery on one of their many properties. For gold and metal investors, Midland now offers an excellent option to gain exposure to such a discovery with the current share price now well off their former record highs.
- Peter Spina, President of GoldSeek.com
MidlandExploration.com
TSX-V: MD | OTC Markets: MIDLF
Shares Outstanding | 30.3million |
Fully Diluted | 32.7million |
Market Capitalization | $19.7 million |
Peter Spina's experience with the precious metal markets started back in the mid-1990s, which led to the creation of GoldSeek.com back in 1995. Today GoldSeek.com ranks in the top three most popular global gold websites and its sister site, SilverSeek.com ranks as the most visited silver website in the world. Back at the start of the new secular precious metals bull market, Peter established the technically-focused subscription newsletter, which at the start of 2005 was merged into the more comprehensive Gold Forecaster (goldforecaster.com) service. In addition to the newsletter and websites, Peter frequently appears in the media including MarketWatch, Reuters, and Investors Business Daily.
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-- Published: Monday, 27 January 2014 | E-Mail | Print | Source: GoldSeek.com
Midland Exploration: Hedging Investor Risk Exploring for Gold, Silver, Rare Earths, Platinum Group Metals
