The recent launch and ensuing price chart trajectory of Abitibi Metals (AMQ.C) is one of the reasons we remain true to this Wild West sector, despite the carnage witnessed in recent weeks/months. After trotting out a new acquisition on Nov. 16, the stock went on a high-volume tear.
My interest in Abitibi Metals (formerly known as Goldseek), which goes back more than two years, was sparked not only by the company’s extensive portfolio of prospective properties in the prolific Abitibi Greenstone Belt, but in the pedigree of management and its highly protective values concerning its tight share structure—management and associates own > 75% of the outstanding common shares.
Having spoken with CEO Jonathon Deluce recently, it’s apparent that he remains committed to preserving the company’s tight structure, and will likely hold off raising funds until he’s able to create additional value via the business end of the drill bit, though no one could blame him for entertaining a raise after today’s steep climb (the stock was good for another 24% gain today (Nov. 27)).
As a bet on company management, the wait for this one was worth it, as the above price chart clearly demonstrates. The stock was actually trading in the sub-nickel range for over a year (between April 2022 and July 2023). I know some of you were actively accumulating the stock during that time—congrats on seizing the low-risk opportunity.
The company’s Nov. 16 acquisition headline that triggered this recent trading frenzy: Abitibi Metals Secures the High-Grade B26 Polymetallic Copper Deposit (Ind: 7.0MT @ 2.94% Cu Eq & Inf: 4.4MT @ 2.97% Cu Eq).
AMQ management has had its eye on this property—the B26 Polymetallic Copper Project—for the past three years. CEO Deluce characterizes B26 as “one of Quebec’s most promising mineral discoveries with a current strike of 1 km and depth extent of 0.8 km.” The project boasts a high-grade resource of some 400 million pounds of copper and 286,000 ounces of gold (along with significant zinc and silver credits at depth).
B26 Resource Summary (2018):
- Indicated: 6.97 Mt at 2.94% Cu Eq (1.32% Cu, 1.80% Zn, 0.60 g/t Au and 43 g/t Ag);
- Inferred: 4.41 Mt at 2.97% Cu Eq (2.03% Cu, 0.22% Zn, 1.07 g/t Au and 9 g/t Ag).
Some noteworthy drill hole intercepts that underpin B26’s resource include:
- 2.32% Cu Eq over 89.5 metres (1274-13-117);
- 3.05% Cu Eq over 48.1 metres (1274-16-224);
- 8.95% Cu Eq over 11.5 metres (1274-14-152).
Located along the same structural trend as the historic Selbaie Mine seven kilometers to the southwest, the company will be targeting the ‘low hanging fruit’ expansion potential of its existing high-grade (shallow) resource with an upcoming drill program (Selbaie’s historical resource = 56.9 Mt @ 0.87% Cu, 1.85% Zn, 0.55 g/t Au, 39 g/t Ag).
AMQ management believes B26 holds the potential to deliver an economic PEA with a minimum defined 20-to-30-million-ton high-grade copper resource.
AMQ stands to earn an 80% interest in B26. Getting this deal inked with SOQUEM, a subsidiary of Investissement Québec, now a significant AMQ shareholder, was a major accomplishment as this gov’t entity is very selective, only partnering with those who meet their strict criteria.
The terms of this deal, which includes a very agreeable year one (exploration) spending commitment, are detailed near the bottom of this Nov. 16 press release.
CEO Deluce: “One of the key characteristics for us was to find an asset with the potential to deliver an economic PEA with a minimum defined 20-to-30-million-ton high-grade copper resource, and I firmly believe that we have achieved that with B26. We have an aggressive exploration plan designed for this deposit with 12,500 metres targeted in 2023-2024 with an initial 2,750 metre program to commence shortly. Our initial drill strategy aims to delineate B26’s open-pit potential in addition to continuing to develop and grow the existing underground resource. We believe there is significant upside in developing an open-pit resource and look forward to including this as part of a robust maiden Preliminary Economic Assessment with strong numbers.”
On Nov. 23, the company followed up its acquisition news with the following headline: Abitibi Metals Unveils 2024 Exploration Strategy for the High-Grade B26 Deposit (Ind: 7.0MT @ 2.94% Cu Eq & Inf: 4.4MT @ 2.97% Cu Eq), Focused on Growth and Discovery.
The company’s immediate plans for B26, as per the guts of this press release:
1) 10,000-plus meters of drilling:
- The company plans an aggressive (minimum) 10k drilling campaign in 2024, with a 2,750-meter phase-one program set to begin in January. This first phase will target the open-pit potential of the B26 deposit while concurrently advancing and expanding the existing underground resource. Further: ‘This phase will concentrate on high-priority infill drilling in areas with higher metal factors within the resource, roughly from surface down to 300 metres and exploring mineralized lenses, continuity and geometry, and expansion possibilities.’
- Regarding accelerated drilling plans and future capital raises: ‘The Company is confident that the Project will warrant much larger annual drill budgets for expanding the resource and developing new targets. The Company will be ready to scale up drilling once valuation and financing goals are met.’
2) Updated internal resource & 3D model (verbatim as per the Nov. 23 press release):
- Through the review of the 2018 resource, we have identified opportunities for improvement, which will strengthen our drill plan and a potential increase of current tonnage without further drilling. These areas include:
- Geological Modeling: Better define high-grade lenses to generate strong resource growth-focused drilling
- Density Factor: Review and analyze additional samples to determine the correct density factor to include in the updated internal resource / 3D model. The Company believes the density factor could be currently understated, which could result in the correct factor contributing additional tonnage above the 2018 resource numbers.
- Gold Silver Grades: Review and analyze metal grade variability for resource estimation update.
- Resource Estimation (open-pit and underground): To complete a robust 3D and internal resource model which will provide a strong basis for evaluating economic potential.
3) Gravity Survey:
- The Company is planning a Gravity Survey grid to cover extensions of the VMS contact to help model the geology, primarily the mafic-felsic contacts and sulphide-rich environment, in order to target new mineralized extensions close to the surface and at a moderate depth (300-600 metres). This is aligned with our first-year objective of improving our understanding and model of the open-pit potential of the Project.
CEO Deluce: “We’re thrilled to unveil our first-year strategy for the B26 Polymetallic Copper Deposit. We are focused on growth and discovery and will leverage the extensive work already completed to drill existing high-priority targets in the near-term while systematically building a robust 3D model that provides additional high-value targets to grow and expand the resource in our follow-up programs throughout the rest of the first year.
We believe that the initial 10,000 metres of drilling we have planned is only the tip of the iceberg and that B26 will deserve much larger programs as this Project progresses.”
Mr. Deluce continued: “We are confident that our two dynamic projects, the B26 Deposit and the Beschefer Gold Project (known historically as B14), located just 7 km apart, create a district-scale metals opportunity in the Abitibi Greenstone Belt. The standout historical intercept at B26 of 2.32% Cu Eq over 89.5 metres, coupled with Beschefer’s impressive 55.63 g/t gold over 5.57 metres, exemplifies the high-grade potential of both Projects.
As countries increasingly seek to secure critical metals, we take pride in being a Canadian company focused on developing home-grown assets. Our year one exploration strategy is designed with clear objectives: to de-risk, expand, and aim to make new discoveries outside of this significant resource. As the first public company to have the opportunity to option B26, we fully intend on pairing our aggressive exploration program with an equally aggressive marketing and awareness strategy in order to deliver B26 the attention it deserves.”
AMQ’s cap structure remains super tight. Even with this steep share price trajectory, the company’s market cap sits at only $29.24M, based on its 60.28 million shares outstanding and recent $0.485 close (some mining observers believe AMQ will continue to re-rate, viewing the current valuation as modest when compared to its peers).
A link to the company’s recently updated corporate presentation can be found here.
Forum Energy Metals (FMC.V)
Forum recently announced having revised and completed the acquisition of Rio Tinto Canada’s (RTEC) interest in the Janice Lake copper project in northern Saskatchewan, giving Forum a 100% interest in the project – Forum Acquires Rio Tinto’s Interest in the Janice Lake Copper Project.
As part of this deal, RTEC retains a 20% back-in right and a 2% NSR on the project (capped at $50 million).
RTEC may exercise the Back-in Right at any time no later than 180 days following the earlier of completion of a feasibility study or commencement of commercial production if a feasibility study is not completed prior to the commencement of commercial production. The Back in Right can only be exercised by paying Forum an amount equal to all the expenditures incurred by Forum on the Project from now up to the Back-in Right trigger date. On exercise of the Back-in Right Forum and RTEC will form an 80/20 joint venture for further development of the Project.
The company characterizes Janice Lake as ‘highly prospective with over 20 copper occurrences’, most of which have yet to meet the biz end of a drill bit. We should learn more about management’s plans concerning Janice Lake in the not-too-distant future. I wouldn’t be surprised to see it optioned to a mid-size Cu company.
Rick Mazur, President & CEO: “This agreement allows Forum shareholders an optionality play in copper where Rio Tinto added significant value to the project. Forum has reviewed the data and has determined that copper deposits remain open for extension and numerous copper showings on the 52km extent of the property remain to be drilled. The key claims on the property are in good standing for four to nineteen years while copper emerges as a fundamental commodity to achieve the energy transition.”
With a busy 2024 on deck, which will see an aggressive drill campaign at their Thelon Basin project in the Nunavut Territory of northern Canada, the company recently announced a $9M raise – Forum Energy Metals Announces Brokered Private Placement for up to C$9.0 Million.
The company has a world-class (high-grade) U3O8 deposit in its crosshairs at Thelon—they’re already off to a good start (scroll down to the bottom of my Nov. 7 Highballer roundup for a project refresher).
END
—Greg Nolan
Full disclosure: Abitibi Metals is a past Highballer client. Forum Energy Metals is a current Highballer client (consider the author biased in his views regarding both companies).
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