By Richard Bell
Gold companies are stumbling over themselves staking claims across vast swathes of central Nova Scotia. The gold at stake is disseminated gold, in particles largely invisible to the naked eye. But by using open-pit mining and a water/cyanide-based extraction process, companies can make big profits with gold selling at over $1,000 per ounce, provided that the Canadian Environmental Assessment Agency approves all the proposed mines, and no significant local opposition develops.
Atlantic Gold, which was just purchased by the Australian gold company St. Barbara, lead off the new gold rush, opening its first mine in 2017, with plans for at least 3 more, starting with Beaver Dam, Fifteen Mile Stream, and Cochrane Hill.
There was no question that Atlantic Gold was on to something. On March 5, the company said it had done better than expected in 2018, producing 90,531 ounces, squeaking past the high end of its annual estimate (82,000 to 90,000 ounces).
On March 13, the company had more good news for investors, significantly boosting its estimates of how much gold it would recover at Touquoy and Cochrane Hill by several hundred thousand ounces.
And then on May 14 came the news that all investors in “junior” mining companies like Atlantic Gold want to hear: the Australian mining company St. Barbara Ltd. was buying the company for a total equity value of $772 million, offering shareholders a generous 41.1 % premium over the value of the stock on May 14, 2019.
In early May, another mining company, MagumaGold Corp (formerly known at Coronet), provided a powerful endorsement of Atlantic Gold’s analysis of the gold-bearing potential of the geological Maguma Terrane, where most of Nova Scotia’s gold has come from. .) MagumaGold announced that it had “acquired 11,147 mineral claims totalling 179,280 hectares,” making it “one of Nova Scotia’s single largest mineral claim holders.”
Theo van der Linde, president of MegumaGold Corp, could not have made the company’s debt to Atlantic Gold any clearer: “A new interpretation and a well-capitalized story - Atlantic Gold - has opened the door to the realization that the entire Meguma formation has the potential to host broad anticlinal structures which are relatively uniform in setting and geology.”
The yellow streaks on the map show the areas in the Maguma formation where MagumaGold has acquired leases. The company has already conducted “a 12,342 kilometre aeromagnetic and radiometric survey and acquired 1,110 square kilometres of LiDAR…. one of the largest modern-day airborne initiatives in Nova Scotia.”
And on May 9, MagumaGold announced “through its initial reverse circulation (RC) drilling program it has established anomalous gold over a one kilometre strike length in the Killag East area of the company’s Killag exploration property.”
As for its competitor Atlantic Gold, MagumaGold pointed out, “the Company believes that it now controls that largest anticlinal coverage position within Nova Scotia. MegumaGold estimates that it holds approximately 466 km (total strike-length) of gold-prospective anticlines. Recent corporate presentation disclosure by neighbouring Atlantic Gold indicates their present anticline exposure at 45km. MegumaGold believes that its strategic control of exploration anticlines is a significant, long-term competitive advantage among publicly-traded gold exploration companies operating within Nova Scotia.”
MegumaGold is not the only company trying to profit from watching Atlantic Gold. Osprey Gold Development Ltd. also pays tribute to Atlantic Gold geological strategy. On May 16, Osprey Gold reported that its most recent exploration in the area around the historic Caribou Mines, an area surrounded by Atlantic Gold holdings, had yielded promising results. In a press release, the company said, “These results provide additional support for the Company’s concept that disseminated gold mineralization occurs in the sedimentary sequences surrounding historically mined high-grade veins at Caribou. This style of mineralization is similar to that which has allowed Atlantic Gold to build a successful mining operation in Nova Scotia.”