evolvinggold.com • 604.685.6375
President & COO
NioGold’s partnership with Aurizon Mines Ltd in July 2010 has brought in funding and technical expertise that enabled NioGold (TSXV: NOX) to step up drilling at its Marban Block property, located in the Malartic gold camp in the Abitibi region of Quebec. Based on over 72,000 metres of drilling completed since 2006, the property has proven up indicated resources of 598,000 ounces gold and inferred resources of 361,000 ounces gold. NioGold President and COO Rock Lefrançois is confident this year’s drill program and the company’s exploration activities will bring additional upsides that would stoke investor interest.
Resource Intelligence: One big news item from NioGold last year was your partnership with Aurizon Mines. How strategic was that move for you?
Rock Lefrançois: Bringing a major partner on the Marban Block property has always been part of our game plan. The partnership brings us the capital to increase the gold resources and technical expertise to assess the economic viability of mine development within the next three years. Under the terms of the option agreement with Aurizon Mines, there is a first year earn-in program of $5.9 million, which includes 50,000 metres of drilling. We initiated that in August 2010 with the goal of increasing the near-surface gold resource at the Marban and Norlartic deposits. So far we have completed 15,000 metres of that program, all focused on Marban. The drilling is confirming the continuity and the extension of gold-bearing shears.
RI: What other recent developments have added value to NioGold?
RL: Other than the partnership with Aurizon, there were two other developments that really increased the value of the company. First, our announcement in January that we increased our indicated and inferred close to 1 million ounces got the attention of several mining companies. Second, we closed a $7.5-million bought deal private placement in December, which gives the company close to $10-million working capital, which we will use to aggressively explore the remainder of our landholdings.
RI: You’re in one of the world’s most favorable mining jurisdictions and prolific gold and base metal regions, how does this impact the projects’ costs and potential profitability?
RL: Very significantly. Our projects are located in close proximity to the full-service mining town of Val D’or that has been there since the 1930s. We have milling facilities, provincial highways, railroads, power line, communication systems, skilled labour, workforce, drilling contractors and assay labs to name a few. Our exploration is very cost-effective and future mine development will likely be very cost-effective as well. Also, the company receives 35% in tax credits from the Quebec government for exploration expenses, allowing us to use those returns as working capital.
RI: You are trading at between $0.25 and $0.40. Do you think this is a fair valuation of the company?
RL: No, not at all. Based on just the ounces in the ground and discounting the upside that our large land holding could create, we have been evaluated at between $0.50 and $0.70 by some analysts. We are aware that we are undervalued in the markets right now.
RI: What’s next to move from the current stage to mine ready-stage?
RL We are looking at over 200,000 metres of drilling in the next three years. After that program Aurizon has to do a resource payment for half the ounces in the ground from an updated resource estimate that we will complete during this three-year program. At that time we will make the decision to go into a feasibility study and Aurizon could get another 10% by delivering the feasibility study. In the meantime, we will probably be doing a scoping study. If we do a feasibility study after this three-year program and it is positive, the decision will be made to go into mine development. We’re looking at a minimum of three years until we get to the feasibility study stage and then the decision will be made.
RI: Since you’re still a few years away from mine development, what value does your company immediately provide to investors?
RL: Our activities and the news that our progress will be generating should create some enthusiasm among investors. We announced recently that the company has planned a minimum of 55,000 metres of drilling in 2011 and that number will most likely be closer to 70,000 metres. Of that total, 20,000 will be pure exploration. We will be investigating under-explored sectors in the mining camp. The upside would be for new discoveries and we anticipate that all this drilling in 2011 will generate a steady flow of news.
RI: Give three reasons why investors should take a close look at NioGold.
RL: Since 2005, we have acquired very large land holdings within the heart of Canada’s most prolific gold mining district. We’re right next door to one of the largest gold projects in Canada, which is Osisko’s Canadian Malartic project. We have been successful in our drilling to define close to 1 million ounces of gold in the ground and those ounces are growing. We are well-financed for aggressive exploration on the remainder of our land holdings outside the Aurizon option.
- Explorer in Canada’s premier gold mining district
- Cadillac, Malartic and Val-d’Or mining camps, Quebec
- 125 km2 land holdings covering 20 km of gold mineralized fault
- Surrounded by seven operating gold mines
- Adjoining one of Canada’s largest developing gold project (Osisko Mining 9M ounces gold reserves)
- Over 72,000 metres of drilling completed
- 960,000 ounces gold resources defined and growing
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