As evident from a recent tour of the site, Treasury Metals’ (TSE:TML) (CVE:TML) wholly owned Goliath gold project offers a significant resource and a low-risk profile to gold producers and investors.
The Goliath gold project is located just a few kilometres from the
town of Dryden, Ontario and sits on an NI 43-101 compliant resource of
1.63 million ounces of gold (1.7 million ounces of gold-equivalent) in
the inferred and indicated categories combined, at an average grade of
2.0 grams per tonne (g/t).
As it ramps up towards mine feasibility, Treasury recently hosted
several analyst and investor tours, participants of which all took an
interest in the potential of a relatively new gold discovery located in
The tours also included senior management and Bill Fisher, a director of the board.
“These tours represent the first in a series of investor tours to
increase awareness of the project which benefits from operating in a
world-class jurisdiction like northwestern Ontario,” says Treasury’s VP
of corporate development, Greg Ferron.
“In 2011, our President and CEO Martin Walter focused on building a
new technical team and they completed the largest exploration program
since Teck’s discovery in the early 90’s.
“The team quickly demonstrated the potential of the project, and we
are now at the stage to present our results first hand to a wider
Shortly after one of the Goliath project tours, mining analyst Frank
Zargar of Union Securities’ capital markets group released an initiation
research report on Treasury Metals.
In the report, released in early May, Zargar highlighted the
project’s low capital expenditure, good grades, infrastructure, and
proximity to Dryden.
“The project is much more likely to be economical compared with a number of its peers,” Zargar notes.
covers 49 square kilometres and is based two kilometres from the
Trans-Canada highway, within the Eagle-Wabigoon-Manitou greenstone belt.
Zagar highlights the large size of the Goliath project, saying that
the “large prospective and relatively underexplored land position
outside the resource area could yield significant discoveries.”
Proactive Investors was among the participants of one of the recent
tours of the property, and noticed first hand a plethora of development
in the area served by power lines, gas supply, and water supply.
Treasury has extensive workshops, offices and storage facilities
located at the edge of the resource, about two kilometres from the ore
body, on what used to be a government-funded tree nursery research
facility that closed several years ago due to a decline in the forestry
Under a qualified management team and technical staff, the company
completed 50,000-metres of infill and expansion drilling and results
reported throughout 2011 exceeded the miner’s expectations.
The company says that high-grade mineralization was reported since
the drilling program started in late 2010, with the best results being
16.60 metres of 32.73 g/t gold (Au) in hole TL11-135 and 5.11 metres of
23.22 g/t Au in hole TL11-132.
The program also expanded the resource in the western section and at
depth in the central and eastern sections of the Main Zone, and was also
“very successful” in adding ounces in the open-pit area.
Indeed, Zargar says that under its new management, the Goliath
project’s development is getting fast-tracked,and its upside potential
is being explored.
“I think that over the past year, it’s apparent that they [Treasury]
have been very good at bringing in people with the right expertise
needed to advance this project,” he adds.
Mark Wheeler, senior mining engineer with Treasury, explains that
initial design work has yielded 2.0 grams per tonne (g/t) open pit for
the initial years of mining.
With very little overburden and an ore body that extends to surface,
the project’s targets include annual gold production of approximately
100,000 ounces or more of gold per year and a daily mill rate of 2,700
Wheeler says the strip ratio is already solid, but he believes it
could be improved with steeper pit walls confirmed by the ongoing
hydrogeological and geotechnical work.
“The more I see, the more positive it is looking,” he says.
adds the project is currently in the permitting process for advanced
exploration, and he is hoping for bulk sample and mini pit construction
this summer, following the approvals.
“We continue to work with the Ministry of Environment (MOE) and we
expect we will go with three, five to 10 metre pits to have a look and
get some more geotechnical information,” says Wheeler, adding that 2,000
to 3,000 tonnes of ore are to be sent offsite for bulk sample testing.
“We just sent 400 kilos to G&T Metallurgical Services in Kamloops
and within four months we expect to have a final detailed mill flow
“With the quality of rock we are seeing, we shouldn’t see any problems.”
Wheeler adds that former testing in the area has yielded 97 percent recovery – 70 percent recovery from gravity alone.
The Treasury team is indeed positive about the anticipated results of the testing.
Environmental baseline studies also started in the fall of 2010, and
are ongoing under the watchful eye of Mac Potter, Treasury’s
Potter has been using his expertise in environmental studies to work
directly with consultants as the team gets prepared for the upcoming
updated PEA - expected out this year.
“We are working with agencies now, water sampling locally and
continue to study geochemistry, hydrogeology, benthic invertebrates,
fisheries and terrestrial biology.
“We hope to complete that this year.”
In 2010, the company released a preliminary economic assessment (PEA)
for Goliath that will be updated using Treasury’s latest resource
estimate from November 2011.
Treasury's newest resource will allow the company to model an
open-pit and underground operation with a much higher production rate
and increased scale from the initial PEA.
Walter confirms that the next PEA will be “much more detailed and far
more relevant” to the actual plan of taking the mine into production.
The report is slated to be available in early July this year.
“We forecast mining at surface to start in the fourth quarter 2015,
with underground mining to commence in 2017 at 1,500 tpd,” notes Zargar.
Once the underground mine comes on line, Zargar reports excess ore
mined from the open-pit mine will be stockpiled in order to maximize ore
grade feed to a 3,000 tpd throughput mill/processing plant (assumed
“Treasury’s goals are realistic; they are just dependent on funding.
The right management and expertise, with vested interest, is what is
going to take this mine into production.
“I think they just need to continue upgrading resource categories and to work toward a full feasibility study.”
notes in his report that he estimates an additional net total project
financing requirement of approximately $100 million to bring the Goliath
open-pit mine into production by the fourth quarter of 2015, and to
develop the underground mine.
“We assume Treasury will meet this funding gap through a combination
of 25 percent debt and 75 percent equity financing,” he says.
“I would expect that as Treasury advances the project, it will attract the eyes of others in the industry.
[about] 100,000 ounces over the next 10 years, it could add significant
production in a very attractive jurisdiction to another producer.”
of Treasury’s mandate has been to “Drydenize the project” and that
includes a focus on engaging the community as the project moves toward
At a recent analyst tour, Proactive Investors was privy to meetings
with the local mayor, councillors and other Dryden representatives that
showed the town was extremely keen on seeing Treasury develop the
As Mayor Craig Nuttall tells it, Dryden is “very supportive of
Treasury” and is welcoming the opportunities it can bring to his
“We look forward to Treasury coming in. Dryden is open for business,” says Nuttall.
Back on the property, Rory Krocker, senior project geologist, and
Adam Larsen, Treasury’s exploration geologist, are visibly passionate
about the ore body at Goliath.
“We’re certainly in the right area and believe we can expand the current 1.7 million ounce global resource,” says Krocker.
“In 2012, we started exploration outside the resource area with holes on the north part of the property.
“We are excited about the results and are drilling the iron formation for the first time.”
Investors can expect these results over the coming months.
Looking ahead, Treasury says that a major focus in 2012 will be
additional exploration on the 49 km2 piece of land that encompasses the
Goliath gold deposit and shows potential to yield gold mineralization -
this includes about six kilometres of prospective east to west strike
along trend from the deposit.
The company says a full flow sheet, an updated PEA and full
metallurgy results are anticipated by the end of June to mid-July.
Treasury is also expecting to produce an updated mineral resource
estimate in early 2013.
“If the results are positive, and I think they will be, the flow
sheet and latest PEA could push this project into full feasibility by
the end of the year,” says Walter.