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Thursday, 15 August 2013
Canamex Resources sticks to drilling at Bruner as project potential gleams
Canamex Resources (CVE:CSQ) (OTCQX:CNMXF) is developing its Bruner project in Nevada at a time when the junior exploration market has been hurting, to put it mildly, from lack of funds and investor interest, but that hasn’t stopped CEO Bob Kramer from advancing the property to attract the attention of industry majors.
The company has seen investment from the likes of giant silver miner Hecla Mining (NYSE:HL), investing $2.52 million for a near 15 per cent stake in the junior explorer last year. Canamex also just announced the appointment of Hecla’s senior VP of exploration, Dr. Dean McDonald, to its board of directors, which Kramer unsurprisingly views as a positive for the company.
The company has been drilling away at its Bruner project, on various targets at the property, deciding this year to zero in on high grade areas. In 2012, Canamex drilled a total of 20 holes at its Penelas East high grade target, which averaged 48 metres of thickness and 1.41 grams of gold.
“This area of the property is one we consider to be potentially quite significant,” says Kramer. Indeed, right out of the gate this year, drill hole B-1301 hit 91.4 metres of 3.1 grams per tonne (g/t) gold, including 1.5 metres of 117 g/t gold and 396 g/t silver, in what is believed to be the "second best intercept ever drilled" on the asset. This hole is located just 55 metres south of the discovery hole B-1201 reported last year, which contained 110 metres of 4.08 g/t gold.
These results have driven the company toward continued focus on Penelas East, as well as the other high grade target of the old Bruner mine vein on the east side, where drilling is due to start “in the next month or so”. “The property will tell us how many metres we are going to drill. We are being very careful on how we are proceeding with our drilling program,” says Kramer.
Indeed, both established miners and junior exploration companies have had to work diligently, cautiously dishing out whatever cash they have until dry capital market conditions improve. Canamex has, for example, been quite attentive not to drill in an area where it was not getting “the proper feedback”.
Case in point, the company decided not to focus on the northern extension of the historic resource at the property after some drilling there earlier this year, understanding that from a market perspective, “the interest is in higher grade possibilities”, despite the potential for “excellent gold recoveries from an internal standpoint”.
“We did a column leach test on this historic non-NI-43-101 compliant resource area simulating two and three-stage crushing, with essentially identical test results of 85% gold extraction. This is very important from an operating standpoint – if one can eliminate an additional stage of crushing, power consumption can be reduced,” he explains.
Kramer says this points to the potential for positive economics of a heap leach operation at Bruner , which could benefit from a transmission line located 20 miles away, with a blanket right to move distribution lines into its property “without having to go through environmental assessments”. This compares to situations where power is more remote, and projects have to generate power through diesel, becoming much more expensive to operate.
The company is entirely focused on the Bruner project, dedicating all of its energy and resources there. It also has the Aranka North gold asset in Guyana, where it has met all its expenditure obligations, but that project is in a care and maintenance situation for the time being, due to market conditions.
“We’re a small company, and the market is horrible right now. We’re husbanding resources where appropriate.”
It seems wise of Canamex to focus on Penelas East with the recent results hailing out of the area, which is a 1.5 kilometre distance from the old Bruner mine vein.
When asked about an NI 43-101 compliant resource, with the company already having a historic, non compliant resource of roughly 383,000 ounces of gold, Kramer says he is first aiming to get a better understanding of the property as a whole by putting money into drilling. He adds, however, that it will indeed happen, potentially at some point in 2014, but the maiden report is not “top of mind” at the moment.
Canamex, unlike many junior explorers out there currently, has enough cash to carry out its drilling plans at Penelas East and the old Bruner mine this year, but the Canadian company has not escaped unscathed from the recent bloodbath in junior mining stocks. “It’s a more brutal correction than many had anticipated, and gold has come under a significant amount of pressure, having an overall negative impact on all junior resource stocks – it has certainly impacted Canamex for sure.”
Kramer is still encouraged, though, as he says it is hard to imagine that gold will not have a recovery, and potentially a significant one occurring by the end of this year. He believes we are starting to see the first signs of a more positive environment to come.
“We’re at that point in the junior market where it has been in a state of distress for so long, that when a move finally does occur, it could be pretty dramatic.”
The chief executive points to the fact that there are many opportunities that are substantially undervalued in his view, including Canamex, with the company “getting no credit for its cash or favourable location in Nevada”.
“Hecla has made three strategic investments so far, and we are one of them. We should definitely take some positives from that, and from our zip code in Nevada.
“The market is not prepared to pay up where there is potential for geopolitical risk. That doesn’t exist in Nevada.” The Nevada project, in which Canamex has the right to earn a total 75 per cent stake, stretches a total of about 2,100 acres in central Nevada near the Paradise Peak Mine, the Round Mountain Mine, and the Rawhide mine, about 25 miles west. The historic resource at the site, though not compliant, was based on work completed by some heavyweights in the industry, including Miramar, Newmont (NYSE:NEM), and Kennecott.