- The gold bull market has dominated the greater part of 2020 with all-time high prices even throughout the global pandemic
- Poised for promising results, Battle North Gold’s Bateman Gold project sits in Red Lake, Ontario, an area that was home to a significant gold rush in 1925 and continues to produce
- With Feasibility Study news out, Battle North is ready for gold production in 2021
There’s no doubt gold is in a secular bull market.
Its new all-time high of USD$2,067 helped the yellow metal nearly double since December 2015.
That record price was soon followed by amazing news that Warren Buffet’s Berkshire Hathaway had bought into the gold mining space.
And still the average miner remains dramatically undervalued compared to the overall stock market. It’s one of the last sectors that, for now, is still fundamentally inexpensive.
Yet that’s starting to change. Thanks to record prices and high-profile investors, a lot more attention is being paid to precious metals.
The bear market from 2012-2016 forced gold miners and explorers to slash costs and rationalize projects. It also led to a dearth of new mines and discoveries. But with a renewed gold bull market, high-grade and high-margin projects in safe mining jurisdictions are starting to command top valuations.
“Given our management team’s successful turnaround track record, the Bateman Gold Project’s short timeline to commercial production, the significant existing infrastructure, and large tax loss pools, Battle North Gold is in an enviable position within this rising gold price environment.”
— George Ogilvie, P.Eng., President and CEO, Battle North Gold Corp.
That makes a Canadian developer like Battle North Gold (TSX: BNAU | OTCQX: BNAUF), with its well-advanced project and numerous exploration targets, more coveted than ever.
The company’s flagship Bateman Gold Project in Red Lake, Northern Ontario, is a top-notch asset in a significant gold mining area.
And as one of the largest and highest-grade gold camps in North America, the Red Lake District holds a lot more gold that’s yet to be discovered and mined.
BNAU’s flagship: The Bateman Gold project
The Bateman Gold Project is a diamond quickly emerging from the rough, originally staked nearly a century ago. De-risked and shovel ready, it forms the core of Battle North’s operations.
The company’s highly anticipated Feasibility Study has just been released. Serious gold investors need to take note, because it’s likely to put BNAU on many radars.
Here are the impressive highlights:
- After-tax net present value at a 5 percent discount rate: $305.0 million
- After-tax life-of-mine free cash flow: $418.5 million
- After-tax Internal rate of return: 50.3 percent
- Gold price assumption of USD$1,525/oz and exchange rate of USD/CAD 1.35
- Cash cost: USD$613/oz.
- All-in sustaining cost: USD$865/oz
- All-in cost (including initial capital): USD$1,010/oz
- 8.2 years of mine life, including 21-month ramp-up to pre-commercial production
- Average 80,000 oz of annual commercial production
- 603,000 oz of life-of-mine payable gold
Now that’s robust. And the best part is it doesn’t even account for eventual expansion possibilities or exploration upside on Battle North’s 28,000-hectare land package in Red Lake.
Brock Colterjohn, Institutional Equity Research Mining Analyst at Cormark Securities notes, “The Bateman Gold project is now backed by a robust feasibility study, thanks in part to management’s tireless efforts over the past four years to de-risk the project and demonstrate the commercial viability of the asset.”
“While the current resource is lower grade than its predecessor, Battle North’s substantial tax loss pools ($704 million), sunk capex ($770 million) and early operating cash flows help drive the project’s robust economics,” he adds.
In 2018 management significantly grew mineral resources, with Measured and Indicated Mineral Resource estimates increasing 113 percent, while Inferred Mineral Resource estimates were up 81 percent. That was followed up last year, with an additional 110 percent increase in Measured and Indicated Mineral Resource estimates. This year, further drilling has again led to an ongoing mineral resource estimate expansion.
The F2 Gold Deposit is the Bateman Gold project’s main deposit that will feed the processing plant. The updated Mineral Resource estimate released in July of this year has grown to 979,000 oz at 6.63 g/t Au in the Measured and Indicated category, and another 283,000 oz at 6.57 g/t Au in the Inferred category, all at a 3.0 g/t Au cut-off grade.
Bateman’s obvious qualities are its size and grade. But investors shouldn’t overlook its well-advanced stage.
Since 2002, Battle North Gold has completed more than 550,000 m of diamond drilling on the Bateman Gold project. Over its history, the Bateman Gold project has seen over $770 million in sunk capital to bring it to its current status. Today, Battle North has the benefit of owning an operational 1,800 tpd mill and 14,000 m of underground development, as well as extensive surface infrastructure.
The company also has strategic control of the Bateman Gold project, owning 100 percent of the mineral rights, while a 2 percent royalty exists on water claims and a 1 percent royalty exists on land claims.
Though the Feasibility Study assumed a USD$1,525/oz gold price, gold prices have averaged near USD$1,800/oz for the past 6 months and look to be trending higher. At USD$1,900/oz, the after-tax IRR on Bateman soars to 86.4 percent at current exchange rates.
Battle North holds $67 million in cash, of which $10 million has been earmarked for regional exploration. That leaves roughly $55 million available for the Bateman Gold project. With the Feasibility Study calling for approximately $109 million of Initial Capex, the company is estimating approximately $93 million as its Project Funding Requirement, factoring in operating cash flow from gold production during the ramp-up period, changes in working capital, and projected corporate G&A.
The company is already in talks with several financing groups to provide the remaining cash to achieve a fully funded project.
The NI 43-101 Technical Report for the Feasibility Study will be completed within 45 days from the Feasibility Study announcement. The report will be provided to the financing groups to complete their review. Assuming that the project gets a final green light from Battle North’s Board of Directors to proceed with construction, the Bateman Gold project could be as early as 7 months away from its first production of gold. From that point Battle North will produce roughly 48,000 gold oz during the ramp-up period until the 21st month, when commercial production is anticipated to be reached.
Here are some highlights from our Bateman Gold Project: - 100% Owned by us - High-grade F2 Gold deposit - 1,800 tonne...Posted by Battle North Gold Corp. on Wednesday, September 2, 2020
More gold in the String of Pearls
Management has been aggressively exploring and growing the nearby String of Pearls project, which consists of four zones: McFinley, Pen, CARZ, and Island.
Located just 420 m west of Bateman’s main deposit (the F2 Gold Deposit), McFinley hosts a 2002 historic Inferred Mineral Resource estimate of over 66,000 oz of gold averaging 6.86 g/t Au. Highlights from 2020 drilling at McFinley include 191.00 g/t Au over 0.2 m, as well as 84.90 g/t Au over 0.27 m.
The Pen Zone, located just 550 m from Bateman, boasts recent drill assays that include 34.01 g/t Au over 2.37 m, and 6.88 g/t Au over 2.50 m. Historical assays are impressive as well, with results including 46.00 g/t Au over 1.0 m and 13.13 g/t Au over 1.7 m.
These are considered very high-grade intercepts, and yet somewhat typical of the type of gold found in the Red Lake District. What’s more, the String of Pearls targets are seen as potential sources of incremental ore to expand the Mineral Resource estimates and provide additional mill feed.
There’s obvious potential for organic growth from the String of Pearls, especially since it may be accessible from underground. An updated mineral resource estimate for McFinley and a maiden mineral resource estimate for Pen are planned for Q4 this year and Q1 next year, respectively.
Potential benefits of producing from these nearby areas in the future should not be underestimated. The Feasibility Study shows that mining Bateman will achieve a peak average throughput of 1,500 tpd of ore. But the existing mill has been built to process up to 1,800 tpd, so there’s already excess capacity available. These multiple high-grade zones could well provide incremental feed, helping extend the Bateman Gold project beyond the current 8.2-year mine life.
Red Lake: A prolific gold mining district
Gold was first discovered in 1897 by the Geological Survey of Canada at Ontario’s Red Lake Gold District. A regional gold rush was triggered in 1925 when gold was found on the shores of Red Lake. Since then, the area has produced more than 28 million oz of gold, making it one of the largest gold camps in all of North America.
The Red Lake Gold Mines, which Newmont Mining sold to Evolution Mining earlier this year. The mine hosts three underground complexes, with a combined August 2020 Mineral Resource Estimate of 11 million oz averaging 7.1 g/t Au.
Battle North’s control of over 100 square miles in such a well-established gold mining area is significant. The company’s holdings are the Red Lake District’s second-largest land package.
It’s not unrealistic that a sizeable $10 billion player like Evolution Mining might envision consolidating the Red Lake district, combining all of the regional databases into one. The potential synergies and economies of scale would be too attractive to ignore.
With that in mind, investors would be wise to consider both Battle North’s near-term and longer-term prospects.
Remember, we’re in the early innings of a secular gold bull market.
Battle North Gold has just released a very robust Feasibility Study. Exploration will forge ahead, and drilling will continue on the String of Pearls.
BNAU is in the enviable position of having multiple catalysts lined up over the next 12 months: announcement on project financing, commencement of project construction, Mineral Resource estimates on McFinley and the Pen Zone, and the first gold pour from the Bateman Gold project.
Next year will also see regional exploration begin. Permits have already been applied for, and drills could already start turning by February.
George Ogilvie, P.Eng., President and CEO of Battle North notes, “Given our management team’s successful turnaround track record, the Bateman Gold project’s short timeline to commercial production, the significant existing infrastructure, and large tax loss pools, Battle North Gold is in an enviable position within this rising gold price environment.”
“Add in the potential for regional exploration success along with the prospect of consolidation within the Red Lake District, and Battle North’s share price could ignite.”
A high-grade, shovel-ready project with robust economics is the cake. The second largest exploration land package in the prestigious Red Lake gold camp is the icing on that cake.
Learn more about Battle North Gold by visiting their website here.