Amex Exploration drills high-grade gold at Perron

After setting up Sulliden Exploration in 1995 and opening an office in Lima in 1996, Jacques Trottier wrote a personal check in 2002 to acquire a property from a family in the Cajamarca region of northern Peru.

Trottier was interested in the property based on historical data and then reinterpreted it to determine that there was potential for a multi-million-ounce gold deposit. His theory turned out to be right when he discovered the Shauhindo deposit, which he grew to about 3 million oz. gold.

Shahuindo went on to become a gold-silver mine in 2016, and is now owned by Pan American Silver (TSX: PAAS; NYSE: PAAS), with an estimated mine life to 2028.

Today, the French Canadian geologist, with a PhD in economic geology from Ecole Polytechnique of Montreal, is convinced he has the makings of a new gold mine on his Perron project, 110 km north of Rouyn Noranda in northwestern Quebec.

His junior company, Amex Exploration (TSXV: AMX), has spent more than $12 million on Perron, and found five mineralized gold zones, the most exciting of which, the Eastern Gold Zone, is open in all directions along strike and at depth and has returned both high-grade and low-grade intercepts to a vertical depth of 425 metres.

Last month, the company increased its 2019 drill program from 10,000 to 25,000 metres, most of which is targeting the Eastern Gold Zone, and has two rigs running around the clock. Highlights from the program include drill hole 19-22, which returned 393.33 grams gold per tonne over 2 metres starting from a depth of 225 metres, including 263.51 grams gold per tonne over 1 metre, 677.62 grams gold per tonne over 1 metre and 307.33 grams gold per tonne over 1 metre.

Drill hole 19-27 cut 56.75 grams gold over 9 metres from a vertical depth of 270 metres including 581.59 grams gold over 1 metre and 17.33 grams over 1 metre, while drill hole 19-33 returned 32.11 grams gold over 7 metres starting 290 metres downhole and including 248.05 grams gold over 1 metre, 52.19 grams gold over 1 metre and 13.11 grams gold over 1 metre.

The management team at Amex Exploration's Perron project in Quebec. Credit: Amex Exploration.

So far, all 30 drill holes in the Eastern Gold Zone have intersected mineralization greater than 1 gram gold over variable widths and 16 holes have intercepts of greater than 10 grams gold. The high-grade zone is hosted within a highly sericitized and sheared rhyolite unit of about 20 to 30 metres. Drilling has extended to a depth of 465 metres.

"I've been in the business for more than 30 or 40 years, and this is the best gold project I've ever seen," Trottier says in a telephone interview. "In my personal opinion, it's already a mine because it's such high-grade and continuous and homogenous, that however deep and lateral it is, it should justify a simple operation that is an underground ramp into the high-grade zone."

Of course, he adds, this is still to be proven through drilling and economic studies.

The mineralized material, he says, could be shipped to existing gold mills with available capacity within an hour and a half's drive of the project, such as Kirkland Lake Gold's (TSX: KL; NYSE: KL) Holt mill and Iamgold's (TSX: IMG) Westwood mill.

In February, precious metals investor Eric Sprott took part in a $5.4 million non-brokered private placement for a 7.4% stake in the company's outstanding common shares, now valued at about 8.5%. Other significant shareholders include Commodity Capital AG, a global mining fund based in Germany with 4.6%, and management with 11%.

The Perron property was explored originally by Falconbridge for base metals in 1994 and 1996. Amex, formerly known as Minieres Coleraine, had the option to acquire 100% of the property in 1996. Since then, Trottier and his team have found the Eastern Gold Zone, as well as the Perron Gold Zone, the Central Polymetallic Zone, the West Side showing and the Normetal Horizon.

Amex discovered the Eastern Gold Zone in December 2017, during a regional exploration drill campaign. The discovery hole 17-03 identified two zones of near-surface mineralization, called the High Grade Zone and the Low Grade Zone, with values including 12.22 grams gold over 5 metres and 0.81 gram gold over 77 metres, respectively.

Follow-up drilling in 2018 intersected 269.23 grams gold over 1 metre and 0.4 gram gold over 21 metres in drill hole 2018-17.

"This compares very well, and, in some cases, is even better when compared to other high-grade projects in Canada, like Osisko's Windfall or Great Bear on a consistency basis," Trottier says.

The HGZ is hosted within a quartz vein that occurs at the contact of a regionally extensive rhyolite package and a narrow mafic intrusion. Coarse gold mineralization occurs most often in association with sphalerite but also as free gold within quartz or at the margins of pyrite grains.

The zone appears to strike roughly East-West and plunges to the East at about 70 degrees. Trottier and vice president exploration Kelly Malcom believe the mineralization identified so far shares similarities with Archean orogenic vein-hosted gold deposits found elsewhere in the Abitibi Greenstone Belt and around the world. The HGZ extends to a depth of 465 metres and remains open at depth and along a 100-metre strike length.

The LGZ consists of disseminated and quartz vein-hosted gold mineralization associated with a regional extensive rhyolite package that lies north of an endesite. The gold mineralization is associated with intense sericite alteration and pyrite and sphalerite sulfides. The LGZ has a strike length of about 300 metres.

Within the broad zones of low-grade mineralization Amex has also identified panels of higher grade mineralization with results of up to 3.41 grams gold over 5 metres in drill hole 2018-15, 1.20 grams gold over 17 metres and 3.91 grams gold over 5 metres in drill hole 2017-03, and 2.69 grams gold over 3 metres in 2019-22.

The fact that the LGZ is close to the HGZ, and that the zone contains higher grade envelopes of gold, may potentially mean that it is amenable to underground mining methods but it's still too early to tell, Malcolm says.

"These zones seem to merge at depth and we're intrigued by this hypothesis and we think there is some compelling geology if these three zones merge together and could potentially be a feeder zone for the area," he says. "That's a working theory, we haven't validated it or tested it yet, but it's encouraging to think these three zones could come together."

Malcolm also notes that to have coarse gold associated with sphalerite is unusual in the area. "It's unique to have this association. It does not commonly occur in the Abitibi," he says.

"It's interesting. We don't fully understand the mineralization relationship, but it's definitely a unique factor we have that I don't think other deposits in the Abitibi share."

"Sphalerite is a zinc sulphide mineral - usually we don't see that often in gold-rich quartz veins," Trottier adds. "If there is any mineral following gold in those kinds of orogenic systems it's copper, or copper sulphide. Having zinc sulphide is quite unique, especially in Quebec's Abitibi because so many high-grade deposits, like they have in Red Lake in Ontario and like at Great Bear's project, don't see that in Quebec. So much native gold is not conventional."

The company's interpretation, so far, is that there may be some input from a nearby volcanic massive sulphide (VMS) system that could be inputting the zinc mineralization into the system. "It's still early in our hypothesis, but that could be interesting for regional exploration, as well," Malcolm says.

"Most probably we have discovered a feeder zone to a VMS that is gold and zinc rich," Trottier continues. "So the fluids that brought the gold with the quartz also bears some zinc and then deposited it in an area of low pressure ... and that's why we have sphalerite associated with the gold."

Drill core from Amex Exploration's Perron project, 110 km north of Rouyn Noranda in northwestern Quebec. Credit: Amex Exploration.

In March 2013, Amex made a significant discovery of a high-grade gold-rich polymetallic intercept of 3.84 grams gold, 23 grams silver, 1.4% zinc and 0.10% copper over 15 metres starting from 402 metres downhole, including 19.07 grams gold, 102 grams silver, 5% zinc, 0.38% copper and 0.13% lead over 2 metres. Amex named the area the Central Polymetallic Zone and describes the zone as similar to Agnico Eagle Mines' (TSX: AEM; NYSE: AEM) LaRonde deposit, and the Bousquet mine in Temagami.

"It captured people's attention, and just a few days after that Agnico Eagle made us an offer for an option agreement, and they spent three years on the property chasing world-class big VMS gold-rich deposits," Trottier says. "They were looking for the big thing, massive sulphide, polymetallic gold-rich."

Agnico spent about $2.25 million on exploration but withdrew from the option agreement in 2017, Trottier says, most likely because they were channelling most of their energy into their Amaruq discovery near its Meadowbank mine. "Maybe some budgets were shifted."

In addition to the Central Polymetallic Zone, Amex expects to do more work on its Perron Gold Zone, which has the potential for both low-grade bulk tonnage mineralization and narrow high-grade selective type mineralization. Falconbrige discovered the zone in the 1990s and drill intercepts include 5.66 grams gold over 8 metres in drill hole 1997-S03, 9.76 grams gold over 5 metres in drill hole 1997-S04, and 24.59 grams gold over 6 metres in drill hole 1997-S14.

"So far, we've identified conventional orogenic gold and gold-rich polymetallic VMS systems, and our objective is to complete a maiden resource on the Eastern Gold Zone as soon as possible, hopefully sometime in 2020," Malcolm says.

For 2019, Amex intends to focus on the Eastern Gold Zone as well as regional targets. About 6,000 metres of its 25,000-metre drill program will be spread across six different targets, one of which, about 1 km to the west, is the same vein next to a dyke and has a similar signature as the Eastern Gold Zone.

"We've got a large land position with over 10 km of prospective strike along the Abitibi Greenstone Belt, which is very much underexplored, and we know for sure there is opportunity to host multiple ore deposit types and now our mandate is to identify multiple ore deposits," Kelly says.

The project benefits from its location off a highway near the small mining town of Normetal, and low drilling costs of $160 per metre - about 50% cheaper than drilling in other parts of northern Quebec. "We can drive to our core shack in a Honda Civic, and we don't use helicopters," Malcolm says.

In addition to relatively inexpensive drilling costs, Amex gets a 33% tax credit from the Quebec government.

For his part, Trottier envisions an underground mine with a portal and simple ramp, with the potential to go deeper with a shaft and more extensive production later on.

"Even now we can make a mine out of this, just with rough numbers," he says. "One can imagine a scenario where you mine with long-holes and then truck it back to surface and to any mill. Our objective is to have a big mine, and to do this we must continue to drill."

Amex shares are trading at 86 ? in a 52-week range of 5.5 ? to $1.52. The company has a $47-million market capitalization.