Wallbridge Mining (TSX:WM, Frankfurt: WC7, OTCMKTS:WLBMF) - Economically Derisked Exploration In The Abitibi
Palisade Research February 22, 2017 Category: Research Wallbridge Mining Co. (TSX:WM, Frankfurt: WC7, OTCMKTS:WLBMF)
Current Price: C$0.07
Shares Outstanding: 222.4 million
Market Capitalization: C$15.6 million
52-Week Range: C$0.035-C$0.10
Cash in treasury: ~C$1.0 million (Jan 31, 2017)
Current Assets: $1.5M (Sept 30, 2016)
Current Liabilities: ~C$0.95 million (Sept 30, 2016)
As we were preparing this article, Wallbridge released an update of its own on its new flagship, the Fenelon project.
Wallbridge announced the results from a pre-feasibility study (PFS), headlined by Fenelon's ability to generate almost immediate cashflow, and significant growth potential. This recent PFS showed highly lucrative results with a 92% rate of return. You read that right - ninety two percent.
Located in the prolific Abitibi-belt in Quebec, the company will now make a production decision later this year. Wallbridge will also be exploring at surface to continue to add 'low-hanging' ounces.
Once in production, we believe Fenelon will be able to grow its high-grade resource significantly. The PFS was performed on only the top 100 meters and along a 200-meter strike, whereas similar projects in the Abitibi measure at least 800 meters deep. Fenelon has also confirmed a mineralized structure that spans 4,000 meters. The growth profile here is incredible.
Fenelon will be the foundation of Wallbridge moving forward, as management plans on adding at least six more projects with similar economics, with the long-term plan in becoming a high-margin mid-tier producer.
The Fenelon Gold Project - Location, Location, Location
Fenelon was acquired in October 2016 from Balmoral Resources (TSX:BAR) after performing due diligence on more than 100 projects. Speaking to President and CEO, Marz Kord, Fenelon passed a very strict mandate, which includes: an NPV to capex ratio of greater than one; scalability, short ramp-up to production, at least a 1-3-year initial mine life, and a high-margin return for shareholders.
The project has seen over 50,000 meters of drilling and this extensive exploration has uncovered several mineralized zones. In 2001 and 2004, two bulk samples were sent to processing and they delivered excellent grades of 9.84 g/t and 10.70 g/t, and recoveries over 97%.
Fenelon currently has a small resource; it only encompasses a 200 metres strike, 100 metres wide and 150 metres deep. The estimated outlined high-grade resource near existing underground infrastructure includes 38,000 (12.97 g/t) M&I and 1,900 (9.15 g/t) inferred.
The PFS converted the majority of the resources into reserves, but once again, the total area included is the study is just a fraction of the prolific land package.
The project will be cheap in terms of processing, and will require only $2.5 million in capex to get to production. But the most exciting part of Fenelon is the scalability.
The below map shows the current resource, the high grade mineralized intersections outside the resource and the potential for expansion as compared to one of many similar high-grade deposits:
(Source: Wallbridge Mining)
The PFS confirms the attractive economics of Fenelon within the top 100 metres of the deposit. Thus, there is enormous potential for vertical expansion. In fact, the company that sold Fenelon to Wallbridge, Balmoral Resources, has this fact on their website: The vast majority of the large gold deposits in the Abitibi have vertical dimensions which exceed their horizontal dimensions - often by a factor of 3 or 4:1. Several deposits have been mined to vertical depths exceeding 1,000 metres at average grades in the 7-8 g/t range. Harte Gold's (TSE:HRT, Mkt Cap: C$170M) Sugar Zone property is a good comparison. A high-grade 400,000 oz gold deposit open at depth, with gold mineralization extending to 1,000 meters at depth. Another example is Pure Gold's (CVE:PGM, Mkt Cap: C$111M) Madsen Gold Project. It currently has 1.2M oz and a ramp based development to a depth of 600 meters, with the Austin zone mined from surface to a depth of 1,200 meters. Let's look at the numbers. Fenelon currently has 300 ounces per vertical meter, which we believe can be increased to 500 ounces with further drilling. If Wallbridge increases its depth to 800-900 meters, this has the potential to increase the resource to at least 300,000 ounces.
(Source: Wallbridge Mining)
Now let's look at the real blue sky. The mentioned growth is limited to a 200-meter strike and as depicted above, the Fenelon has confirmed a mineralized structure that spans 4,000 meters. Wallbridge will concentrate on the low-hanging fruit for now, but once cash flowing, will really throttle exploration and begin adding the substantial ounces. Thus, Wallbridge estimates total production potential at Fenelon at 20,000-40,000 ounces of gold per year. The company's management team is stacked with geos and actual mine operators that know the area very well. The company currently has ~C$1.0 in the treasury, which it will use for permitting and a small exploration program at surface. We also want to mention WM's free call option on its Ni-Cu-PGM Parkin property in Sudbury, Ontario. It is currently being developed in partnership with Lonmin PLC, which has committed to $4 million on exploration in 2017, essentially making this venture risk-free for Wallbridge. Exploration results so far have been very encouraging, including 24.3 meters of 1.2% Ni, 1.5% Cu, and 2.2 g/t PGM back in April 2016. In October 2016, a new 20,000-meter drilling program commenced. Wallbridge Mining has a strong stream of catalysts on the horizon, with the most exciting coming from Fenelon. There is no denying the geology of the project; Marz and company just need to drill now. Palisade Global Investments Limited holds shares of Wallbridge Mining. We receive either monetary or securities compensation for our services. We stand to benefit from any volume this write-up may generate. The information contained in such write-ups is not intended as individual investment advice and is not designed to meet your personal financial situation. Information contained in this report is obtained from sources we believe to be reliable, but its accuracy cannot be guaranteed. The opinions expressed in this report are those of Palisade Global Investments and are subject to change without notice. The information in this report may become outdated and there is no obligation to update any such information. Do your own due diligence.