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Golden Valley Mines Ltd
Symbol GZZ
Shares Issued 133,993,575
Close 2019-05-30 C$ 0.32
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Golden Valley talks corporate activities, JV updates

2019-05-30 11:08 ET - News Release

Mr. Glenn J. Mullan reports


Golden Valley Mines Ltd. has provided an update of the company's activities at its joint ventures and related entities, including Abitibi Royalties Inc., International Prospect Ventures Ltd. and Val-d'Or Mining Corp.

1. Related entities

Abitibi Royalties: Golden Valley holds an approximate 44.9-per-cent interest (5,605,246 shares) in Abitibi Royalties.

Q1 2019 cash flow

During Q1 2019, Abitibi Royalties generated total cash flow of approximately $1-million, with approximately $388,000 coming from the company's 3-per-cent net smelter return (NSR) at the Canadian Malartic mine. Royalties from the Canadian Malartic mine commenced at the end of Q4 2018. Canadian Malartic is the largest gold mine in Canada and is operated by Agnico Eagle Mines Ltd. and Yamana Gold Inc. The remainder of Abitibi Royalties' cash flow during the quarter came from options premiums ($505,000), dividends ($92,000), realized capital gain from a non-core equity investment ($13,000) (no shares in Agnico Eagle or Yamana were sold in Q1 2019) and interest ($3,000). Please see Abitibi Royalties' news release dated March 14, 2019, for the company's 2019 to 2021 royalty production schedule and Abitibi Royalties' news release dated April 16, 2019, for further information.

Canadian Malartic exploration

Exploration programs are continuing to evaluate several deposits to the east of the Canadian Malartic open pit where Abitibi Royalties holds a 3-per-cent NSR. This includes portions of Odyssey, East Malartic, Sladen and Sheehan. During Q1 2019, exploration at the Odyssey deposit focused on defining several internal zones and expanding the deposit toward the Rand Malartic property boundary to the east.

Odyssey and East Malartic potential production (2021 to 2023)

Odyssey and East Malartic are being studied for potential underground mining from surface to a depth of 600 metres, starting between 2021 to 2023 and then potentially deeper beyond 2023. Preliminary studies show the potential for production increases of approximately 150,000 gold equivalent ounces per year at the Canadian Malartic mine, with ore fed to the existing Malartic mill, displacing a portion of the lower-grade open-pit ores. Further evaluation through additional drilling from underground access points, resource delineation and engineering would be required to advance Odyssey and East Malartic toward a development decision. The study is expected to be completed in late 2019 or early 2020 and, if approved, development starting thereafter. The permit allowing for the development of an underground ramp at the Odyssey project was received by Canadian Malartic in December, 2018.

For further information, including technical information, regarding Abitibi Royalties' interests at the Canadian Malartic mine, please see its press release dated May 6, 2019.

International Prospect Ventures: Golden Valley holds an approximate 16.5-per-cent interest (4,470,910 shares) in International Prospect Ventures.

International Prospect now holds 100-per-cent ownership of eight properties in the eastern Pilbara of Western Australia, southeast of Karratha, covering a total area of approximately 1,026.10 square kilometres. Granting of the exploration licences for the eight properties was completed as of Jan. 9, 2019. The strategic locations of the claims were determined on the basis of a review of known geology and historical exploration results and a focus on coarse-grained conglomerate host rocks at, or in proximity to, a prominent and well-documented geological unconformity.

Porcupine Miracle prospect: The property is located approximately 30 kilometres southeast of South Porcupine (Timmins, Ont.) and comprises nine mining claim cells (64 hectares) within Langmuir township. International Prospect has completed a phase 1 property-scale ground magnetic, induced polarization (IP) and horizontal loop electromagnetic (HLEM) geophysical surveying. A follow-up phase 2 program of prospecting, mapping, bedrock stripping, sampling and diamond drill is recommended. The property is available for option and International Prospect is actively seeking joint venture partners.

Val-d'Or Mining: Golden Valley holds an approximate 31-per-cent interest (13,187,443 shares) in Val-d'Or Mining.

In 2017, Val-d'Or Mining signed a mining option agreement with Golden Valley to acquire a 100-per-cent interest in the Abitibi greenstone belt prospect comprising 61 grassroots properties. Pursuant to the terms of the option, Val-d'Or Mining must incur $4-million of expenditures with respect to exploration and other mining operations on the properties before Dec. 31, 2021 (with $500,000 to be incurred on or before Dec. 31, 2018, $750,000 to be incurred on or before Dec. 31, 2019, $1-million to be incurred on or before Dec. 31, 2020, and $1.75-million to be incurred on or before Dec. 31, 2021).

As consideration for the option, Val-d'Or Mining will issue 16,666,668 common shares to Golden Valley at a deemed price of 12 cents per share for an aggregate deemed value of $2-million (issuable as to 4,166,667 common shares on or before each of Dec. 31, 2018, 2019, 2020 and 2021). In addition, Val-d'Or Mining has granted Golden Valley a royalty equal to 1.25 per cent of the NSRs from the 61 properties on the terms set out in the option agreement of which 1 per cent may be bought back by Val-d'Or Mining by paying Golden Valley $5-million, at Val-d'Or Mining option, in cash or shares at a deemed price per share equal to the market price of Val-d'Or Mining's shares at the time of such election. If Val-d'Or Mining has issued the common shares and incurred the expenditures provided for in the option agreement, it may exercise the option on or before Dec. 31, 2021.

Val-d'Or Mining has exceeded its obligation to incur $500,000 of expenditures on or before Dec. 31, 2018, as required under the option. Val-d'Or Mining intends to continue the earn-in process and it has therefore issued, subsequent to year-end, a total of 4,166,667 of its common shares, valued at $416,667, to Golden Valley.

Val-d'Or Mining's primary focus for the 2019 exploration program is on two prospective gold targets: the Oregon prospect and Magoma prospect. Both are located in the Abibiti greenstone belt in northwestern Quebec within close proximity to the mining and exploration centre of Val d'Or, Que.

The Oregon prospect covers an elongated granodiorite intrusion that dips to the northeast and lies along a northwest-southeast axis. The granodiorite part of the property hosts the historic Oregon showing. This mineral occurrence occurs within a fracture zone that hosts a series of parallel quartz stringers mineralized with pyrite. It has been traced out by previous exploration programs over a strike length of 120 metres. The primary metallogenic target is an intrusive-hosted, bulk tonnage gold deposit.

The Magoma prospect overlies the felsic volcanic rocks of the Hunter mine group and is situated midway between the Rouyn-Noranda and Normetal mining camps. The Magoma gold showing occurs within an extensive network of quartz veins controlled by intense shearing that cuts through tuffacaeous and porphyritic units of rhyolite. This geological setting is proximal to a fault splay from the regional gold-bearing Macamic deformation corridor that passes through the northeast part of the property. The primary metallogenic target is an orogenic gold deposit spatially related to a deformation zone hosted in altered and mineralized metavolcanic rocks.

Diamond drilling activities are expected to commence on the two properties following completion of a follow-up program of geological mapping, prospecting and sampling. The objective of this work is twofold: 1) ground truthing of defined geophysical anomalies from the 2018 surveys completed by Val-d'Or Mining and 2) complete detailed mapping and characterization of the historical mineralization, to assist with drill target selection.

Property-scale remote sensing studies were completed on three prospects (Dionne, Mona Lisa and Riviere Lois prospects) and a property compilation was initiated on the Calamity prospect. The objective of the work was to define targets for a follow-up ground prospecting and sampling and/or geophysical programs during the summer 2019 field season. These four properties are both located in the Abitibi greenstone belt in northwestern Quebec.

For additional details with respect to the exploration and fieldwork completed to date by Val-d'Or Mining, please refer to Val-d'Or Mining's continuous disclosure documents available at the SEDAR website by accessing Val-d'Or Mining's issuer profile.

2. NSR updates and longer-term catalysts

Sirios Resources Inc. -- Cheechoo gold prospect -- James Bay, Quebec

The company currently owns approximately 3 per cent of Sirios and holds an NSR on the Cheechoo project, which ranges from 2.5 per cent to 4 per cent depending on commodity prices.

Sirios reported the completion of its 2019 winter diamond drilling campaign. Forty-seven drill holes were completed for a total of 11,322 metres drilled, targeting five separate areas. As of May 27, 2019, assay results remain outstanding for the remaining 10 holes of the 2019 drill program. Initial drill results announced by Sirios included 315 grams per tonne (g/t) gold over 1.1 metres, 187.0 g/t gold over 0.8 metre and 106 g/t gold over 1.3 metres. A maiden gold resource estimate for the Cheechoo gold project is expected in 2019 as reported previously by Sirios.

For additional details with respect to the exploration and fieldwork completed to date on the Cheechoo gold project, as well as for the details on the expenditures made to date by Sirios on the project, please refer to Sirios's continuous disclosure documents available on SEDAR by accessing Sirios's issuer profile.

Other NSRs and free-carried interests

The company holds 61 1.25-per-cent NSRs through its option/joint venture with Val-d'Or Mining, as well as several NSRs and free-carried interests (FCI) through its active joint ventures with Sirios Resources, Bonterra Resources Ltd. and other joint venture partners. All of these NSRs and FCIs are in the Abitibi greenstone belt.

3. Near-term catalysts -- joint ventures (partner financed)

Alexandria Minerals Corp. -- Centremaque gold prospect -- gold project, Val d'Or, Que.

Alexandria may earn an 80-per-cent interest in the Centremaque gold project by issuing treasury shares of Alexandria to Golden Valley over a four-year period from date of signing with a total value of $250,000 and by conducting exploration activities totalling $4-million over the same four-year period, of which $250,000 is to be spent in the first year of the option agreement. The price of the shares, and therefore the number of shares to be issued, is determined by reference to the market price at the time each tranche is due.

Alexandria agreed to a $750,000 work commitment on or before April 20, 2019, in accordance with the terms of the option agreement. To date, Alexandria incurred approximately $660,000 in exploration expenditures and has requested to extend the deadline to July 31, 2019, with a plan to incur the shortfall by that date. The company has agreed to the extension in consideration for which Alexandria will issue 500,000 of its common shares, valued at $25,000, to the company.

A total of seven drill holes totalling 3,348 metres were completed on the Centremaque prospect. Three new gold-bearing zones have been intersected, located approximately two kilometres west of the Bulldog zone (area west of the Orenada open pit). Drill holes CAX-18-001 and CAX-18-003 intersected gold-bearing, hosted in brecciated-, biotite- and chlorite-altered, ultramafic volcanic rocks north of the Cadillac break. Drill hole CAX-18-006 intersected a gold-bearing zone associated with strongly altered shear zones hosted within the Pontiac sediments located south of the Cadillac break.

Presently, Alexandria is planning a six-hole, 1,000-metre drill program to commence in the second quarter of 2019. Contingent of these results, a phase 2 program of 5,000 metres is planned for the fourth quarter of 2019. For additional details with respect to the exploration and fieldwork programs completed to date on the Centremaque prospect, as well as for the details on the expenditures made to date by Alexandria on the project, please refer to Alexandria's continuous disclosure documents available on SEDAR by accessing Alexandria's issuer profile.

Bonterra Resources Inc. -- Lac Barry prospect -- gold project southwest of the Gladiator deposit (Bonterra) and south of Osisko Mining's Windfall Lake gold project

Golden Valley granted an option to Bonterra to acquire an 85-per-cent interest in the Lac Barry prospect. In accordance with the option agreement, Bonterra issued to Golden Valley 519,480 common shares in the capital of Bonterra having an aggregate value of $200,000 and Bonterra must incur expenditures in an aggregate amount of $2-million over a three-year period.

Bonterra has met the option agreement expenditure requirements for the third anniversary date of $2-million. Golden Valley now retains a 15-per-cent free-carried interest in the Lac Barry prospect and a 3-per-cent NSR, with 1 per cent of the NSR being subject to a buyback in favour of Bonterra for $1-million, payable by Bonterra to Golden Valley.

Bonterra completed till sampling (101 samples in 2016 and 26 in 2017), prospecting, grid establishment (79 kilometres in 2016, 26 kilometres in 2017 and 53 kilometres in 2018), permanent and drill trail construction (13.8 kilometres), geophysical surveying (74-line kilometres of IP and 310 kilometres of ground and airborne magnetic), lidar (light detection and ranging) survey, and two phases of diamond drilling programs totalling 19,936.7 metres in 55 holes. The results of this exploration activity lead to a new discovery of a gold-bearing and silver-bearing horizon termed the Temica gold zone, with grades up to 2.7 metres at 4.7 g/t gold as reported by Bonterra. No additional work was reported on the property during the first quarter of 2019.

For additional details with respect to the exploration and fieldwork programs completed to date on the Lac Barry prospect, as well as for the details on the expenditures made to date by Bonterra on the project, please refer to Bonterra's continuous disclosure documents available on SEDAR by accessing Bonterra's issuer profile.

Battery Mineral Resources Ltd. (BMR) -- Island 27 prospect -- cobalt-silver-nickel project between Kirkland Lake-Matachewan, Ont.

Golden Valley entered into a mining option agreement with BMR pursuant to which the company would grant to BMR an option to acquire up to an 80-per-cent interest in the Island 27 property, in consideration for which the company would receive $500,000 in cash payments and Battery Minerals would incur $5-million in expenditures over a four-year period. Once the option is exercised, Golden Valley would have a 20 per cent free-carried interest in the property and a 1-per-cent NSR.

A 12-hole, 2,119.5-metre diamond drilling program was completed on the property. The primary objective of the drill program was to test the geometry and grade distribution of the mineralization discovered by Golden Valley in 2008 (DDH GIS-08-04), grading 4.18 per cent cobalt, 0.38 per cent nickel and 12.1 g/t silver over four metres from 110 metres to 114 metres.

Selective assay intervals for GIS-08-04 are shown in the attached table.

Sample        From         To    Width         Co         Ni       Ag
                (m)        (m)      (m)*       (%)        (%)    (g/t)
311708      110.00     111.00      1.0      1.785      0.131      3.0
311709      111.00     111.90      0.9       4.36      0.364      7.0
311710      111.90     112.30      0.4      1.305      0.107      4.0
311711      112.30     114.00      1.7       6.33      0.607     22.0

* True widths have not yet been established.     

In addition, a number of untested induced polarization anomalies were to be tested for possible extensions of the mineralized corridor and/or additional zones of cobalt-silver-nickel mineralization.

Although no economic grade cobalt/silver/nickel was intersected, a number of anomalous multielement mineralized zones were intersected and are associated with similar fracturing and alteration observed in the original discovery hole intersection. Following completion of the diamond drill hole database, three-dimensional modelling and a proposed follow-up drill program, a structural geological review was undertaken on the historical and 2018 drill core (SRK Senior Consultant -- structural geology). The objective of SRK's work was to constrain the structural framework of cobalt mineralization and support exploration targeting. It is now understood that cobalt mineralization is hosted within breccia veins locally developed as dilational jogs along regional faults or shear zones. These breccia veins and dilational jogs will be targeted by the next drill programs.

In addition, Golden Valley and BMR ground staked 12 new claims in 2017 and 73 mining cells in 2018. The Island 27 prospect now comprises 233 mining cells covering an area of 4,641 hectares. The Island 27 prospect is located at the northern margin of the cobalt embayment and is underlain by early Proterozoic rocks which rest unconformable on Archean intrusive and metavolcanics rocks of the Superior province. On May 8, 2019, the company received notice from Battery Minerals terminating its participation on the Island 27 property. Golden Valley believes the work completed has identified compelling geologic targets that warrant further drill testing. The company intends to initiate a business development process to identify a new partner or, subject to market conditions, continue as operator on the Island 27 property.

Eldorado Gold Corp. -- Abitibi greenstone belt joint venture -- Bogside gold prospect -- Cadillac, Quebec

In 2008, the company earned a 70-per-cent interest in the group of nine properties (eight gold and one copper-zinc-silver) located in the AGB (Quebec and Ontario) and a joint venture was formed with Integra Gold Corp. Golden Valley is the operator for the joint venture. The Bogside, Perestroika, Recession Larder, Murdoch Creek, Munro, Denovo, Cook Lake and Claw Lake prospects are held under a ratio of 70-per-cent-to-30-per-cent joint venture agreement between Golden Valley and Eldorado, with the latter having acquired its interest through the acquisition of Integra.

A ground prospecting and sampling program during the summer 2019 field season is planned over the Claw Lake prospect (northeastern Ontario -- Shiningtree area) for follow up of a remote sensing study previously completed on the property. An exploration program over selective parts of the Cook Lake prospect (northeastern Ontario -- Kirkland Lake gold camp) targeting the historical Scott-Kirkland gold mines shaft No. 1 where historical sampling yield results of 2.63 ounces per ton gold over three feet is planned.

4. Summary of activity

Golden Valley remains active through its related entities (Abitibi Royalties, International Prospect Ventures and Val-D'Or Mining) and its arm's-length joint ventures. Exploration activity is expected to continue with the focus on both the Abitibi greenstone belt and Western Australia, as noted above.

The company has relied on publicly available information from the other public companies and has not attempted to independently verify the information in this press release.

Glenn J. Mullan, professional geoscientist, the president and chief executive officer of Val-d'Or Mining, and Michael P. Rosatelli, master of science, professional geoscientist, the vice-president of exploration for Val-d'Or Mining, are the qualified persons (as that term is defined in National Instrument 43-101 (Standards of Disclosure for Mineral Projects)) who approved the technical disclosure included in this news release.

About Golden Valley Mines Ltd.

Golden Valley Mines is focused on project generation and continues to evaluate opportunities to enhance its mining exploration property portfolio. The company is able to grow its current assets by way of partner-financed option/joint ventures and through its shareholdings in related entities.

We seek Safe Harbor.

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