Gold Terra Resource: This is why a 3,000-meter drill hole is a good idea for a junior explorer

One of the ways in which the quality of an outstanding CEO is demonstrated is by recognizing opportunities and daring to do things that others simply lack the imagination to do. At that moment, it can come at the price of being pretty much alone. This description pretty much characterizes Gold Terra’s CEO, Gerald Panneton (67 years), and his current endeavor. No other junior explorer would have dared to drill a hole to a depth of 3,002 meters.

This innovative drill hole (GTCM24-056) from the current year 2024 was the deepest hole ever drilled on the property of the historic Con Mine of Newmont near Yellowknife. Gold Terra’s (TSXV: YGT; FRA: TX0) business plan is simple: define 2 million ounces of very high grade gold through wedges from the existing master well, and then acquire the former Con mine from Newmont, including the historic 650,000 ounce resource at 11 g/t gold. Already, the Company has outlined a total resource of 542,000 @ appx 8 g/t (Sept 2022 MRE) near surface with its 2021 2022 drill program.

The goal: to revitalize a historic mining camp

Panneton is convinced that there is much more gold along the Campbell shear zone, both in the continuation of the old mine and in the immediate vicinity. In short, it is about reviving an historic mining camp with all the advantages that this entails: good infrastructure, simple approval procedures (after 2003, the mine was completely dismantled except for very important infrastructures such as settling pond, roads, power, ditches, office warehouse, etc…s) and a trained workforce. Gold Terra has already reached a resource of 542,000 ounces on the Con Mine option (CMO), so another 75% percent is still missing from the self-imposed minimum target. The target zone for the wedges will be the mineralization below the existing Robertson shaft, which extends to about 1900 meters. From its master drill hole, the company plans to test the continuation of the dipping, high-grade Campbell Shear zone, in the upper part of which Newmont mined some 6 million ounces of gold at average grades of 16-20 g/t gold between 1938 and 2003.

Figure 1: The Robertson shaft was built in the 1970s. It is a reinforced concrete shaft with a depth of 1,900 meters. To realize such a shaft today would probably cost around 200 million dollars – here one can confidently speak of “sunk cost”. The old Newmont mine still contains a resource of 650,000 ounces at an average of 11 g/t.

Figure 2: View of the former Con Mine, which Gold Terra can acquire from Newmont

How does a junior exploration company come up with the idea of drilling a 3,000-meter-deep hole and drilling wedges from it? Don’t all other explorers want exactly the opposite? Namely, to find high gold grades as close to the surface as possible? But let’s take this in order: Gerald Panneton has already written a success story with Detour Gold between 2006 and 2013, based on his consistent pursuit of a vision in which few initially believed. At the time, it was about reinventing the historic Detour mining camp by converting former high-grade underground projects into a huge open-pit mine. In just six years, he increased Detour Lake’s resource base to 30 million ounces, while raising C$2.6 billion in capital, and build a mine over 26 months. The gold price at the beginning of the journey was USD 650! In 2018, Detour Gold was eventually sold to Kirkland Lake for C$4.9 billion, and then to Agnico Eagle. To this day, this mine is the largest gold producer in Canada and remains one of Agnico’s flagship projects.

The Gold Terra project in the Northwest Territories near Yellowknife follows a different logic than Detour Lake, but there are parallels as well. Furthermore, the gold price is now above 2,600 USD per ounce. Within or near the more than 900 km² project area that the company has secured, five historic gold mines (Mon Mine; Crestaurum Mine, Giant Mine, Ptarmigan Mine and the aforementioned Con Mine from Newmont) are located along a 70-kilometre-long strip in the well-known Yellowknife gold belt. The underlying geological denominator of all these projects are the two shear zones Con and Campbell, of which the latter, in particular, has already produced 5.1 million ounces at average grades of 16 g/t. Gold Terra intersected the Campbell shear zone in the first hole at the end of 2023. The second hole, GTCM24-056, (see above) was steeper and will be used in the future for branching out with wedge drilling and thus to drill two million ounces below the Robertson shaft.

Figure 3: Gold Terra’s exploration license is more than 900 km² in size and contains or borders five gold mines. The Crestaurum deposit, 15 km north of the Con Mine, consists of a four- to five-meter-wide quartz vein system with gold grades of 6 g/t Au (six grams per tonne) in the open pit. Gold Terra believes that this project would be a good addition if a new mill were to be built on the site of the Con Mine.

As someone who has discovered and delivered 2mines for Barrick early in his career, Gerald Panneton naturally has a different view of things than a CEO who is doing something like this for the first time. Even at this supposedly early stage, he has a clear vision of what a future production scenario could look like. He estimates that it would take about three years to complete the drilling, supported by a pre-feasibility study to acquire the Con Mine from Newmont. Once permitting is completed, it will take 12-18 months to build a new 2000 tpd (tons per day) mill, and used the near surface mineralization to start the Mine, while continuing the drilling at depth. However, this is not something that needs to be done immediately, because Panneton estimates that Gold Terra could already mine between half a million and a million ounces near the surface, which could provide early cash flow.

For example, a PEA that would combine the historic mine and the satellite deposits is conceivable. In a 2,000 tons per day scenario, about 1,000 tons would probably come from the Con mine and 1,000 tons from one of the satellite mines north of town. That could yield 150,000 ounces per year for the first five, six, seven years. Panneton’s conclusion: “With gold at over $2,600, we are in a very fortunate situation.”

Conclusion: Even with a gold price of 2,600 USD per ounce, financing junior explorers is not (yet) a sure thing. On the contrary: even an old warhorse like Gerald Panneton has to fight hard for funds despite his success story, even though he already counts important institutions and industry giants like Eric Sprott among his shareholders. At least the company raised around 2.4 million CAD in fresh funds at the end of the year. Of course, the availability of money dictates the pace. Panneton is convinced that with the right amount of money, Gold Terra can prove more than 5 million ounces of gold with money supply and time. What this statement covers so far is many years of experience. The Con Mine would be the fourth mine that Panneton has put into production in his career.