Quebec exploration thriving as gold takes off

Over 200 million ounces of gold has been extracted in the past 100 years or so from the Abitibi greenstone belt, a 2.6-2.8 billion-year-old geological feature which spans the Ontario-Quebec border in Canada. In 2017, it produced over 1.8Moz, some 32.6% of Canada's total according to Natural Resources Canada, second only to Ontario. The region is famous for its deep high-grade vein gold mines. In Val d'Or, the road signs reel-off a string of instantly recognisable mining names such as Malartic, Rouyn Noranda, Kiena, Cadillac, Goldex, La Ronde and so on.The mines are famous for being deep (LaRonde has a 2.2km shaft) and efficient (Goldex mines sub 2 grams per tonne material from over 1km deep), and while Agnico-Eagle is the main producer presence in the region continues to generate excitement. The start-up of Canadian Malartic in 2012 showed the region still has a lot to give and a lot to teach, being a low-grade open pit mine in the heart of a high-grade, deep underground mining district. The team behind the Malartic discovery is showing Quebec's potential again through its Windfall project further north.Canadian Malarctic is arguably the star mine now but more recently, Wesdome Gold Mines and its Kiena mine have grabbed the headlines from very high-grade drill results as it ramps up production, and whose share price which seems to have doubled every semester over the past two years.Wesdome's exploration success and an increasing gold price environment are rejuvenating junior explorers in the district who are now able to raise the meaningful amounts of money required to drill the deep holes they need to show the continuity of veins and orebodies below former mines requires. "The region has a multitude of mills that will need the ore as existing mines become depleted and most of the infrastructure the new mines will need is already there," said Phillipe Cloutier, president and CEO of Cartier Resources.Quebec is a province with a stated aim to be the leading exploration and mining jurisdiction in the world. Being fourth in this year's Fraser Institute Survey rankles as it covets the number one spot."The Quebec provincial government wants to make the province the leading mining jurisdiction in the world and provides significant support, such as the Plan Nord programme which seeks to promote the potential for mining development in Québec north of the 49th parallel," said John Burzynski, president and CEO of Osisko Mining. Osisko obtains a 38.5% benefit for every dollar spent on its Windfall project.Perhaps the greatest asset Quebec has is its mining culture, which means there is a knowledgeable and experienced workforce on hand, professional and technical service providers and local communities that depend on mining. The most obvious example of this is the fact that the Canadian Malartic open pit gold mine was excavated at the side of the town of Malarctic. From the viewing platform overlooking the pit, one is a stone's throw from a community church, Route 117 and residential neighbourhoods which butt up to the mining property perimeter, proof that mines and communities can coexist.Quebec's mining culture also means miners and developers have a degree of certainty about how permitting processes will unfold and in what time frame, something often lacking in emerging nation jurisdictions which can end up being honey traps. Little wonder Quebec is a preferred investment jurisdiction for many companies.The province is also willing to have share infrastructure development costs as projects go into production such as building or upgrading roads and building power substations. High grade at Windfall, Quebec But what may see Quebec eventually lead the Fraser Institute rankings is the various funding mechanisms the province has to invest in junior explorers and their exploration programmes such as Caisse du depot et placement du Quebec and Ressources Quebec.Explorers in Quebec can also benefit from Canada's flow-through and charity flow-through financing mechanisms, allowing them to raise providing what they call soft dollars at a considerable premium to their share price. Flow through must be used for exploration expenses in Canada within a defined time period and provides explorers greater scope to dill while minimising shareholder dilution.The presence of a mining cluster in Quebec means exploration dollars go a long way, even when drilling deep holes. "Quebec is still very cheap for drilling at about C$100/m all-in and rates for 2019 look like they will be cheaper," said Richard Nieminen, exploration manager at Radisson Mining Resources.Such financial incentives are necessary given that explorers often have to drill holes in excess of 1km deep. Indeed, Osisko is drilling a 3.5km hole at Windfall, which it says will be the longest ever in Canada, as its drill programme nears 1 million metres completed.For project developers, the government of Quebec provides a tax holiday of two to five years depending upon the level of the capital investment. "It has a proactive fiscal approach and sponsors the risky part of the business as long as it sees they will be able to make their money back via income taxes and jobs," said Phillipe Cloutier, president and CEO of Cartier Resources.And with millions of ounces of gold still being found, Quebec will continue to be a sought-after jurisdiction for exploration and mine development.

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