Steady, Solid Shallow Gold Results from Cartier

Philippe Cloutier is back on Cartier Resources’ (ECR.V) press release every 2-3 weeks cadence at the Cadillac Project in Quebec. The headline number in the most recent release was 7.1 gpt gold over 8 meters, which is an excellent result.

Ronan Deroff, Vice President Exploration of Cartier, is quoted in the release,

These results of Portal Sector are particularly exciting as they confirm the presence of a fourth gold sector with strong exploration potential. Benefiting from the existing road access and historical infrastructure, this new sector has the potential for resource growth while being strategically located with respect to the Main Sector.

Indeed. But take a look at the best results table:

There are a couple of meters of very high grade, with visible gold, in the 8 meters of 7.1 gpt. And it isn’t very deep.

Cartier’s 100,000 meter drilling program is testing targets which earlier drilling and historic drilling have already confirmed are mineralized. The objective is to add gold ounces to inventory. Cartier’s overall geological model suggests that there are what might be called gold reefs across a 15 kilometer stretch of land Cartier has secured. You can get a sense of the scope of the project in this diagram.

As Cloutier explained to me over lunch the day before VRIC, ECR wants to drill a lot of fairly shallow holes to confirm the mineralization at the targets across the property. He’s well aware from his drilling experience at the old Chimo mine, that gold deposits on the Abitibi gold belt tend to go deep. But, for the moment, ECR is content to stop well short of the bottom of the mineralized targets.

It is very much a market-driven drilling strategy. Cloutier would like to see ECR shares move up a little every month. He has patient investors whose time horizon is two or three years or longer. He has a strategic investment from Agnico Eagle, a company which has milling capacity nearby. So Cloutier has the runway to prove up what he is pretty certain is an actual “gold camp”.

There are a lot of definitions of “gold camp”. The best I’ve seen in a modern context is a “network of deposits”. That is very much what Cloutier hopes to find and is finding at ECR’s Cadillac Project. From a larger company’s perspective, having the exploration work done to confirm a resource at a number of sites along strike creates the opportunity to acquire the entire project as it moves into the development phase. Which, in turn, means the larger company is able to plan the development according to its own metrics and goals.

One of the interesting elements at Cadillac is the fact the Chimo mine has a 900-meter shaft (currently flooded) and there is a “ramp” very near the drill targets at Portal. Existing mining infrastructure can be a significant advantage, as it reduces costs. Next time I speak with Philippe I will be asking about the “ramp”.

The price of gold has fallen back a bit from the all-time high in February. Which does not worry ECR one bit. Cloutier is building an in situ gold inventory. The more gold ounces there are in that inventory the more an acquiring company will expect to pay. In February, I wrote:

Back in November, there was a flurry of M&A activity with gold just breaking through the $4000 mark. A notable transaction was Fresnillo buying out Probe Gold and the purchase price valued Probe’s 10 million ounces in situ at $78 Canadian or $55.5 US. Even after last week’s crash, gold is hovering around $5000, up 25% from November. It is reasonable to assume a similar rise in the in situ value of gold resources.

Gold is still hovering around $5000.

The overall junior market is a bit discombobulated by the war in Iran and the general sell-off on the main boards. Cartier dropped a little from its January high of $0.325 and is trading around $0.26-28. Its market cap of 118 million does not yet reflect the growing gold inventory. As ounces are added, revised MREs will come out. The last MRE, filed January 28th, for the first time disclosed 502,600 measured gold ounces, as well as 265,200 indicated and 2,416,900 inferred for a total of 3,184,700 ounces. I suspect the next MRE will disclose 5,000,000. If you use the Probe in situ value of $78 that would suggest a buyout price of $390,000,000 or 4 times the current market cap.

A number which will only grow as Cloutier and his team keep the drills turning and the assays coming. Cartier is fully financed for the 100,000-meter program. The results delivered last week are the 9th batch: at a guess, the program is about 10-15% complete. This suggests that, every two weeks for the next year or so, investors and the market will have hard news to look forward to.

(Disclaimer: I hold shares in Cartier Resources which I may sell at anytime. This is not investment advice. Do your own due diligence. Call the CEO.)