Bonterra Resources (BTR) - High-Grade Gold Results Increase Options

Bonterra Resources is a Canadian gold exploration company with a large balanced portfolio of exploration and mining assets including the Gladiator, Barry, and Moroy deposits, along with Urban-Barry Mill and multiple highly prospective exploration prospects. Bonterra is located within the Abitibi Greenstone Belt in Québec.

Matt Gordon caught up with Pascal Hamelin, President, and CEO, Bonterra Resources. Pascal has over 3 decades of experience in mining project management at the Sudbury and Abitibi camps. He previously served as the President and COO at Metanor Resources which was acquired by Bonterra Resources in 2018. His educational credentials include a Mining Engineering Degree from Polytechnique Montréal. He is a member of the Ordre des ingénieurs du Québec and Professional Engineers of Ontario. 

Company Overview

Bonterra Resources is a gold exploration company founded in 2007 and headquartered in Canada. The company is listed on the Toronto Stock Exchange (TSX-V: BTR) and the OTC Markets (OTCQX: BONXF). Metanor Resources Inc. and Symphony Resources Ltd. are the company's subsidiaries. 

Bonterra Resources is advancing and exploring its advanced gold exploration project in northern Quebec. The company's assets include the Gladiator, Barry, and Moroy deposit situated within the Urban-Barry camp. The operating mill at the camp is wholly owned by the company. 

The company published a resource estimate in June 2021 with a 1.3Moz M&I (Measured and Indicated) and 1.8Moz inferred resource. Since then, the company has drilled 90,000m and continues to explore at a pace of 6,000m/month. 

Capital Raise

Bonterra Resources recently raised capital over $10M by way of flow-through funds. In Canada, mining companies are offered a fiscal incentive for exploration drilling, also known as flow-through financing. This incentive has enabled the company to raise capital at a premium rather than a discount. This capital raise was made possible through the demonstration of aggressive drilling and discovery of high-grade targets which lead the company out of flow through liability. 

The equity raise was carried out at a premium with a 30-day average of $1, along with a flow-through of $1.47. The company plans to continue diamond drilling at the Urban Barry Camp through the existing cash flow as the capital would be paid for by the government within the next 2-3 years. 

The decision to continue drilling is in favor of attaining a premium for equity financing, which the company was able to achieve in September 2021. Raising hard dollar equity led to a discounted price for the investors. The equity raise is ongoing and planned for a close shortly. It consists entirely of institutional investors. 

PEA Considerations

Bonterra Resources has a combined PEA (Preliminary Economic Assessment) planned for the Gladiator, Barry, and Molroy deposits along with the central mill. The company is looking to delay the PEA in favor of locating the right trail which would define future targets. It is also looking to incorporate recent drill results in the PEA. 

It is important to note that the company is not looking to base this PEA on the existing resource. However, if it keeps hitting targets, a renewed resource update is also under consideration. Currently, the company's drill operation is ongoing and it has received positive results, causing a direct impact on the future PEA. The company is working on the mine design and scrutinizing its options to ensure that the PEA is based on ideal parameters. 

Drill Results

As per a recent press release, Bonterra Resources found gold reserves of 8g over 12m on the surface. Between 2008-2010, the company mined a small open-pit that had good grades. The head grade to the mill was 2.2g without a mine design or a geology model in place. 

This year, a pit shell was done that was included in the June 2021 resource estimate. Since then, the company has been drilling outside the pit shell area along with step-up drilling. Currently, the extension zone to the pit shell is being drilled to the east. 

Once winter approaches, the company will continue drilling operations towards the east, targeting the 500m unexplored zone. At the Barry deposit, the company has utilized a diamond drill within 50m from the core shack. The surface infrastructure at this deposit demonstrates a potential pit shell operation. 

The Gladiator Deposit

Presently, the company's M&I resource is higher than inferred. This is due to the fact that the drill spacings are too wide, directly impacting the overall ounces and the grade of the reserves. The company is looking to carry out infill drilling to convert the inferred resource to indicated while simultaneously increasing the overall grade. 

Gladiator is a high-grade narrow vein deposit. The company is currently within the permitting phase for a decline at Gladiator. As the deposit is located below a lake, the surface drilling operation is tedious. Once the permit is obtained, the company expects to drill between 10,000m-20,000m on a monthly basis. 

The timeline for the permit is expected in winter 2021. However, the development of the decline is planned for summer 2022 due to favorable weather conditions. This decline would be utilized towards drilling from underground to gain a good intercept that would enable the company to close the gap between the inferred and indicated resources whilst increasing the grades. 

The drilling is planned to be carried out on barges during the winter season as they will be ashore during that time period. The company has planned 2°-3° to demob the material from the barges. One of the barges is already demob-ready and the second one is under progress. 

The company is looking for regional targets through the utilization of diamond drill crews as it anticipates that the current reserves are merely the tip of the iceberg as seen at Windfall and Barry deposits. Regional drilling is planned in winter through a single crew.

A second drill is currently exploring the extension that was identified at Gladiator back in spring 2021. This extension is located at depth to the east. Even though this extension is at depth, it can be drilled from the land. 

Upcoming Drill Plans

The company is looking to drill the Gladiator deposit at a pace of 3,000m-4,000m/month throughout the winter season. At the Barry deposit, the company is drilling the pit shell extension. A third drill is currently being utilized at the extension of Windfall Golden Bear, leading to the identification of a new 1km zone in the north. This zone features a deformation corridor trend which is being target-tested by a drill crew. 

Bonterra Resources applied for a 2,500t/day mill operation with the Ministry of Environment last month. This permitting process is close to conclusion, however, the company's priority is towards advancing engineering and geology for its assets. The company is looking to carry out infill drilling to convert the inferred ounces. 

The Barry deposit is ready for mining and has the permits. Meanwhile, the Moroy deposit is under the permit process and requires a Feasibility Study along with a pending mining lease. It is expected that once the lease and permits are in place, Moroy can start production quickly. 

As the Gladiator deposit requires a decline for underground operations, it is expected to lag a few years behind Barry and Moroy. The company is also looking for the ideal way to place the Barry open-pit as a part of the overall operation. 

M&A Considerations

Bonterra Resources is open to either a potential M&A (Merger and Acquisition) or building the project through the company's own resources. Currently, the company is working towards de-risking the operation, acquiring permits, continuing drilling and expansion. The company has the financial backing of investors, providing it the capacity to build the project and make an offer to the shareholder base to ensure maximum value.

As the company nears production, it can command a higher premium per-ounce compared to simply having a resource or a PEA in place. The company's financial backers include Wexford Capital, Kirkland Lake Gold, Fidelity Investments, Caisse de Depot, Ruffer, and MMCAP Canadian Fund. 

Bonterra Resources' institutional investors have a strong belief in the potential of its camp. The company's existing mill serves as an asset that can process material from the mines, the underground operation, and the open pit. This enables the company to ramp up operations as needed. 

The company is currently looking for the ideal strategy between either ramping up the mill as more supply is added or investing in all 3 assets simultaneously. This is also the reason that the company has postponed its PEA to Q4 2021.

To find out more, go to the Bonterra Resources Website