Bonterra Resources (BTR) - How to Build a Mine in Canada

Bonterra Resources Inc. is a Canadian gold exploration company, with a large portfolio of exploration projects in Quebec, Canada. The asset portfolio of the company holds the Barry, Gladiator, Moroy and Bachelor deposits, as well as the only permitted and operational gold mill in the region, namely the Bachelor Mill.

The Barry open-pit project, which is the focus of the company’s advancement initiatives, holds 148 Koz of gold in the measured category, 17 Koz of gold in the indicated category and 1 Koz in the inferred category. Bonterra Resources Inc. recently released drill results from its drilling campaign at the Barry open pit deposit as well as an operational update. The recently completed 25,000 m definition drilling surrounding the near surface mineralization at the Barry gold deposit was aimed at further defining the project’s mineralisation. The highlights of the definition drill campaign includes 1.8 g/t of gold over 23.2 m as well as 6.3 g/t of gold over 4.1 m and 5.9 g/t Au over 6.6 m.

The operational update of the company includes the announcement that Bonterra Resources Inc. will place the underground infrastructure at the Bachelor-Moroy deposit under permanent care and maintenance. The savings that will be realised by placing the underground deposit in care and maintenance is approximately CAD$ 3 million per year and will be implemented towards the development of the Barry deposit.

Bonterra Resources Inc. plans to reach production at the Barry open pit project by Q3 2023, with the initiation of pre-production. The Barry open pit project is set to be in commercial production by the start of 2024. The company will in parallel with its expansion and production initiatives also continue with advancing various permits including expanding the Bachelor Mill to 1,800 tons per day, expanding the tailings management area and constructing an underground ramp at the Gladiator deposit.

Bonterra Resources Inc. History and revised strategy

Marc-Andre Pelletier, the President and CEO of Bonterra Resources Inc. joined the team officially in January 2022. Pelletier has more than 25 years of experience as a mining engineer, with the majority of his career spent in underground gold mining operations. He served as the Chief Operating Officer at Wesdome Gold Mines Ltd. where he played a pivotal part in the restart of production at the Kiena Mine in Val d'Or, Quebec. A new strategy was required to direct Bonterra Resources Inc. towards producing when Pelletire joined the company, with him explaining the strategy as follows:

“The strategy is very simple: we want to grow the business to the point where we're going back into production. We want to become the next gold junior producer. The question is, how do we do that? We really want to develop our assets to the next stage.”

Pelletier explains that upon joining the company he evaluated the company’s asset portfolio, with the aim being to evaluate the economic viability of the respective assets, and steer the company towards production. The evaluation of the company’s asset portfolio led Pelletier to the decision to place the Bachelor-Moroy underground mine under permanent care and maintenance and primarily focus on the company’s Barry deposit.

“When I joined the company earlier this year, I took the time to look at our deposits, our infrastructure, and Bonterra has great deposits: we have 2 huge deposits containing almost 2 Moz gold. We have a mill. The strategy is simply, what do we do next? I concluded that the best way to bring the company back to being a gold producer is to advance the Barry deposit. It is an open pit with an underground portion of the deposit, and we recently published a PEA on the Barry open pit.”

The aim of advancing the Barry open pit deposit is to enable the company to produce cash flow. The initial estimate places the deposit at a 5-year life of mine and annual gold production of 30,000 ounces of gold. The cash flow will enable Bonterra Resources Inc. to be able to advance its various assets through its own costs, leading to less dilution of the company’s shares as well as organic growth, Pelletier explains.

“The feedback is fairly good. In order to become a mining company, we have to stop diluting our stock. If you look at my past experience at Wesdome, from 2017 to 2022 when I left, we were able to grow the business organically without going to the market. We think the market did recognize that and that's basically what we're trying to do at Bonterra. Of course, it's a smaller-scale project that we have here, so that's what we're working on. We have a mining lease at Barry. We have processed ore at the mill in the past, so all indicators will move towards the Barry open pit.”

PEA and funding

Pelletier explains that the preliminary economic assessment (PEA) that the company published in June 2022 of the Barry open pit project, was aimed at providing a foundation on which the company may raise the required funds to place the project in production. The highlights of the PEA include an after-tax NPV5% of CAD$ 48.3 million, an after-tax internal rate of return (IRR) of 43%, and an all-in sustain cost of CAD$ 1,420 per ounce of gold, Pelletier explains the company’s intent as follows:

“We needed the PEA that we published in June to be able to talk to investors and bankers to have something very concrete to show them. The initial CAPEX, as per the PEA, is CAD$ 22 million. We know we're going to need some working capital because, at the start of the pit, the stripping ratio is going to be pretty high with waste against ore, so we would like to begin the construction work and production at the Barry pit with about CAD$ 40 million. We've been working on that since we published the PEA, we're trying to get the best deal for the company, considering the current market conditions, of course.”

Bonterra Resources Inc. plans to implement a mixture of various funding options including equity and debt in an attempt to minimise the dilution of the company’s shares.

“We're looking for a mix of equity, debt, and a convert. This week at Beaver Creek, we've talked to many people, and I would say that quite a few people are interested in going with that kind of mix of financing.”

The project also has various net smelter return (NSR) royalties on it, with Bonterra Resources Inc. working toward removing the NSRs through buyback arrangements.

“There are. Some of the NSRs we can actually buy back. There's a royalty from Sandstorm at 3.9%, and 2.1% can be a buyback for USD$ 2 million. Those buybacks were actually considered in the PEA. We are actually working on another possible NSR reduction deal at the moment, and hopefully, those deals will conclude before we release the PFS on the Barry open pit before the end of the year.”

The company has also conducted expansion drilling initiatives at the project, with the aim being to update the project’s mineral resource estimate before the end of 2022. The updated mineral resource estimate will enable the company to conduct an up-to-date pre-feasibility study (PFS). The PEA as well as the planned PFS serve as de-risking initiatives according to Pelletier.

“We've done a very small campaign, and what we're trying to do is to close the edge of the pits and make sure we don't leave anything behind. As an example, on the west side of the pit, there were 2 small satellite pits, so we tried to join them together or join them to the main pit. We did some infill drilling there just to make sure we're not going to leave anything behind. I do not expect a lot of changes from the past summary, but again, the PFS process is the tool that we're using to de-risk the project as much as possible on many aspects, and geology is one of them.”

Recent activities

Bonterra Resources Inc. on the 7th of September 2022 released an operational update as well as assay results from the Barry open pit project. The assay results are the result of a 25,000 m definition drilling campaign at the project, which consisted of 54 drill holes. The assay results include highlights as 1.8 g/t of gold over 23.2 m including a 4.0 m interval at 3 g/t as well as 6.3 g.t of gold over 4.1 m.

The operational update of the company included the announcement to place the Bachelor-Moroy underground deposit under permanent care and maintenance. The company will save CAD$ 3 million a year by placing the deposit on care and maintenance, which it will be able to direct towards various other advancement initiatives.

“I had to make a very hard decision recently; I am a mine opener, I'm not a mine closer, but unfortunately, we made the decision to put the Bachelor underground mine under permanent care and maintenance. The last production at the mine was in 2018, so Bonterra has kept the mine running for 4 years: de-watered, well maintained, and that costs a lot of money. We believe we're going to save about CAD$ 3 million per year by putting that mine on care and maintenance. It breaks my heart, but it's the right thing to do for the company. We're going to reallocate that money to the development of our project. Barry underground is the next project following the Barry open pit.”

The company also announced that it had initiated infill and definition drilling initiatives at the Barry underground deposit. The company plans to complete 41,500 m of drilling at the underground portion of the project.

Future

Bonterra Resources Inc. plans to reach production at the Barry open pit project by Q3 2023, with the initiation of pre-production. The project is set to be in commercial production by the start of 2024, with Pelletier explaining:

“We're talking about mid-year, next year to get back into production. It has a very high stripping ratio at the start, so in the first 3 months, there's more waste to move than ore. We should be back in the ore later in Q4 next year. 2024 will be the first full year of production for the pit and we are going to be at the 1,200 tons per day stage for about 30,000 ounces of gold a year.”

The underground deposit of the Barry project is set to experience a total of 125,000 m of exploration drilling over the next 1.5 years. Bonterra Resources Inc. plans to update the mineral resource estimate of the underground portion of the project by the end of Q4 2023, with underground drilling and a preliminary economic assessment planned for the start of 2024, Pelletier explains:

“For the underground, we actually have 2 diamond drills on the deposit. We started 2 months ago with a 125,000 m drill program. That's going to take about 1.5 years. We're going to do about 40,000 m this year and 80,000 m next year. That program is well underway. We would like to publish a new mineral resource estimate on the underground portion of the deposit by the end of next year.”

Bonterra Resources Inc. will in parallel with its expansion and production initiatives also continue with advancing various permits including expanding the Bachelor mill to 1,800 tons per day, expanding the tailings management area and constructing an underground ramp at the Gladiator deposit. Pelletier explains that the company is intent on reaching production and states that it has a clear plan and path going forward.

“We have a very clear plan. We are in the executing mode. The PFS is coming. Financing - we're working on that. The permitting would be the trigger, and again, we are working on that.”

To find out more, go to the Bonterra Resources website