Bonterra Resources (BTR) - Rushing to Cashflow & Gold Expansion

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, which combined hold a mineral resource estimate (MRE) of 1.24 million ounces of gold in the measured and indicated category and 1.78 million ounces of gold in the inferred category. Bonterra Resources Inc. also owns the only permitted and operational gold mill in the region, namely the Bachelor Mill.

The company recently published a preliminary economic assessment (PEA) of the Barry open-pit project. The PEA was completed by SLR Consulting Ltd. in accordance with NI 43-101 standards, with the engineering and cost estimates being endorsed by AMC Mining Consultants Ltd.

The PEA of the Barry open-pit project is based on the project’s updated mineral resource estimate (MRE), published by the company in June 2021 The NI 43-101 compliant 2021 mineral resource estimate consists of a combined 1.9 million tons of mineralisation at a grade of 2.68 g/t of gold. The PEA shows a total of 2 million tons of mineralisation to be mined with a total contained amount of gold of 152,684 ounces.

The PEA also shows an overall gold recovery rate of 95%, with a strip ratio of 5.4 to 1. The life of mine (LOM) is estimated to be approximately 5 years, with an initial capital cost (CAPEX) of CAD$ 22.1 million. The highlights of the PEA further include an after-tax net present value at a 5% discount price (NPV5%) of CAD$ 48.3 million, an internal rate of return after tax of 43%, and a sustain capital cost of CAD$ 21.3 million.

Project Portfolio

Bonterra Resources Inc. holds a sizable position in the Urban Barry Camp, located approximately 225 km Northeast of the city of Val-d’Or in Quebec, Canada. The company’s asset portfolio consists of the Gladiator, Barry, Bachelor and Moroy deposits. The Gladiator deposit holds 391,000 ounces of gold in the indicated category and 989,000 in the inferred category. The deposit has also been outlined by diamond drilling to a strike length of 1600 m and a depth of 1100 m.

The Barry deposit of the company is comprised of both an open-pit as well as an underground component. The open-pit mineral resource estimate (MRE) of the deposit shows 148,000 ounces of gold in the measured category, 17,000 ounces of gold in the indicated category and 1,000 ounces of gold in the inferred category. The underground component of the deposit’s MRE boasts 55,0000 ounces of gold in the measured category, 470,000 ounces of gold in the indicated category and 687,000 ounces of gold in the inferred category.

The Bachelor deposit holds 15,000 ounces of gold in the measured category, 27,000 ounces of gold in the indicated category and 6,000 ounces of gold in the inferred category. The Moroy deposit holds 7,000 ounces of gold in the measured category, 112,000 ounces of gold in the indicated category and 98,000 ounces of gold in the inferred category.

The company has a total mineral resource estimate of over 3 million ounces of gold discovered.  The mineral resource estimate was created through the conducting and analysis of 554,914 m of drilling, which equates to the company discovering 5.4 ounces of gold per metre drilled.

Barry PEA

Bonterra Resources Inc. on the 13th of June 2022, released a preliminary economic assessment (PEA) for the Barry open-pit project. The PEA was completed by SLR Consulting Ltd. in accordance with NI 43-101 standards, with the engineering and cost estimates being endorsed by AMC Mining Consultants Ltd.

The rationale behind the completion of the PEA, according to the company, is to enable cash flow at the Barry open-pit project, which the company will then re-invest to advance the company’s various other deposits. Marc-Andre Pelletier, the President and CEO of the company,  explains that the company believes in starting small and expanding the business and its operations systematically. He states:

“…start small and grow the business. That's Bonterra's strategy. The Barry open pit did very well with that strategy because, of course, it's a small project: 150,000 ounces, 5 years life of mine, so it's about 30,000 ounces of gold per year. There was a modest investment of about CAD$ 21M initial capital requirement, but really, it will generate some cash flow for the company. The intention is to invest the cash flow into the Barry underground, which contains 1.2 million ounces of resources.”

The highlights of the PEA, include an after-tax net present value at a 5% discount price (NPV5%) of CAD$ 48.3 million, an internal rate of return after tax of 43%, an initial capital cost (CAPEX) of CAD$ 22.1 million, and a life of mine (LOM) sustaining capital cost of CAD$ 21.3 million.

The Barry open-pit project is calculated to have a 5-year life of mine, with a production profile of 30,000 ounces of gold per annum. The total production of the Barry open-pit project is estimated to be 145,050 ounces of gold at a 95% mill recovery rate. The deposit is furthermore estimated to have a strip ratio of 5.4 to 1 and an all-in sustaining cost (AISC) of USD$ 1,065 per ounce of gold. The PEA was calculated using a long-term gold price of USD$ 1,600.

Bonterra Resources Inc. believes that the Barry open-pit project will be a stepping stone for the company, Pelletier explains:

“Really, the Barry open-pit is just a baby step for Bonterra, but it's a big step as to where we're going. Production restart: we will have to gain our credibility as a producer, which I'm very confident we will, but our focus is moving to the underground resources. We actually have 2 diamond drills on the Barry underground deposit and we initiated an infill diamond drill program already.”

Barry exploration drilling

Bonterra Resources Inc. released results from the ongoing exploration drilling campaign at the Barry project at the beginning of April 2022. The exploration drilling is targeted at the Northeast sector of the Barry deposit, near the surface as well as at the southwest sector at depth.  The exploration drilling is aimed at expanding the deposit from its NI 43-101 compliant 2021 mineral resource estimate.  Pelletier explains that the obtained drilling results and the resulting updated mineral resource estimate will be implemented towards the creation of a pre-feasibility study, he states:

“We have done some exploration drilling on the east-northeast side of the pit, and there are actually 3 pits - a big one and 2 smaller ones that are kind of satellite pits, and we've done some drilling between those pits to see if there are any gaps we could close. That drilling has been completed, and as we are going to the PFS level, we are going to look to see if we can make those pits bigger, maybe group them together or extend them on the east-northeast extension. We will do that exercise as part of the PFS.”

The highlights of the exploration drilling include 7.1 g/t of gold over an intercept of 7.6 m, including 20.1 g/t of gold over 1.4 m as well as 13.2 g/t of gold over 1.4 m. The drilling highlights further include 1.3 g/t of gold over 12.0 m, 2.3 g/t of gold over 9.0 m, and 17.4 g/t of gold over 4.4 m, which includes a 0.5 m intercept of mineralisation at a grade of 146.0 g/t of gold.

Accessing the underground deposit

The company intends to develop the Barry project to the point of underground mining, Pelletier explains the rationale and intent of the company with the project as follows:

“…in our business, it is very simple; you always have to feed your mill with the best ore available. For Bonterra, it is the Barry open pit. We need to develop the underground, the grade is going to be twice as high, so production is going to be twice as high.”

The company announced on the 13th of June 2022 that it had initiated infill and definition drilling of the underground portion of the Barry deposit. The company plans to complete 41,500 m of drilling at the project in the coming year. The project has an existing exploration ramp in place, which goes to a depth of approximately 100m. Pelletier explains that the company intends to develop the underground portion of the project to be able to initiate production from it by 2026, he states:

“I would like to bring that deposit on in 3 years, so 2026. In year 3, the pit will keep going, however, the underground portion of mill feed will increase, eventually up to 1,200 tons per day. At that time, Bonterra will be a 60,000-ounce producer, and cash flow will increase. Okay, mining underground is more expensive. The AISC will probably be higher, however, production will double so we are going to generate more money.”

Future

Bonterra Resources Inc. plans to raise additional funds in the future, with it planned to be a combination of both equity and debt financing. The company believes that the PEA will be a valuable tool in future fundraises, with it also focused on including the correct partners for the advancement of the project, Pelletier states:

“For Bonterra, we need to come up with the best deal for the company. We need to look at all the options and which partners to bring in and how they want to do it. We need to talk to those people. The PEA is a great tool; now that we have numbers, we can talk about real things.”

The company will furthermore continue to advance the exploration of its Gladiator and Barry deposits in the coming year, with the aim being to initiate production at the Gladiator project after the Barry open-pit and underground deposits, Pelletier explains:

“I believe that once we reach 60,000 ounces, that's when Gladiator will come online. That's part of the mill upgrade, at 2,400 tons per day, we are working on the permitting for that. 1,200 tons per day from Barry underground and 1,200 tons per day from Gladiator.”

The company will also advance the permitting and design of the planned exploration ramp at the Gladiator deposit. Bonterra Resources Inc. will aim to publish the pre-feasibility study (PFS) of the Barry Open-pit project by the end of 2022. The PFS will also further assist in the de-risking of the project.

To find out more, go to the Bonterra Resources website