Rupert Resources (TSX-V: RUP) - Technical Analysis

Rupert Resources Ltd. is a Canadian gold mining company focused on the exploration and production of base and precious metals. The company's flagship asset is the Rupert Lapland Project in Finland. The company's other assets include Red Lake in Ontario, Surf Inlet in British Columbia, and the Hirsikangas deposit in Central Finland.

Merlin Marr-Johnson caught up with Thomas Credland, Head of Corporate Development, and Dr. Charlotte Seabrook, Group Exploration Manager, Rupert Resources. 

Mr. Thomas is a geologist with over 15 years of experience in mining. He began his career in the gold mining industry in Western Australia before returning to the United Kingdom to work as a mining analyst. He then worked in an institutional equity sales role at Canaccord before moving into a senior corporate position at a London-listed mining company. His educational credentials include a degree in Geology from the University of Edinburgh and a Masters in Mineral Project Appraisal from Imperial College, London. 

Dr. Charlotte has over 15 years of experience in geology and exploration having completed her Ph.D. at the University of Witwatersrand and is a Registered Professional Geoscientist (RPGeo) through the Australian Institute of Geoscientists. She holds an M.Sc Mineral Resources (Cum laude) from the University of Wales (Cardiff) and is based in Finland. Prior to joining Rupert Resources, Charlotte worked as a District Geologist for Newcrest in West Africa and has worked on gold and copper projects in central Africa and Australia. 

Company Overview

Rupert Resources was founded in 1981 and is headquartered in Toronto, Canada. Northern Aspect Resources Ltd. is the company's subsidiary. The company is listed on the Toronto Stock Exchange (TSX-V: RUP) and the OTC Markets (OTCQX: RUPRF). The company owns 100% of the new, high-quality 3.95Moz Ikkari discovery, and permitted Pahtavaara mill with a land package of 595km² in the Central Lapland Greenstone Belt of Northern Finland.

Rupert Resources has a $1Bn current market cap. The company made the Ikkari discovery 2 years ago and it put out a maiden resource within 15 months, half the time of the average gold discovery. The company is currently in the key winter season with 80,000m drilling planned in 2022. The company got to the main resource at Ikkari at 36,000m. 

The Central Lapland Greenstone Belt

Rupert Resources’ options and its parts of properties were acquired in September 2016. The company had the brownfields part of the mine that included a 126km² area in the middle part of the Central Lapland Greenstone belt. The company’s operations are located within a major mineral province with about 40Moz gold equivalence resource including the Ikkari discovery. 

The land package has potential for orogenic gold and base metals in a 50km radius. This area is comparable to the Eastern Goldfields in Western Australia or Canada’s Abitibi. 

Over the course of the past 5 years, the company has consistently added to its land package. Currently, the company’s land claims encompass a 700km² area. It is continuously carrying out a winnowing process of picking up ground, evaluation, and drilling. 

Rupert Resources’ part of mine had been on care and maintenance since 2014. It was evident that the geology was similar to the mineral belts of Eastern Goldfields in Western Australia and Birimian in West Africa. For the company, this land package served as a unique opportunity from an exploration perspective. 400,000m of past drilling was done in the company’s part of the mine and there were a total of 4 drill holes elsewhere on the 120km² area that was largely unexplored. 

The historical data and data capture that was done over the GTK showed that transects of basic till had been done but not to a consistent standard. According to the company, there were several reasons that discoveries hadn’t been made, even though the geology appeared to be promising. The area featured 2 billion-year-old rocks with a significant structural complexity which is needed for orogenic gold deposits.

The Ikkari Discovery

Dr. Charlotte, Group Exploration Manager, Rupert Resources joined the company in late 2018. This was prior to the commencement of regional exploration projects. The company had carried out initial work on the land package assessment from a high-level viewpoint. She joined the company and kicked off the ground exploration. 

The original drill programs were designed to assess the potential of the western part of the company’s permits as a whole. The company managed to define several good till anomalies. The base of till was part of the company’s primary strategy. 

The company drilled a few holes in the best-looking tills and found impressive amounts of gold in each of the early drill holes. This drilled technique was highly successful and the company wanted to continue drilling potential areas that would become bigger deposits. Meanwhile, the holes that did not return good results were left behind. The company made the Ikkari discovery on the 6th drill hole. 

An important consideration for the company was the hurdle rate. Even though the asset may become better over time, it needed to meet the company’s initial hurdle rate of $2Bn NSR (Net Smelter Return), a benchmark set by the company to ensure market interest and an exploration worth conducting. The company had been highly ambitious with its targets which led to 5 strong discoveries. It continued exploration until the desired scale and style of mineralization were found. 

Notably, the $2Bn NSR target was in situ revenue. The hurdle rate was based on the area’s geology and the holes that were being drilled. Some of the earlier holes were predominantly rich in sulphides along with gold mineralization. In essence, these holes had massive sulphides with a large component of piretite and chalcocite. The company believed that the results were promising and they could lead to the big deposit that it was seeking. The company sought a more classic, orogenic gold-style mineralization with lots of silica along with significant demonstrations of multiple fluid flow events and big structures.

Rupert Resources was looking for a specific type of host rock, which it was able to find on the 6th drill hole, leading to the Ikkari discovery. At Ikkari, when the first 2 holes were drilled, the company immediately defined a 500m strike length. This area was found to host exceptionally high 100m widths. It was these findings that made Ikkari stand out from other discoveries that featured around 10m of 2g grades. 

The first 4 drill holes at Ikkari led to a 300m-400m strike length. These holes were far apart and it was found that all 4 intersected very broad widths of really good-looking mineralization with visible gold throughput. It was evident that this was a more promising system than the other discoveries. 

The system features a large amount of deformation. It is apparent that the deposit has been through several deformation phases. One of these phases is marked by a strong shearing event that overprints everything. This served as a key indicator that the company had reached the system. 

It was found that pyrite was disseminated through the whole system. Additionally, the company found intense alteration along with several overlapping alteration phases, indicating the presence of multiple fluid flow events. Taking all these factors into consideration, the company was able to determine that the system is big in size. 

The company anticipates that the shearing event was responsible in part for the fluid flow. However, it has also observed a later phase of brecciation over-printing the entire system as well. The combination of these 2 factors shifted the company’s focus on gold-bearing fluids within the system. 

Underlying Geology

The Ikkari discovery features a series of sub-vertical structures with shearing that is associated throughout the system. Along the structures, there are rafted blocks of various different lithologies brought up into the system. This may be the factor responsible for the fluid flow event. The system also features a series of late-stage breccias that have contributed to the localization and in some cases, remobilization of some of the gold fluid, particularly at the contacts of a few of the breccias where the gold fluids are present in higher concentrations.

The system carries cataclastic breccias. It features a big cataclastic breccia that is in contact with the carbonaceous shale. This large breccia is quite broken up. The system also has really early cataclastic breccias that are rich in tourmaline. As these breccias are broken up, they are believed to be in early phases. 

The company has also identified hydrothermal breccias. These breccias cross-cut and are sub-vertical in expression. The hydrothermal breccias are carbonate-rich and carry hematite along with a lot of disseminated pyrite when mineralized. Rupert Resources anticipates that the source of fluids within the hydrothermal breccias are a result of a reasonably late event and could be related to the dewatering of an adjacent basin. 

Resource Definition

Rupert Resources’ Ikkari Discovery has a 4Moz resource. On the north side of the resource, there’s a sharp boundary that is controlled by the main sub-vertical structure along with other structures. Further north, there is a possible presence of a series of smaller sub-vertical structures which also host mineralization. 

At the south end of the discovery, the company has had limited drilling so far. It appears to be controlled by multiple structures on the southern contact. There is a presence of a lot of lithologies that are folded, some of the alterations appear to demonstrate a similar pattern. The south end of the discovery is fairly complicated and the company continues to work on it. There are indications that the southern contact may have the potential for additional zones. The company has drilled limited holes in the southern contact zone which go all the way through. 

Prior to publishing the Ikkari maiden resource, the company focused on the critical mass of the resource. It sought to set a baseline for its discovery. The company was looking to understand the value of ounces. It needed to define the resource and follow up with metallurgical work and preliminary engineering. 

When permitting is initiated, a company is required to have a roughly constrained area. The company continued to uncover new areas as it understood the exceptional potential of the Ikkari resource. A distinct feature of the Ikkari resource is that it was established with relatively small amounts of drilling. 

Drill Operations

At the Ikkari discovery, the company has an 800m strike length with a vertical drill depth of 450m. The average width here is between 80m-100m. Through infill drilling, the company was able to gain confirmation that the deposit is a big block of mineralized rock.

The company recently published drill results on a hole featuring exceptional grades of 103m of 8g gold. Though this is not the best intercept, when combined with the 80m at 2.5g grades found at the top of the hole, this is the best hole the company has drilled at Ikkari so far. The grades demonstrate the value of infill drilling as it helps understand the value of every ounce rather than a narrow focus on finding additional ounces. 

Rupert Resources has set a 0.2% cut-off grade at the Ikkari discovery. The resource has a high-grade component that features a big lump of 100Mt mineralized unconstrained rock that features 50Mt of supply, which is included in the maiden resource. 

Currently, Rupert Resources is focused on its winter drill season at the west of the Ikkari discovery. As the ground is significantly wetter, the company can achieve good access during the winter months. The majority of the company’s drill rigs are currently employed in this region. The company is looking to expand the deposit to the west. At the same time, the company is following up and drilling deeper at the successful sections. It has employed multiple rigs to drill deeper holes through the main and eastern parts of the deposit. 

It has plans to move drilling from the west to the east as it completes the current phase of its winter drill program. The company is looking to ensure that deeper holes are drilled along the way to assess the deposit’s depth potential. The strike length here is open in both directions and at depth. 

The company plans to follow down in 1 section and explore each vein as it moves forward. At the same time, the company is stepping out at 40m intervals.  Within the Ikkari target, some areas are planned for aggressive exploration with 80m step-outs and 40m back infilling. The company is reviewing each hole as it is drilled and is looking to develop a result-driven forward strategy instead of drilling at a fixed plan. 

Rupert Resources has plans to carry out aggressive exploration in the east. This is because the eastern part of the deposit has fairly limited drilling, and it has demonstrated some very high grades so far. The company is looking to drill slightly deeper holes and then infill back towards the previous hole. 

The deposits appear to get narrower towards the east. In a past press release, the company stated that even though the long section of the deposit is narrowing, it carries very high grades along 20m-30m of thickness, though the plunge is complicated. The Ikkari deposit is split into multiple zones of mineralization and it seems that the individual zones may have various plunges in different directions. 

The company is waiting to assess the drill results once the assays are back. Currently, it plans to continue drilling, particularly in the east where consistent high grades are found. 

Rupert Resources is drilling the deposit in sections, however, it is difficult to join the sections to reconstruct a geological package or to receive more preferable host units. As per the company, the deposit features a siltstone unit that controls a lot of the underlying mineralization within the ultramafic package. These siltstone units are easy to identify and are known to contain significant mineralization. The company is trying to follow these siltstone units. Notably, the 100m at 8g/t grade was found across a possibly repeated siltstone package. 

The company has identified dissemination in multiple areas. In the northwest part of the deposit, a large block of completely albite-altered felsic rock with brittle fractures was identified. These micro-fractures host mineralization. 

Rupert Resources plans to focus on the deposit’s structure, followed by favoured lithologies. The region is covered by thick layers of till along with swamp-like environments that cover large areas. Structures can be defined through magnetics or regional geophysics, however, to identify the mineralized regions, a basic till needs to be carried out. The company continues to carry out tilling year-round. 

The Ikkari discovery had a 200m long base of till anomaly along with an 800m strike that comprises the resource. The base of the till has indications of multiple glacier events. The gold mineralization comes to the sub-crop beneath the till layer. To find the anomaly, the base of the till would need to be drilled. 

The company found 0.1ppm (parts per million) anomalies here. Meanwhile, at the Heina South deposit, the company found anomalies with up to 1g gold. The Ikkari anomaly wasn’t considered significant, however, once the company carried out infill baser till, over the initial Ikkari anomalies, it was able to find much higher anomalies along the extent. 

The company is focused on big regional structures that are expected to host mineralization based on the gold occurrences found in Ikkari and other deposits. It is using the base of till to narrow down the search area within the parts of the structures or intersections to identify mineralization. It has a series of alteration minerals here which as per the company is key for identifying mineralization. 

Rupert Resources has identified albite alteration in locker-felsic sediments. Albite is a regional alteration feature that is favourable because it plays a part in mineralization. Since the region has gone through numerous phases of carbon alteration on a huge scale, it is difficult to distinguish one from the other. The presence of sericite silica alteration could indicate richer parts of the system. 

Rupert Resources is utilizing till sampling as the best indicator for gold. It is currently focused on regional exploration. At area 1, the company has had 6 initial discoveries along with 4 other target areas featuring a similar scale and magnitude. 

The company continues to look for potential around the Ikkari deposit as part of the program. The company is also focusing on big tracts of land with structural complexity and with coincident anomalies as part of its regional exploration campaign. 

Heina Central

The Heina Central deposit is within area 1 and is located 800m-1km north of the Ikkari discovery. This area has a copper component and features a significantly different geological expression. The deposit is sulphide dominated and piretite-pyrite dominated along with a gold component. It also has lower continuity and thickness within the mineralized units compared to the Ikkari discovery. 

The grades found here are 50m-60m at 0.5 gold and 1.5% copper. Since the surface expression is limited in size,  the company intends to carry out deeper diamond drilling over the course of the next 2 months. Notably, gold mineralization is widespread along the whole belt. 

As with all greenstone belts, there are different styles of mineralizations and deposits. The Kitsler deposit further north is double refractory and has an arsine-pyrite component. Meanwhile, Ikkari is free milling and void of these characteristics. The Kitsler deposit is 45km north and is part of the same age rocks and lies within the same broad suits of controls and fluids. This indicates that there is homogeneity amongst the deposits at both regional and local levels. 

The stage of mineralization has been dated to be earlier than some of the regions in the belt’s southern part. As the deposit lies within the equivalent rock and age range, there are assumptions that it might be a part of the larger overall system. 

Targets 2022 and Beyond

The cut-off for the Ikkari maiden resource is based on drilling done by the end of May 2021. By the end of 2022, the company expects to conclude 55,000m drilling at Ikkari, with 30,000m drilling done in Q1. The company is looking to make the most of its winter drilling season as this time provides the best access. The drill cut-off is planned for Q2 2022.

The underground cut-off is 1.2Mt, while the open pit cut-off is 0.6Mt. The company has a large unconstrained body of rock where it has the opportunity to further increase the resource by optimising the cut-offs and the pit slopes along with other metrics. 

Rupert Resources conducted a trade-off study on the underground versus the open pits. This deposit can be mined as a big open pit. The company has determined that this is a much smaller scale operation based on the compelling 2:3:1 strip ratio. The company has a strong focus on margins and environmental impact. The company has carried out significant work to better understand these metrics and found that it has minimal impact on the NPV (Net Present Value). The company is focused on high-value ounces and margins instead of scale. According to the company, this deposit can be mined in a multitude of ways and would still work. 

The Kittila Mine

At the Kittila Mine, the underground grades are within the 3g-4g range. Since the deposit is double refractory, it develops a large number of stopes each year, up to 200 stopes annually. These stopes are great for mining, though due to the technical complexity caused by the big autoclave and double refractory nature, the grades and economics are expected to be quite different. 

The metallurgical work indicates that gold is either associated with the pyrite or present as free gold enclosed by the pyrite. The latter can be extracted through a small grind. The company found that it can achieve a good gold liberation at 120 yard microns. This is a very coarse grind with a highly favourable mass pool. A very coarse grind can help extract a lot of gold which has several advantages including energy consumption. From a metallurgical perspective, the collected concentrate can be upgraded to produce a float concentrate early on in the process. This leads to a significantly smaller back end. 

There are no deleterious elements present. The deposit features ice in the pyrite, which acts as a neutralizer in terms of the waste rock, acting as a benefit. 

The company’s presentation provides a 4,000t-14,000t per vertical metre range. This is because the grade ounces drop off with a drilling density of 300. The company is looking to drill additional holes and carry out deeper drilling to find the ounces per vertical metre. It plans to drill the depth extensions in Q1. 

Rupert Resources’ consensus NAV (Net Asset Value) was calculated through 3 analysts. The company hasn’t floated its internal NAV yet. The consensus NAV was calculated based on the company’s published resources. Having a published resource enables external modelling that can provide DCF (Discounted Cash Flow) rather than just the value and in situ dollars per ounce multiple. 

Rupert Resources is expecting an increased news flow in 2022 along with drill results. The company anticipates another significant discovery could be made this year. Compared to last year, It has increased the number of drill rigs by a factor of 3. 

Rupert Resources has $50M in current cash flow. The company is continuing operations at Ikkari along with additional drilling at Heina Central and Heina South. It seeks to demonstrate the potential of Ikkari’s satellite deposits. The company plans to carry out additional grassroots exploration. The baser till rig is providing the company with new anomalies which are planned for testing over the next 2 months. 

Agnico Eagle’s Holdings

Agnico Eagle holds a little under 10% in Rupert Resources on an outstanding basis. Additionally, Agnico has warrants that bring its holdings closer to under 15%. Rupert Resources can ask Agnico to exercise these warrants as long as the shares are above $1. Rupert Resources anticipates that the shares will go above $1 over the next 2 weeks.

To find out more, go to the Rupert Resources website