Kevin Keats is taking one financial analyst’s words to heart — the province is “one hill away” from an area play.
It’s the kind of optimism that comes naturally to any prospector who leads a junior mineral exploration company in Newfoundland and Labrador.
The trick is finding the hill.
That hill could be the discovery triggering a claims-staking rush known as an area play.
Keats is president and CEO of Gander-based Golden Dory Resources, a junior mineral exploration company with gold properties in central Newfoundland and Nevada.
On Tuesday, the company announced the latest assay results from exploration drilling completed in July — boosting its gold resources by 50 per cent.
“We think with another 10 or 12 holes we could actually turn a lot of the resources into the indicated category instead of inferred,” said Keats.
Indicated resources are the firmer resource estimates.
Those estimates say the Huxter Lane property, for instance, contains indicated resources of almost 11.2 million tonnes of ore averaging 196,000 ounces of gold.
Those results more than double when inferred resources are added to the mix.
Inferred resources were 38.7 million tonnes of ore averaging 569,000 ounces of gold.
The company will use this information to plan its winter drilling program.
Keats is one of 23 prospectors from five generations of the same family tree whose branches also go by the names Stares, Smith, Crocker and Barrett.
“Four of us are CEOs of junior mineral companies and the rest are in the field actively exploring for the next deposit,” said Keats.
Mick Stares, president and CEO of Rare Earth Metals Inc., is his first cousin.
Based in Thunder Bay, Ont., Stares started out 25 years ago exploring for gold and base metals.
Now, he’s hunting for rare earth minerals in southwest Labrador.
“We’re currently spending just over $2 million in Labrador,” said Stares. “By week’s end, we’ll have close to 17-18 drill holes completed on all of our prospects.”
Those rock samples will be assessed over the next few months to pinpoint targets for next year’s round of drilling.
Rare earth minerals
Rare earth minerals are used in batteries for electric cars, magnets in cellphones and computer hard drives, and to create the colours green, red and blue in flat screen TVs.
China dominates the market, but these days it’s using its rare earth mineral production for domestic industries.
“We think with another 10 or 12 holes we could actually turn a lot of the resources into the indicated category instead of inferred." - Kevin Keats
And that creates opportunities for new sources.
“It’s about a $1.5-billion industry now and it’s growing 10 per cent a year,” said Wayne Reid, director of Rare Earth.
The company has several prospects in a 340-square-kilometre exploration property in Labrador dubbed Red Wine.
Twenty kilometres away is a convenient hydro access road dating back to the construction of the Smallwood Reservoir.
“We fly into the property, but we drive into the camp,” said Reid.
Keats said Golden Dory will continue to hunt for gold in the province, but it also needs to explore in proven mineral districts, such as Nevada.
“You’re getting absolutely nothing for the value of your properties in Newfoundland in the market, let’s say on Bay Street, Howe Street, those places.
“But as Eric Coffin said in his talk, it’s only one hill away. That’s all that starts an area play.
“We’re hoping we’re about to do that with the Huxter-Brady project and prove there are multimillion-ounce deposits in Newfoundland.”
Coffin, along with his brother David, produces the Hard Rock Analyst newsletter on metals explorers, developers and producers.
Coffin hasn’t seen an area play in the province since the Voisey’s Bay nickel discovery ignited a claim-staking rush in Labrador in the 1990s.
“One of the main things that gives an area play legs is secondary discoveries, and Voisey’s Bay unfortunately, so far at least, hasn’t really had them,” he said.
“It’s difficult to sustain market interest in an area play unless the market believes that, in fact, the area is capable of generating multiple discoveries.”
Until two years ago, Coffin said the Yukon hadn’t seen an area play since the Klondike gold rush days of 1897.
In 2008, a series of gold discoveries changed the way hard-rock explorers viewed the Yukon.
“I think Newfoundland’s got the same issue on the gold side,” said Coffin.
“There’s been a number of gold discoveries, but no one’s pulled one together yet that has enough scale to really drive that sort of speculation.
“That’s not to say it won’t happen. People said it wouldn’t happen in the Yukon until two years ago.”