Tumbling world markets offered the perfect opportunity for Premier Gold to make its move in the Geraldton exploration camp.
The Thunder Bay exploration outfit promises to be active in 2009 with three major gold projects on the go in some of the hottest exploration and mining camps in North America.
Their biggest push this year is at Geraldton where the company began a 50,000-metre drilling program on their highly prospective Hardrock project located along the TransCanada Highway just outside of town, in early January.
The acquisition of some additional property and old mining assets from Barrick Gold last fall, has doubled the size of their land package. It represented a decade's worth of effort for president and CEO Ewan Downie as he secured land at the historic Little Long Lac Gold Mine site.
The crash of world money markets last fall afforded a good opportunity for some well-financed and aggressive juniors, like Premier, to pick up some bargain properties such as the Geraldton project. About $8 million of their $15 million exploration budget will be spent there this year.
"These properties are often held by majors for decades and decades, and it was just a matter of convincing them to sell (it)," said Downie.
With much media fanfare, Premier held a Thunder Bay press conference in early January, attended and lauded by local politicians and Northern Development and Mines Minister Michael Gravelle for their sizeable investment in the North in such shaky times.
Premier has three flagships projects, one at Red Lake (Rahill-Bonanza), another at Musselwhite Mine (PQ-North) and, mostly recently, Geraldton (Hardrock), a busy exploration camp that has been largely dormant from mining for 40 years.
At Rahill-Bonanza in the heart of the Red Lake camp, Premier has a 49 per cent stake in the ground under a joint venture with Goldcorp. PQ-North, 150 km north of Pickle Lake, is wholly owned atop an iron formation that's host to Goldcorp's Musselwhite Mine. Hardrock is a joint venture with Roxmark Mines, with Premier having a 70 per cent earn-in interest.
Gold has been one of the few shining commodities this winter as investors have flocked to the precious metal as security.
To Downie, it's no big secret for Premier to raise money. While other junior miners checked back exploration to preserve cash over the winter, Premier has pressed on. "In terms of the amount of drilling, we'll be the same this year as last."
He chalks it up to his company's good track record of success and ability to raise money.
Downie made his mark as the former head of Wolfden Resources by identifying base metal deposits in Nunavut. He sold those projects to an Australian mining firm and is now concentrating on his Ontario gold projects through Premier Gold. Downie said he didn't position Premier to become an unofficial exploration arm of one of the world's biggest gold producers (Goldcorp), he's just staying true to his theory that future mines lay next to old headframes.
"Where there's been gold found before is often the best geology."
For their long term strategy, the company has hired former Goldcorp execs Stephen McGibbon, as vice-president/COO and Tim Twomey, to head up exploration.
"We've been looking to build a team that could move projects toward production," said Downie. "As with Wolfden, we wouldn't be adverse to some corporate activity but in the same token, we're not counting on it. We're planning on moving forward on our own."
At the Geraldton property, there are three past producing mines working the same orebody. Nothing, including any deep drilling, has been done since the late 1960s. Downie is optimistic in finding more mineralization beyond 2,000 feet and, hopefully, some new discoveries.
"It's what we view as one of the most prospective area for defining and discovering gold zones."
Premier's more marginal, "second tier" northwestern Ontario properties -- Argosy, East Bay and Newman-Madsen, even a high-grade project in Mexico, are on hold.
Downie said precious metals is on the upswing. Gold is petering on an all-time high because of the exchange rate and has been one of the best performing places to invest over the last six months.
"In terms of Canadian dollars, it has bounced back already."
Because of the strength of gold and ongoing world financial turmoil, he anticipates good prospects ahead in 2009.
In hard-hit forestry towns along the North Shore of Lake Superior, if a few good mineral deposits can become operating mines, that will ease the pain of mill closures and stem the outmigration of skilled labour.
"We're hoping we're a good news story for the entire region of northwestern Ontario and hopefully in the future if (we) can develop operations, it'll be beneficial for all surrounding communities like Geraldton, Long Lac and the local First Nations."
Fact box:
Premier Gold Ltd.
Ewan Downie
CEO/President
TSX: PG
52 Week Hi: 3.14
52 Week Lo: 1.05
Active Projects:
Hardrock (Geraldton)
- operated under joint venture with Roxmark Mines Ltd.
PQ North
- wholly owned, atop gold-bearing zone hosting Goldcorp's Musselwhite Mine.
Rahill-Bonanza (Red Lake)
- operated under joint venture with Goldcorp
www.premiergoldmines.com
