Mayfair Gold sees a window of opportunity to take advantage of gold prices being at all-time highs by getting into production more quickly with a manageable small-scale mine.
The Matheson-headquartered gold company is mulling over its development options for its Fenn-Gib mine project, outside the northeastern Ontario town.
This is a “generational gold cycle,” said CEO Nicholas Campbell in explaining the company’s permitting and development strategy for Fenn-Gib in a mid-year message to shareholders and investors on Aug. 5.
The conventional way to mine building is to construct a large-scale mine that maximizes annual production to support a more than 10-year mine life, the company said. However, there are potentially high costs and huge risks associated with that approach. There can be delays in construction which can snowball to drive up costs and result in development capital overruns, the company update said.
Mayfair said there are 4.3 million ounces of indicated gold in the ground, enough to support a large-scale mine, but they’re considering a lower-risk approach, starting out with an initial pit operation. The deposit contains a higher-grade gold zone near the surface. By tapping into that high-grade zone, the company believes it can get better gold recoveries and higher margins than with a larger, higher volume operation.
“This allows Mayfair to focus on mining and processing of higher-grade material at the start of the proposed mine life,” said Campbell.
Fenn-Gib is Mayfair’s only asset, situated 21 kilometres west of Matheson. Highway 101 runs by the project site. The company is confident it can raise a mining workforce from nearby Matheson and Timmins.
The company would prefer to keep Ottawa out of the permitting picture.
By starting out small, Mayfair said it would only have to go through the provincial permitting process, rather than a federal environment assessment process that comes with a larger mine.
“There has yet to be a single mine permitted through the new (federal) Environmental Assessment process, which was enacted in 2019,” said Campbell.
The provincial process “still requires a rigorous environmental review, but, if done properly, there is a more defined path to receiving all required permits to begin construction in a timely manner,” he said.
Based on the environmental baseline data they’ve collected to date, Mayfair is confident it can begin the provincial permitting process within six months and have all the necessary permits in hand to begin mine construction in late 2028.
The specific details on what Fenn-Gib could look like, and on what scale, will come out in a pre-feasibility study scheduled to be released in the fourth quarter of this year.
That study is being led by Mayfair’s COO Drew Anwyl, who worked on the construction of the Detour Lake near Cochrane, Canada’s largest open-pit gold mine, and more recently helped Generation Mining, north of Marathon, navigate through a complex environmental assessment and permitting process for that proposed open-pit mine.
The company is also running a drill program of this high-grade zone this month, which will give them a better understanding of how best to mine the area and how much cash flow will be generated in the first few years of the operation.
