Borealis Mining’s (TSX-V: BOGO) acquisition of Gold Bull Resources (TSX-V: GBRC; US-OTC: GBRCF) and its Sandman project in Nevada show how the company is advancing towards mid-tier gold production.
The Borealis mine’s adsorption, desorption and refining (ADR) plant is producing doré bars from leached material. Its infrastructure makes the Gold Bull acquisition in December particularly strategic as it has capacity to process the oxide ore from Sandman, Borealis president and CEO Kelly Malcolm said in an interview.
“The acquisition of Gold Bull is significant because it’s exactly the type of target we have in mind for our M&A strategy,” said Malcolm, a geologist by training who was involved in a discovery at Detour Lake in Ontario. “There are many targets like Gold Bull’s Sandman project with sub-1.5-million-ounce numbers, which is typically the starting point for the majors to start to get excited.”
Malcolm said the “spectacular” preliminary economic assessment (PEA) for Gold Bull is one of the best projects he’s seen on an internal rate-of-return (IRR) basis while the net present value (NPV) is strong relative to the purchase price.
“If we are able to put a few of these acquisitions together,” he said, “we can build quite an interesting company.”
Malcolm, who won a 2022 industry award as vice-president of Amex Exploration (TSXV: AMX; US-OTC: AMXEF), has attracted some mining legends to the company’s board of directors, management team and investors. Bob Buchan, founder of Kinross Gold (TSX: K, NYSE: KGC), is a director; Rob McEwen of Goldcorp fame has a double-digit stake in the company and Eric Sprott is another significant investor.
The 2023 PEA for Sandman reveals a post-tax IRR of 81% and NPV of $121 million (C$173.1 million) at a 6% discount rate based on a gold price of US$1,800 per ounce. It estimated an initial capex of US$31.5 million, post-tax payback of 1.3 years, annual production of 37,900 oz. of gold, and a nine-year mine life for a heap leach operation on site with loaded carbon shipped to an external ADR facility.
“Sandman made sense at $1,800 per oz.,” Malcolm said. “But it would have been challenging for Gold Bull to raise the pre-production capital based on their market capitalization. That’s why they agreed to join forces with us. They were looking for alternatives where one plus one could equal four, five or six.
“Today’s gold prices should be materially affecting assets like Sandman. Unfortunately, they’re not materially affecting equity values for the most part, so there’s a big discrepancy between value in the ground and value in the market.”
In January 2021, Gold Bull released a NI 43-101 mineral resource estimate for Sandman reporting an indicated resource of 18.6 million tonnes grading 0.73 gram gold per tonne for 433,000 oz. and an inferred resource of 3.2 million tonnes grading 0.58 gram gold for an additional 60,800 ounces.
Borealis said it’s acquiring all of the outstanding shares of Gold Bull pursuant to a plan of arrangement whereby each common share of Gold Bull was exchanged for 0.93 of a Borealis share, translating into an acquisition price of “around $14 per oz.,” Malcolm said.
The all-share acquisition amounts to an C$8.9-million purchase price based on the number and price of Gold Bull shares and gives Gold Bull shareholders a 14% stake in Borealis.
“Sandman was held by Newmont (TSX: NGT; NYSE: NEM) for a number of years,” Malcolm said. “They did a lot of drilling and baseline work, including archeological and biological studies as part of a property-wide plan of operations which is required in Nevada ahead of drilling to ensure there are no surprises.”
Gold Bull acquired the property in 2020 for US$4 million. The project has four near surface deposits, all of which outcrop at surface. Of the 494,000-oz. gold resource, roughly two-thirds is oxide mineralization, which would be leached on site and trucked to the Borealis ADR facility.
“At depth, you start getting into more sulphide mineralization,” Malcolm said. “But interestingly, Newmont did a fair bit of metallurgical work showing the sulphide mineralization is non-refractory. If that’s the case, the sulphides could potentially be amenable to heap leaching as well. That’s something we will work on verifying as soon as possible.”
Transportation costs of loaded carbon, he added, are essentially nil on a per ounce basis.
“So, that’s the plan – a standalone mining operation with limited infrastructure to keep costs down as low as possible, then trucking the loaded carbon to the Borealis operation.”
The company plans to advance towards a feasibility study for the Sandman project and start production as soon as possible. Malcolm predicts that once the detailed engineering is done, it should take 18 to 24 months to obtain Sandman’s mining permits. The CEO described local town Winnemucca as a mining-focused community where approvals shouldn’t be onerous.
The Gold Bull portfolio also includes the early-stage Big Balds project 120 km south of Elko and 10 km west of Kinross Gold’s Bald Mountain mine. Geophysics work has identified three priority targets at Big Balds that haven’t been drilled.
“It’s a big prize if we are successful there but it was certainly the lesser of the two projects that attracted us to Gold Bull,” Malcolm said.
The company also has plans to ramp up operations at Borealis. It was discovered in 1978 and produced 500,000 oz. of gold grading 2.02 grams from eight near-surface open-pit oxide deposits beginning in the 1980s.
There was also minor production from 2011 to 2013 by Toronto-based Gryphon Gold and from 2021 to 2022 under the ownership of Waterton Global Resource Management for another 125,000 ounces.
Malcolm acquired Borealis in April 2023, making the company one of the few juniors with under $100 million market capitalization to own a permitted mine producing revenue. In January, the company announced production of about 550 oz. of gold from residual leaching. Now it plans to crush, stack and leach a 330,000-tonne stockpile grading roughly half a gram gold.
“This should dramatically increase our gold yield this year,” he said. “We are also working on plans to restart mining operations later this year, but I’m unable to provide guidance on that at this point.”
The Borealis project has a historic resource reported by Gryphon Gold in 2011 of 1.83 million oz. grading 1.28 grams gold in the measured and indicated category and over 195,000 oz. grading 0.34 gram gold in the inferred category. The company plans to update the resource but not before a significant amount of confirmatory drilling, which will take some time to complete, Malcolm noted.
In November, Borealis announced positive assay results from a 3,500-metre drill program at its Graben historical gold deposit that demonstrated large widths of highly consistent gold mineralization within an extremely silicified and sulphidized body.
One assay result showed 2.25 grams gold over 99.1 metres, including 4.06 grams over 21.3 metres. Another assay returned 2.11 grams over 36.6 metres, including 8.24 grams over 4.6 metres and 2.06 grams over 27.4 metres further downhole. More drilling to test new targets across the project is planned for this summer.
Aside from the expansion potential of the known historical resources, Borealis touts the potential for new gold discoveries across the largely underexplored 54.4-sq.-km land package. Aside from its ADR facility, existing Borealis infrastructure includes several open pits, a mobile equipment fleet, 20 hectares of permitted heap leach pads and waste rock facilities.
With this acquisition complete, said Malcolm, “we are actively looking for additional opportunities in Nevada and possibly in neighbouring states that are as accretive as we think Gold Bull and Sandman are to Borealis.”
The preceding joint venture article is PROMOTED CONTENT sponsored by Borealis Mining and produced in co-operation with The Northern Miner. Visit: www.borealismining.com for more information.
March 11, 2025
March 11, 2025
March 10, 2025
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