Calibre strikes high-grade gold near Valentine mine build as production nears

Calibre Mining (TSX: CXB; US-OTC: CXBMF) has found gold a kilometre from its Valentine mine in Newfoundland, just months before production is expected to start. The grades are 40% higher than the existing reserves.

The new intercepts in the Frank Zone are outside documented resources. The discovery comes from the company's 100,000 metres of drilling launched earlier this year, and shows the gold district's untapped potential, president and CEO Darren Hall said Monday in a release. It "strengthens our confidence that Valentine represents a new gold district," Hall said.

“Since our initial due diligence in 2024, the team has been extremely excited by the highly prospective district potential of the Valentine gold mine property, which has a similar geologic setting to the prolific Val-d’Or and Timmins camps in the Abitibi gold belt,” Hall said.

The Valentine project, 85% complete as of this month, remains on track to pour its first gold in the second quarter next year. With construction nearing completion and production expected to average 200,000 oz. per year over the first 12 years, the recent exploration success adds momentum to Calibre’s push to establish Valentine as a cornerstone asset.

Visible gold

Highlight hole FZ-24-048 cut 172.8 metres at 2.43 grams gold per tonne from 271 metres depth. Hole FZ-24-046 returned 95.4 metres at 2.12 grams gold from 341 metres depth and hole FZ-24-040 cut 78.3 metres grading 2.26 grams gold from 361 metres deep.

The drilling targets the underexplored Valentine Lake Shear Zone, which stretches 32 km across Calibre’s 250 sq. km property. A 2022 feasibility study for the Valentine project defined proven and probable reserves of 2.7 million oz. (51.6 million tonnes at 1.62 grams gold per tonne) and 3.9 million measured and indicated oz. (64.6 million tonnes at 1.90 grams gold), inclusive of the reserves. There are also 1.1 million inferred oz. (20.7 million tonnes at 1.65 grams gold). 

The drilling found a 1,000-metre corridor of continuous mineralization. Several intercepts contained visible gold.

Calibre shares opened in the red on Monday at $2.33 following Friday’s $2.35 close, but by early afternoon trading, bids were pushing prices 1.3% or 3¢ higher at $2.38. Shares have ranged between $1.18-$2.90 over the past 12 months and the company has a market capitalization of $1.9 billion.

Building scale

The company’s growth prospects have some analysts convinced. BMO’s mining analyst Brian Quast maintains an outperform rating on the stock due to the company’s long-term growth plans. He gives a target price of $4.40 per share.

Calibre’s senior vice-president of strategy and growth, Tom Gallo, explained that the 1 km stretch of gold mineralization the new drilling outlined is southwest of the Leprechaun deposit. It extends the known mineralized area to 1,500 metres.

He noted that some of the richest intercepts also expanded the gold zone's width by 250-300 metres. This opens new exploration opportunities beyond the main Valentine Lake Shear Zone.

Cautious outlook

The company says it will define new targets while ongoing drilling northeast of the Marathon deposit is uncovering “promising opportunities and identifying several new, high priority targets for exploration,” Hall said.

Calibre last month cut its full-year production forecast by over 18% to 235,000 oz. gold and raised Valentine’s capital cost estimate by $91 million to $744 million, citing underperformance in Nicaragua and revised infrastructure material needs.

Calibre also amended its gold prepayment agreement with Asahi Refining, securing an extra US$55 million for 20,000 oz. of gold, to be delivered at 2,500 oz. per month from May to December next year. This builds on a US$60 million agreement from March for 27,600 oz. with deliveries on the stream coming from other operations since May.