Globex Assembles Important Property Packages Adjacent to Francoeur–Arntfield Gold Mines Project
As a project generator, Globex Mining Enterprises Inc. (CA: GMX – $0.31 & US: GLBXF – $0.24 & GER: G1MN – €0.20) has been able to build shareholder value through a variety of property transactions in the past where the Company acquired strategic property holdings and subsequently arranged Joint-Venture (JV) partnerships, or the outright sale of a project to earn a capital gain. Management has often chosen property holdings within the province of Quebec, where the Company has ‘home field advantage’ based on its long term presence in this region that includes one of the most prolific mineral resource belts in all of Canada.
It should come as no surprise then that the Company reported this week that yet another promising transaction has been arranged with the potential to add value to its core portfolio of holdings. This deal comes with a twist, as the transaction is basically a property swap with another explorer that is active in the productive Abitibi Greenstone gold belt. And while both companies involved in this deal emerge stronger as a result of this consolidation of holdings, it can be argued that Globex is the beneficiary of the transaction.
Newly Acquired Property Holdings Include Critical Extension Areas to Ongoing Discoveries
Globex announced that it has agreed to transfer ownership of a total of 19 exploration claims located in Beauchastel Township, Quebec, to Monarques Gold Corporation. This includes a block of 17 contiguous property holdings to east of the Wasamac Mine property held by Monarques Gold, in addition to another claim on the western boundary, and one other property claim located in Courville Township. These claims were not considered core holdings for Globex, but they were attractive to Monarques Gold to consolidate property ownership and increase the prospective exploration area for its ambitions to expand the Wasamac resources.
In exchange, Globex will gain ownership of a large group comprising a total of 65 property claims that build greater ownership for several core holdings currently under exploration activity in the district. These include a group of 20 claims to the northwest of the exciting Francoeur-Arntfield project, where the Company has an aggressive exploration program underway.
One of the deposit areas at Francoeur-Arntfield, the West Gold Zone, has an established NI 43-101 compliant gold Indicated resource of 320,000 tons grading 6.47 g/t gold, plus another 18,000 tons with an average grade of 7.17 g/t gold inferred. The newly acquired property holdings are situated directly on strike and down-dip from this deposit area and therefore may build greater value for the project if further exploration work outlines additional gold zones.
Another package of 8 claims is located adjacent to the 450 Zone project, where surface channel sampling has encountered high grade gold. A program of line cutting has commenced on this property to prepare for geophysical surveys that will assist in defining the trend and extent of the 450 Gold Zone.
Recall that in October, Globex reported the discovery of a gold structure called the 450 Zone, occurring near the southern edge of the property. It was interpreted that additional parallel structures would be encountered as more work was completed, and perhaps extending beyond the property controlled by the Company. The successful transaction to extend the land holdings of this property so quickly after this initial discovery is an indication of how important this zone and the surrounding area may become.
A third group of 7 claims included in this transaction adds property leverage well beyond the southern limits of the Francoeur-Arntfield property. Historical work completed on the Western Buff #1 and #2 zones in 1971 outlined small deposits with attractive grades of copper. Globex plans to complete follow up work to see if the tonnage of these early stage deposits can be expanded into a more exciting development targets. Additional polymetallic leverage is also possible elsewhere on this property, as lead, zinc and silver have also been encountered in veins by a previous operator.
One last package of 30 claims extends across roughly 4km of strike length of the Larder Lake – Cadillac Break, a major structural corridor of the Abitibi Greenstone belt that has been associated with many large gold discoveries in the district. This area within the claim group has been largely unexplored in the past due to the presence of overlying sedimentary rocks adding extra difficulty to defining gold targets. However, the technology to achieve a ‘blind discovery’ hidden below rock layers, using geophysical interpretation to outline structural targets, has advanced to make this prospect much more attractive as a legitimate gold exploration area. Further work is warranted here as this area could become a high profile exploration prospect, or an attractive asset to vend into a JV with another company.
Assembling Key Property Holdings in a Highly Competitive District
Securing expansive property holdings amidst high profile exploration districts is often challenging due to the fact that active exploration has been underway in this area for more than 100 years, with many different companies competing to acquire ownership of the best prospects. Often only smaller packages of claims may be assembled by any one company, covering a fraction of the potential gold deposit areas along a structural corridor. And as exploration progresses, some discovery zones may be interpreted to extend well beyond the limits of the property claims. It then becomes a strategic imperative to negotiate acquisitions to extend the most attractive discovery areas, without also paying a premium fee to conclude a deal.
The fortunate compromise that Globex has been able to arrange with Monarques Gold is therefore a win-win transaction for both companies to divest of isolated holdings that do not fit well with core projects, to acquire new claims and assemble greater leverage for the projects which are indeed of great value to each company.
Globex management has delivered a strategic victory by locking up additional holdings immediately on strike from gold zones under active exploration. It is very common occurrence that an exploration program is halted because the most attractive discovery zone is found to extend beyond the property boundary. Assembling larger holdings is often impossible, or very expensive to accomplish after a gold discovery has been reported.
The effect of this arrangement is that Globex has secured critical holdings that could enable geologists to expand on emerging discoveries underway at the Francoeur-Arntfield Gold Mines and the 450 Gold Zone project, and advance these prospects further along the value curve.
The other claims that have been acquired as part of this deal will also have the potential to yield discovery leverage in the future or add shareholder value in subsequent transactions.
For this proven successful explorer, gaining additional property holdings in one of the most attractive districts in Canada is an accomplishment. To do so without incurring a significant transaction cost, through the exchange of non-core holdings, makes this deal even more appealing.
Shareholders may not have to wait long for this transaction to pay off, as the Francoeur-Arntfield project has already demonstrated a very high ratio of drill holes that encountered high grade gold and this new extension of the property area will be tested shortly. Recommendation: BUY.
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