Globex Mining Signs Another High Value Option Deal Within An Established Mining District of Quebec
Over the past years, the management team of Globex Mining Enterprises Inc. (CA: GMX – $1.01 & US: GLBXF – $0.80 & GER: G1MN – €0.71) has assembled a vast portfolio of mineral exploration properties. The strategy is focused towards identifying attractive properties that can be secured at bargain prices and optioned or sold at significantly higher valuations. This week, Globex reported another lucrative property transaction.
The Company arranged an option deal to vend 100% ownership of three Quebec properties to junior explorer Orford Mining Corporation [ORM]. The Eagle Northwest, Gagne and Valrennes claim packages were consolidated to form the Joutel Eagle property involved in this deal. Spanning a combined property area of 50 square kilometers, the holdings are located in the Joutel Township.
The terms of the transaction involve a series of cash/share payments over a five-year period, along with phased work commitments funded by Orford. The total value of this transaction is $1,655,000 (half in cash and half in Orford shares) and payment of $425,000 is due within the first year, of which $225,000 was paid upon signing of the option agreement. Orford has also pledged to fund at least $2,775,000 in exploration work at the property. At least $200,000 in exploration activity must be completed at the property in the first year. A further commitment to fund $325,000 in the 2nd year of the agreement was also agreed.
Globex will retain a 3.5% Gross Metals Royalty (GMR) against all of the claims involved in this transaction. Orford will have the option to repurchase 1.5% for a cash payment of $2 million.
Orford Expans Interest Within Casa Berardi Structural Trend
Orford is perhaps the ideal option partner for the Joutel Eagle Property. David Christie, serving as the President and CEO of Orford, started his career working in the area. Orford controls the McClure East and the Joutel South properties located in close proximity within the district. Orford also controls the expansive Joutel Omega further to the south. These properties amount to a combined area of 21 square kilometers. The Joutel Eagle property is therefore an excellent strategic addition to build greater clout for Orford in this established mining district.
The Casa Berardi structure is associated with many high-grade gold deposits and several significant mining operations. These include the Casa Berardi gold mine and the polymetallic Estrade mine. The historic Eagle & Telbel Gold mine, located just to the southeast of Joutel Eagle, produced more than 1.1 million ounces of gold.
A mineralized structure has been interpreted running northwest through Joutel Eagle for more than 11 kilometers of strike length. Within this structure, the South Gold Zone is the most advanced mineralized area where historic drilling encountered gold values along a 700m strike length and down to 500m below surface. Numerous other gold and base metals showings have been reported throughout the property area.
Integrated Exploration Approach Planned for Consolidated Property Holdings
Orford has indicated that its first priority will be a review of the historical work programs and compiling exploration data reported by previous operators of the property area. Joutel Eagle was assembled from several smaller holdings that were previously explored by various companies, often acting independently. There are many discovery zones and established gold and base metals showings on these claims. Historical drill core intervals up to 13.5 g/t gold are reported. High-grade samples up to 26.2 g/t gold were extracted during trenching work.
Despite the extensive previous work history, the property is considered underexplored. Historical exploration activity may have focused on promising sections while neglecting the wider structural context for a system that extended beyond the border of a smaller property area. These established gold-copper zones represent advanced exploration targets. The potential to confirm and follow up on wider structural trends is also attractive.
No extensive exploration activity was completed after 1999. Modern exploration technology may provide an advantage in directing future exploration. Orford will undertake geophysical surveys to enable better interpretation of structural features. With an updated geological model in hand, Orford will then develop an integrated exploration strategy for the consolidated property area. Thereafter, focused modern programs may be targeted to more effectively advance exploration. Orford plans to commence drilling by the winter of next year.
Another very active year is now drawing to a close for Globex. The flow of positive property transactions continues to make headlines. The option deal for the Joutel Eagle project further enhances the value proposition for shareholders. During the full term of this deal Globex will receive significant payments of cash and Orford shares. This generates a direct capital gain and contributes further strength to the working capital position for the Company. However, the work commitment funded by Orford may also build further value if an attractive resource is defined within the project area. The GMR held on the property by Globex will increase in value if work programs are successfully concluded by Orford.
Meanwhile, the increase in exploration activity by Orford may also attract additional speculative interest towards other projects in this area. This is interesting, as Globex controls two other claim packages in the Joutel Mining Camp: The Poirier Mine project and the Joutel Copper Mine project. Each of these includes past-producing mines with remnant historical resources and the prospect for additional resource discovery. As the exploration activity advances at Joutel Eagle, Globex may find a partner interested in these other projects.
Another benefit to the steady deal flow in recent quarters is that Globex is accumulating minority ownership positions in many of its partner companies. Similar to the arrangement with Orford, Globex is often paid in shares for at least a portion of the transaction value. This share ownership position may increase in value as a result of the successful work programs arranged in these deals. In effect the portfolio of shares held by Globex adds another dimension of value creation for shareholders. The growth engine for Globex is revving up and the future prospects remain very attractive. Smallcaps Recommendation: BUY.
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