The Valentine Gold Project is located in Newfoundland, Canada, 63 km from the town of Millertown. Gold deposits at the property are hosted by the Valentine Lake Intrusive Complex, situated in the Exploits Subzone of the Dunnage Tectonostratigraphic Zone of the Newfoundland Appalachian System. The area was first explored for base metals in the 1960s by ASARCO and was first recognized as a gold prospect in 1983. Through a number of acquisitions and spinoffs, the Valentine Project came under the ownership of Marathon Gold, which was itself acquired by Calibre Mining in 2024.
The Valentine Gold Project consists of five deposits, Leprechaun, Sprite, Berry, Marathon, and Victory, of which Reserves have been declared at Marathon, Leprechaun, and Berry. Extraction at Valentine is currently planned as conventional shovel and truck operations. The Reserve pits planned are relatively small, relegated to mining high grade ore due to high strip ratio. Pit optimization were completed at a gold price of US$1,600/oz gold price with pits selected at US$1,200/oz (Marathon), US$950/oz (Leprechaun), and US$1,350/oz (Berry). These pits correspond to the inflection point, beyond which additional material is economical and increases the size of the Reserve but does not increase NPV.
The project has a projected mine life of 15 years, producing 51.6 Mt ore at a strip ratio of 10.6:1. The Reserve grades 1.62 g/t, thus the project averages an annual throughput of 122 koz at 2.5 Mtpa or 196 koz at 4.0 Mtpa. Valentine is blessed with high grade at the start of project life. Phase 1 feeds in excess of 2.5 g/t, processed at 2.5 Mtpa to produce an annual average of 200 koz. Production ramps up in 2029 to 4.0 Mtpa. With 8.6 Mt stockpiled at a grade of 0.53 g/t, 35.7 Mt direct feed contains 1.9 Moz for a grade of 1.68 g/t. This provides an annual average in excess of 200 koz until mine production begins to wind down in 2036 and remaining ounces are recovered from the low grade stockpile, until production concludes in 2039. Per the Technical Report, the project has a Pre-tax NPV5% of C$1,000 M and Pre-tax NPV10% of C$558 M.
| Tonnes (Mt) | Au (g/t) | Au (Moz) | |
|---|---|---|---|
| Reserve | 51.6 | 1.6 | 2.7 |
| M+I | 13.0 | 3.0 | 1.3 |
| OP | 11.3 | 2.9 | 1.1 |
| UG | 1.7 | 3.5 | 0.2 |
| Inferred | 20.7 | 1.7 | 1.1 |
| OP | 17.5 | 1.3 | 0.8 |
| UG | 3.2 | 3.4 | 0.3 |
The excitement surrounding Valentine is palpable, as it leads the charge in the Atlantic Canada gold rush. Let the emotions subside and some risks rise to the surface. While head grade is good for open pit mining, strip ratio is high, restricting ultimate pit depth. Underground potential exists, but what is considered high grade for an open pit becomes fairly marginal underground. Of the five deposits at Valentine, two are too small to be feasible. The three Reserve pits are mined simultaneously in the Life of Mine plan. Based on the MRMR published, some open pit expansion potential exists for Marathon, with approximately 10 Mt Resource exclusive of Reserve; Leprechaun and Barry each contain less than 5 Mt and expansion is unlikely. Momentum estimates 200 to 300 koz may be extracted underground, although this is likely too small to be a standalone operation, existing to boost pit grades only.
The greatest risk to Valentine is its aggressive production schedule. Mining Momentum is of the opinion that annual throughputs are beyond the optimal point for the size of the deposit, evidenced by the lack of a smooth, steady-state production profile. The problem here is philosophical. The perceived issue is reducing grade and the response is to increase mining rate to compensate. Does this kneejerk reaction make sense? The first three years of 200 koz production has already achieved payback. The mine could continue to operate at a comfortable, steady-state rate rather than spend additional capital to expedite depletion. This enables a sequential approach to scheduling the three pits and incorporates greater robustness into the plan, minimizing risks of delays and cost overruns. Fundamentally Valentine is a 120 koz per year project, blessed with the good fortune of starting mine life at 200 koz during the payback period. Unfortunately, ounce production from near surface, high grade ore has been treated as the baseline, rather than the bonus.
At the end of the day, small pits are expensive to run and the same levels of productivity as large pits cannot be expected. The benefits of improved grade control and ore sorting are also surrendered. Mining Momentum believes Valentine will either underperform on plan and/or face delays and overruns, all of which are expensive. High strip ratio also makes the pits particularly sensitive to slope angle and subsequent cost increase if poor geotechnical conditions are encountered. Additionally, just over 7% has been dedicated to contingency, a far cry from 10% to 15% recommended by the AusIMM and 12% to 18% recommended by the SME. Despite the risks identified, Mining Momentum likes Valentine for what it is, high grade, near surface deposits, with a quick payback, further sweetened by bullish gold prices. Just treat them as nice, small pits, rather than pretending to be a larger deposit that sustains an annual production of 200 koz.
The information presented above does not constitute investment advice. This is a summary from the NI 43-101 Technical Report effective November 30, 2022 (INSERT), with commentary from the author. Statements above do not represent the views of Calibre Mining. If any discrepancies arise, the information contained within the NI 43-101 are official and final. For latest depletion data, please refer to the AIF update.