A source with close ties to Barsele Minerals Corp. (BME:TSX.V; BRSLF:OTCQB) says the junior has made another proposal to buy out Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) at the jointly held Barsele Gold Project in the Skellefte gold belt in northern Sweden.
The news comes after the initial Letter of Intent to buy Agnico’s 55% indirect interest (held through Swedish company Gunnarn Mining AB) was terminated in November. Canada’s Bank of Montreal is acting as an advisor.
“Most of the proposal is what (Agnico had) already agreed upon. The only change (is) that there is a slight difference to how the $45 million is paid,” the source says. “But Barsele would own 100% and be the operator.”
Agnico, the project’s current operator, has curbed exploration spending in recent years as it focuses on reducing debt and developing its robust suite of Canadian assets. Agnico spends roughly only what is required by Swedish mineral exploration leases to maintain ownership at Barsele.
The new proposal would also see Agnico become Barsele Minerals’ largest shareholder.
More importantly for Barsele shareholders, the junior would have the necessary control to launch something resembling a 40,000-meter drill program that would almost certainly expand the 2.5 million ounce (2.5 Moz) gold resource.
Barsele President Gary Cope thinks that would change the perception of Barsele in the junior space.
“The exciting part is that we would have to get a rerating based on instead of owning 1.1 million ounces as 45% owners, we'll have 2.5 million ounces. And that's a very conservative 2.5 million,” Cope tells Streetwise Reports. “An Agnico resource has all sorts of mining criteria built into it so when you see an Agnico resource, it's ultra conservative. Agnico Vice-Chairman Sean Boyd calls them ‘mineable inferred.’”
National Designation Gives Project a Boost
The future of the Barsele gold project received a boost late last year when the Swedish Geological Survey designated the land hosting the Barsele Gold Project’s Avan-Central-Skiråsen gold system, as well as the land surrounding the Norra satellite deposit, an area of National Interest under the Swedish Environmental Code.
The National Interest area comprises 685 hectares and gives any deposit inside that perimeter priority in terms of permitting and protects that land against encroachment from non-mining interests.
“Sweden’s federal government has recognized its size and potential to generate significant returns for the government in taxation,” Cope says, adding that Sweden’s corporate tax rate is a 22% flat tax.
He adds: “It will benefit us on the permitting side; it takes now priority, mining will take priority over everything. And that's good because in Sweden there are areas of the country that are difficult to get a permit. … We look forward to future advances in mineral resource definition and permitting.”
Boulder Grading 90 g/t Gold 'a Pretty Good Sign'
The Barsele project sits in Skellefte gold belt, which strikes east across northern Sweden and is known for its volcanogenic massive sulphide gold deposits. It was once home to the Boliden mine — the European Union’s richest gold mine — situated 60 km northeast of the Barsele project.
“When you find boulders sticking out of the ground at 90 grams gold, that's a pretty good sign.”
—Barsele President Gary Cope
Boliden is now a town (and a mining company) but the first gold mine there was mined until 1967 and produced more than 4 million ounces of gold at average grades of 15 grams per tonne gold (15 g/t gold), along with copper, zinc, and silver.
Barsele Minerals recently announced that a boulder grading 90.8 g/t gold was found about 150 meters up-ice and northwest of previous boulder discoveries made in 2016, southeast and along trend of the Avan-Central-Skiråsen zones.
Cope says exploration geologists found another boulder grading 21 g/t gold in the same area, but it was not included in the press release.
“When you find boulders sticking out of the ground at 90 grams gold, that's a pretty good sign,” Cope says.
Barsele 'Could Be Massive'
So why wasn’t that area drilled after the boulder trail was found in 2016?
“The answer to that is Agnico’s limited [exploration] budget, for starters. There's probably four or five of these different areas that are off trend that need drilling,” Cope tells Streetwise.
Cope promises that if Barsele manages to secure the 55% of the Barsele project it doesn’t own, these areas and other will be drilled extensively, with the aim of putting a target on its back for a larger company.
“The jurisdiction is as good as it gets. The metallurgy is as good as it gets — as high as 96% (gold recoveries) in Agnico’s testing. All the infrastructure is there. And (Barsele) could be massive. We won't be around to see how massive it gets. We're not miners. But another miner could come along when we get 100% and realize that there's something significant they can get their hands on,” Cope explains. “Let's just hope we get into a real hot gold market, which we haven't seen yet. If China comes out with a new gold-backed digital currency, look out for gold.”
Barsele counts U.S. Global Investors, the Contrarian Group, and Donald Smith and Co. Value Fund among its major shareholders. Fresnillo Plc (FRES:LSE) owns 4%, while management owns about 25%.
Barsele Minerals trades in a 52-week range of $0.82 and $0.35.
Disclosures
1) Brian Sylvester compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None. His company has a financial relationship with the following companies referred to in this article: None.
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