Two Canadian Miners Enter Into Options Agreement for Quebec Gold and Lithium Project
Canadian gold exploration company Vanstar Mining Resources Inc. (TSX.V:VSR) (OTCQX:VMNGF) (FSE:1V8) has entered into an options agreement with Quebec-based Mosaic Minerals Corp. that will allow Mosaic to acquire and explore the Amanda property for gold and lithium potential.
Mosaic will be able to earn into the Amanda property, which is located 65 km northeast of the town of Namaska, Quebec. Mosaic will acquire an initial 50 percent interest in the Amanda project in exchange for $1 million in exploration expenditures and the issuance of four million shares to Vanstar over the next three years.
The $1 million expenditure will be paid as $250,000 each on the first and second anniversary, and the $500,000 balance on or before the third anniversary of the deal. The shares will also be issued as 1 million shares each by the fifth business day after the effectivity of the deal and the first anniversary, while the rest of the 2 million shares will be issued five business days after the second anniversary of the agreement’s effective date.
After that, the two can enter a 50-50 joint venture, or Vanstar may allow Mosaic to acquire an additional 30 percent interest in exchange for filing a National Instrument 43-101 resource report by the end of 2030.
Mosaic will be the operator of the project but the company noted that the transaction is still subject to regulatory approval.
Mosaic for its part identified several significant gold zones in the Amanda property, including the Arianne, Kog, Ti-Beu and Rock'n Hammer showings. Several surface sampling and drilling revealed the presence of gold near surface and at depth. This includes 2.42 grams per ton of gold (g/t Au) at 4 meters, and 5.44 g/t Au at 7m, including 12.11 g/t Au at 3m in Arianne.
The 7,306-hectare Amanda property is located on the Auclair formation with historic gols showings of up to 12.1 g/t Au over 3m, which has reported gold and lithium deposits. Other than the Amanda property, Vanstar has other projects in Quebec such as the Nelligan project, Bousquet-Odyno project, Felix project, Frida project, and Eva project.
Catalyst: 10,000m Drilling Program for Two Projects
According to the company’s latest investor presentation, Vanstar’s partner IAMGOLD is set to conduct a 10,000-meter step out drilling this year. The company said this can expand both companies’ known mineralized zones in Nelligan and Bousquet-Odyno projects.
Limits to the The Nelligan project is not yet defined and opened in all directions, leading to more potential exploration.
For Bosquet-Odyno, Vanstar said the previous drillings result is 21m at 5.23 g/t Au, including 10.5m at 10.14 g/t Au at about 270m vertical depth. This demonstrates both the continuity of mineralization with open pit potential near surface, and that high grade zones continue at depth, which will still to be tested.
Vanstar highlighted that the flagship Nelligan project has been carried to production by JV partner IAMGOLD, and that the company does not need to contribute any funds to advance the project to production.
It also mentioned that Bosquet-Odyno offers considerable exploration upside in an ideal location on the Cadillac Break, a prolific gold bearing structure that has produced 100 million oz of gold since 1990 and is seen to have higher grade potential to be mined at depth.
Why Gold?
Stockhead noted that gold producers are taking a bullish stance on gold heading into 2024 that rising rates will subside that have prevented a breakout of the precious metal.
The report quoted Evolution Mining executive chairman Jake Klein as saying that gold could be the alternative to the US dollar, which can be a safer bet when looking at the developments that will happen in the next 12 to 18 months such as the upcoming US election, the questions about the Chinese economy, and the continuing war in Ukraine.
“I think the gold story is compelling. It’s a store of value and as people think about their portfolio, it is an alternative to the US dollar,” he added.
Stockhead noted that gold prices are falling as the US Treasury yields rose above the 2-percent level, which alerted some traders. The bullion prices might have gone down for the past month, but is still well above the $1,900 per oz level and is expected to see some gains while approaching 2024.
Why this Vanstar? Early Profit and No-Cost Exploration via Options Agreement
Vanstar said the Amanda project consists of 145 claims with confirmation of gold potential based on geological and geophysical data as well as the presence of many gold showings in several locations.
Vanstar President and CEO JC St-Amour said the agreement will allow significant amount of exploration work on the Amanda project at no cost to the company.
"Shareholders will continue to maximize their exposure to the value in the Nelligan project while having exposure to the exploration upside generated by exploration activities at Amanda," St-Amour said.
Ceasars Report noted that Vanstar stands to benefit from the options agreement it entered with partners IAMGOLD and Mosaic, allowing Vanstar to profit from the projects early on, with no development cost on their part while the projects move into exploration and production.
“No minimum size of the resource has been mentioned [for the Amanda project], so it looks like completing a resource calculation, even if there’s only one symbolic ounce of gold or tonne of spodumene would be sufficient for Mosaic to obtain the 80 percent ownership in Amanda,” according to the report.
“Should Mosaic make a large discovery as part of its CA$1M exploration commitments, Vanstar can always elect to continue to advance the project in the aforementioned 50/50 joint venture structure while the 4 million shares in Mosaic should also be rerated,” the report added.
Aside from the Amanda project, Vanstar also holds 25-percent interest in the Nelligan project, with the other 75 percent owned by IAMGOLD through options agreement. The same has been done with Bousquet-Odyno project where Vanstar is also earning from the 75 percent interest it put under options agreement with IAMGOLD.
Ownership and Share Structure
According to their investor presentation, Vanstar has a total of 58.05 million shares issued, with 68.36 million fully diluted stocks and options of around 10.3 million. The company has traded within the 52-week range of CA$0.27 to CA$0.40.
Vanstar has a market capitalization of CA$20.74 million.
