Franco-Nevada Corporation (TSX: FNV) has invested $6.75 million in an Ontario gold mine owned by the Canadian precious metals company Red Pine Exploration Inc. (TSX-V: RPX) (OTCQB: RDEXF) and will receive a 1.5 per cent net smelter return royalty in exchange.
Red Pine announced the investment on Tuesday and will be using the funds for continued exploration and development of the Michipicoten Greenstone Belt’s Wawa Gold Project, the company’s flagship asset. The project hosts two mineral deposits: Minto Mine South and Surluga, the largest deposit.
According to a technical report in 2019, the two deposits are estimated to contain 700,000 ounces of gold at an average grade exceeding 5 g/t Au. Highlights from last year’s drill program at Surluga included 8.00 g/t Au over 11.38 metres, with three high-grade intervals of 9.33 g/t Au over 0.79 metres, 57.99 g/t Au over 0.92 metres and 15.92 g/t Au over 0.86 metres.
The property where the project is situated spans 7,030 hectares, has 301 mining claims and “numerous” historic/past-producing gold mines. It has produced over 120,000 ounces of gold and has had over 87,000 metres drilled historically.
“With a comprehensive examination of the geology, geophysics, geochemistry, alteration mineralogy and structural geology, Red Pine has uncovered new targets,” says the company.
Approximately 95 per cent of the resources at the two deposits are situated between the surface and a depth of 350 metres. The company says the size of the mineralized system suggests there may be potential for hybrid pit and underground development.
“On the back of this non-dilutive financing, and with over $10 million in cash on hand, we are well positioned to deliver on our exploration goals, including ongoing infill and expansion drilling, an updated mineral resource estimate defining the open pit exploration target, and a potential preliminary economic assessment,” said Red Pine’s President and CEO Quentin Yarie.
The Royal Bank of Canada (TSX: RY) is one of the key institutional investors in the company’s 100 per cent owned Wawa project.
“We believe that the Michipicoten Greenstone Belt has great geological potential and are pleased to be partnering with Red Pine with the objective of advancing a new mine to production in Ontario,” said Franco-Nevada’s CEO Paul Brink.
Other gold producers operating in the project’s surrounding area include Wesdome Gold Mines Ltd. (TSX: WDO), Alamos Gold Inc. (TSX: AGI) (NYSE: AGI) and Angus Gold (TSX-V: GUS). Alamos acquired a 19.75 per cent stake in Red Pine at the end of 2019.
As of May 31st, Red Pine had 167.8 million outstanding basic shares. The company’s stock rose by 3.45 per cent Tuesday to $0.15 on the TSX Venture Exchange.
Franco-Nevada shares rose by 1.7 per cent to $195.30 on the Toronto Stock Exchange.