Ticker: BTR CN
Cash: C$15m
Market cap: C$46m
Price: C$0.345

Our view
We met with the management of Bonterra at PDAC – in short, we see potential for a >1Moz mineable high-grade resource on strike-continuous deep rooted quartz veins of their Gladiator project in Quebec. This ‘off the end of the Abitibi’ Urban-Barry greenstone belt has now been put on the map by Osisko’s consolidation of the belt in 2015 and definition of 1.6Moz @ 8.2g/t Au at Windfall Lake. With an existing 273koz @ 9.4g/t Au open in every direction, deep roots, and continuous ~2.5m thick ore zones in the same terrane as Windfall, the geological pedigree is first class.

The opportunity comes from the history – only 49 holes were drilled in 2010/11 for the maiden resource, but market conditions stopped exploration thereafter. When Osisko earned in in 2015 this funded ground IP and mag, and drilling increased the resource envelope tremendously, but was too wide spaced to lift the resource. A 1Q17 C$15m fundraise now enables 40,000m of drilling (only 16,000m in maiden resource) with four rigs turning now to (i) infill around 2015/16 wides paced drilling including hits of 8.5m @ 15.7g/t in the ‘deep east’ outside the current envelope, (ii) drill new zones in the Rivage Gap area following up holes such as 3m @ 73.8g/t, and (iii) blue sky from along-strike drilling of till targets on the Coliseum licence on the same regional liniment.

A combination of a post-money market cap of only US$46m, a fully-funded 2017 drill campaign, Osisko voting  with their cheque-book as a 5% holder and the work to date leaves Boneterra arguably showing better upside than many higher valued, earlier stage peers.

Company summary
Bonterra’s Gladiator project lies in the Abitibi greenstone belt, with giants like Detour Lake (16Moz), Timmins (71Moz), Kirkland Lake (24Moz), and Val d’Or (20Moz). The Urban-Barry greenstone belt was seen as an analogy of the Timmin’s belt (>70Moz historic production over ~60km strike), leading Osisko to consolidate holdings in 2015 including taking 19.9% of Bonterra at the time.

Regional geology: Bonterra holds two licences, Arena and Coliseum, covering ~12km strike length along a major auriferous structural corridor at the far eastern end of the belt and only 8km from Osisko’s Windfall Lake project. The SSW-NNE structural corridor is mineralised as evidenced by multiple gold showings, and deeply rooted, as seen by carbonatites (deeply sourced igneous bodies) in the sequence. The belt comprises alternating mafic volcanics and greywackes, but what is particularly interesting is that at Gladiator a flexure in the regional lineament, and associated dilatant jog, is coincident with gabbro and komatiite (iron rich) units and porphyry intrusives (rigid body), providing all the critical ingredients for a typical orogenic gold deposit.

Deposit scale geology: At Windfall gold is associated with porphyry dykes, and is hosted by ~300m strike length veins sets with significant vertical continuity, typically showing 10g/t over 5m thickness. At Gladiator, the mineralisation style is the same. Specifically, the gladiator host sequence comprises basalts and gabbros with late sub-conformable felsic porphyry dykes, with gold mineralisation forming at the sheared contacts of the rigid-bodied dykes. A syenite dyke is the key structural host, and has been identified over 1000m strike and >700m depth – this is again a signal of a deeply rooted orogenic system up which both syenite dykes and gold bearing fluids can travel.

Resource and evolution: Bonterra started work channel sampling in 2010, followed by ground mag in 2011 and 49 holes over the two years. From this, 15,642m fed into the maiden (current) resource of 273koz @ 9.4g/t in 2012. Interestingly Windfall Lake itself stood at 699koz @ 7.9g/t M&I+Inf at that time, but that resource was based on 358 holes drilled over 7 years. Bonterra themselves slowed down in reflection of market conditions, halting all drilling in 2012 – 2014 with little to no exploration at all. Scout drilling resumed in 2015 after a placement from Osisko, and the 2015-2016 programme dramatically increased the mineralisation limits from a ~150x200m core area to 1,200x600m. However, despite deep hits of 4m @ 12g/t and 5.5m @ 70g/t, and strike extensions showing 3.8m @ 16.8g/t and 3m @ 8.7g/t, the spacing was too wide to define a resource. Now fully funded with a C$15m equity raise in 1Q17, the simple upside at Gladiator this year comes from using these funds to infill previously drilled wide-spaced holes, as shown below.

Figure 1: Long-section through Gladiator showing (a) 2012 resource and (b) 2015/16 envelope

Mineralisation style and continuity
The majority of the mineralisation is hosted on the fringe of a porphyry intrusive that has come up the same shear zone (ie plumbing system) as the gold bearing fluids. What this means is that each ‘vein’ has good lateral and excellent depth continuity as it tracks the porphyry boundary to depth, very similar to Roxgold in Burkina Faso. Very simply it means that disparate drill hits can more than likely be tied together in a 43-101 resource, or more importantly in an underground stope. This is a key differentiator when comparing this to ‘stacked lodes’ where horizontal orientation makes mining difficult, and individual lodes cannot be tied to each other in a block model nor mined. This is exemplified by the 3D outline of the ore zones (in red) at the 200m and 300m level, shown in plan below. It can be seen that the orientation and nature of each ore zone is broadly similar, reflecting the continuity (and thus mineability) discussed above.

Figure 2: Plant sections through ore body at varying depths
Osisko and camp consolidation: Osisko previously moved on the camp with a C$20m investment by Osisko Royalties into Oban Mining (renamed Osisko Mining) concurrent with acquisitions by Oban of Eagle Hill (Windfall owner), Ryan Gold and Corona Gold. This occurred at the same time as a placement by Oban into Bonterra for 19.9% ownership in 2015, which has now diluted down to ~5%. The advantage of having Osisko in the belt is two-fold, being that infrastructure will now be developed to within 8km of Gladiator, and also from a consolidation / M&A standpoint.

Why we like Bonterra
1. Existing high grade resource in prolific belt
2. Existing 2015/16 drilling already ‘proved’ out an expanded ore envelope
3. Fully funded with C$15m for 40,000m 2018 drill season, first full season since 2011
4.Vertically continuous ore lodes = mineable, and with depth extensions
5. Exciting new belt, blue sky along strike and Osisko on the register
Brock Salier
Partner, Sprott Capital Partners
T:  +44.207.659.0841
M: +44.7400.666.913

Read more at 

Disclaimer/Disclosure/Conflicts of InterestVancouver, BC – March 2, 2017 – BonTerra Resources Inc. (TSX-V: BTR, US: BONXF, FSE: 9BR1) (the “Company” or “BonTerra”) is pleased to announce that it has closed its previously announced bought deal private placement for gross proceeds of $13,974,800 (the “Offering”). Sprott Capital Partners, a division of Sprott Private Wealth LP acted as lead underwriter on behalf of a syndicate of underwriters which included INFOR Financial Inc. (collectively, the “Underwriters”). Eventus Capital Corp. participated as a selling group member in the Offering... Eric Sprott, through 2176423 Ontario Ltd., a corporation which is beneficially owned by him, acquired 13,900,000 Common Shares pursuant to the Offering (approximately 10.0% of the issued and outstanding Common Shares) for total consideration of $3,892,000. Prior to the Offering, Mr. Sprott owned 307,000 Common Shares (approximately 0.3% of the then outstanding Common Shares). Mr. Sprott now holds directly and indirectly 14,207,000 Common Shares (approximately 10.3% of the outstanding Common Shares). The Common Shares were acquired by Mr. Sprott, through 2176423 Ontario Ltd. for investment purposes. Mr. Sprott has a long-term view of the investment and may acquire additional securities of the Company either on the open market or through private acquisitions or sell securities of the Company either on the open market or through private dispositions in the future depending on market conditions, reformulation of plans and/or other relevant factors. A copy of 2176423 Ontario Ltd.’s early warning report will appear on the Company´s profile on SEDAR and may also be obtained by calling (416) 362-7172 (200 Bay Street, Suite 2600, Royal Bank Plaza, South Tower, Toronto, Ontario M5J 2J2). Source

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Name: Brock Salier
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