Gold mining through the three decades from 1970 to the year 2000 broke many small companies.
With gold surging from $38 an ounce in 1970 to more than $600 U.S. an ounce in 1980, economic feasibility was rampant for miners. But, declining prices that dug bullion’s value all the way down to $270 U.S. an ounce by the year 2000 meant that plenty of miners closed the doors on producing mines because they couldn’t service the associated debt.
This opened a door of opportunity for tightly-run companies to swoop in and acquire those mines at discounted rates to expand upon the reserves and further develop previous producers. Companies such as Carlisle Goldfields Limited (TSX:CGJ) acquired properties and now stand to capitalize on what could prove to be very strategic acquisition moves.
Carlisle is a Toronto-based gold exploration and development company focused on development of its wholly-owned mining leases and claims in the Lynn Lake Greenstone Belt of Northern Manitoba, covering approximately 20,000 hectares which include the former MacLellan Gold mine and two other former producing gold mines as well as numerous other historically identified Gold Zones all within close distance of the town of Lynn Lake.
In the late 80’s, MacLellan produced more than 144,000 ounces of gold and 436,000 ounces of silver and was developed to approximately 400 metres in depth. A complete infrastructure is intact with mine shafts, road access, power line, ramp access and the town of Lynn Lake, about five miles (eight kilometres) away, which made for a pretty sweet acquisition by Carlisle in 2005.
The company estimated that at least 200,000 ounces of gold were still in the mine at that time.
Since then, the company has been drilling, expanding and boosting its resources. A 2010 NI 43-101 compliant resource estimate included total open pit and underground resources having increased to 5.3 million tonnes containing 658,200 ounces of AuEq (Gold Equivalent) at an average grade of 3.85 g/t AuEq (3.59 g/t gold and 19.3 g/t silver) in the measured and indicated categories and 4.4 million tonnes containing 506,200 ounces of AuEq at an average grade of 3.56 g/t AuEq (2.9 g/t gold and 42.4 g/t silver) in the inferred category.
It looks like that resource estimate is going to get another shot in the arm as Carlisle has completed a 45,000-metre diamond drilling program which is providing strong assay results. The company intends to calculate a new compliant resource to be published in the first quarter of 2012 which will include new results from the MacLellan Mine, the Western Extension and the Bruichladdie Zone. The latest drilling "filled the gaps" from areas that were either not drilled or were under-drilled, extending mineralization, according to the company.
More drilling is planned that will not be part of the new resource report as management is still defining the configuration of some areas.
Investors are cheering the company continuing to increase reserves on their large holdings in Manitoba. Shares had slipped as low as 13 cents in mid-December, but have been steadily chugging upward towards four-month highs around 25 cents currently. Friday’s volume of more than 2.3 million shares traded (just before the close) looks to be a record volume day as there has only been one session that has come close to that amount of volume.
Everything appears to be aligning for Carlisle Goldfields and it’s just a matter of time before production can begin to turn those reserves to cash. Proper due diligence is encouraged.
