Goldsource Mines – Enjoying the Simple Things
We look at Goldsource Mines to learn how phased development and carefully chosen resources can reap amazing dividends.
Goldsource Mines is a Canadian exploration and development company led by an experienced management team and board bringing a diverse range of experience to its work.
“What we do is target high-quality exploration assets in jurisdictions with a well-defined mining code,” explains Steve Parsons, Goldsource’s CEO. “In terms of high-quality, we target projects that offer favourable size and margin potential, a low CAPEX intensity, straightforward development plans and projects that are distinctly scalable with opportunities for phased development.”
Goldsource Mines is currently exploring the Eagle Mountain Project, an asset 100% owned by the company. In line with Goldsource’s MO the resource is high-quality, with tangible opportunities for phased development, starting with soft-rock mining with the opportunity to phase into fresh rock mining in later years funded by cash flows. The resource is 1.7 million ounces from the surface down to 80 metres.
“The deposit itself is something that suits our corporate objectives very well,” Parsons observes. “In a nutshell, what we have with the Eagle Mountain Project, an asset with resource scale and production scalability, a resource that sits at the surface and a team with the vision and expertise to develop it. What we’re looking to do is continue to define and expand the resource, while further exploring other targets to bring it all together with another resource update later this year. That resource will then be the basis of a pre-feasibility study we will deliver in 2022. We will then carry on with permitting and enter production probably in 2024.”
The cornerstone of the Goldsource Mines strategy is phased development, which is something of a focal point for Parsons.
“This is something that I talk about a lot, especially in my previous career working for investment dealers as a mining analyst,” he says. “I used to focus on the mining cycle, not just in the gold sector but in mining as a whole. Knowing where you are in the mining cycle, specifically with respect to the construction backdrop, is critical for developmental success and generating favourable returns for shareholders.”
The issue is that the mining industry as a whole is quite small, especially concerning access to expertise. The talent pool of engineering firms for consulting and mine development is very small, which can cause issues when demand is high.
“Due to the capital intensity of this industry, decisions tend to be very pro-cyclical and consequently everything happens at the same time,” Parsons points out. “When metal prices go up and hit a critical point many, many companies with higher capital intensity assets start sanctioning the development of projects. Invariably the industry becomes congested very quickly.”
Knowing that this is the industry backdrop that needs to be effectively managed, the team behind Goldsource Mines targets high-quality assets that are distinctly low capital intensity, scalable and cater to phased development.
“A lower capital intensity project and phased plan can help navigate the industry pressures and provide the opportunity for materially better outcomes for stakeholders,” says Parsons. “These are the style of projects that get built with less pressure on CAPEX and development timelines. So we look for projects that offer these attributes. They can be navigated through a congested procyclical backdrop and also offer the margin potential to be built off-cycle.”
Keeping it Simple
Simplicity is key to Goldsource Mines’ approach.
“It’s important to find an asset that’s not complex from a mining, processing or permitting perspective and that is located in an industry-supported jurisdiction like Guyana,” Parsons tells us. “The more complex it is the more consulting firms you need, so human resources are critical all the way through the cycle. So, we have a straightforward asset. It’s simple in that it’s shallow, with a very large resource contained from the surface down to 80 metres. We have got a significant deposit. Moreover, the surficial gold is contained in soft-rock saprolite, which should support a free digging operation, mining without drilling or explosives. We can just use an excavator while in the saprolite.”
Even with a resource, this straightforward, expertise is still necessary. Fortunately, it’s the precise expertise that under-explored Guyana has in abundance.
“Guyana particularly has a pedigree for mining, with 100 years of history, mostly in artisanal mining, but with some large commercial operations,” Parsons says. “As a result, there is expertise with respect to open-pit mining. We won’t require a deep expatriate skill set as would be the case for a project with more complex development plans.”
The Next Phase
From here, Goldsource Mines plans to provide further definition to the resource with drilling, followed by further engineering and a pre-feasibility study.
“Then things will start moving really quickly as we bring in engineers and look at next steps to take it from exploration to a mid-size gold operation,” Parsons says.
Meanwhile, Goldsource will be parallel tracking many activities alongside that, including expanding its CSR efforts and building and maintaining its dialogue with government agencies and local communities.
“We have a tremendous opportunity with an asset quite different to what you typically see in Guyana, where many projects are quite remote or not road accessible,” Parsons says. “We have a road-accessible project, close to a town with a commercial airport. These are really important features to maintain the simplicity of the project, eliminating complexities and leveraging what we’ve got to expedite a development plan.”
The point Parsons keeps coming back to is that Eagle Mountain is no pipe dream, this is a concrete prospect that will yield excellent results for the company and its stakeholders.
“The goal for the company is to continue to get out and impress upon the stakeholders, our investors, that this is an eminently buildable project,” he tells us. “This is more than a story this is a tangible project with attributes that cater to a straightforward development plan. We’re looking to expand the existing resource and uncover and unlock the additional potential on our property.”