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Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

The Valley of Gold

Here's a trip report from warmer times...

Osisko's Malartic facility and our tour bus.

 

I travelled to Montreal on June 29th 2011 in order to take in Golden Valley Mines' AGM. While these meetings are often major snoozers, it was an important event for Golden Valley. The main focus of Golden Valley is putting together grassroots targets (mostly along the Quebec portion of the Abitibi Greenstone Belt) with an initial 100% interest. Then they find partners to continue exploration funding while retaining a meaningful interest. This generative model allows the Golden Valley to operate without blowing up its share structure. 


Golden Valley had quite the collection of projects up until the AGM, in fact they had enough to float 3 brand new public companies via a Plan of Arrangement. On June 30th the Plan of Arrangement was approved and 3 new companies hit the market on July 15th.

  • Abitibi Royalties Inc. (RZZ.V) 
  • Nunavik Nickel Mines Ltd. (KZZ.V)
  • Uranium Valley Mines (VZZ.V)

Golden Valley shareholders received 1 share of each of these companies for every 25 GZZ.V shares they owned and they were valued at $0.16 for RZZ.V, $0.30 for KZZ.V and $0.235 for VZZ.V. These companies have not traded any volumes yet, even though they are listed. On average they have ~10 million shares out standing and Golden Valley Mines still owns ~70% of each company. Each company will be hiring its own CEO.

The most interesting company of the group is Abitibi Royalties Inc. which holds the Malartic CHL project. This is a JV with Osisko where Abitibi has a 30% carried interest to production. On Canada Day, Golden Valley took investors and analysts on a tour of the Osisko Malartic project. 


Osisko had to move a large portion of the town of Malartic to build its mine. Nobody seemed to be complaining, this is a very big mine with a large payroll. In fact there are over 10 million ounces of gold in the proven and probable category with a cut off grade of 0.32 g/t. There will be much rock handling. This mine is in the shadow of an old headframe but I'm sure the oldtimers would have a challenge figuring out how to mine this barely visible gold. Osisko is drilling 26,000 meters on the JV property and a resource estimate will be coming shortly. 


Nunavik Nickel Mines holds advanced nickel-copper-PGE projects situated in the Nunavik Region of Québec.

Uranium Valley Mines Ltd. holds a 40% interest in the Beartooth Island Project, a JV with Ditem Explorations. They also have a 50/50 JV on the Otish/Mistassini project with Lexam VG Gold Inc. (it never hurts to be connected to Robert R. McEwen, former Goldcorp Chairman).

Golden Valley is also exploring for platinum group elements/nickel-copper/chromium in Sierra Leone through its wholly owned subsidiary Calone Mining Company (S.L.) Ltd. While not an easy place to do business, the potential rewards are huge.

Glenn's company Canadian Royalties was responsible for the discovery and development of the Nunavik Nickel Project. During the aftermath of the 2008 meltdown, the company was picked off in a takeover by Jilin Jien Nickel Industry Co. and Goldbrook Ventures (GBK.V)  for ~$192 million. 


CEO Glenn Mullan has a loyal and hard working team assembled and there are multiple avenues to success for Golden Valley shareholders. Shares have pulled back after the initial excitement about the Plan of Arrangement.