Pancontinental Gold Corporation is a Canadian junior with an interest in low-risk North American mining districts, but don’t let its name fool you. As of the start of 2018, the company is a multi-commodity driven explorer, having identified an emerging bull market in the battery metals space. Gold is still a key part of Pancontinental’s vision, which is maintained by its continuing commitment to the Jefferson Gold Project in the US state of South Carolina, but its strategic decision to acquire the Montcalm West Nickel-Copper-Cobalt Project in Ontario, Canada is a function of several factors.
“One is the current market conditions for those battery metals,” says Pancontinental’s president and CEO Layton Croft.
“The recent performance of those commodities, the very robust outlook for demand and the fact that this cobalt is located in a very safe, pro-mining jurisdiction with great infrastructure, great local suppliers and labour and access to capital, as opposed to other more high risk locations, have all been factors.”
The deal was also built on a long-term relationship between one of Pancontinental’s founders and Kevin Filo, a local exploration and project geologist with over 30 years’ experience in Ontario’s Abitibi greenstone belt region.
Filo played an instrumental role in getting the deal for Montcalm over the line, but with the opportunity presenting itself as something that made complete sense for both parties, it was soon agreed that he would come on board with Pancontinental as a senior technical advisor for the project.
Pancontinental’s story actually began in Australia, where the firm was first positioned in 2004 as a uranium explorer. David Mosher, one of the company’s founders and a current member of the company’s Technical Advisory Committee, made a name for himself via the discovery of the Jabiluka deposit in Northern Australia, which was the largest uranium deposit in the world at the time.
He and Donald Whalen, chairman of Pancontinental, later spent over 15 years running successful TSX-listed High River Gold Mines. The duo developed successful mining projects in Canada, Burkina Faso and Russia and are veterans of the business.
The company also experimented with a rare earths deposit in Australia before becoming aware of the Jefferson Gold Project in the spring of 2016.
“In light of what we in the company believe is an emerging gold market, we decided to shift the focus and the company changed its name from Pancontinental Uranium to Pancontinental Gold,” Croft recalls.
By the summer Pancontinental had struck a deal to buy the project, with Croft joining the company as an advisor and consultant in the autumn. At the time the company was listed on the NEX Exchange one tier down, and quickly raised C$1 million through a non-brokered private placement that set the ball in motion for the company’s new vision.
After being appointed CEO and president in April 2017, Croft oversaw post-drilling activity at Jefferson, which focused on six holes at one target called Anomaly A, along with a significant volume of post-drilling geophysics work.
“The rich data set we have goes back to the 1990s when trenching, sampling and shallow RC drilling was conducted on land in the Jefferson project. We did some geophysics work, including in-house proprietary geophysical analysis of our data and other regional data.”
After all this analysis, the most striking conclusion made by Pancontinental was the geological similarities to mined zones within the former producing Brewer gold mine adjacent to Jefferson and the very successful Haile gold mine which is in operation just 12km along trend. This notion is at the centre of Pancontinental’s strategy and is also replicated in the Montcalm project.
“That’s what makes our overall story particularly compelling but also coherent,” proclaims Croft.
“We are focused in North America, where there are safe jurisdictions, proven geologic potential, and supportive, pro-mining local governments,” Croft says. “We believe the timing for gold and battery metals is excellent.”
“There are several key denominators in our business. The commodity, the geology, the location, the timing and the people. In the case of the Montcalm West Project, all of those are very strong,” Croft continues.
The Montcalm project sits within 1km of Glencore’s former producing Montcalm site that mined approximately 3.9 million tonnes of nickel-copper-cobalt ore in its short life. This proximity to a former mine was a major factor in Pancontinental’s attraction to the area.
“We also have a gargantuan land position with great camp size potential. Those are two important ingredients,” weighs in senior technical advisor Kevin Filo. Pancontinental’s land position is split between two sites; the Montcalm property and the Nova property, both of which provide interesting mineralisation patterns.
The Montcalm mine was discovered in the 1970s by Teck Corporation as a single line input anomaly. In other words, the geophysics barely picked it up, but they did find it. Twenty years later a Finnish company came along and found extra tonnage which allowed the mine to be put into production.
However, what Pancontinental found was that the mine is comprised of a series of lenses with deepest lens starting at 250 metres down, and that during the exploration and mining phase at the mine, geophysics technology at that time had its limitations.
“Today with this nickel-copper-cobalt rush, fortuitously we happen to have technology that will penetrate below 250 metres,” says Filo. “The land position joining the mine has never been followed up by these new state-of-the-art airborne EM and gravity systems that can help us look at the next layer of the cake.”
There is one minor issue with the Montcalm area, namely extensive sand and clay overburden cover. Therefore, geophysics will be Pancontinental’s primary tool, and Filo has great trust in the technology. The company will also look at near surface targets outlined but untested by previous operators, as well as new targets identified by the new airborne systems.
“We have a great nickel-copper-cobalt situation, high demand and we have the technology to look for a new mine right beside an old mine,” says Filo.
The poly-metallic nature of nickel, copper and cobalt at Montcalm West is a very important distinction for Pancontinental, particularly as all three are vital ingredients in the EV story. The importance of cobalt and nickel in car batteries is well documented, but demand for copper is likely to rise not only from EV manufacturers but also to contribute to the construction of more power infrastructure and hydro lines.
“All three of these are bona fide battery metals that will remain in high demand for the foreseeable future,” predicts Croft. The polymetallic nature of the mineralisation should also offset risk by reducing Pancontinental’s exposure to a single commodity.
The global cobalt market
Croft identifies a few variables impacting the current cobalt market, not least the DRC’s recent mining code reform which increased the cobalt mineral export tax and government royalties and implemented an excess profits tax. Well over half of the world’s global supply is produced by this African nation, and these changes are very onerous on producers, a situation which may lead to fundamental supply and demand issues impacting spot prices.
“However, all of that being said, for the foreseeable future there is going to continue to be significant demand and limited reliable supply from safe jurisdictions that are pro-mining, where the goalposts won’t suddenly move, or there won’t suddenly be government-imposed force majeure, expropriation or even civil war,” Croft says.
Not only is Montcalm West located in a safe, predictable jurisdiction, the site is also served impeccably by infrastructure links and access is clear-cut. “Our properties are all accessible by timber roads,” says Filo.
“There are milling facilities in Timmins for nickel copper and cobalt only 65km away by road. We have manpower, electricity and we are not in the middle of the Canadian Arctic. That means low-cost exploration, access to labour and much more.”
The Timmins region is also a hive of mining activity, which is reflected in the multitude of local partnerships Pancontinental has already struck up, aided by the localised expertise of Filo who happens to live right in the middle of an active mining camp.
Finally, the presence of Glencore in Timmins may provide an interesting opportunity further down the line. The mining giant has available milling facilities in the area, so if Pancontinental is able to establish a mine deposit, a JV could be a mutually advantageous outcome for both parties.
As Pancontinental embarks on a new multi-commodity vision, president and CEO Croft stresses that he and the company are doing all they can to secure that all important shareholder value in the coming years.
“We are entrepreneurial and very keen to keep risk down,” says Croft. “We’ve struck a very good balance if you look across our board, technical advisory committee and management/technical team. We’ve got a collective amount of experience that spans hundreds of years.
“Most importantly, the people in our team have found, developed and built projects and mines that have returned significant shareholder value to investors. We also have a lot of youthful energy and drive, so we’ve got the perfect mix of people.”