Gold mining is set to come back to Canada’s Nova Scotia as Vancouver-based junior Atlantic Gold (TSX-V:AGB) has begun using a part of a $115-million line of credit to start construction at one of its Moose River project’s mines.
The Touquoy Gold open pit operation, expected to reach full production in 2017, would be the first one the company will build. After it is up and running, Atlantic Gold plans to develop another open pit at the neighbouring Beaver Dam property, located about 37 km by road from Touquoy.
Together, they are forecast to produce 87,000 ounces of the yellow metal a year during their eight to nine years of mine life.
While Nova Scotia has seen three bursts of gold mining activity over the last 150 years, none of them has been able to turn the province into a regular supplier of the precious metal.
Geological challenges, such as high concentrations of gold hidden in narrow veins of rock, have kept most big prospectors away. This, despite the province sits on the Appalachian gold belt, which stretches to South Carolina and which sparked a gold rush in the 1800s.
But according to a recent report on Canadian junior miners published by PwC, Atlantic Gold believes it has the knowledge and technology to succeed where others have declined to tread.
“We actually saw this as an opportunity to take advantage of a counter-cyclical market and acquire projects for a lower valuation than what they ordinarily might be valued at,” chief executive Chris Batalhawas quoted as saying in the PwC study. “With the downturn in the market, we were able to locate certain projects through multiple acquisitions that may not have ordinarily been available.”
According to data compile by PwC, Atlantic Gold’s management team has raised significant funds in a relatively short period of time, including the completion of a Cdn$9.2 million flow-through financing deal last month.
Atlantic Gold ranked as the 24th most valued junior miner on the TSX-V as of June 30, 2016, with a market cap of Cdn$117.1 million.