Scandinavia Becoming a Hot Spot for Gold Exploration
Explorers having success in Sweden and Finland
The success of Rupert Resources (TSX: RUP) and its 4.2 million ounce Ikkari gold discovery in Finland has shone a light on the prospectivity of Scandinavia.
In February, Rupert released a prefeasibility study for Ikkari, outlining initial capital costs of US$575 million for a 20-year open pit and underground mine to produce 227,000 ounces of gold per annum at all-in sustaining costs of US$918 an ounce.
The study returned a post-tax net present value of US$2.5 billion, internal rate of return of 49% and payback period of 1.7 years, based on a gold price of US$2650/oz.
Earlier this month, Agnico Eagle Mines (TSX/NYSE: AEM), owner of Europe’s largest gold mine Kittilä, also in Finland, paid C$11.7 million for a further 2.6 million shares in Rupert to take its stake in the company to 14%.
Agnico’s executive vice president, sustainability, people and culture Carol Plummer will join the Rupert board.
Barsele
Agnico’s Finnish division also holds a 55% stake in the Barsele project in Sweden, in joint venture with First Nordic Metals (TSX: FNM), the latter of which is free carried to 70%.
On the sidelines of the Mining Forum Europe in Zurich earlier this month, FNM president Adam Cegielski said Agnico had spent around US$55 million at Barsele, including a non-public preliminary economic assessment.
“It’s probably one of the best studied projects in Europe,” he said.
“It’s a beautiful asset but it’s kind of hidden in Agnico.”
Barsele has an indicated and inferred resource of 2.4Moz at around 3 grams per tonne gold, making it Sweden’s largest undeveloped gold asset.
In its own right, FNM holds ground to the north and south of Barsele for a total landholding of more than 104,000 hectares along a contiguous 100km strike length of the Gold Line Belt.
Cegielski estimated the belt was about 100 years behind Canada’s Abitibi Belt in terms of exploration.
Mineralisation at Barsele has been encountered to 600m below surface but remains open at depth.
Deposits in the Abitibi can extend to beyond 3km depth.
“We’re just scratching the surface,” Cegielski said.
“The dream is it goes to a couple of kilometres and you’re mining it for 40 years.”
Cegielski believes the project could be a 200,000ozpa producer.
As Agnico has gotten larger, the project has fallen down its priorities list and FNM is actively pursuing a corporate transaction.
“I think the stars are aligning for a deal and I think it’s going to happen this year,” Cegielski said.
Boosting the company’s cause is the discovery of a Barsele lookalike at Aida on its 100%-owned ground to the south.
“This is a bonafide new discovery,” Cegielski said of Aida, which has returned results including 22.5m at 2.4g/t gold.
“We’re adding a second rig because we’re obviously liking what we’re seeing.”
FNM is funded for 25,000-30,000 of drilling this year.
Pontio
Back in Finland, private company Gemdale Gold Inc discovered a large gold deposit at its Pontio project in 2011.
The company’s work since then, which has included 10,000m of drilling, has defined wide zones of gold mineralisation from surface over a 4km strike length.
Results have included 64m at 1.06g/t gold from 18m and 154m at 0.68g/t gold from 15m.
Executive chairman Patrick Chidley said the company was aiming to define an initial resource within 18 months.
“We say it’s going to be the next big gold discovery in Finland,” he said.
“It’s a big bulk tonnage, lower grade gold deposit.”
Chidley said Canada’s two largest gold mines, Agnico’s Malartic and Detour, had average head grades of less than 1g/t gold.
“It’s entirely doable – you just need the tonnage,” he said.
Gemdale is looking to go public this year and is planning 6000m of drilling at Pontio.
Scandinavia ripe for development
Both Sweden and Finland are considered tier one, mining friendly jurisdictions, but both are considered to be underexplored.
Most of the world’s major miners are exploring there for gold and base metals.
Cegielski said Scandinavia had really only opened up to modern exploration in the 1990s.
“It’s like a final frontier opportunity to go in early and build this big land package,” he said.
Cegielski said recent exploration success, including Ikkari, had put Sweden and Finland on the map.
“It’s kind of woken up the Scandinavian opportunity,” he said.
He added that the Swedish government had permitted two mines in the past year.
Chidley said Finland remained underexplored for gold.
“Finland is a great country and there’s a lot more to happen,” he said.
“It’s only just started to move.”
Chidley said western Finland, where Pontio sits, was an existing mining district.
“It’s probably the best place in the world to build a mine – it’s a brilliant place to be,” he said.