Amaroq Minerals
try not to say bonanza, try not to say bonanza...
Good Morning Team.
I want to take a few moments to consider where Amaroq is going next. Yesterday’s exploration update is the first of many to come - and a recovery to new highs is on the cards.
The RNS was a bit technically deep, so I’m hoping to break it down for you a little. To do this, there are a few key considerations to really nail down.
Golden Nuggets
Here’s the deal. When Amaroq is drilling the target block (or elsewhere) from the surface, it’s a very tricky deposit to drill from the perspective of establishing a reliable estimate of reserves. This is largely because of the nugget effect of the gold in situ. You could drill 10 holes and only strike limited mineralisation in a few of them, or get the jackpot in every hole.
This means that more holes = more understanding, which is always the case but more so for Nalunaq. And the holes themselves need to be interpreted correctly to get a decent understanding of mineral reserves, because there is an larger element of chance when drilling each hole you don’t see elsewhere.
This is not a consistent system. When AMRQ drills from the surface, it’s drilling to understand the structure - and when it drills from underground with understanding of the structure, this is where it can locate and target the right grades - literally by sampling the rock directly, based on visible mineralisation. And even better, when underground you can do more holes in the vein, and with a better idea of what you’re seeing compared to surface drilling.
We know that the project primarily targets gold-bearing veins, with the Main Vein and 75 Vein showing very promising grades. The geological model suggests that these veins could extend beyond the currently identified boundaries - and the company has conducted a high-grade variability study to improve the geological model and better understand the distribution of gold mineralisation.
This study has revealed that surface drilling may have under-reported gold grades, a finding that could lead to better resource estimates moving forward.
Hence why these results - and the updated MRE to come before quarter-end, is so important. Hopefully we’re looking at an increase to 400,000+ ounces from the current reserves, and potentially more.
But the big thing is commissioning, scaling up and mass production. First gold was poured in November, and AMRQ is probably dealing with a very cold winter, even for Greenland.
This is good news.
Getting the mine to be functional in the worst extremes is crucial for future-proofing, and it’s a lot easier to do this before it’s fully ramped up.
But what does fully ramped up look like?
We know Nalunaq produced 360,000 ounces of gold in previous nine years of operation.
And by the end of 2025, the company expects to reach a steady production capacity of up to 300 tonnes of ore per day, yielding more than 4.5 kilograms of gold per day at a grade of 12-16 grams per tonne of raw mineral.
Let’s say this is about 50,000 ounces of gold per year (assuming all goes to plan by the end of the year) - or $150 million per year in revenue.
Initially AISC will be higher but as they ramp up, even if it were as high as $1,500 initially, AMRQ will still be making $75 million+ in free cash flow every year.
And better still, the plant on site can be ramped up to 450 tonnes of ore per day - requiring only perhaps $3 million of additional equipment to make this work. Further, the AISC will fall as contractor use reduces, renewable energy solutions are put in place etc
And the gold price is still rising.
And the exploration is still going.
And the strategic minerals JV is still exploring.
Nanoq alone could be another Nalunaq. Or bigger.
We should expect 2025’s exploration plans in full next month - and then Q1 production figures perhaps by late April.
Exploration update
The exploration update gives you very detailed drilling results at Nalunaq, with a focus on the Target Block Extension and Mountain Block zones.
One thing I’ve always like about Amaroq is that it gives you all the data (including holes which don’t hit).
The company completed 2,985 meters of surface drilling from 11 drill holes on the Target Block Extension zone. Some key intersections from this drilling include:
22.7g/t Au over 0.5 metres from hole NAL2403.
Lower-grade intersections were encountered in other drill holes, with some samples reporting 0.64 g/t Au over 0.5m and 0.37 g/t Au over 0.5m.
Amaroq's underground drilling at the Mountain Block focused on understanding mineralisation continuity, particularly in the Main Vein. Significant intersections include:
47.6 g/t Au over 1.72 metres in hole NAL-UG-2405.
31.6 g/t Au over 0.5 metres in hole NAL-UG-2404.
Other intersections of 23.3 g/t Au, 25.83 g/t Au, and 23.6 g/t Au were also encountered in the underground drilling.
47.6 g/t over 1.72 metres is genuinely sickening. As regular readers will know, every time an explorer uses the word ‘bonanza,’ a fairy dies.
But that grade really is.
And again, they’ve only really just got started.
Channel samples were taken from the Main Vein and 75 Vein outcrops, with notable results like 18.85 g/t Au from the Main Vein and 6.63 g/t Au from the 75 Vein.
Amaroq also implemented advanced sampling methods, including:
detectOREâ„¢, a rapid gold assaying technology, used for preliminary analysis, with traditional fire assays used for confirmation.
QA/QC protocols that ensure sample accuracy, with certified reference materials, blanks, and duplicates inserted systematically.
detectORE™ will be part of my upcoming review into novel techniques - and is at the bleeding edge of what’s now possible in the space.
The underground drilling results suggest that the Mountain Block has exceptionally significant high-grade potential. And clearly, these grades are notably high compared to other gold projects globally, especially in hard rock mining.
For context, high-grade gold deposits generally range from 5-10 g/t Au in most mining operations, with anything above 20 g/t Au considered fantastic. High-grade deposits such as those found in Canada's Red Lake or Nevada's Carlin Trend can host ore grades in the 10-30 g/t Au range, which is similar or slightly lower than the best results from Amaroq’s drilling.
Golden Mile in Australia, inarguably one of the world’s richest gold deposits, yields grades averaging around 2-4 g/t Au. Fruta del Norte in Ecuador is one of the top gold projects globally, and has average grades of 8-10 g/t Au, which are comparable to Amaroq’s best grades but still lower than the highest intercepts from Nalunaq.
It’s just ridiculous - but again, it’s hard to establish the ‘true’ potential due to the nuggety nature of the deposit.
But in terms of growth potential, the surface drilling results indicate that the gold-bearing structures may continue to the west, with the high-grade intersections evidencing that the mineralisation could extend further. Of course, more drilling will be needed to confirm the continuity of these structures and I suspect this will be incorporated into 2025’s plans.
The underground drilling results, particularly from the Mountain Block, suggest a good level of mineralisation continuity, which is critical for planning future mining operations.
The company does plan to continue targeted drilling - underground will evaluate the high-grade extensions and refine the zones, while surface will explore to increase in the company's overall resource base - leading to larger and more efficient future production.
I will caveat that this is an almost unique system - and while these results are beyond exciting, and there are already sizeable reserves - AMRQ has a lot of work to do.
2025 is about getting things right, and as with all mine commissioning, there will be hurdles to cross.
But overall, VP Exploration James Gilbertson puts it perfectly:
‘Our 2024 exploration results continue to validate the geological model at Nalunaq, with underground drilling returning highly encouraging high-grade intersections, reinforcing confidence in the Mountain Block’s potential. In addition, our findings increasingly suggest that previous surface drilling may have under-reported gold grades, as evidenced by both underground drilling results and our high-grade variability study, and we look forward to providing the updated Mineral Resource Estimate expected at the end of this quarter. These insights will be instrumental as we refine our exploration and development approach. With further targeted drilling due to take place in 2025, we remain confident in our ability to define additional high-grade zones and optimise our production strategy.’
Go for gold Amaroq.
It’s there for the taking.