Monarch Mining (GBAR.T) halts operations at Beaufor mine
Monarch Mining (GBAR.T), a Quebec-based mineral explorer/producer, announced today that it had suspended operations at the company’s Beaufor mine due to financial and operational challenges.
At the beginning of June 2021, Monarch announced that it was planning to reopen is wholly-owned Beaufor mine and Beacon mill, located approximately 20 kilometres east of Val-d’Or, Quebec, by June 2022.
Beaufor had already produced over 1.1 million ounces of gold at an average grade of 7.5 g/t gold since the 1930s.
Monarch launched a 42,500 metre drill program at Beafor in October 2020 because of this and the campaign returned high-grade intersections including 35.87 g/t Au over 9.8 metres, 783 g/t Au over 0.2 metres and 187 g/t Au over 0.5 metres.
Results from the first 17,800 metres of this extensive program allowed for a new resource estimate at the project which was released in August 2021.
The expanded measured estimate was 327,500 tonnes grading 5.7 g/t Au for a total of 59,900 ounces of gold and an estimated indicated mineral resource of 956,400 tonnes grading 5.2 g/t Au for a total of 159,300 ounces of gold. Inferred resource was estimated at 818,900 tonnes grading 4.7 g/t Au for a total of 122,500 ounces of gold.
Monarch had attracted major interest in its endeavor at Beaufor and was awarded $13.5 million from the province of Quebec.
The integrated junior miner also managed to close an upsized $14.4 million CAD private placement in early April to help with reopening Beaufor.
Processing Beaufor Ore at Beacon Mill began in the beginning of July 2022, when the company started processing a 530-tonne batch of ore with 30,549 tonnes of stockpiled ore ready to be processed.
The first gold bar was poured at the end of July 2022, with 23,914 tonnes grading 4.76 g/t gold yet to be processed. With ore and ore recovery ranging between 96.3% and 98.7% respectively, Monarch was looking forward to ramping up production to commercial levels.
However, at the end of August, things at Beaufor and Beacon were less than positive. Monarch announced that it would be slowing production at Beaufor as the restart and ramp up at Beacon was going slower than expected with operations at the mill stuck at 50% of its 750 tpd capacity.
Mechanical issues and procurement problems as well as technical issues with the grade reconciliation of the stockpile already at Beacon. The unexpected lower combined grade of the stockpiled ore led to a reduction of cash flow from the mill and Monarch announced it would attempt to streamline mining operations to hopefully reduce dilution.
President and CEO of Monarch, Jean-Marc Lacoste, although challenged by the situation wasn’t daunted by the situation and stated, “During this period, which we believe to be temporary, we will continue to process the more than 20,000 tonnes of ore stockpiled at the Beacon Mill and Beaufor Mine sites in order to generate the funds required for our operations.”
Unfortunately, it only took another month for Monarch to throw up the white flag at Beaufor. The same problems continued to plague operations and after a strategic review, the board decided to shutter Beaufor for an undetermined period.
Lacoste commented, “The decision taken today by the Board and management was after careful consideration of all available information from the mine and mill operations, and the Corporation current and projected financial situation. We understand that this situation is difficult for our shareholders, employees and stakeholders. We will continue to work towards resolving the present situation at the operations while seeking strategic and financial alternatives to maximize stakeholder value.”
This is a prime example of how risky mineral exploration and production can be. According to the Ontario Mining Association less than 1 in 10,000 projects become mines.
Not hard to believe, since a successful mining operation is dependent on a number of variables, some uncontrolled, including geologic, technical, environmental, social, political and economic factors.
Monarch still has other projects in its portfolio including McKenzie Break, Swanson and Croinor Gold, but it will have to get nimble working with both lenders and the investment community to obtain the financing necessary for continued exploration. This is especially difficult after a public setback like Beaufor. This isn’t to say that Monarch irrevocably “dropped the ball”, but sometimes, it just doesn’t go your way.
The company currently trades at $0.07 per share, down 90.54% for the year, for a market cap of $7.52 million.
