There was a suspiciously high volume of traffic between Bay Street and northern Manitoba last week.
In its own way, you could say it's Manitoba's own version of a little gold rush.
But before anyone gets too excited, we should clarify: by "gold" we mean concentrations of around two grams per tonne of ore and by "rush" we mean very cautious interest.
But the very fact a couple of junior mining companies were able to convince close to a dozen mining analysts to fly up to their remote camps is a good sign.
It could be an indication that the capital-intensive mineral exploration business is starting to emerge from a brutally depressed couple of years that saw expenditures on exploration drop by 40 per cent between 2011 and 2013 and financings for junior mining companies hit a 15-year low.
At the very least, it's a signal these two Manitoba projects are a little ahead of the curve. The two projects in northern Manitoba both have modest ambitions and enough upside potential that they survived the past couple of lean years. Both are now ready to get to the next level.
Last year, Mega Precious Metals landed $40 million in conditional financing to take its Monument Bay gold and tungsten deposit, 60 kilometres northwest of Red Sucker Lake, through to a feasibility study. That's typically the final stage before financing of production is secured.
Carlisle Goldfields does not have as much financing in place as Mega but has already completed a preliminary economic assessment on its gold deposits at McLellan Lake and Farley Lake just outside Lynn Lake. That's the first phase of confirming the actual economic viability of the project.
'We know we can recover the tungsten... The question is just how much'
Ross Gallinger, executive director of PDAC (the Prospectors & Developers Association of Canada), said, "There was definitely a tone of optimism," at the large annual conference in Toronto in February.
"The marketplace is easing up a little," he said. "And it is better for projects (like Mega and Carlisle's) that have already identified a resource and are on their way to getting it to some state of economic feasibility."
Glen Kuntz, the CEO of Thunder Bay-based Mega, said in the three years since Mega acquired the property it's been able to do enough exploration so it can show the deposit contains 3.6 million ounces of gold, up from one million.
In addition to the painstaking analysis of core samples dating back to the late 1980s and an aggressive drilling program over the past three years, the company was also the recipient of the kind of good luck every producing mine needs at some point during its development.
Last year, while meeting with geologists at the University of Manitoba inspecting some of the company's core samples with an ultraviolet light, some veins in the samples glowed in a distinctive way.
"We didn't really know what it was, a none of us are that familiar with tungsten, but we did some research and realized we might have something," Kuntz said.
And it wasn't just incidental. They quickly learned tungsten could be found throughout the known gold veins of the property.
Kuntz says the presence of tungsten -- a hard-to-find mineral used in all sorts of electronics and as a hardening agent for steel -- has increased the value of the deposit by as much as 30 per cent.
"We know we can recover the tungsten," Kuntz said, because it is found in such a mineralization that makes its extraction relatively easy. "The question is just how much."
Killian Charles, a mining analyst with Industrial Alliance Securities in Montreal, said Mega still has a lot of work to do to develop the tungsten profile in the deposit, but it definitely makes the project more interesting.
"There is not a lot of tungsten mined in the world," Charles said. "The grade here is strong. Look at the competition out there. This is much higher grade than a lot of other deposits. It cannot be ignored."
He said the fact the tungsten is present in the same ore Mega hopes to mine for gold means the opportunity costs to extract the tungsten will be minimal.
There's intense, time-consuming, expensive technical analysis required before a decision can be made whether or not to build a mine. In the meantime, the exploration campsites are little economic development engines of their own.
PDAC's Gallinger said "One of our priorities has been to get people to understand that the exploration dollars actually go into remote communities -- buying goods and services locally -- and in the form of jobs and service that happen there."
Despite a high-profile dispute between Mega and the chief and council of Red Sucker Lake First Nation (RSLFN) -- the band issued an eviction notice last summer and Mega sought and received a court injunction against it -- Kuntz said close to $1 million of the $8 million per year it spends at its remote camp at Monument Bay finds its way into RSLFN in the form of employment, sourcing of some supplies and accessing regional services.
And as remote as the site is -- if and when a mine is built it will have to spend about $50 million just to bring in hydroelectric service -- analysts say it is not a particularly challenging hurdle to overcome.
But on the other hand, Carlisle Goldfields' twin gold deposits outside Lynn Lake are a piece of cake.
Abraham Drost, CEO of Carlisle -- who coincidently is on the board of directors of Mega Precious Metals -- said, "In the business we talk about the availability of infrastructure and quite frankly, Lynn Lake is second to none."
What he's talking about is the fact that there are road and rail connections as well as hydro and close proximity of the deposit to the town.
Carlisle has a slightly smaller resource than Mega -- 1.7 million ounces of gold -- but it has already produced a preliminary economic assessment that details how a mine could be built for about $185 million.
Drost said there are financing options available.
"Even when the markets were down and gold was out of favour, money was always available," he said. "The question is always: at what price."
Mega's $40-million financing has a number of innovative features including very specific milestones that have to be met before subsequent tranches are triggered.
Drost said there a number of non-dilutive, non-equity-type financing Carlisle may be able to consider including streaming deals -- which is a down payment for a right to a percentage of production in due course -- royalty deals, or gold loan transactions where the lender is paid back in gold from production.
Mines at Lynn Lake or Monument Bay are not going to be built in the next year or two and maybe never.
But both companies are at the point of development where they can at least let themselves believe it is a possibility.