Sphinx unfazed by sinking zinc

Sphinx Resources is leveraging several plays in the Pontiac region of southwestern Quebec, but its most promising zinc property is Calumet-Sud, a joint venture with SOQUEM, a subsidiary of Investissement Québec and a leading player in mineral exploration in the province.

Calumet-Sud is adjacent to the site of the former New Calumet mine, which produced 3.8 million tonnes at a grade of 5.8% zinc, 1.6% lead, and 65 grams silver per tonne between 1944 and 1968.

All 29 holes along a 1,500-metre zone in the company’s early 2019 drill program returned zinc mineralization. Highlights included 4.9% zinc over 2 metres from 70 metres downhole, including 8.5% zinc over 1 metre in drill hole 1926. Drill hole 1905 cut 2.63% zinc over 1 metre starting from 5 metres’ depth, while drill hole 1917 returned 1.36% zinc over 6 metres from 73 metres, and drill hole 1911 cut 12.75% zinc over 1 metre from 41 metres.

While promising, Ryan admits the initial drill results suggest that Calumet-Sud would not be economic at today’s metal price. Nevertheless, he plans to “drill for bulk” near the initial drill holes to keep his options open in case the zinc market changes.

Ryan’s priority is to get government approval for more drilling. “We have approvals from the farmers that own the properties, but we need permission from the [Commission de protection du territoire agricole du Québec], as well,” hesays. “We filed a revised claim in June, and are currently waiting for an answer.”

Michel Gilbert, who recently took over as president of SOQUEM, Sphinx Resources’ joint-venture partner, isn’t phased by current low zinc prices, either. “It’s always better to do exploration when prices are low, because there is less competition,” he says. “The mining industry operates on very long cycles, so short-term fluctuations are less of a concern than they would be in other industries.”

Quebec Premier François Legault, whose Coalition Avenir Québec government took office in October 2018, has made the development of the province’s mining sector a priority. SOQUEM, a division of Ressources Québec, which invested in more than 20 projects last year, should be a beneficiary.

“We are looking to foster diversification of Quebec’s mining base outside of the Abitibi region,” SOQUEM’s Gilbert says. “We have been investing a lot in the James Bay area. But the Pontiac region, where Calumet-Sub is located, is also promising, as there used to be considerable mining done there in the 1940s and 1950s.”

Gilbert, a mining geologist, says SOQUEM encourages the exploration of sedimentary exhalative deposit zinc opportunities, such as those in Calumet-Sud, which are relatively underexplored in a province better known for volcanogenic massive sulphide-type deposits, such as those in the Matagami Camp.

Ryan took over as CEO of Sphinx Resources in December 2018. He has been investing in mining companies for more than three decades. Today, he is a major shareholder in the company, where zinc properties are concentrated along a 40 km long, northwest-trending corridor in the Pontiac municipal regional county. “I have lived in the area and done business here for many years,” Ryan says. “That gives me several advantages, particularly on the social-licencing front.”

There are plenty of people cheering Ryan on in his efforts. The Pontiac region has seen a paper mill and associated sawmills close during the last couple of years, and jobs are scarce. “Locals want us to do business here,” Ryan says. “I met with the city council and they were highly enthusiastic.”

Ryan’s connections paid off recently when he was able to recruit Lawrence Cannon — a retired federal cabinet minister, ambassador to France and longtime friend — to sit on Sphinx’s board. Cannon, who has connections in the province dating back to his time as former prime minister Stephen Harper’s Quebec lieutenant, has taken on the chairman’s role at the company, as well.

“Quebec is a great place to do business,” Ryan says. “It always does well on the Fraser Institute [mining jurisdiction study] and offers significant advantages, including tax credits and low after-tax costs for flow-through shares.”

The big question though remains low zinc prices, which show few signs of a short-term bounce back, he says.

Recent data from the International Lead and Zinc Study Group show output currently exceeds demand, with the global zinc market registering a deficit of 134,000 tonnes during the first half of 2019.

Unless that trend reverses, Ryan says, things are unlikely to bounce back anytime soon.

Ever the entrepreneur, he has been finding ways to keep busy while he awaits developments on the zinc front.

In June, Sphinx Resources bought 42 claims in Calumet North from Ressources Tranchemontagne, and Ryan got to work, commissioning flyovers, soil sampling, mapping and induced polarization.

Initial results look promising from 56 grab samples collected in September on the latest stripped exposure of the Shae zone. In October the company announced it traced a 10-metre-wide, copper-gold zone grading up to 3.8 grams gold per tonne and 11.8% copper.

“We will know a lot more once our drilling campaign gets underway next year,” Ryan says. “But we are quite hopeful.”

(This story first appeared in The Northern Miner)