Resource World Magazine

54 www.resourceworld.com D E C E M B E R / J A N U A R Y 2 0 1 9 BARKERVILLE GOLD MINES resurrecting historic gold camp by Peter Kennedy BARKERVILLE GOLD MINES LTD. [BGM-TSXV; BGMZF-OTC; IWUB-FSE] recently said it has produced 12,200 ounces of gold from a test mine on its large Cariboo gold project near the his- toric, restored gold rush town of Barkerville in east-central British Columbia. However, Barkerville management has much bigger goals as the company moves ahead with plans to become a "significant gold producer in Canada" by developing the Cariboo Project with the backing of a shareholder group that includes Osisko Gold Royalties Ltd. [OR-TSX, NYSE) and Osisko Mining Inc. [OSK-TSX]. This effort is being led by Barkerville President and CEO, Chris Lodder, who was an Americas Exploration Manager for AngloGold Ashanti. He has had a long association with the Osisko group through his own exploration services company. Following an approach by Bay Street gold bug, Eric Sprott, Lodder said Osisko agreed to back the Barkerville Project on the expectation that it will be a long life mining operation [20 years plus] and potentially the Osisko group's flagship asset in Western Canada. The Cariboo property's mineral tenures cover 2,071 km 2 along a strike length of 67 km, which includes several past producing placer and hard rock mines. Due to the fact that the mining sector is vying with tour- ism and forestry in the Cariboo area, Barkerville is planning for what will be mostly an underground operation, with sufficient ore reserves to support the construction of a brand new mill. It is hoped that this scenario will speed up the mine permitting pro- cess toward the desired conclusion. As Lodder sees it, the problem with the existing QR mill, which is being used to process ore from the Bonanza Ledge test mine, is that it is located 110 km from the mine site, meaning ore has to be trucked by road. Financing should not be an issue for Barkerville. The company recently announced a $33 million royalty financing deal with Osisko Gold Royalties. Under the second amended and restated royalty purchase agreement, Osisko pledged to acquire an addi- tional 1.75% NSR royalty on the Cariboo property for $20 million in immediately available funds, raising its total royalty on the project to 4%. Under the deal, Barkerville has the option to grant Osisko an additional 1% NSR on the property for an additional $13 mil- lion at any point between the closing date of the transaction and December 31, 2018. As part of the deal, Osisko will receive 10 million common share purchase warrants. The warrants will be exchangeable for common shares of the company at an exercise price of $0.75 per common share for 36 months after closing of the royalty deal. On November 8, 2018, Barkerville was trading at 38.5 cents, leaving the company with a market cap of $178 million based on 439.8 million shares outstanding. The 52-week range is 78 cents and 35 cents. The amended royalty agreement will have the effect of increas- ing Osisko's existing NSR royalty on the property to 4%, and later 5% if the NSR royalty option is exercised. If the warrants are exercised, Osisko's equity stake in Barkerville would increase to 34.7% from 32.4%. That is in addition to the 16% equity interest held by Osisko Mining. Located in a historic mining district where the first gold dis- coveries were made in 1858, Cariboo currently hosts 1.6 million ounces of gold in measured and indicated resources and a further 2.6 million ounces in the inferred resource category. Measured, indicated and inferred resources at the site are contained in the Cow and Island Mountain deposits. The under- ground mineral resource estimate incorporates the Cow and Valley Zones on Cow Mountain and Shaft Zone and Mosquito Creek on Island Mountain at a cut-off grade of 3.0 g/t gold. Mineral resources in the Bonanza Ledge and BC Vein deposits on Barkerville Mountain are also included in the resource esti- mate, the company said in a press release, on May 2, 2018. On September 11, 2018, the company announced positive results from its test mine at Bonanza Ledge, allowing the company MINING Pouring a gold bar at Barkerville Gold's QR mill. Photo courtesy Barkerville Gold Mines Ltd.

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