“We discovered some old underground maps from Orenada zone 4,” says CEO Eric Owens. To that point, Alexandria had been focusing on drilling zones 1 and 2 of the deposit. But the maps, based on results from previous owners, pointed it to an area it had to that point largely ignored. 

“These high grade veins were identified in zone 4, things that weren’t previously emphasised when we acquired the property.”

The “a-ha” moment, as Owens calls it, came when Alexandria geologists realized that the deposit was not a disseminated deposit as had been thought, but actually hosted broad zones of mineralisation the previous owners had been drilling parallel to.

“They were just skimming along the edges of the veins and occasionally intersecting one and getting a slight kick, but mostly getting 40 or 50m of low grade material,” said Owens.

New approach in hand, Alexandria shifted its drill angles in 2015 and immediately hit an interval of 3.14g/t gold over 27.8m, including 17.03g/t over 3.4m.

Fast forward to 2017, the company is now in the midst of a fully-funded 30,000 drill program and cranking out strong near-surface results at Orenada zone 4. Alexandria currently has three drills turning, and is bringing in a fourth, with the goal of updating its resource before the end of the year.

The current resource, which dates from 2009 and also includes zone 2, comprises 188,844oz grading 1.36g/t in the measured category, 196,097oz grading 1.01g/t indicated, and 176,000 grading 1.16g/t inferred, for a total of 560,941oz across all three. 

“We think we can double it from that estimate and increase it to 1-1.1 million ounces,” said Owens. “We think that’s the first step of a growth scenario here, because we have 4-5km of strike length on either side of this thing along a trend here with a lot of potential for much more discovery and growth as well.”

Recent drill highlights include hole 084, which returned 42.5g/t over 1.5m and 16.3g/t over 1.2m, including visible gold; hole 090, which returned 4.1g/t over 10.2m, including 7.42g/t over 1.1m; and hole 100, which hit intervals of 9.0g/t over 13.9m, including 20.0g/t over 2.9m, and 3.8g/t over 63.7m, including 6.3g/t over 15.4m.

“There are still a lot of questions we have about this thing. But we now know that this is not a truly disseminated deposit, it is a high grade vein deposit, which has lower grade halos around the veins,” said Owens. “So even though we’re intersecting high grade veins, they’re surrounded with halos of lower grade material between half a gram and 2-3 grams.”

In that way the deposit is somewhat similar to the Canadian Malartic deposit - though on a smaller scale and earlier stage - which also hosts high-grade veins surrounded by lower-grade halos. Both deposits also lie along the Cadillac Break fault zone, which has produced some 100Moz gold over the past century. Alexandria controls a 35km stretch of the break.

Drill results at Orenada have also come from within 250m of the surface, which greatly simplifies potential extraction and makes the deposit significantly more appealing in a market where miners are increasingly valued for their cost profile above their production. And Owens says that while some the veins have been standalone, others have halos as large as 40m.

“It’s a near surface deposit, which means it would be a low cost deposit to mine, and it’s also a low cost deposit to try to find,” said Owens. “It’s not envisioned as a narrow veined mining scenario for some future miner. The value proposition is that these can be low grade to modest grade bulk tonnage mineable deposits which are low cost operations and high value.”

Alexandria’s shares have yet to catch fire this year, but the smart money has begun to elbow its way aboard, with Eric Sprott taking on an 8.5% stake in the company earlier this year. Other significant shareholders include Agnico-Eagle Mines (CN:AEM) with 8%, Teck Resources (CN:TCK) with 2%, and IAMGOLD (CN:IAG), also with 2%.

And while Orenada is the company’s focus at the moment, it’s not the only source of potential growth. The Akasaba and Sleepy properties are also on the Cadillac break land holding, as well as other targets that merit investigation when time permits, said Owens.

“Akasaba has a half million ounces of resources on it, which we haven’t done a follow up program on, so that has certainly more potential for discovery there,” he said.

Alexandria also owns the Wim and Hudvam VMS copper-gold projects in the Flin Flon district in Manitoba. Alexandria optioned 70% of Sleepy to Probe Mines (CN:PRB) last year and Probe is currently drilling on it. Owens said he would entertain offers on the Manitoba properties.

All told, the four non-Orenada projects hold resources of 1.04 million gold equivalent ounces indicated and 769,612oz inferred.

With a market capitalisation of about C$30 million, it’s easy to imagine a larger player making a move on Alexandria, particularly with such a large land holding in a historically productive district.

The recent rise in gold prices has yet to trigger a consolidation spree, but some view Eldorado Gold’s (CN:ELD) recent purchase of Integra Gold and its 1.9Moz Lamaque project as a possible benchmark, particularly with gold prices now at their highest level in nearly a year.

Where the math gets interesting is that Alexandria now has similar company-wide resources to what Integra had before the takeover, as well as considerable expansion options and compelling near-surface accessibility. But its market cap is a fraction of Integra’s C$590 million purchase price, which suggests the potential for near-term share growth.

“We’ve got a good project and between all our projects we’ve got about  2.3 million ounces of gold resources, so it’s not like we’re necessarily an early stage exploration company,” said Owens.

The company has a cash and short-term asset position of about C$6 million and is sufficiently funded to get it to the resource update, which might be a natural catalyst for a stock re-rating.

In the meantime, drilling Orenada 4 is the priority. The project open both along strike and at depth. Owens plans to eventually drill below the 300m level, though the plan is to minimise costs by wringing as much value as possible from near-surface targets.

Owens, a co-founder of the company who helped take it public in 2006, is confident he has the personnel to do it, with vice-president of exploration Philippe Berthelot, who has 30 years of mining experience in Quebec and was responsible for discovering the Langlois mine in northwestern Quebec.

“Our goal is to find a 2, 3, or 4 million ounce deposit in this area all at shallow depths,” said Owens. “That’s really the growth potential that we envision for Alexandria shareholders.”