Canadian exploration company Mistango River Resources will buy physical gold to offset the “hidden tax of inflation”, chairperson Stephen Stewart announced on Monday.

The company, which has a joint venture with Agnico Eagle Mines that funds all its exploration activities, will allocate a portion of its C$7.5-million cash treasury towards the purchase of physical gold.

Gaining exposure to the price of gold would help offset the devaluation effects on cash in a heightened inflation environment not seen since the 1970s.

“To our knowledge, we are the first exploration company to take this defensive stance against inflation to protect our cash treasury.

“Mistango’s core focus remains unchanged, which is to deploy capital through exploring and acquiring properties. However, shareholders invest in juniors like us for exposure to the price of gold, so this cash management strategy is in line with, and enhances, the investment thesis of Mistango,” said Stewart.

The company has been “very active” in evaluation opportunities and stated that a transaction would likely occur in the near term.

Mistango is currently focused on its Kirkland Lake West and Omega projects, in the Kirkland Lake district of Ontario’s Abitibi Greenstone Belt.

Agnico holds an option to acquire up to a 75% interest in these projects by spending C$60-million. 

In a separate statement, Mistango reported that a seven-hole, 5 400 m Phase 2 drill programme, had been completed at Kirkland West, which is adjacent and to the west of Agnico Eagle's Macassa mine and is thought to have western extensions of critical gold structures in the Kirkland Lake Gold Camp. 

Drill Hole BAL21-024 intersected visible gold at 922.81 m to 922.31 m, which returned a value of 86.2 g/t and intersected more gold mineralisation at 1079.15 m to 1080.12 m with a grade of 5.65 g/t. Both results, the company noted, appeared to be related to either the main break of the Larder Lake/Cadillac Fault zone or the Amalgamated Fault.

Drill hole BAL22-025 intercepted gold mineralisation above the 86.2 g/t assay and returned a 1.09 g/t assay from 716 m to 717 m, about 150 meters above BAL21-024.

Drill hole BAL21-021 intersected gold mineralisation, which returned a value of 1.13 g/t over 3 m from 225 m to 228 m, about 100 m to the east of BAL21-024.

Further, Mistango said that it began drilling on its Omega project on February 7 and had thus far completed 2 988 m of a planned 5000 m drill programme. More than 1 480 samples had been submitted for analysis.