IAMGOLD announces $170m gold prepay arrangement

IAMGOLD Corporation (TSX: IMG) today announced that it has entered into a forward gold sale arrangement with financial institutions whereby the company will receive a prepayment amount of $170 million in exchange for delivering 150,000 ounces in 2022, with a gold floor price of $1,300 per ounce and a cap price of $1,500 per ounce.

The prepaid gold arrangement is supported by a syndicate of banks including Citibank N.A. and National Bank of Canada. According to the press release, terms of the prepay are:

  • Funding of $170 million is provided to IAMGOLD in December 2019 in exchange for physical delivery of 150,000 ounces of gold over the period of January 2022 to December 2022.
  • Delivery can be made from the production of gold from any of IAMGOLD's operating mines.
  • The cost of the Prepay arrangement is 5.38% per annum, which is based on the date the prepayment is advanced, quantity of ounces settled and timing of delivery.
  • The collar on the prepay at the time of delivery of ounces occurs as follows:
    • If the prevailing gold price equal to or less than $1,300 per ounce, there is no incremental payment to IAMGOLD or from IAMGOLD;
    • If the prevailing gold price is greater than $1,300 per ounce but less than $1,500 per ounce, the syndicate pays IAMGOLD the difference between the prevailing gold price and $1,300;
    • If the prevailing gold price is greater than $1,500 per ounce, the syndicate pays IAMGOLD the incremental difference between $1,300 and $1,500, or $200 per ounce.
  • The funding is expected to be accounted for under IFRS as deferred revenue.

"Entering into the gold prepay provides additional liquidity to IAMGOLD at attractive terms to support the execution of the company's growth strategy, while also mitigating any downside price risk below $1,300 an ounce on 150,000 ounces of production," said Carol Banducci, EVP and CFO in a media statement.

On Tuesday, gold was trading at $1,292 per ounce, not far off a six-month high.


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Skeena hits long (15m) and strong (31 g/t) at Eskay Creek

Skeena Resources of Vancouver recently completed a surface drilling program on its Eskay Creek property  in the province’s Golden Triangle.

  • Phase one drilling at the 21A zone returned these highlights:
  • Hole SK-18-033: 4.93 g/t gold, 134.59 g/t silver over 33.57 metres;
  • Hole SK-18-034: 7.11 g/t gold, 54.21 g/t silver over 28.88 metres;
  • Hole SK-18-036: 22.36 g/t gold, 646.92 g/t silver over 14.72 metres;
  • Hole SK-18-037: 6.68 g/t gold, 14.56 g/t silver over 5.50 metres; and
  • Hole SK-18-040: 12.73 g/t gold, 1.71 g/t silver over 4.50 metres.

Skeena says the 21A zone contains a significant portion of the 2018 pit constrained resource including 1.1 million indicated tonnes at 4.9 g/t gold and 72 g/t silver and 2.8 million inferred tonnes at 3.8 g/t gold and 63 g/t silver. The project also has an  underground resources of 2.5 million indicated tonnes at 7.2 g/t gold and 215 g/t silver plus 812,000 inferred tonnes at 7.2 g/t gold and 214 g/t silver.

Eskay Creek was first explored in the 1930s, but it wasn’t until 1995 that the gold mine was officially opened. The mine closed in 2008 having produced about 3.3 million oz. of gold and 160 million oz. of silver.

This article originally appeared in the Canadian Mining Journal. 

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Wallbridge discovers VG zone at depth at Fenelon

Underground and surface drilling yields results for Toronto-based Wallbridge Mining Co. at its Fenelon gold project 75 km northwest of Matagami, Quebec. The results are high grade – up to 144.77 g/t gold over 6.1 metres – but the program also resulted in the discovery of a new visible gold zone at depth. Surface drilling has so far returned 4.70 g/t gold over 3.0 metres

The foregoing intersection was drilled underground into the Habanero zone. Here are some more underground results: 9.12 g/t gold over 7.0 metres including 24.63 g/t gold over 2.5 metres in the Naga Viper zone; 25.24 g/t gold over 9.3 metres including 125.44 g/t gold over 1.8 metres in the Habanero zone; 10.39 g/t gold over 4.5 metres in the Chipotle zone; 39.28 g/t gold over 1.7 metres in the Naga Viper zone; and 49.21 g/t gold over 2.2 metres in the Paprika zone.

Surface drilling has so far returned these assays: 4.70 g/t gold over 3.0 metres in the Habanero zone; and 29.90 g/t gold over 1.0 metre confirming the high grade nature of this deep intersection of what is most likely the depth extension of the Tabasco zone.

Wallbridge says it was hole FA-018-051 that returned visible gold in a potentially new zone at a vertical depth of 380 metres. Assays from 12 underground and 15 surface holes are pending.

Bulk sampling (35,000 tonnes) is currently underway at Fenelon, and the company plans to start gold production later this year.

The 2019 drill program – 50,000 to 75,000 metres – will commence in early February with mobilization of at least one underground and one surface drill rig.

This article originally appeared in the Canadian Mining Journal. 

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TMAC completes permitting for Madrid and Boston projects

With the receipt of Type A water licences, Toronto-based TMAC Resources has completed the permitting of its Madrid (both north and south) and Boston gold deposits. The Minister of Intergovernmental and Northern Affairs approved the licences, as recommended by the Nunavut Water Board.

The company spent last year ramping up production at its first mine on the Hope Bay property – Doris. This year will see the company balance optimization of established operations with development activities. Madrid North will be the next gold mine, and the Doris mine will begin to move underground.

The Doris water licence was amended to allow expansion of the Doris tailings management facility to 18 million tonnes from 2.5 million tonnes to accommodate Madrid tails.

Permits have also been obtained for alternative wind power generation, expansion of TMAC’s port facility, and surface mining of the Madrid and Boston crown pillars.

This article originally appeared in the Canadian Mining Journal.

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Angola to hold first diamond auction to bolster investment

Angola will give the results of its first diamond auction on Jan. 31 as the southwest African country’s seeks to increase transparency, attract more investment and boost government revenue, state-owned diamond-trading company Sodiam said.

The evaluation of seven gemstones from Angola’s northeast Lulo mine that will be sold is expected to end between Jan. 25 and Jan. 28, Eugenio Bravo da Rosa, head of the Luanda-based company, said. Lazare Kaplan International Inc., the KGK Group, Rosy Blue and the Diarough Group are among diamond manufacturing and distribution companies invited to the auction, he said.  Much of Angola’s diamond deposits remain under-explored because of a 27-year civil war and a business environment that remained difficult to enter after fighting ended in 2002

“We’re confident that this auction will result in a level of revenue that is higher than normal,” Bravo da Rosa said in an emailed response to questions late Sunday. The auction is in line with Angola’s goal to become “increasingly more open to foreign investment by following the best global practices,” he said.

Angolan President Joao Lourenco has been trying to open up and diversify the economy of Africa’s second-biggest oil producer to shake off a slowdown that began with a drop in crude prices in mid-2014. His predecessor Jose Eduardo dos Santos’ tight grip on the economy prompted some foreign miners to avoid Angola, which is also the source of the fifth-most diamonds in the world.

Bravo da Rosa said Sodiam now plans to hold at least six diamond auctions a year to entice more investment in the industry. The dates of the auctions are still being decided, he said.

Pink Diamond

Among the gemstones that will be sold this month is a 114-carat stone and a pink, 46-carat gem. Both diamonds were found in the alluvial Lulo mine, where in 2016 one of the world’s biggest diamonds — a 404.2-carat stone — was found. The lion’s share of Angola’s diamond production comes from alluvial deposits, or rivers, but Angola has been working to increase exploration of gems in shafts of volcanic rock, known as kimberlites.

Much of Angola’s diamond deposits remain under-explored because of a 27-year civil war and a business environment that remained difficult to enter after fighting ended in 2002. Angola’s diamond output fell 11 percent to 8.4 million carats in 2018 from a year earlier. Still, higher gem prices led to an 11 percent increase in revenue to $1.22 billion, said Bravo da Rosa, who cited preliminary data.

“The average price in 2018 increased by about 24 percent compared to the previous year,” he said. “There is currently a price reduction environment, especially for smaller diamonds.”

The Lucapa Diamond Co. operates the Lulo mine in Angola’s Lunda Norte region through holding company Sociedade Mineira do Lulo, or SML. Lucapa has a 40 percent stake in SML. The remaining shareholders are state-owned Angolan diamond mining company Empresa Nacional de Diamantes EP, or Endiama, and local partner Rosas & Petalas, according to information on Lucapa’s website.

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Rare earths deja vu: Chinese crackdown = higher prices

In a scene awfully familiar to those who follow the rare earths market, China is once again threatening to hatchet production of the valuable minerals used in high-tech, renewable energy and military applications.

Last week it was reported that the Chinese government published new guidelines designed to eliminate illegal mining and encourage more high-end processing. Those sterile words are code for “less polluting”.

Shutting down illegal rare earth mines is nothing new to the Chinese, who have found that the process of extracting rare earth oxides from ore and refining them into useable products has come at a high price to the environment.

(For more about the poisoned lake and rare earth mining near Baotou, Inner Mongolia, read this story by the BBC.)

"Dependency on one country or source for rare earths is dangerous. Right now the situation is fairly dire in the industry because we are being held captive by the Chinese for these materials."— BravoSolution's Paul Martyn

What is news, is the effect that limiting Chinese production will have on rare earth oxide prices; we only need take a look back to know this to be true.

China controls about 90% of the rare earth market so any export restrictions will be felt in countries that buy them, including the United States and Canada. The only REE mine in the United States, Molycorp’s Mountain Pass, went bankrupt in 2015 – although it is making a comeback, having been purchased by a US-led consortium.

In 2009 China launched a crackdown on illegal REE mining. At the time authorities said the unregulated industry was driving down global prices, making it impossible to cover the huge environmental clean-up costs.

The Chinese government imposed export controls on its rare earths, meaning a 40% drop in exports. Beijing said it had to implement quotas to protect the environment, but critics saw them as naked protectionism.

A year later, an international incident sent rare earth oxide prices into the stratosphere. In September 2010 a Japanese naval vessel interdicted a Chinese fishing boat near the Senkaku Islands, which Japan and China both claim ownership of, and detained the captain. The response hardly seems balanced in retrospect, but the Chinese decided to ban all rare earth exports to Japan, then an industrial powerhouse and China’s largest REE customer. The rare earths market panicked, and within months, all of the rare earth oxides gained in price.

While the spike in rare earths prices was good for miners like Molycorp and the numerous exploration companies that sprang up in search for them, buyers of products made from rare earths balked and pressured governments to do something about it. The US, European Union and Japan brought a case to the World Trade Organization to try and settle the dispute and get China to lift the restrictions.

In 2015 it did, resulting in a torrent of Chinese rare earth exports into the market and the inevitable collapse in prices.

While rare earth prices have never taken off to the extent they did between 2010 and 2015, intermittent crackdowns by China have seen price rises. We saw it happen in 2013 and in 2017.

Could this latest crackdown be China’s attempt to manipulate the REE market again? We can almost certainly bet on it. But we have another factor that could play into a rare earth revival, and that is a new high-tech arms race that is developing between the superpowers.

Donald Trump’s threat to withdraw from the 1987 INF Treaty with Russia may be the catalyst that starts a new arms race between the United States, Russia and China as each projects military power in defense of spheres of influence outside their borders.

If the US Military deploys missiles to places like Guam and Japan, it would deter China from a first strike against US ships and bases in the region, and also force Beijing into a costly arms race.

Not being party to the INF Treaty would also allow the United States to counter Russian aggression in Eastern Europe.

Why is this important? Because an arms race requires rare earths – something the US is in very short supply of. Not only that, the United States is wholly dependent on China for the mining and refining of rare earths it needs to expand and modernize its military.

China Is Beating the US in the Rare-Earths Game

The need for a North American rare earths industry, complete with a “mine to magnet” (as in permanent magnets made from rare earths) supply chain, has never been more crucial – considering the aforementioned arms race and the continuing trade tensions between the US and China.

The first step is finding the elements, and that’s where exploration comes in. While the US has some deposits, for example in Alaska and Wyoming, none are yet mineable. Same with Canada.

At Ahead of the Herd, we are focused on finding early-stage companies with the potential for adding shareholder value in growing sectors like rare earth mining.

Richard (Rick) Mills, aheadoftheherd.com

Legal Notice / Disclaimer

This document is not and should not be construed as an offer to sell or the solicitation of an offer to purchase or subscribe for any investment. Richard Mills has based this document on information obtained from sources he believes to be reliable but which has not been independently verified. Richard Mills makes no guarantee, representation or warranty and accepts no responsibility or liability as to its accuracy or completeness. Expressions of opinion are those of Richard Mills only and are subject to change without notice. Richard Mills assumes no warranty, liability or guarantee for the current relevance, correctness or completeness of any information provided within this Report and will not be held liable for the consequence of reliance upon any opinion or statement contained herein or any omission. Furthermore, I, Richard Mills, assume no liability for any direct or indirect loss or damage or, in particular, for lost profit, which you may incur as a result of the use and existence of the information provided within this Report.


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Project Halo rejects favouritism claims in Optimum Coal mine buy

Project Halo, the South African consortium selected as preferred bidder in the highly contested acquisition of coal mines previously owned by the Gupta family, is denying circulating allegations of favouritism for allegedly being linked to the same family.

The group, which last year bought three major assets from Tegeta Exploration and Resources (Pty) Ltd., a Gupta family-linked mining company, said Tuesday that Optimum Coal Mine, Koornfontein Mine and Optimum Coal Terminal had not been operating at full functionality. This, as the mines' owner was put on business rescue after the main buyer of those operations’ output, state-owned power utility Eskom, refused to renegotiate what it said was an unprofitable coal-supply contract and issued penalties.

The South African consortium has distanced itself from allegations that it is linked to the Gupta family, the previous owner of Optimum coal and other two assets.

But Swiss company Charles King SA argued it was seeking to stop business rescue practitioners from selling the three assets while they were awarded to Project Halo. Charles King has noted the Gupta’s holding company had agreed in 2017 to sell it Optimum for 2.97 billion rand ($201 million), though the transaction wasn’t completed.

Eskom is currently at the centre of an official investigation into claims that members of the Gupta family used their friendship with former President Jacob Zuma and his son Duduzane to secure business contracts.

"Fair and Square"

Paul Buckley, director of Project Halo, said there was nothing shady in the way it secured the bid to acquire mine and other related assets.

“Let it be stated clearly that we won the bid fair and square, based on our sound business proposal which was assessed by the business rescue practitioners as the best plan presented to them,” Buckley said in a statement.

He noted that Project Halo declared its expression of interest in the Optimum mine in March 2018, putting down a deposit of R250 million, as per business rescue practitioners procedure, towards the end of 2018.

“We are focused on going through the final stage of the process with the creditors and then immediately hit the ground running, paying particular attention to the workers,” Buckley said.

“Our sympathies lie with the workers at the mines, who have not been paid for some time. As soon as we take over the mine, and production resumes, we hope to address the workers’ plight.”

Over 2,000 workers at the Optimum and Koornfontein Collieries have not been paid their salaries for the past three months, laying the blame on the business rescue practitioners overseeing the operations.

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Emmerson moves forward with Africa’s hottest new potash project

Potash development company Emmerson (LON:EML) is ticking all the right boxes as it speedily progresses with the development of its 100%-owned Khemisset potash project in northern Morocco.

The London-listed miner said Tuesday it had completed a scoping study at Khemisset, which confirms the project’s technical and economic viability, and will now push on towards production.

Emmerson has completed a scoping study at its Khemisset project in northern Morocco, which shows it has the potential to be among the world’s lowest capital cost potash mines.

Key work to be undertaken this year, Emmerson said, includes infill and exploration drilling on the Moroccan project to confirm and expand its mineral resources. In particular, the company will work on upgrading the inferred resource estimate of 311 million tonnes at an average grade of 10.2% potassium superoxide.

Khemisset, which has the potential to be among the world’s lowest capital cost potash projects, could deliver earnings before interest, taxes, depreciation and amortization margins of more than 60% over a minimum mine life of 20 years, Emmerson said.

Following drilling the company will work on a pre-feasibility study, environmental and social impact assessments, after which it plans to kick off  strategic discussions with potential sales and marketing partners.

"The exceptional results of our scoping study (…) gives us a high degree of confidence to push ahead with our technical and engineering work. Based on current planned work programme, we are fully funded through until the first quarter of 2020," Chief Executive Officer Hayden Locke said in the statement.

Assuming everything moves forward according to plan, Emmerson expects to publish a definitive feasibility study next year, with first potash being delivered in 2022.

Shares in Emmerson shot up as much as 4.2% on the news and were trading 1.8% higher at 2.90 pence by mid-afternoon London time.

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Lion One buys drill assets in Fiji

Lion One Metals (TSXV: LIO) announced has just bought the drilling assets of drilling company Geodrill, which is located in Fiji’s main island.

The purchase would allow Lion One to prepare for drilling at its 100%-owned Tuvatu gold project, which on the island of Viti Levu also in the Fiji Islands.

In a press release, the North Vancouver miner explained that the Geodrill asset package includes one surface diamond drill rig capable of drilling up to 800 meters in HQ sized drill core, and one underground diamond drill rig capable of drilling in excess of 100 meters in NQ sized drill core. Drilling rods, down-hole survey cameras, down-hole temperature monitors, a spare parts inventory, transport vehicles, and support trucks were also included.

Photo by Lion One Metals,

The equipment is not new to the Canadian firm as its team has already used the surface drill rig for the majority of the 28,000 meters of exploration and resource definition diamond drilling undertaken over the past five years at Tuvatu, as well as for the majority of the PQ sized geotechnical drill holes completed for the tailings storage facility, new portal location for the underground development, and the process plant and surface infrastructure areas.

“With the purchase of these drilling assets Lion One has also hired an experienced local drilling team that will ensure the company has readily available, cost-effective drilling capabilities well into the future,” said Lion One’s Managing Director Stephen Mann in the media brief. “We can now plan future exploration drilling and have access to essential equipment at a significantly reduced cost to undertake that work. Such further work will be scheduled following the end of the current wet season in Fiji.”

The high-grade Tuvatu project is the largest undeveloped gold project in the island country. According to Lion One, it is expected to produce 100,000 ounces of the yellow metal per year over a 10-year mine life. Such production target is based on a 600 tpd CIL operation yielding recoveries of 86% with up to 40% of gold recoverable through the gravity circuit.

Resource is reported at a 3 g/t Au cutoff representing a resource amenable to underground production. The June 2014 Tuvatu resource estimate reported an indicated resource of 1,101,000 tonnes at 8.46 g/t Au for 299,500 ounces of gold and an inferred resource of 1,506,000 tonnes at 9.70 g/t Au for 468,000 ounces of gold.

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Toronto miner one step closer to start drilling at Peruvian project

Toronto-based Palamina Corp. (TSXV: PA) took one step forward regarding its 100%-owned Coasa gold project by submitting, this week, an Environmental Impact Declaration (DIA in Spanish) to the Peruvian Ministry of Energy and Mines. Such declaration is the primary environmental permit required prior to drilling.

The 17,200-hectare Coasa project is located in the Puno region of southeastern Peru and covers the town of Usicayos. It lies midway between the Ollachea and La Rinconada deposits, which are focused along a structurally deformed east-west trending jog-zone, part of a larger regional shear-zone.

In a press release, Palamina said that it has outlined an initial 3,000-metre drill program to test a couple of zones within the project, that is, the Veta and Phusca Zones.

"Once approved the DIA will enable Palamina to excavate trenches and complete up to 40 drilling platforms," the company's President, Andrew Thomson, said in the media brief.

The firm expects the environmental permit to be issued by late May and to cover 15 platforms and an initial 2,500 metres of drilling planned at Veta and 5 platforms and 500 metres of drilling planned at Phusca.

"DIA permits allow for 40 drill platforms leaving Palamina 20 for future use. Final drill target selection will be made following the conclusion of further geological mapping, trenching and prospecting expected to recommence by the end of April," Thompson said.

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