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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IDM Mining can proceed with B.C. gold project

Rob McLeod, President and CEO of IDM Mining, shows off the 10 g/t gold mineralization underground at the Red Mountain Project, northwest B.C. Photo by Ellsworth Dickson.

IDM Mining Ltd. [IDM-TSXV; IDMMF-OTCQB] said Tuesday January 15 that the Canadian Environmental Assessment Agency has issued a positive decision statement for the company’s Red Mountain underground gold project near Stewart, northwest British Columbia. As a result, the project can now proceed.

The announcement comes just days after Ascot Resources Ltd. [AOT-TSXV; OTVF-OTCQX] said it is acquiring IDM in a deal that values IDM at $0.086 per share.

Ascot said aim is to consolidate its Premier Gold Project with IDM’s Red Mountain Project, thus creating a leading high-grade gold development and exploration company in northwestern British Columbia’s Golden Triangle region.

Ascot has said its near-term strategic goal is to define a new high-grade resource for underground mining, while continuing to explore nearby targets on its Premier-Dilworth properties, also near Stewart.

IDM Mining is focused on advancing the Red Mountain Project towards production. The 17,125-hectare project is located 15 km northeast of the mining town of Stewart. The project is also close to a paved highway and grid power.

Having recently announced an increased high-grade measured and indicated resource, the company envisions bulk underground mining methods, producing gold-silver doré bars at the site.

As proposed, Red Mountain Underground is expected to produce 1,000 tonnes of ore per day or 365,000 tonnes per year over an operational mine life of six years.

In the press release Tuesday, IDM said Canadian Environment Minister Catherine McKenna has announced that under the Canadian Environmental Assessment Act, the proposed Red Mountain Underground Gold Project is unlikely to cause significant adverse environmental effects and the project may proceed.

As part of the Environmental Assessment Decision Statement, McKenna has established more than 120 conditions that IDM must fulfill throughout the life of the project.

For example, the proponent is required to carry out the designated project in a manner that protects migratory birds and avoids killing or disturbing migratory birds or destroying, disturbing or taking their nests or eggs.

IDM shares were unchanged at $0.06 on Tuesday. The shares trade in a 52-week range of 10.5 cents and $0.04. Ascot shares were off 0.89% or $0.01 at $1.11.

IDM recently secured a provincial Environmental Assessment Certificate for the Red Mountain Project, which also provides a defined set of conditions and commitments that will allow for commercial development and operation of the project.

Red Mountain hosts a NI 43-101 compliant estimated resource of 2.8 million tonnes in the measured and indicated category averaging 7.91 g/t gold and 22.75 g/t silver, for 704,600 ounces of gold and over 2 million ounces of silver. On top of that is an inferred resource of 316,000 tonnes, averaging 6.04 g/t gold and 7.61 g/t silver, for 61,400 ounces gold and 77,200 ounces of silver.

“The combined company will control two geological trends, hosting significant ground in the Golden Triangle, which remains highly prospective for additional gold-silver discoveries,” IDM President and CEO Robert McLeod has said.

Transition Metals up 68% on Nova Scotia gold assays

The Transition Metals Highland Gold Project in Cape Breton, Nova Scotia. Source: Transition Metals Corp.

Transition Metals Corp. [XTM-TSXV; TNTMF-OTC] shares rallied Tuesday January 15 after the company released new assay results from its Highland Gold Project in Cape Breton, Nova Scotia.

Highlights from a rotary air blast drilling program include 9.14 metres, grading 23.22 g/t gold, the company said in a press release.

That included 3.05 metres of 49.54 g/t gold (1.6 oz/ton) at the Main Zone before ending in mineralization at a depth of 21.34 metres.

The hole was completed as part of an initial test program to assess the effectiveness of RAB drilling to recover samples of near surface oxidized and weathered bedrock and to test for a southward extension of a historically identified zone of sub-cropping mineralization called the Main Zone.

Transition shares rose 68.7% or $0.055 to 13.5 cents on volume of 2.13 million on Tuesday.  The 52-week range is $0.06 and 20 cents.

In total, seven holes for 200 metres were completed on the property before the onset of winter conditions in the Highlands forced the company to demobilize until weather conditions improve in the spring.

Transition has an option to acquire a 100% interest in the Highland Gold Project, which covers an extensive cluster of high-grade gold occurrences in an area that has seen limited exploration.  The project is located 60 km northwest of Sydney and covers 5,408 hectares. It is accessible either by a major road or by a network of logging roads.

“Bedrock in the Highlands displays a high degree of chemical weathering and oxidation comparable to that developed in a subtropical environment,” said Transition CEO Scott McLean.

“Since acquiring the property last fall, our work has highlighted numerous exploration targets associated with mineralized structures, prospective alteration and till anomalies that support the potential for a multi-kilometre scale gold system on the property,” McLean said.

“The Main Zone is one of 30 mineralized zones identified to date on the property,” he said.

McLean went on to say that RAB drilling has proven to be an effective tool in inexpensively and rapidly screen numerous targets moving forward.

Transition recently received the first set of assay results from the continuing drill program conducted by North American Palladium Ltd.’s [PDL-TSX; PALDF-OTC] on the Sunday Lake platinum-palladium project.

Sunday Lake is located 25 km north of Thunder Bay and approximately 95 km south of North American Palladium’s producing Lac Des Iles Mine.  he property covers a 3.5-km diameter circular reversely polarized magnetic anomaly associated with a large buried mafic-ultramafic intrusion, which is interpreted to be Proterozoic in age and related to the Mid-Continental Rift.

North American Palladium holds an option to earn a 75% interest in the property and Transition holds a 25% free carried interest through to the completion of a feasibility study.

Transition said results sourced from a North American Palladium’ March 27, 2018,  news release include Hole SL-17-18B, which returned 18.65 metres at 4.05 g/t PGM (platinum-palladium-gold), including 4.9 metres at 6.10 g/t PGM and 0.64 % copper.

“These results demonstrate the potential of the Sunday Lake intrusion to host significant economic mineralization and the grades encountered are higher than other similar deposits and mines in the district,” said McLean.

“The geology at Sunday Lake bears many similarities to the company’s 100%-owned Saturday Night project located in similar geology 16 kilometres to the west that we feel may have similar potential.”

The property is located within an emerging platinum group metals camp.

The Newmont-Goldcorp Deal Is Positive News for Gold Mining

The Newmont-Goldcorp Deal Is Positive News for Gold Mining

Consolidation season has finally arrived in the goldfields, just as many experts and analysts have been predicting for some time now. With exploration budgets having been slashed since their 2012 peak, and because there are today fewer and fewer ounces of gold available to be mined, one way forward for producers of all sizes will be to ramp up mergers and acquisitions (M&A) activity.

You might have heard that Newmont Mining will be buying Goldcorp in a massive $10 billion deal. The resultant company, to be headquartered in Denver, will be the world’s largest gold producer by number of ounces mined—larger even than what’s being called “New Barrick,” after the $6.5 billion merger of industry giants Barrick Gold and Randgold Resources, announced back in September. Whereas Barrick-Randgold produced a combined 6.6 million ounces of gold in 2017, Newmont-Goldcorp was responsible for as much as nearly 8 million ounces.

The Newmont Gold Corp deal will create the worlds largest gold producer
click to enlarge

I see this news as positive overall for the metals and mining industry, which has long signaled the need for consolidation. As I explained in a Frank Talk Live segment back in October, it’s when an industry has found a bottom that you start to see big M&A deals. A couple of years ago, the very talented people at Visual Capitalist showed in an infographic that mining M&As peaked in the aftermath of the financial crisis.

A Positive Case Study in M&As: Domestic Airlines

This tacit rule applies not just to metals and mining but also to most other industries. Look at domestic airlines. It’s easy to forget now that between 2005 and 2008, more than two-thirds of U.S. airlines were operating under Chapter 11 bankruptcy protection. A huge wave of consolidation followed, giving us the “big four” carriers—Delta, American, United and Southwest. Profits surged to new highs. This year, according to the International Air Transport Association (IATA), global airlines should see their 10th straight year of profitability, and fifth straight year where “airlines deliver a return on capital that exceeds the industry’s cost of capital, creating value for its investors.”

Consolidation Could Speed Up the Closer We Get to “Peak Gold”

So will gold miners follow suit and consolidate (more so than they already are)? And will this lead to a similarly sustained period of outstanding profitability?

No one can say for sure, of course, but my guess is that we’ll continue to see more and more deals the closer we get to the idea of “peak gold.” As I’ve shared with you before, the yellow metal is getting exponentially more difficult and costly to mine. The “low-hanging fruit” has likely already been plucked, so to speak. Exploration budgets have been slashed, and the days of 20- and 30-million-ounce gold deposits could be behind us, to say nothing of 50-million-ounce discoveries.

The amount of gold in major discoveries has been trending down for years
click to enlarge

To replenish their own reserves, big-name miners such as New Barrick and Newmont might decide to absorb smaller-cap junior producers with provable mines instead of spend higher and higher costs to scour the world for progressively harder-to-find deposits.

Says Michael Siperco of Macquarie Research, the Barrick-Randgold and Newmont-Goldcorp deals could “spark a wider consolidation in the industry, where too many gold companies are chasing too few assets.”

Only time will tell if this happens. I’ll be curious to see what companies could be next to strike a deal!

Stay up-to-date on this potential trend by subscribing to our FREE, award-winning Investor Alert!

All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor. By clicking the link(s) above, you will be directed to a third-party website(s). U.S. Global Investors does not endorse all information supplied by this/these website(s) and is not responsible for its/their content.

Holdings may change daily. Holdings are reported as of the most recent quarter-end. The following securities mentioned in the article were held by one or more accounts managed by U.S. Global Investors as of 12/31/2018: Newmont Mining Corp., Barrick Gold Corp., Newcrest Mining Ltd., American Airlines Group Inc., Delta Air Lines Inc., United Continental Holdings Inc., Southwest Airlines Co.

KER Commentary – Tue 15 Jan, 2019

Adrian Day – Insights On The Newmont Goldcorp Deal

I highly respect what Adrian Day has to say on the metals markets so when the deal between Newmont and Goldcorp was announced yesterday I reached out for a comment. We get into some of the finer details of the deal and find out who the real winner is.

Adrian Day – Newmont/Goldcorp deal

Click here to visit the Adrian Day Asset Management website.

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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