If Anglo’s woes symbolize the pain of production in a falling price environment, a property deal between two juniors announced after market close yesterday may hint at brighter days to come – the looming supply crunch and rising prices that inevitably follow a price crash.
Rob McLeod’s IDM Mining (IDM-T) has signed an agreement with Oban Mining (OBM-T) that will see Oban invest $1 million for a 20% stake in IDM Mining, which takes control of Oban’s portfolio of Yukon precious and base metals prospects.
Oban picked up the properties in June through a consolidation of five junior mining companies including Ryan Gold, but the Yukon properties were a bit of an outlier in a portfolio focused on Ontario and Quebec prospects. Oban retains a 1% royalty on the Yukon properties, which consist of 14,310 claims covering about 308,000 hectares.
For McLeod, IDM’s president and CEO, the deal brings him back to terrain where he experienced his greatest success. The exploration geologist was VP exploration at Underworld Resources when the junior made the White Gold discovery, which sparked a gold rush in Yukon. Underworld was sold to Kinross for $139 million in 2010.
The IDM deal was cheered in the CEO Chat room, where McLeod is a regular – and valued – contributor.
Here’s what McLeod had to say in chat: “There is a huge portfolio with alot of data that I’ve been working through. A lot of the properties received two seasons of systematic exploration, dominantly soil sampling. First Season: ridge and spur reconnaissance soil lines; Second season: detailed soil grids. There are multiple properties with awesome anomalies that mostly had no prospecting/mapping follow-up. Many of these are in virgin districts for gold exploration.”
Most of the Yukon claims are good until 2017 or later, McLeod said.
Bringing in Oban as a major shareholder gives IDM access to deep pockets and technical expertise: Oban’s co-chairmen are Ned Goodman and Osisko Gold Royalties chairman and CEO Sean Roosen. Veteran geologist John Burzyinski is Oban’s president and CEO.
The $1 million received from Oban will be paid to Seabridge Gold, which was due a $1-million option payment (IDM optioned its flagship Red Mountain project from Seabridge).
Red Mountain is a high-grade underground gold project that is currently going through environmental permitting. The plan is to get a small mine into production and grow it; IDM has applied for the streamlined “substitution” status, meaning the federal government will OK the mine if it gets provincial approval.
Red Mountain’s history also ties in to McLeod’s personal narrative – Red Mountain was the site of his first job as a junior geologist out of university.
On the closing of the Oban deal IDM will have about 91 million shares outstanding, and a share price today of 9 cents. Cash and equivalents of $641,245 as of July 31.
Related reading: Geologist takes mineral hunt to his hometown | Vancouver Sun
Columbus Gold (CGT:TSX) – The French government has authorized the use of cyanide at Columbus Gold’s flagship Paul Isnard mine project in French Guiana.
Columbus and JV partner Nord Gold (50.01%) currently have 4 drill rigs operating at the project, which has a current resource of 3.9 million ounces of gold Indicated and 1.1 million oz Inferred.
The plan is for a feasibility study to be out before the end of 2016.
Robert Giustra, chief executive officer of Columbus Gold, commented: “The authorization of cyanide use is a clear message from the French government that it is committed to developing the vast gold potential of French Guiana. It’s an essential and very positive development for Columbus, that greatly increases the level of confidence with respect to the development of our Montagne d’Or gold deposit.”
Columbus has 141 million shares out for a market cap of $52 million, and cash of $1.7 million as of Sept. 1.
Lundin Gold (LUG:TSX) – Haywood Securities has initiated coverage on Lundin with a buy rating and 12-month target price of $5.
“Lundin’s flagship Fruta del Norte (FDN) project in Ecuador is among the largest and highest grade undeveloped gold projects in the world. It does, however, come with significant geopolitical risk. … Lundin is part of the Lundin Group of companies, which has a track record of successfully operating in some of the most politically challenging parts of the world, including the Democratic Republic of Congo and Argentina, and is better positioned than most to capitalize on this opportunity,” the report stated.
If you do not have a Haywood broker, send a nice email to Riley Skinner at firstname.lastname@example.org (and tell him James sent you).
Lundin acquired Fruta del Norte from Kinross for US$240 million in December 2014. Lundin Gold is in talks with the Government of Ecuador on the Exploitation Agreement, which they hope to get done in the next couple weeks.
Lundin has 101 million shares out for a market cap of $394 million and cash of $31.6 million as of Sept. 30.
Join the conversation at CEO Chat, the investment conference in your pocket, which is becoming a powerful tool for crowd-sourced stock analysis.