STA – Sanatana Starts Fight of their Life Against IAMGOLD

POSTED ON November 12, 2013 BY Travis McPherson
CATEGORY Finance, Mining,

Watershed Project (Company)

In early 2011, a junior resource company, Sanatana Resources (STA:TSXV), was looking to acquire land in a developing gold camp in Canada and they came across one such opportunity in a property called the Watershed project in northern Ontario. This property was owned by Augen Gold so STA entered into an option agreement with Augen to earn in a 50%-interest in the project. STA has spent over $9 million on the Watershed project and now holds a 50% interest in 46 mineral claims. Now, the project’s other 50% owner, a subsidiary of IAMGOLD (IMG:TSX), has filed an application for easements over the Watershed Property on the grounds that these easements are necessary for the economic development of the Cote Gold Project. As one might expect, STA has objected to the proposed easements and will plead its case to the Ontario Mining and Lands Commissioner.

Augen (renamed “Trelawney Augen Acquisition Corp”) was acquired by Trelawney, which was, itself acquired by IMG in June 2012 for $608 million, making IMG, STA’s 50% partner. If IMG is successful in its easement application it would not only kill STA as a company, but it would also bring into question the sovereignty of Ontario mining law, which is presumed to have one of the highest standards, globally.

This rings eerily familiar to a recent case involving Cliffs Natural and TSX-V listed junior KWG Resources (KWG:TSXV) in which Cliffs sought and failed to receive approval for an easement to build infrastructure for their Black Thor deposit. Given the precedent set by the KWG/Cliffs case, it would appear the defense is strong for STA, however, in the world of mining the only certainty is uncertainty, so we will wait to see how it unfolds.

STA had $285,000 at the end of June, but recently completed a $800,000 private placement at $0.08. Although STA remains committed that IMG's plans will be rejected, the market is not giving much confidence to STA's claims and shares are down 80% this year alone (however, some of that decline can be attributed to the weak demand for exploration stories).

Here's the 5-year chart:

Read: Sanatana Commences Binding Arbitration Proceedings Against TAAC

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

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