Integra removes permitting risk in Quebec

POSTED ON November 13, 2014 BY Travis McPherson
CATEGORY Integra Gold, Stories,

The Val d'Or Foreurs won the QMJHL title this year with the help of Detroit Red Wings top prospect, Anthony Mantha (Photo: Francois Laplante/FreestylePhoto/Getty Images)

The Fraser Institute rated the Canadian province of Quebec number one in 2011 for mining companies to operate in. Since then, la belle province has fallen out of the top 10 to rank at 11 last year due to regulation changes which caused certain mining projects to come under scrutiny. Most of the projects that were scrutinized were in more populated areas or places where aboriginal land ownership issues arose.

Fortunately for Integra Gold (ICG.TSXV) the city of Val-d'Or is not one of those places. They have one of Canada's next high-grade gold mines in their portfolio and it is right on the edge of Val-d'Or (which translates of Valley of Gold). The company's Lamaque South project and recently acquired Sigma-Lamaque mine and mill complex literally abut the city of 32,000 people. Val d'Or is a true 'mining town', in the sense that it only exists because of the Sigma and Lamaque mines which have operated there since the early 1930's.

Today Integra announced that after reviewing their project description for the combined Sigma-Lamaque complex and Lamaque South project, the Canadian Environmental Assessment Agency has determined that Integra won't have to file an onerous Environmental Impact Statement in a move that shows why Quebec was once the best place in the world to mine.

As a result, the project is now principally permitted through to production which is a significant de-risking event for the company. Additionally it sheds light on how cooperative the government is being towards the project.

Shares are up 12% on the news this morning.

Integra Gold's combined project package surrounds the mining town of Val d'Or (Photo: Integra Gold Corp.)

Stephen de Jong, Integra's President and CEO commented: "We are expecting to realize significant operational and capital expenditure savings as a result of the Sigma/Lamaque Mine and Mill acquisition, but we did not fully appreciate the substantial impact it would have on our project permitting timeline. Permitting is a crucial factor in the successful development of any project, and is often overlooked at the PEA stage. We will confirm the full impact that this ruling will have on our development timeline as part of our updated PEA which is now nearing completion."

Due to the fact the company acquired the Sigma-Lamaque mine and mill, the authorities now say that the Lamaque South part of their project (the project Integra held prior to the acquisition) only accounts for a small fraction of the combined land package. Management is finalizing a mining plan whereby they will be able to mine the Parallel Zone from underground infrastructure which they acquired at the complex. As a result, the project's footprint is very small.

The company says that most of the required permits are already in place for the Sigma-Lamaque complex and that the majority have now been transferred into Integra's name.

"From a time value perspective to cash flow, this ruling should save an estimated 6 to 12 months as we progress towards a production decision, in addition to the positive timeline implications stemming from the infrastructure obtained in the acquisition," noted Stephen de Jong, President and CEO.

Integra's management team and consultants are working to update the March 2014 PEA in order to incorporate the Sigma-Lamaque acquisition.

The company says the updated PEA will focus on decreased operational costs related to the mill acquisition as well as an updated engineering plan to access the Parallel Zone via existing underground infrastructure at the Sigma-Lamaque project. This should be published before year-end and will be followed up by an updated resource estimate which will include another 40,000 metres of new drill data.

The current PEA is already robust, but assumes toll milling which increases operating costs. Fortunately, the deposit is extremely high-grade and, as a result, has large operating margins.

The Lamaque South project is estimated to produce an average of over 110,000 ounces of gold annually at $665 per ounce C1 costs ($805 per ounce all-in) for 4.25 years. Over that period a total of 505,600 ounces of 8.19 g/t gold material is estimated to be recovered.

Based on a gold price of $1,275 per ounce, the project is estimated to generate a post-tax NPV (5%) of $88.5 million and an IRR of 38% and to cost $69 million in upfront capital with an additional $66.8 million in sustaining capital.

With the acquisition of the Sigma-Lamaque mine, not only should the operating costs come down, but also the initial and sustaining capital due to the fact that there is significant surface and underground infrastructure at the newly acquired complex.

Read: Integra Gold Achieves First Major Permitting Milestone At Lamaque Due To Mill Acquisition, Shortens Anticipated Development Timeline

Disclosure: Integra Gold Corp. is a CEO.ca client. The company had no influence on this story. All facts are to be verified by the reader. Always do your own due diligence as this is not investment advice.

Travis McPherson

trav@ceo.ca

Travis McPherson

trav@ceo.ca

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