It shouldn’t be long before the market realizes the potential of one $50 million plus market cap gold project developer
SmallCapPower | July 6, 2016: Brexit uncertainty seems to be adding more fuel to a gold price advance that began back in January. This, in turn, should continue to propel M&A activity in the gold mining sector. Canada has long been a preferred location for developing gold projects, with companies such as Kaminak Gold, Claude Resources, and Lake Shore Gold being acquired recently. Today, we focus specifically on Ontario where there’s a few juniors that will likely be attracting the attention of bigger players should the gold price rally prevail.
Treasury Metals Inc. (TSE:TML): It shouldn’t be long before the market realizes the potential of the $50 million plus market cap gold project developer. The Company’s Goliath Gold Project in northwestern Ontario is one of the few remaining advanced stage gold development projects in Canada. TML has an estimated 1.2 million Measured and Indicated gold equivalent ounces with an open-pit grade of 2.8 g/t, in addition to more than 340,000 gold equivalent Inferred ounces. Goliath’s existing infrastructure (road access, power lines, and a Canadian Pacific Rail terminal at the nearby city of Dryden) and low initial CAPEX estimated at C$93 million makes it appealing to potential suitors.
Treasury Metals is expected to have all of its permits completed, including one to build its own mill, and begin mine construction in early 2017.
The Company also recently raised about $4 million of new equity.
It’s interesting to note that First Mining Finance Corp. (CVE:FF) this year paid about $72 million in stock to acquire an earlier stage, neighbouring deposit (Goldlund). Goliath’s proximity to Rainy River and Red Lake could pique the interest of both New Gold Inc. (TSE:NGD) as well as Goldcorp (TSE:G).
Detour Gold Corp. (TSE:DGC): An expensive acquisition target with a market cap of about $6 billion, but what its single-producing mine lacks in grade (less than one gram per tonne), it makes up for in volume (16.4 million ounce reserve). The rising gold price has made this project much more appealing, however, as the Company is expected to produce nearly 600,000 ounces of gold in 2016 at All in Sustaining Costs of less than US$900 an ounce.
Kirkland Lake Gold Inc. (TSE:KGI): Bringing in precious metals investing legend Eric Sprott as Chairman has paid off big for Kirkland Lake. The Company owns the Macassa Mine and Mill and four contiguous formerly producing gold mining properties in northern Ontario. Macassa has one the highest reserve grades of any gold mine in the world at 17.1 grams per tonne (g/t). Kirkland Lake is targeting production of almost 300,000 ounces of gold in 2016, and is currently sitting on about $130 million in cash. The Company generated $23.6 million in free cash flow during the first quarter of 2016 and recently hired former Lake Shore Gold Chief Tony Makuch as its new CEO.
Pure Gold Mining Inc. (CVE:PGM): Pure Gold owns the Madsen Gold Project in the Red Lake mining district with an estimate life of mine diluted head grade of 8.3 g/t gold. A recent Preliminary Economic Assessment forecasts life of mine All in Sustaining Costs of US$692 per ounce and an IRR of 74%, based on a US$1,175 per ounce gold price assumption.
Wesdome Gold Mines Ltd. (TSE:WDO): Wesdome is currently mining gold at the Eagle River Complex in northern Ontario from the Eagle River and Mishi gold mines. The Company also has development projects in the Kiena Mine Complex (Quebec) and Moss Lake (Ontario). The Eagle River mine is thought to contain 300,000 ounces of Proven & Probable underground reserves at 9.2 grams per tonne. Wesdome had about $25 million in cash as of June 13, 2016.
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