The latest deals involving the industry’s best known promoters have always been a major talking point among attendees at the Prospectors and Developers Association of Canada convention in Toronto.
So as the mining sector’s biggest networking event got underway on Monday, it was no surprise to hear the discussion turn to Frank Giustra’s Klondike gold exploration deal.
The Vancouver-based financier has taken a stake, (believed to be just under 10%) in Klondike Gold Corp. (TSX: V.KG, Stock Forum), which is working to secure a large land position, about 15 kilometres south of Dawson City, Yukon, around the site of the original Klondike gold discoveries.
With an eye to achieving that goal, Klondike Gold recently completed the acquisition of an 80% stake in Lonestar Gold Inc., a private B.C. company. It plans to get the other 20% via the acquisition of Klondike Star Mineral Corp. (OTO: KDSM, Stock Forum), which is trading at 3 cents this week, and holds a 55% stake in the Lone Star property.
The Klondike Star acquisition is expected to unify title to the 133-square kilometer Lone Star property, setting the stage for future exploration on nine targets outlined so far.
A well placed source said Giustra likes the fact that Klondike Gold has an experienced management team in place, led by Chief Executive Officer Erich Rauguth and director Manfred Peschke. Both were involved with Vanessa Ventures, the company that acquired the Las Cristinas gold property in Venezuela, before the site was scooped up by Placer Dome Inc.
The Klondike gold rush was attempted by roughly 100,000 people who attempted to travel to Canada’s Yukon region between 1897 and 1899.
Since then, the Klondike gold fields are estimated to have produced about 20 million ounces of placer (or river bed) gold. For its part, Klondike Gold is betting that the Lone Star project contains the main hard rock source of much of the placer gold.
“The property has been overworked and under-appreciated,’’ said Doug Leishman , a Bowen Island, B.C. mining consultant, who was a mining analyst at Yorkton Securities when the investment firm was being run in the mid 1990s by Giustra.
Trading at 18.5 cents on Monday, Klondike Gold has a market cap of $15 million, based on 81.6 million shares outstanding. The 52-week range for the stock is 21 cents and 7 cents.