When we reflect back on 2017 and recall any ‘mega’ deals in the junior mining sector a clear player stands out: Integra Gold Corp. (TSX: V.ICG, Forum) and its C$590 million acquisition by Eldorado Gold Corp. (TSX: T.ELD, Stock Forum). ICG shareholders got a 52% premium and ELD got a project in mining-friendly Quebec. To reach this momentous conclusion for Integra, the team had quite the run delivering a 6X return for shareholders in just four years. They played to their audience – the gold producer in need of increasing ounces.
During a time of very depressed commodities prices, this Company saw the forest through the trees - the producer pipeline of assets was dry and they worked to deliver assets of size and quality that those producers needed. Integra was strategically structured by management so that it could either be sold or built. And they were aggressive. They did what very few others were doing at the time: they drilled. A lot. They were different, challenging the ingrained mindsets of the past, and daring to be different in their approach to building shareholder value.
What do you think the Integra team did with a major deal behind them? They kept the executive team together and are aiming to do it all over again with Integra Resources Corp (TSX: V.ITR, Forum).
From the initial launch of this ‘Integra 2.0’ they knew what they wanted: North America. Precious metals assets. Accessible. History of production. And projects often considered ‘overlooked’ or ‘impaired’.
Well, they found it. From Kinross Gold, Integra acquired 100% of the DeLamar Gold and Silver Project, located in the heart of the historic Owyhee County mining district in south western Idaho. The DeLamar Mine closed in 1998 with precious metals prices below US$300, after producing 1.6 million ounces of gold and 100 million ounces of silver.
The DeLamar Project today incorporates roughly 5,300 acres of patented and unpatented claims, a further 4,100 acres of leased lands with approximately 1,500 drill holes and 145,000 metres of drilling outlined in historic databases, with a wealth of past mining and milling production data to draw from.
Sound familiar?
In many ways the acquisition of DeLamar asset is strikingly similar to Integra Gold’s asset acquisition of Sigma-Lamaque back in its early days:
- Established production history
- “Under the radar” opportunity with multiple tested targets
- Robust resource potential
- Excellent infrastructure and existing on-site facilities
- Pro-mining jurisdiction
What has Integra communicated about the DeLamar Project? With an updated resource estimate already announced, the project exhibits significant exploration upside, remaining open at depth, with limited historical deeper drilling below 120 meters. The limited deeper drill hole data that does exist from the early 1990s shows intercepts intersecting a series of “feeder” high-grade veins, assaying up to 2 oz/t of gold or more.
There also appears to be strong metallurgical gold-silver recoveries in past production. And test work demonstrates great optionality for the potential for future development of both bulk mineable gold-silver mineralization at surface, and high grade, vein-type “feeder” mineralization at depth. Picture the low grade bulk mineable mineralization being the branches on the tree and the high grade “feeders” being its roots.
Just like the Lamaque project in Val D’Or, this asset in Idaho was mined in the past with a respectable history of production. The DeLamar Mine first operated in the 1880’s, where underground miners spent 30 years producing 733,000oz of gold and 57 million oz of silver, with average grades in the 1oz/tonne region. In the 1970’s, new owners of the site developed a near-surface resource which was bulk mined, producing a further 870,000 oz gold and 50 million oz of silver.
As displayed in the current resource estimate which Integra defined right out of the gate, these mines did not run out of ore. They were shut down due to severely depressed metal prices in the 1990’s, with gold prices sinking to below $270/oz and few mines producing economically. So, Integra has once again taken it upon themselves to de-risk the asset. And this time during what looks to be a more promising precious metals market.
Integra has laid out a plan to deliver on this project, which includes an aggressive 20,000 meter exploration program, metallurgical work and a PEA study. They are also in the final stages of negotiations to acquire patented claims in the past-producing Florida Mountain Gold and Silver Project, which borders DeLamar 5km to the east. This site also last operated in the 90’s and shut down after low metal prices, and should not be downplayed as it has strong potential to add further ounces and exploration upside on the horizon.
Integra is well-funded to execute on this plan, having recently closed an oversubscribed $27 million private placement. And, even in these early days, they appear to have strong industry support. Kinross Gold has become a 9.9% shareholder of Integra Resources, also retaining a net smelter return royalty. David Awram, co-founder of Sandstorm Gold has joined the Board of Directors and Randall Oliphant has been retained as a strategic advisor to the Board. Oliphant brings his wealth of mining knowledge amassed at the helm of Barrick Gold, New Gold and as an advisor to Newmarket Gold.
I bet that in true Integra fashion, we will see them once again try to do things a little differently. Back at Lamaque they applied artificial intelligence and machine learning to identify high value targets and help find gold. Algorithm driven big data screening capabilities have rapidly evolved since then so you can bet they will find ways to merge this approach with traditional geoscience once again. Many boots on the ground are expected in coming months to conduct geophysical surveying, drilling and assay results and field reconnaissance programs.
Integra has a robust project at DeLamar with strong growth potential. They are coming out of the gate with a sizable gold-silver resource, historic knowledge and databases, high quality low and high grade exploration targets, and an executive team proven capable of raising the funds required to develop a project. This presents an attractive, low-risk development opportunity, strengthened by a compelling value proposition and a team dedicated to generating long-term shareholder value and repeating its past successes. My bet is that Integra 2.0 is going places.
Full Disclosure: Integra Gold Corp is a paid client of Stockhouse Publishing.