Salman Partners comments on Integra Gold CorporationAccording to Salman Partners:
Integra Gold Corp. (ICG - TSXV - $0.25; NOT RATED) - 185.0M Shares Outstanding
Integra Gold, transformative asset acquisition
Integra Gold announced yesterday that it has entered into an asset purchase agreement to acquire the “Sigma-Lamaque Milling Facilities and Mines”, located 500m from the boundary of Integra’s Lamaque gold development project in Val-d’Or, Quebec.
The deal, valued at Cdn$7.55 million, consists of Cdn$1.8 million in cash and Cdn$5.75 million in common shares (25 million shares at Cdn$0.23/share).
Transaction Includes:
- Permitted 2,200 tpd milling complex, recoveries in comparable ore at 95%
- Permitted tailings facility, 3 years of capacity with room for expansion
- Permitted underground mining infrastructure, includes 3 established portals
- 586,000 oz M&I at 4.96 g/t, and 1,853,000 oz Inferred at 6.29 g/t
Note that the mill and tailings infrastructure replacement value was recently calculated to be approximately Cdn$100 million, excluding the resource (WSP Canada Inc, 2014).
This recent purchase will add significant upside to Integra’s already prospective PEA (after-tax NAV5% of Cdn$88.5 million NPV5%, 38% IRR, assuming US$1,275 Au), with broad stroke implications consisting of:
- With a milling facility onsite, toll milling mark-up of Cdn$15-20 per tonne will no longer apply
- Constructed tailings facility will push associated CAPEX off by at least two years; avoid CAPEX associated with preparation of dam foundation (assuming Integra purchased a mill, but had to construct a tailings dam).
- Established portals are within the vicinity of the Parallel Zone; may negate the need for the Parallel Zone access ramp outlined in the PEA, significant potential CAPEX savings.
- Further analysis will be required to determine the implications and feasibility of the acquired resource. Note that the resource is associated with the historic Lamaque mine (Teck Cominco), which in association with the Sigma (Placer Dome) mine, both included in the deal, collectively produced over 9 million ounces of gold.
The second part of this transaction includes “Rock Waste Company”, which has purchased the non-acid generating waste rock from the historical Sigma/Lamaque operations for use as construction aggregate. Through this arrangement Integra will receive a Cdn$1,025,000 payment (Integra’s net cash payment will be brought down to Cdn$775,000) and its estimated net reclamation obligation payable will be Cdn$2.5 million.
In summary, this acquisition is seen as a huge win for Integra. Not only will it significantly improve its already prospective PEA, it will materially open up the scope of the Lamaque project.