RE:Lake Shore Gold Acquires Significant Equity Interest in IDM IDM
The Red Mountain gold deposit has Measured and Indicated Resources of 435,395 ounces of gold at 8.4 g/t, and Inferred resources of 140,122 ounces at 5.4 g/t Au. A 2012 PEA estimated that production costs would be $459 per ounce, with CapEx of $162.7 million.
Lac Minerals advanced the project in the 1990′s, going as far as to build a production sized decline ramp into the deposit. Lac was sold to Barrick Gold in 1993, and by 1997, Red Mountain was put on the back burner. A couple of junior companies, as well as Seabridge, have held it since.
image: https://www.stockhouse.com/getmedia/29371856-67a0-4877-bc47-bf95706b28d3/Tommy-Selfie-at-Red-Mountain?width=174&height=129
Selfie atop Red Mountain
I visited the project last year when it was held by Banks Island Gold, who soon after dropped it due to expensive carrying costs, to focus on their Yellow Giant asset.
Revolution (soon to be IDM Mining) appears to have inked a slightly more favourable deal to acquire the deposit from Seabridge compared to Banks Island. They will pay Seabridge $2 million ($1 million within 90 days, $1 million within 1.5 years), issue 29,733,000 pre-consolidation shares, and incur $7.5 million in exploration and development expenditures over 3 years. Seabridge also retains a stream to acquire 10% of gold production at $1000 per ounce, up to a total of 50,000 ounces. Alternatively, Seabridge may elect to receive a $4 million payment at the commencement of production in exchange for buy back of the gold stream.
Investors can expect plenty of newsflow from Red Mountain this summer as infill drilling gets underway.
“Our objective is to advance Red Mountain to a positive production decision in the near term,” said Michael McPhie, newly appointed Executive Chairman of Revolution and the Managing Director of JDS Gold Ltd. “The 2014 work program will include detailed engineering and delineation drilling with the objective of upgrading the existing resource and moving the project down the path to development.”
CEO Rob McLeod sees exploration potential outside of the existing resource, and is optimistic that glacial retreat since work stopped in 1996 may result in more gold being found on the project. According to the news release, “Glacial retreat over the past couple of decades has resulted in discoveries of additional mineralized zones at Seabridge’s KSM Project and Pretivm’s Valley of the Kings Deposit.”
McLeod also touched on a more personal note in the news release.
“It has been my ambition over the past 20 years to return to explore the Red Mountain Project near my hometown of Stewart, where I first started my career as an exploration geologist in 1993.”
Readers unfamiliar with Mr. McLeod should know his previous company, Underworld Resources, was a resounding success after it struck white gold in the Yukon and sold to Kinross in 2010, enabling him to launch Revolution.
Revolution’s backers, including Kinross, Sun Valley Gold, and others, have seen Revolution’s share price trend with the rest of the junior mining market since January, 2011, with RV shares falling from a high of $0.85 to as low as $0.01 in November, 2013.
It is typical of junior mining executives in Canada to abandon their existing shareholders and share structures when launching new companies after previous ones fail, or stall.
I asked Mr. McLeod why he chose to use Revolution to launch this idea, when he could have easily positioned himself and Mr. McPhie in a new vehicle that the gentlemen owned the majority of.
“Because shareholders deserve another kick at the can,” Mr. McLeod said.
IDM Mining will have a low cost project with exploration upside, but more importantly it will be led by a great team of mining executives in their early to mid forties who are hungry for more success.
With Mr. McLeod’s track record as an exploration geologist and family history in the mining business, especially near Stewart, BC, Mr. McPhie’s strong financial, team building, and permitting experience, and the impressive mine development track record of JDS and Mr. Stibbard, the new Revolution Resources, or IDM Mining, gives shareholders a very good kick at the can indeed. A team like this shouldn’t be ignored, even in a lousy junior market environment.