Basic Overview An already planned 2015 fall/winter drilling campaign of 40,000/45,000m by ICG, was substantially adjusted upwards when Eldorado Gold entered the picture last August with their financing of the 2016 drilling campaign of 100,000m.
EGO grows buy acquisition, and when EGO is looking for which few viable exploration companies around the world to acquire, there's a check list of priorities that must be met. Two of those boxes that need to be check first in my opinion would be that of the project's infrastructure, and jurisdiction/location. Then to follow, metallurgy, grade continuity, social/economics, size/scale, and grade. Integra Gold, checks all the boxes, and the scale of this high-grade deposit continues to grow by leaps & bounds.
By the middle of 2016, ICG extensive ongoing drilling campaign, along with the 1H/2016 PEA detailing the all important mining model of those C Structures, will give everyone involved, a much clearer picture of the scale, and economics that this resource could evolve into.
With that, an intelligible determination of valuation could be determined by EGO, or others on the value of the Lamaque Project, and with it a viable offer could then be made to ICG, and their shareholders.
I find it hard to see how another producer could make an cognizant offer, without knowing what's the scale of the resource is, the logistics of the mining model, and the expected generated free cash flow. But then again, if ICG is being courted by others as well, EGO could be pressured into making an early offer, having contingencies entered into an agreement until those unanswered above question are answered.
What we do know -
1) EGO is at least one of the producers looking to acquire (fully or partially) Integra Gold.
2) ICG management team & board had fully understood before bringing EGO in, what their modus of operandi had been in the past, and would be going forward.
3) ICG management & board has, and will continue to think, ahead of the curve. and outside the box.
4) With EGO blessing, ICG is carrying on an extensive ongoing deep (1000m) step-out drill program, primarily clarifying the extent of the C Structures at Triangle, as well a other mineralized zones throughout the South Lamaque property.
5) Surface infractural at Triangle is essentially completed. and underground exploration, and mining are ready to begin early 2016.
6) A revised PEA modeling of the C Structures into the mine plan 2/H 2016.
7) Advancing the Triangle ramp underground so as to begin an exploration program which can include a bulk sample of up to 5,000 tonnes of mineralized material.
8) With $20 million in the bank, $12.5 million in warrants, and $3.5 million from the Quebec resource tax rebate, Integra Gold with $36 million, is well financed going forward.
Why the need for a partner -
My thoughts, if Integra was to go it alone bringing the project into commercial production, management knew they would need to raise roughly an additional $80 million over the next 24 months. Plus, if management also wanted to fast-track the Lamaque Deep Project into production, one could add another $100+ million to that total.
With a current share price of between .30 - .35 cents, it would make it virtually impossible, even with a roll-back, to raise funds for both projects together without giving away to much . While raising $80 million for just the South Lamaque Project, under favorable underwriting terms, and without having heavy shareholder dilution, very difficult.
So Integra Gold brings Eldorado Gold aboard, viewing it as the best case solution for the company, and its shareholders in securing the funding needed to advance the Lamaque Project into production.
Integra Gold still holds a strong position -
Integra's management, board, & stakeholders hold over 50% of all the shares, if a take-out was presented, and depending on the wording, a shareholder approval of upwards to %66.66 would be needed. In other words, and simply put, any terms of a take-out that are offered for shareholder approval would have to be terms a shareholder could not refuse.
There's very little doubt in my mind that before Integra entered into last August "Share Purchase Agreement" with Eldorado Gold, Integra's Management & BOD had, lets say an understanding with EGO of what general terms they would both agreed upon when, and if the time came for either a JV, or a complete take-out.
My bet is on the side of some type of JV deal going thru, and could be made once enough of the ongoing drilling results on these C structure are released, allowing the technical team to have a fairly comprehensive handle on the scale (laterally, and at depth) of these structures, with the possibility of also waiting for the revised PEA to come out 1/H2016, so as to overview the modeling these C Structures present into the mine plan.
What's the Lamaque Project worth?
The understanding of the C Structures by the technical team, that was realized shortly before EGO came into the picture last August (no coincidence), has quickly transformed Integra Gold into a world class gold deposit.
Drilling down at Triangle to just 1000m at 2200 Au ounces per/vertical meter (as was the Sigma Plug), would give ICG a 15 year mine life, at 150,000 Au ounce per/year, that's just using the Triangle resource
As an advance exploration company Integra is in the enviable position of being right at the top of their quartile with some of these outstanding attributes - Owning their own Mill, and Trailing Facilities, Fully Permitted by year end 2016, Outstanding Surrounding Infrastructure, Outstanding Jurisdiction, 94%+ Metallurgy, Multi-Million High Grade Au Resource, High Profit Margins, and No Debt.
With all those above attributes, and at current market prices, a price of around $100 - $125 per/Au ounce at the Lamaque Project would be rightly justified. if not more.
The biggest problem in determining the value of the Lamaque Project is how many Au ounces are to be included in any potential offer to be made?
Needless to say any numbers presented here are extremely rough, and most probable under counted.
Latest resource update total on the Lamaque South Property was around 2 million Au ounces, with the Sigma-Lamaque Property at around 2.5 million Au ounces, for a combined total of 4.5 million Au ounces Indicated/Inferred.
Knowing that the last Resource update was based solely on the Triangle Zone, and 43,435m of new drilling from other zones was not included, along with the current 2015/2016 drilling of 140,000m not included. The resource at only the Lamaque South Property could easily have the potential of increasing to over a 4 million Au ounces.
Without a recent updated resource estimate at the Sigma-Lamaque Property, no additional Au ounces will be added to the current resource of 2.5 million Au ounces, giving a potentially combined total resource for both properties of around 6.5 million Au ounces that may be included in any type of offer
Total Au resource - 6.5 million Au ounces x $100 = $650 million dollars.
Lamaque Project 50/50 JV - producer to pay $325 million dollars to Integra.
South Lamaque Property - 4 million Au ounces x $100 million dollars = 400 million dollars.
South Lamaque Project 50/50 JV - producer to pay $200 million dollars to Integra.
These figures being conservative, are likely to be undervalued. But as a ballpark figure, one can get a better feel of what the potential value of the Lamaque Project may present to shareholders in the near & long term.
Of course, all of the above is in only my own humble opinion - GLTA