IDM Mining, Ascot Resources to join forces
IDM Mining Ltd. and Ascot Resources Ltd. are joining forces to create a premier mine development and exploration company with two high-grade gold-silver mine projects near Stewart, a mining town in northwestern British Columbia’s Golden Triangle.
“The combination of Ascot and IDM creates a very attractive opportunity in northwest British Columbia’s Golden Triangle for our shareholders and stakeholders,” said Ascot Resources President and CEO Derek White. “Based near the historic mining town of Stewart, this area has hosted several prominent, profitable, and high-grade gold mines and we see that similar potential going forward.”
In an all-shares deal announced on Jan. 7, IDM shareholders would be issued 0.0675 shares for every IDM share held. The value of this buy-out works out be roughly C8.6 cents per IDM share, or about C$41.35 million, which is a 54 percent premium to IDM shareholders.
IDM Mining President and CEO Rob McLeod is a third-generation resident of Stewart and hopes this deal will result in a new generation of mines that will revitalize the economy of this northern B.C. mining town and provide new opportunities for the people that live in and around this community at the southern tip of the Golden Triangle.
“In addition to long-term value for both shareholders of Ascot and IDM, this combination provides a critical mass and optionality for development of multiple high-grade gold deposits which will result in significant stakeholder benefits for citizens of the Nisga’a Nation, for my hometown of Stewart and for my friends in the border town of Hyder (Alaska),” said IDM Mining President and CEO Rob McLeod.
The expanded Ascot Resources would own a compelling pipeline of mine development and exploration projects at the southern gateway to the Golden Triangle, a pipeline that begins with IDM Mining‘s Red Mountain gold-silver mine project about nine miles (15 kilometers) northeast of Stewart and Ascot Resource’s Premier gold mine project about 16 miles (25 miles) north of the mining town.
“At this time in the gold sector, scale is important and together with the Red Mountain project, the larger company will hopefully become a prominent gold developer in terms of both grade and tonnage,” said White.
When brought together, these properties would host 5.55 million metric tons of measured and indicated resources averaging 7.78 grams per metric ton (1.37 million ounces) gold and 24.5 g/t (4.37 million oz) silver, plus 6.35 million metric tons of inferred resource averaging 7.12 g/t (1.45 million oz) gold and 23.2 g/t (4.72 million oz) silver.
Advanced Red Mountain
With Red Mountain nearing the end of the permitting process, IDM Mining brings what is arguably the most advanced gold mine project to the table.
A 2017 feasibility study details plans for a 1,045-metric-ton-per-day mill to process high-grade ore from the Red Mountain underground mine that is expected to average roughly 78,800 oz of gold and 228,800 oz of silver annually over an initial six-year mine-life.
This operation is based on 1.95 million metric tons of reserves, averaging 7.53 g/t (473,000 oz) gold and 21.86 g/t (1.37 million oz) silver.
Considering the resource expansion success IDM has had over the past two years, however, this feasibility study is a bit outdated.
At the time the reserves were calculated for the 2017 feasibility study, Red Mountain hosted 2.07 million metric tons of measured and indicated resource averaging 8.75 g/t (583,700 oz) gold and 25 g/t (1.66 million oz) silver.
A 29,312-meter drill program completed in 2017 both increased the overall resource and substantially expanded the gold reporting to the measured resource category, much of which would likely convert to reserves with an updated feasibility study.
As of June 2018, Red Mountain hosted 2.77 million metric tons of measured and indicated resource averaging 7.91 g/t (704,600 ounces) gold and 22.75 g/t (2.77 million oz) silver.
In addition, the underground mine project hosted 316,000 metric tons of inferred resource averaging 6.04 g/t (61,400 oz) gold and 7.6 g/t (77,200 oz) silver. This marks a roughly 5 percent decrease in this category, as most of the inferred resources in three planned mining zones – Marc, AV and JW – were upgraded to the higher confidence measured and indicated category. Roughly 82 percent of the current inferred resources are found in new zones – Smit, SF, Bray, Chicka and Cambria Zones – indicating the potential for future expansion at Red Mountain.
A 10,000-meter drill program completed in 2018 focused on expanding and upgrading the resources in these areas.
“We will include results from this drilling program in an updated resource estimate in 2019. In addition to the increased resources announced earlier this year, these results would be included in an updated feasibility study,” McLeod said in December.
In the meantime, the proposed underground mine at Red Mountain is nearing the end of the BC Environmental Assessment Act and Canadian Environmental Assessment Act review processes.
IDM received the requisite provincial environmental assessment approvals in October.
The issuance of the provincial environmental assessment was heralded by First Nations, municipal and provincial leaders from the area of northwestern British Columbia where the underground mine is to be developed.
“Nisga’a Treaty lands are rich with natural resources. We are confident that this decision and conditions will provide significant opportunities for our citizens, with strong protection of the land, water and wildlife,” said Nisga’a Lisims Government President Eva Clayton.
For further details about what northern British Columbia leaders had to say about this permitting milestone, read Stewart leaders support Red Mountain Mine, published in the Oct. 12 edition of North of 60 Mining News.
A positive federal Environmental Assessment decision is anticipated in the near term.
The finalization of the permitting process and an upgraded feasibility study will pave the way for developing a high-grade gold-silver mine at Red Mountain.
Past producing Premier
As advanced as the Red Mountain mine project may be, the past producing Premier Mine may be the first operation in the new Ascot Resources portfolio to come online.
The Premier property has a century of gold-silver production under its belt and already has the basic infrastructure needed to quickly and efficiently resume production.
An underground mine at Premier produced 2 million oz of gold and 45 million oz of silver from 1918 to 1952; and an open-pit operation in the 1990s produced another 260,000 oz of gold and 5.1 million oz of silver.
McLeod’s grandfather immigrated from Scotland to work at Premier in 1925, and his father, uncle, cousins and himself have all worked at various iterations of the mine over the ensuing seven decades.
Today, Ascot hopes to use the mill, assay lab, crusher, tailing storage area and underground workings remaining from these past operations that employed three generations of McLeods to resume mining on this historic Golden Triangle property.
“Our principal business objective is to maximize the utilization of the existing infrastructure, specifically with regard to the mill throughput of up to 3,000 tonnes (metric tons) per day,” said Ascot Resources CEO White.
Ascot believes the resumption of underground mining with a focus on higher-grade resources is the most efficient way to begin the next chapter of mining at Premier.
Through a combination of management cutting deals at the negotiating table and drills cutting gold-silver across an expanding property, Ascot has substantially increased the high-grade resource available to feed the mill at Premier.
According to a calculation published in December, Premier hosts 2.78 million metric tons of indicated resources averaging 7.46 g/t (667,000 oz) gold and 26.2 g/t (2.34 million oz) silver; and 6.03 million metric tons of inferred resources averaging 7.18 g/t (1.39 million oz) gold and 24 g/t (4.65 million oz) silver.
This marks a 230 percent increase in the tonnage gold grades in the higher confidence indicated resources and the inferred resource tonnage has increased by nearly 370 percent, with higher gold grades in both categories, when compared to a resource calculated in May.
The ability to add so much gold to the Premier resources in just six months is the product of an aggressive drill program on the Premier property and the acquisition of Silver Coin, an adjacent property that historically provided ore for the Premier mill.
This Silver Coin property alone contributes 859,000 metric tons of indicated resource averaging 8.01 g/t (221,000 oz) gold and 20.5 g/t (566,000 oz) silver; and 1.16 million metric tons of inferred resource averaging 7.78 g/t (289,000 oz) gold and 22.1 g/t (821,000 oz) silver to the Premier resource calculation.
With high-grade gold-silver resources at Silver Coin adding to the growing deposits on the Premier-Dilworth properties, Ascot has the foundation to begin considering the re-opening of the Premier Mine.
“Our principal business objective is to maximize the utilization of the existing infrastructure, specifically with regard to the mill throughput and I remain very optimistic about Ascot’s future success,” White said in December.
It is currently unclear whether the new and expanded Ascot Resources would develop a mine at Premier or Red Mountain first.
While Red Mountain is the seemingly most advanced of the two projects, Premier already has most of the mine infrastructure in place and has much of the permitting active for resumption of mining at the past producing mine.
This leaves a lot of options on the table, including the possibility of making the Premier mill a central processing facility that processes ore from all the Stewart-area properties in Ascot’s expanded portfolio.
Whatever the final decision is, it is likely that both projects will benefit from the optionality provided by being under one roof.
“At this time in the gold sector, scale is important and together with the Red Mountain project, the larger company will hopefully become a prominent gold developer in terms of both grade and tonnage,” said White. “In addition, the company will have experienced people with deep local knowledge and backgrounds in exploration, underground mine development, finance and mining operations, which will ultimately maximize value for shareholders.”
As part of the business combination deal, IDM Mining Vice President of Project Development Ryan Weymark and Red Mountain Mine Manager Dave Green will be joining the Ascot management team.
Weymark, a mine engineer familiar with Red Mountain, will bolster Ascot’s already strong mine building team.
Green, who has several decades of underground mine experience and is considered one of the top development and production miners in northwestern Canada, will be another strong asset as Ascot looks to develop underground operations.
IDM Mining Director Andree St-Germain, an experienced mining finance executive with an extensive background in banking and financial management, will join the Ascot board of directors.
McLeod will serve as a technical advisor to the new Ascot Resources, a role he plans to hold until his vision of new and renewed mines revitalizing his hometown of Stewart is realized.
“I want to see this thing be a success and I will help out in whatever capacity, for as long as it takes,” said the IDM Mining CEO.
In the meantime, IDM will need to get at least two thirds of its shareholders to vote in favor of the transaction. Osisko Gold Royalties Ltd, which holds 18.86 percent of IDM shares, supports the business combination and will vote its shares in favor of the buyout by Ascot.
A special meeting of IDM Mining shareholders will be held in the coming week to vote on the buyout and the transaction is expected to be complete by the end of March.
“This is going to be an awesome story for both of our shareholders moving forward; and it is a great story for the people of the North, all of our stakeholders and our respective crews,” McLeod said.