NUNAVUT
Toronto-based mineral exploration company TMAC Resources Inc. recently announced the successful closure of a financing deal for its Nunavut Hope Bay gold project, 170 km southwest of Cambridge Bay.

Existing infrastructure, like this Doris North power station, give TMAC's Hope Bay/Doris North gold project an advantage in today's challenging investment market. - photo courtesy TMAC Resources

The privately held company has arranged $77.8 million in financing through several investment brokers. After paying back a $15-million dollar loan to Newmont Mining Corporation, the current financing arrangement plus on-hand cash leaves TMAC with $72 million for advancement of Hope Bay.

In March 2013, TMAC closed a deal with Newmont Resources to acquire the deposit, existing mine facilities and the project’s valid Class A water-use license with the Nunavut Water Board.

The Hope Bay project includes the Doris North deposit. Doris North is at an advanced stage of exploration with much physical infrastructure already in place including underground mine work.

“The main thing that needs to built is the processing mill,” said TMAC CEO Catherine Farrow. “Most everything else is there already.”

Camp facilities are already in place, as is fuel storage and a partially-built power plant. The company has modularized mill components assembled in South Africa, acquired from Newmont, as well as an already built camp in Quebec that TMAC wants to bring up for work on another property under the Hope Bay umbrella.

Farrow said the total capital cost to bring the project into production sits at around $300 million, a relatively modest sum for remote Northern mining projects.

“We really leveraged the value of previously-invested capital,”said Farrow.

That leveraged capital means Doris North is, Farrow said, viable at much lower than today’s gold price.

“We’re robust down to $1,000 (an ounce),” she said.

Before arranging this financing, Farrow was more concerned about investor confidence than the price of gold.

“We’re fine with the price of gold, but the markets have been shaken and they’re volatile,” Farrow said.

“People have been bitten by the mining industry in the past. They’re wary and want a lot of details before they put their money in.”

This newest financing should clear the way for approximately $50 million worth of project risk control this year, through further resource definition, plant engineering and further environmental permitting.

Although the TMAC inherited advanced permitting from Newmont, they filed an amendment with the relevant regulatory boards to change the project description.

The amendments surround an increased production rate, diversion of treated water from the freshwater Doris Creek and the current strategy to mine entirely underground instead of open pit.

Holding a type A water license is expensive. Farrow said it costs TMAC about $3.5 million per year.

“With the type-A license, we’re essentially permitted as an operating mine,” Farrow said. “But we’re not mining anything yet.”

The upside to that cost is that TMAC is ready to put the mine at Doris North into production without need for a further rigorous and expensive regulatory application. That may turn out to be a major selling point to potential investors when the time comes.

Pending positive results this year, TMAC plans to have an economic pre-feasibility study completed by early 2015. At that point, TMAC could seek project financing.

According to a December 2013 pre-feasibility report, total measured and inferred resource estimations show a 10-year mine-life. That could easily be extended after this season’s exploratory drilling.

An existing Kitikmeot Inuit Association impact benefit agreement associated with Doris North under previous ownership remains in effect and includes annual payments for training, education, cultural and community funds.

TMAC has also inherited a commitment to providing employment and training opportunities for Kitikmeot Inuit, business opportunities for Inuit-owned businesses and employment support for Inuit employees including but not limited to free airfare to point-of-hire.

New regulatory permitting and a new benefit agreement would have to be negotiated prior to the development of other properties associated with the Hope Bay project.

Farrow said that it was too early to talk about employment levels at the mine or to give a construction start-date.

“I would love to have the money next week,” Farrow said.

“Unfortunately, we are at the mercy of the markets.”

Farrow did add that under ideal circumstances, TMAC could have construction financing in place before the end of 2015.