The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Beaty, Lundin investment funds increased program at Kaminak's gold project
Over the past five years, Kaminak Gold Corp. has rocketed the Coffee project from Yukon Territory's other White Gold property to an expansive set of gold deposits on pace to be the first of the Shawn Ryan discoveries to be developed into a mine.
A preliminary economic assessment published in June envisions an open-pit mine and heap-leach facility producing an average of 167,000 ounces of gold annually over the life of mine at an all-in sustaining cash cost of US$688 per ounce.
The PEA is based on an indicated and inferred mineral resource estimate derived from 961 diamond core and reverse circulation drill holes completed from 2010 to 2013 for a total of 185,000 meters.
This estimate consists of an indicated resource of 14 million metric tons averaging 1.56 grams per metric ton (719,000 ounces) gold and an inferred resource of 79 million metric tons averaging 1.36 g/t (3.43 million ounces) gold.
"The recently completed Coffee PEA has delivered a high-value, high-margin and low-risk gold project in one of the world's safest, pro-mining jurisdictions, Yukon Canada, and marks a significant milestone for our company. At a US$1,250 gold-price, Coffee will generate more than $2 billion in gross revenue, deliver total life of mine, pre-tax, free cash of $800 million and payback capital in under two years," said Kaminak CEO Eira Thomas. "Further upside to this evaluation is anticipated through optimization studies and continued exploration."
The Kaminak executive was not alone in her assessment. A month after the release of the PEA, a pair of world renowned mining investors showed up at the Coffee Gold project with check books in hand.
"The biggest development in the Yukon this year is that Lucas Lundin and Ross Beaty, two of the smartest investors in the junior mining space, each bought 10 percent interest in Kaminak (Gold Corp.)," Victoria Gold Corp. President and CEO John McConnell told Mining News in August. "That level of interest shows the project is for real and so is the Yukon."
Lundin, head of Zebra Holdings and Investments S.à.r.l., Luxembourg (a company owned by a trust whose settlor was the late Adolf H. Lundin) and Beaty each agreed to invest C$6.76 million, collectively C$13.52 million, in Kaminak by way of a non-brokered private placement in July.
Lundin and Beaty each now own a 9.98 percent stake in Kaminak and increases the junior's cash position to C$26.5 million, enough to take the Coffee Gold project to the next level.
Two weeks after the cash infusion, Kaminak's board of directors two weeks later approved a C$12 million to get a feasibility study started for its Coffee Gold Project, located on the banks of the Yukon River some 130 kilometers (81 miles) south of Dawson City.
"Following the announcement of a private placement by Ross Beaty and Zebra Holdings on July 14, Kaminak's board of directors have approved the commencement of an approximately C$30 million feasibility study for the Coffee Gold Project, to be completed by the end of 2015," explains Thomas.
Feasibility activities, which began in the third quarter, include infill drilling, additional metallurgical test-work, continued environmental baseline activities and a condemnation program.
Kona North adds gold
By the time Lundin and Beaty invested in Kaminak, a C$3.5-million phase-1drill program aimed at testing new oxide gold targets and expanding previously drilled discoveries near the 4.15-million ounce gold resource was well underway at Coffee.
Results from this program identified near-surface predominately oxidized gold mineralization at the Kona North zone; added 900 meters to the Supremo T3 trend; and intersected high-grade gold mineralization at Cappuccino.
"Ongoing exploration of the numerous high-tenor geochemical anomalies remaining at Coffee continues to demonstrate the resource upside of the project and has the potential to enhance the already positive, high-margin economics at Coffee as demonstrated in the recently completed PEA," Thomas said upon the release of the results from 27 holes. "Delineation drilling at Kona North is underway with the goal of defining a near surface, oxide resource that may be incorporated into the Coffee Feasibility Study."
Results from phase-1 drilling at Kona North include: 28 meters of 3.55 g/t gold from a depth of 14 meters and nine meters of 2.66 g/t gold from a depth of 53 meter in hole CFD376; and eight meters of 4.05 g/t Au from a depth of 38 meters and eight meters of 3.79 g/t gold from 51 meters in hole CFD379. Additional drilling is underway to determine the structural orientation and geometry of the zone and to delineate near-surface oxide ounces that may be incorporated into the feasibility study.
The phase-1 drilling also extended the Supremo T3 zone some 1,000 meters to the north, increasing the strike of this gold-rich zone to at least 3,500 meters. . The best intercepts occurred at the intersection of T3 and the Macchiato trends, including: 14 meters of 1.95 g/t gold from a depth of 81 meters and nine meters of 2.21 g/t gold from a depth of 128 meters in hole CFD356. Kaminak said the magnetic and geochemical signature for T3 extends a further 1,000 meters north, warranting systematic step-out drilling in that direction.
To continue the expansion of Kona North and investigate other high priority targets, Kaminak launched a C$2-million, phase II program.
Rory Kutkuoglu, Kaminak Gold's exploration manager, told Mining News during an early August interview that the junior is expected to spend an estimated C$18.5 million in 2014 and bring five drills online to drill 70,000 meters this year, with a goal of upgrading Coffee's 3.43-million-ounce inferred resource to the indicated category.
By early September, the company had four core drills and two reverse circulation rigs undertaking resource delineation infill, condemnation, geotechnical, hydrological and metallurgical drilling.
With the goal of finalizing a feasibility study by early 2016, this year's program also includes environmental and heritage baseline studies as well as engineering studies into the optimal route and design of a road to access the property.
"Coffee represents a low-risk, high-return development-track gold project in Yukon, Canada where there is a long history of and strong support for gold mining. The completion of a feasibility study is the next major milestone on our path towards a production decision," explained Thomas.
Over his more than 16 years of covering mining and mineral exploration, Shane has become renowned for his ability to report on the sector in a way that is technically sound enough to inform industry insiders while being easy to understand by a wider audience.
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