The mining newspaper for Alaska and Canada's North
The mining newspaper for Alaska and Canada's North
Major buys Kaminak; eyes feasible mine, larger White Gold potential
When Kaminak Gold Corp. cut a deal with Shawn Ryan, an enterprising prospector in Yukon Territory, to option the Coffee gold project in 2009, the exploration company had a hunch it nabbed the best property in the emerging White Gold district. After six years of diligent and well-executed exploration, the junior’s intuition may have been confirmed by Goldcorp Inc.’s willingness to cut a half-billion-dollar all-shares deal to get its hands on the exciting Yukon Territory gold property.
“This transaction is the culmination of years of hard work by our technical and management teams and is a strong value proposition to all our shareholders,” commented Kaminak Chairman John Robins.
Goldcorp’s buyout of Kaminak came on the heels of a January feasibility study that details an open-pit, heap-leach gold operation at Coffee producing 184,000 ounces of gold annually over a 10-year mine life at all-in sustaining costs of US$550/oz. The relatively low-cost operation is expected to repay the C$317 million of capital needed to develop the mine in just two years.
Located in a mining-friendly Canadian territory, Coffee fit the bill for Goldcorp.
“Coffee is located within a politically stable jurisdiction and provides us with an opportunity to add high-quality ounces to our development pipeline at low all‐in sustaining costs,” said Goldcorp President and CEO David Garofalo. “With our strong financial position and mine construction expertise, we see significant potential to deliver value for all partners and stakeholders.”
The significant gold potential across the land package Goldcorp inherited with the purchase of the Coffee, along with the wider prospectivity of Yukon’s famed White Gold district, sweetens the pot for the gold producer.
“With the acquisition of Kaminak and its Coffee project, Goldcorp has inherited a very prospective land package with over 60,000 hectares (150,000 acres) that demonstrates potential for near mine discoveries with mineralization remaining open along strike and at depth and the potential for the discovery of a major new mineral system,” Garofalo added.
Robust Coffee
Ryan, who rose to mining fame on the discovery of the nearby White Gold property that triggered an exploration rush to Yukon, always thought that Coffee, another of his discoveries, could one day be the bigger find.
“Coffee is going to be White’s twin or big brother,” the self-taught prospector told Mining News in 2009. “It’s the same size system … but the intensity of the anomaly is 30 percent (soil) to 40 percent (rocks) higher.”
Following an initial season of sampling and trenching, Kaminak drilled the first-ever holes in Coffee in 2010 – and the results lived up to Ryan’s expectations.
CFD-001, the maiden hole at Coffee, cut 15.5 meters averaging 17.07 grams per metric gold starting at just 15 meters down. The very next hole cut five significant gold-bearing intersections: 11.95 meters of 3.95 g/t gold; five meters of 4.89 g/t gold; 14 meters of 2.11 g/t gold; 2.75 meters of 4.31 g/t gold; and 4.1 meters of 2.96 g/t gold.
From these first two holes, Kaminak proceeded to drill 16 separate and distinct gold discoveries outlining 63.7 million metric tons of indicated resources averaging 1.45 g/t (2.97 million oz.) of gold and 52.4 million metric tons of inferred resources averaging 1.31 g/t (2.1 million oz.) gold.
The roughly 3 million oz. of gold in the indicated resource formed the basis of the feasibility study that detailed an economically robust Coffee gold mine, even at the relatively low gold price going into 2016.
“This feasibility study firmly establishes the Coffee project as one of the world’s best undeveloped gold projects by value and margin that works in the current gold-price environment,” said Eira Thomas, who was president and CEO of Kaminak during negotiations with Goldcorp. “The Coffee project further benefits from being a simple, open pit, heap-leach mining opportunity, situated near infrastructure that delivers low all-in sustaining costs and pays back capital in under two years.”
The relatively low capital costs, healthy economic returns and high potential offered by Coffee lured Goldcorp to the Yukon.
Adding to Coffee’s value was the good relationship Kaminak has built with Yukoners during the past seven years.
“We are very excited about the Coffee project the Kaminak team has done an excellent job in consulting, engaging with the First Nations and the Yukon government. We look forward to our future engagement with the First Nations and different stakeholders in creating what we believe will be a long and lasting partnership,” the Goldcorp’s Garofalo told shareholders, including those brought onboard through the all-shares buyout of Kaminak.
Beyond the mine
Accelerating an already robust exploration and development plan laid out by Kaminak before the acquisition, Goldcorp is wasting no time advancing its newly acquired Yukon gold asset.
A couple weeks before the May announcement of its pending acquisition by Goldcorp, Kaminak unveiled a C$29 million budget for advancing Coffee towards development. Nearly half (C$13.9 million) was allocated to mine permitting; another C$6.2 million to pre-development and advanced engineering; and C$5 million was earmarked for exploration.
At the time, Kaminak anticipated it could gather all permits required to begin construction at Coffee somewhere around mid-2018. Anticipating a roughly 18-month construction period, the company was targeting first gold from the project by the end 2019.
The company, meanwhile, set out to explore significant expansion potential at Coffee, both proximal to the 2.16 million oz. of gold reserves set to be mined and across the rest of the property.
Priority targets for the initial phase of exploration that began early in June included expansion drilling at Supremo T3 and Latte, two mineralized structures that jointly contribute gold reserves in the current mine plan; systematic testing of early stage drill discoveries and over gold-in-soil anomalies proximal to the proposed Coffee Gold mine; and the testing of priority outlying gold-in-soil anomalies with trenching or drilling.
Goldcorp is picking up where Kaminak left off.
“For the balance of 2016, we expect to invest approximately US$15 million with a focus on exploration, permitting, infrastructure upgrades and basic engineering,” Garofalo told investors and analysts during a July 27 presentation of Goldcorp’s second-quarter results.
“The drilling program is expected to follow up on targets from peripheral to existing resources and reserves, test potential gaps in the resource models and the numerous near surface oxide mineralization targets which have been identified with gold and silver anomalies while also investigating the potential for additional high-grade sulfide mineralization at depth,” the Goldcorp CEO added.
The gold miner’s investigation in Yukon has already spilled beyond Coffee.
In June, the new Coffee owner bought 10.88 million shares of Independence Gold Corp., a junior explorer with several gold properties in the Yukon, including a promising project that wraps around the western edge of Coffee.
The C$1.96 million investment gives Goldcorp a 19.99 percent stake in the junior and a foothold in any discoveries made a few short miles south and west of the coming Coffee gold mine.
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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