Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
Map of White Gold Corp’s properties in the Yukon, courtesy of the company.
Kinross Gold (TSX:K,NYSE:KGC) has unloaded all five of its properties in the Yukon White Gold District to newly formed company White Gold Corp (TSXV:WGO) in a cash and share deal worth around C$60 million.
The origins of the arrangement go back to December 2016, when Agnico-Eagle Mines ((TSX,NYSE:AGM) announced it bought a stake in thousands of mining claims in the White Gold District originally owned by Shawn Ryan, the Yukon prospector whose unique soil sampling method turned him into a millionaire almost overnight. Agnico Eagle, which owns half of the Canadian Malarctic gold mining operation in Quebec and also has the Meadowbank open-pit gold mine in Nunavut, northern Canada, bought 19.9% of the shares in a new company, White Gold Corporation, for $14.52 million.
“The acquisition adds significant exploration potential to our already dominant land position in the White Gold District”: Shawn Ryan, White Gold Corp’s chief technical advisor
Now, under terms of a deal announced last Thursday, Kinross will sell all its properties in the district – White Gold, Black Fox, JP Ross, Yellow, and Battle – for around C$60 million, in return for Kinross acquiring a 19.9% interest in White Gold Corp. The $60 million breaks down to a C$10 million upfront payment, 17.5 million shares of White Gold Corp worth $35.2 million based on a share price of C$2.01, and three staged payments totalling $15 million leading up to a mine construction decision.
Also included in the arrangement is for Agnico-Eagle to participate in a non-brokered private placement with White Gold, worth approximately C$8.75 million, which will be put toward the upfront cash payment.
According to White Gold, the acquisition will add about a million ounces of gold with grades between 2.7 and 3.19 grams per tonne on the Golden Saddle area, based on historic measured and indicated (M&I) estimates of the White Gold property. The M&I resource on that property is pegged at between 840,000 and 1.044 million gold ounces.
With the addition of the Kinross properties, White Gold Corp says it now owns roughly 40% of the White Gold District.
“We are very excited to be acquiring Kinross’ Yukon portfolio; including the White Gold property. The acquisition adds significant exploration potential to our already dominant land position in the White Gold District. Our ultimate goal in the Yukon is to leverage our team’s track record of successful exploration and discovering mineral resources in order to discover additional gold deposits and this acquisition greatly enhances our prospects,” said Shawn Ryan, White Gold’s chief technical advisor.
“We look forward to working with Agnico Eagle and White Gold Corp. to support the pursuit of quality development opportunities in this highly prospective and largely underdeveloped district,” said J. Paul Rollinson, president and CEO of Kinross. “This investment will allow the three companies to pool their expertise together to strengthen their position in this excellent mining jurisdiction.”
White Gold Corp shares rose on the news, closing Friday up 7% to $2.14 on the Toronto Venture Exchange.
The White Gold District has been humming with major gold miner interest over the past year or so.
In March U.S. gold producer Newmont Mining (NYSE:NEM) signed an earn-in agreement with Yukon-focused explorer Goldstrike Resources (TSXV:GSR), to develop its flagship Plateau property.
With the USD$39.5-million earn-in agreement, Newmont joined rivals Agnico-Eagle and Goldcorp (NYSE:GG,TSX:G), which purchased Kaminak Gold and its Coffee project for $520 million, in their pursuit of prospective Yukon gold properties. Goldcorp also paid C$1.9 million for a 19.9% share in Independence Gold (TSXV:IGO), which is also exploring the White Gold district.
