VANCOUVER — When precious metal producers are on the lookout for high grade assets to augment development pipelines, it’s often been junior companies that reap the rewards. And that’s the case for Quebec-focused explorer TomaGold (TSXV: LOT) and its Monster Lake gold portfolio, 44 km southwest of Chibougamau, QC, which has drawn the attention of geographically diverse miner IamGold (TSX: IMG; NYSE: IAG).
On Nov. 12 the companies released the terms of an option agreement that could see IamGold earn a 55% interest in TomaGold’s Monster Lake, Winchester and Lac à l´eau jaune gold properties. In order to acquire its stake the producer must spend $16 million in exploration work over the next five years, with TomaGold also receiving roughly $1.6 million in staged cash payments during that period.
“It’s really great news for our company, and a strong vote of confidence for the project,” comments president and CEO David Grondin during an interview. “IamGold is making a large work commitment, and it’s non-dilutive for us, which was important. Even in good markets most juniors would not have this sort of annual exploration budget, and with equity markets being tough we were looking to option these projects in a cash-rich deal that would assure we were financially secure going forward.”
Over the past two years TomaGold has completed around 7,400 metres of drilling at Monster Lake, with a focus on testing the continuity of the 52 zone at depth, as well as confirming the northern extension of the Annie zone and chasing depth extensions at the 325 zone. The company’s big strike came during its 2012 program at Annie, when it cut 5.7 metres grading 238 g/t Au from 69 metres depth in hole M-12-60.
The mineralized zone consists of a black quartz vein hosted in a strongly sheared lapilli tuff. The tuff host rock is completely silicified. The mineralized section contains native gold over its entire length, as well as around 2% pyrite, 1% pyrrhotite and trace chalcopyrite.
Lac à l’eau jaune and Winchester are earlier stage assets that complete the property package, with Lac à l’eau jaune occupying around 14 km2 directly northeast of Monster Lake, while Winchester is composed of 20 mineral claims over 11 km2 to the south. TomaGold announced the results of a 2,000 metre drill program at Winchester in early July, which were highlighted by 2.25 metres averaging 9.6 g/t Au from 315 metres vertical depth in hole W-13-02.
In light of the deal with IamGold, Grondin and his team decided to pick up additional claims in the neighbourhood. Over the past month the company has acquired another 31 km2 in the Chibougamau region’s Fancamp deformation corridor. The company announced on Oct. 9 that it had acquired 100% stakes in the Cookie Monster and Little Monster projects due east of Monster Lake, and wrapped up a deal with Murgor Resources (TSXV: MGR) for a 70% interest in the nearby Fancamp and Embry properties around two weeks later.
“Well we were looking at the project going forward, and determined we were going to acquire more claims,” Grondin explains, pointing out that the projects have seen much less historic work than Monster Lake. “[They are all] quite straight forward earn-in agreements and I think the conditions are really good. Looking at the process we figured it was important to get more land position in light of what was coming here. There are also some base metals on the projects, and the region has been known for copper mining in the past. Obviously we’re shooting for gold, but if it becomes polymetallic that’s just a bonus.”
TomaGold received $350,000 from IamGold upon the signing of its agreement, and completed a $954,500 private placement in late October. With cash in hand, Grondin says the company will fast track a 3,200 metre structural drill initiative at Fancamp, Little Monster, and Cookie Monster. TomaGold plans on spending around $375,000 on the program, which is focused on a number of geophysical anomalies that carry a similar signature to Monster Lake.
“And we’re still actively looking at acquisition and other opportunities that come our way. Now that we’ve solidified this deal, I don’t want to sit around waiting for progress at Monster Lake,” Grondin adds. “I’m a fan of safe jurisdictions, and I think North America is where we’d like to stay, though for me that does not include Mexico. We’d also consider silver projects on top of gold, and there are really a lot of opportunities. It’s amazing how many companies are sitting with a valuation near zero. It’s just so tough to raise money.”
TomaGold has traded within a 52-week window of 8¢ and 41¢, and closed at 11.5¢ per share at the time of writing. The company jumped to an intraday high of 19¢ per share on Nov.12 following news of its deal with IamGold, while trading an above average 1.3 million shares during the session. TomaGold maintains 66 million shares outstanding for a $7.6 million press time market capitalization.
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