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IDM completes Red Mountain acquisition from Seabridge Gold

27th May 2017

By: Henry Lazenby

Creamer Media Deputy Editor: North America

     

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VANCOUVER (miningweekly.com) – Exploration and development company IDM Mining has completed the acquisition of the high-grade Red Mountain project, in British Columbia, from Seabridge Gold.

TSX-V-listed IDM acquired the 100% interest, subject to certain underlying agreements and royalties, under an April 2014 option agreement.

“Completing the acquisition of title for a 100% interest in the Red Mountain project is another significant step for IDM. We are grateful to have worked with Seabridge as the property vendor, and are excited for further milestones as we advance the project towards a production decision for a high-grade gold, bulk mining underground operation,” president and CEO Rob McLeod stated Friday.

In terms of the option agreement, IDM replaced Seabridge’s C$1-million reclamation security held by the province of British Columbia, and will make a C$1.5-million cash payment to Seabridge upon declaring commercial production at Red Mountain. Seabridge retains the right to acquire 10% of the yearly gold output from the project at a cost of $1 000/oz up to a maximum of 500 000 oz produced, for 50 000 oz to Seabridge.

Alternatively, at Seabridge's option, Seabridge may choose to receive a one-time cash payment of C$4-million at the start of production, in exchange for the gold metal stream interest.

Red Mountain covers an area of 17 125 ha and is located 15 km northeast of the town of Stewart.

A July 2016 preliminary economic assessment (PEA), based on a gold price of $1 250/oz, calculated a base case net present value of C$133.1-million, at a 5% discount rate, with an internal rate of return of 42.4% and a 1.9-year payback of the $89-million initial capital expenditure.

The project is expected to produce on average 70 000 oz/y of gold and 194 000 oz/y of silver over its five-year mine life, with a 15- to 18-month preproduction period.

The project holds about 583 700 oz of gold at a grade of 8.75 g/t in the measured and indicated resource categories, and 1.66-million ounces of silver at a grade of 24.82 g/t in the same categories combined.

Red Mountain is advancing through the provincial and federal environmental assessment processes, in close consultation with the Nisga’a Nation.

Edited by Creamer Media Reporter

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