Iamgold partners with TomaGold to move Quebec projects forward

12th November 2013 By: Henry Lazenby - Creamer Media Deputy Editor: North America

TORONTO (miningweekly.com) – The TSX-V-listed shares of junior gold explorer TomaGold on Tuesday jumped up to 36% from its Monday close, after the company finalised a deal that could see Canadian gold miner Iamgold earn a 50% interest in each of the Monster Lake, Winchester and Lac à l'eau jaune properties, in Quebec, for a total of $17.58-million.

This consideration includes $16-million in exploration work and $1.58-million in payments over five years, with $350 000 owing on signing the earn-in agreement.

TomaGold president and CEO David Grondin told Mining Weekly Online from Quebec City, where he is attending the Quebec Mining Exploration Convention 2013, that besides the deal being a significant endorsement for TomaGold, it was only the start of a partnership that could potentially turn into something much larger.

“Iamgold’s financial and technical resources will enable us to explore Monster Lake and the neighbouring properties faster and in a more optimal manner. The larger work commitments mean that exploration work on the properties will be ongoing.

“In short, this transaction is a testimony to the gold potential of Monster Lake and its surroundings, and we hope to eventually turn it into a mine,” he said.

Iamgold would act as the project operator with the support of TomaGold personnel during the acquisition period, and once it had acquired its 50% interest, the interests of TomaGold and fellow Monster Lake joint venture partner, Quinto Real Capital Corp, would be proportionately diluted so that TomaGold holds a 45% interest and Quinto holds a 5% interest in the Monster Lake property.

“This agreement is also very good for Quinto as Iamgold will have to invest $17.575-million in order to earn Quinto's 5% interest, thus leaving us with a 5% interest in a project that could be far more advanced and far more valuable. Also, Quinto will receive 10% of all cash payments that will be paid during the earn-in period,” Quinto president and CEO Michael Curtis said.

The Monster Lake project, located about 44 km south-west of Chibougamau, has seen about 43 000 m of diamond drilling along the 4 km mineralised corridor since 1984.

Grondin said TomaGold had drilled 16 holes on the Annie zone last year, which resulted in a significant discovery of 237.6 g/t of gold over 5.7 m. The drilling continued this year, with 12 more holes, of which all but five returned values of over 10 g/t gold.

Grondin explained that the other two assets included in the deal had seen much less exploration work to date, but that both assets, especially the Winchester property, had shown a “significant anomaly” on geophysical surveys.

Iamgold owns six operating gold mines on three continents, as well as one of the world's largest niobium mines, with a portfolio of assets located in Canada, South America and Africa.

The companies said the deal still needs regulatory approvals.

By market close, TomaGold’s TSX-V-listed stock gave back some of its gains, after trading at C$0.19 a share early in the day, to close up 7.14% at C$0.15 apiece.