Kaminak Gold CEO Eira Thomas on Hitting the Cycle at the Right Time
At last week’s Sprott-Stansberry Vancouver Natural Resource Symposium, Kaminak Gold CEO Eira Thomas took a moment to chat about progress at the Coffee project in Yukon this year, and about what it takes to bring a mine from exploration and development into production.
At last week’s Sprott-Stansberry Vancouver Natural Resource Symposium, Kaminak Gold (TSXV:KAM) CEO Eira Thomas took a moment to chat about the progress the company has made so far in 2015 and what investors can expect next.
Certainly, it’s been a busy year for Kaminak Gold, which has put out a string of drill and metallurgical results for its Coffee gold project since January. Most recently, Kaminak reported gold recoveries of up to 85 percent from transitional mineralization in column leach tests.
The company is aiming to complete a feasibility study for its Yukon project by early 2016. Thomas stated that Kaminak Gold has completed all fieldwork associated with the study, and is now moving into the final stages of engineering and design for the project. Kaminak is fully funded through to completion of a feasibility study.
Certainly, the current gold price environment has not been kind to mining companies, but Thomas stated that Kaminak Gold’s Coffee project is “actually fairly well insulated” against gold’s decline. “As we like to emphasize, it is a project that really works in the current gold price environment,” she said. Being located in Canada, Kaminak Gold has also seen a weaker Canadian dollar bring costs down for the Coffee project.
More generally, when asked about what it takes to bring a mine from exploration and development into production, Thomas pegged timing as a key issue. “So much of it is just about hitting the cycle at the right time,” she said. “I’ve watched really good companies with great projects struggle in the current market environment because they need cash now.”
Thomas suggested that Kaminak Gold is fortunate in that the big fundraising to build Coffee is still a ways off. For now, the company remains focused on derisking the project and bringing it through the next stages of development.
And while she admitted that permitting can sometimes take time in the Yukon, Thomas stated that it’s a “very predictable and transparent regime.” With a team that has a strong track record of permitting mines, Thomas said that Kaminak Gold is aiming to have Coffee “shovel ready” by the second quarter of 2018.
Watch the video for more of what she had to say.
INN: Gold prices have fallen quite dramatically in recent months. What does that mean for the Coffee project?
ET: You know what, the Coffee project is actually fairly well insulated and as we like to emphasize, it is a project that really works in the current gold price environment. Obviously the recent pullback in gold has been challenging for many companies. Because we are located in Canada, we have also seen our exchange rate go down. So, by and large, we feel pretty comfortable that the assumptions we used in our PEA of 2014 are still relevant.
INN: Ok, and despite a tough market, Kaminak has been keeping really busy. You have still put out some pretty solid drill results since we spoke last January from you’re newer discoveries and from infill drilling as well. Can you give a few highlights?
ET: Sure, it has been an incredibly busy year. We were really fortunate that on the heels of our first economic analysis that we put out in June of 2014, we were able to attract some strategic investors – Lucas Lundin, Ross Beaty and VanGuard Investments out of London – and they are all now sitting at just under 10 percent each. With those investments we were able to move forward immediately into feasibility. So we initiated feasibility in the latter part of 2014 and now we are well on our way.
In fact, we have just completed all the fieldwork associated with the feasibility study, and now we are going into the final stages of engineering and design with the expectation that we will be putting out that feasibility study in early 2016.
INN: And are you fully funded to complete the feasibility study?
ET: We are fully funded to complete the feasibility study. We don’t have a lot of cash in the treasury to go beyond, but that was our main aim of the last financing; to make sure we had the funds to complete that study. And the program is trending on budget and on schedule.
INN: What about the metallurgical results you put out in May? I know you are looking at different sizes, so what is important for investors to note there?
ET: We are. It is really remarkable how size insensitive the Coffee ores really demonstrated to be, so that is very helpful. As investors may recall, in our PEA we wanted to be conservative, so we included three different stages of crushing. The final mine plan is not likely to require that, so that will be helpfu. And we will be of course, communicating more on that as we get closer to releasing the study itself. So we are working to work out optimum sizing right now – we actually haven’t decided on a final crush size – but we are pretty confident we won’t need three stages of crushing.
INN: That is good news.
ET: That is great news, yeah.
INN: So you obviously have quite a lot of industry experience. What do you think is the most difficult part about bringing a mine from exploration to development and into production?
ET: You know, so much of it is just about hitting the cycle at the right time. I have watched, really good companies with great projects struggle in the current market environment because they need cash now. We’ve been fortunate that the big fundraising to build this project is still a ways off.
So our strategy has been to continue to de-risk the project [and] get it through the next stages of development. Beyond feasibility, we have about 24 months of permitting, and that means that our project ultimately will be shovel ready in the second quarter of 2018. That is our current aspiration. So that has given us a little bit of breathing room to think about that bigger financing coming down the path. But obviously, we are very hopeful that the market does turn and that financing opportunities do increase.
INN: I’m glad you mentioned 2018 because I also wanted to ask about the permitting timeline. I have gleaned that permitting in the Yukon that can take longer than expected sometimes. Is that something that worries you for Coffee?
ET: It can. On the other hand it is a very predictable and transparent regime. I think our team has been looking hard at the track record of permitting mines in the Yukon and specifically at different projects that have been through the process in recent years, so I think we have gleaned a lot. We have learned a lot and the Yukon is a small place. People are very willing to help. So there are a lot of learnings there, and the government recognizes that Coffee is a project that works and delivers margin. They need producing mines in their district. They have certainly reached out to us and have asked what they can do to facilitate, so I think we are in good shape.
We think 24 months is a reasonable estimate based on the feedback we’ve got from regulators and from discussing with other proponents on their experiences. And we have a very strong team that has permitted many mines in northern Canada before, so we are feeling very confident about the skills that we bring to the table.
INN: On that note, just one final question. What else can investors look forward to as you move towards completing the feasibility study in early 2016?
ET: We always like to emphasize – and being a geologist, I do always tend to get focused on this, but it is really important to remember, particularly with Coffee – while we have scoped our first mining opportunity, this is a brand new gold district. We’ve got numerous untested, high-tenor gold and soil anomalies that we have yet to drill and explore. So we are looking forward to an opportunity to get back and to do some additional exploration. This is not the kind of market that is really paying for exploration, but we are well set up with the camp on-site and we think we can be very cost effective and we can stretch those exploration dollars. And we’ve got lots of exciting targets to get out there and evaluate in the coming months and years.
INN: That sounds exciting. Thank you for joining me Eira.
ET: Thank you so much for having me.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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