Q&A interview with Integra Gold Corp.’s (TSX: V.ICG, Stock Forum) President and CEO, Stephen de Jong, BComm.
Q: Tell us about Integra Gold and how it was formed?
In 2010 a new management team and Board of Directors was brought into an existing company called Kalahari Resources Inc. The new team renamed the company Integra Gold and refocused the Company’s exploration efforts on the Lamaque Gold Project in Val-d’Or, Québec. The property had been part of the historic Lamaque Mine’s land package, which, along with the adjacent Sigma Mine, produced more than 9 million ounces of gold.
Integra’s property had primarily been exploration ground for Teck Resources Ltd. (TSX: TCK.B, Stock Forum), which did conduct some historic drilling and mining on the property. Current management saw the potential in this property and wanted the Lamaque Project to be Integra’s sole focus. This has resulted in more than 100,000 meters of drilling in three years, a completed Preliminary Economic Assessment, and an NI 43-101 indicated resource of 569,410 ounces of gold grading 9.8 g/t, and an inferred resource of 258,850 ounces of gold inferred grading 13.9 g/t using a 5 g/t cut-off.
Q: Integra Gold released an excellent Preliminary Economic Assessment in March. Can you briefly summarize the report?
The PEA confirmed what the Company had been saying for months. The Lamaque Project is a high-grade, low cost project that can be brought into production with minimal capital expenditure. With a capex of $70 million, and a pre-tax NPV of $146 million and IRR of 51%, the project makes sense. The PEA outlines a mine life of 4.5 years with a very strong production profile of 112,000 ounces per year. The mine life is relatively short, but when you consider that more than 51,000 meters of drilling have not been included in the resource used for the PEA, there is a lot of potential to extend the mine life. That being said even if no more ounces were added to the resource, the economics are still very attractive and warrant advancing the project. The neighboring Lamaque (Teck Cominco) and Sigma Mine (Placer Dome) both operated for 50 and 60 years respectively and seldom had more than 3 years of reserves.
Q: Now that the PEA has been released, where does the company go from here?
The two main areas the Company will be focusing its efforts are (1) continuing to build the size and confidence level of the resource through an extensive 2014 drill program and (2) prepare for underground exploration. The Company has plans to drill over 40,000 meters in 2014 which will both provide the market with strong news flow and lead in to an updated resource estimate, which the Company anticipates will be completed in the second half of this year. As for underground exploration, the Company will be using its PEA and recently completed Environmental Baseline Study to apply for a Certificate of Authorization (“CA”) which combined with any required impact studies will enable the Company to commence underground exploration. Assuming all permitting is in place the Company could potentially start construction of the portals for its underground exploration program in early 2015.
Q: It’s been tough raising money this past year yet Integra raised significant amounts of capital without blinking. What was it that the big money saw in your opportunity?
The money for exploration did not completely leave the market, it just got smarter. And, to be frank, Integra Gold ticks a lot of boxes on people’s investment checklist. The company is focused on a single, high-grade asset close to exceptional infrastructure in a World-class mining camp in one of the geopolitically safest jurisdictions. The Company has raised over $20 million for exploration, resulting in more than 105,000 meters drilled since 2010, two NI 43-101 resource estimates, and the release of a robust PEA that indicates full production may be reached in less 4 years.
Though the industry as a whole suffered dramatically over the last couple of years, money was still available for good projects, and investors recognized the potential of Integra and provided the capital necessary to advance the project. The Company set clear goals, met each catalyst in a timely manner, and returned value to its shareholders. During the last two years, a very difficult time for the resource industry, the Company’s share price has still increased, and this is something the team at Integra is very proud of.
Q: At a time when mining companies and First Nations groups are often at odds, how have you approached consensus building locally?
We have been very proactive and approached the community and First Nations groups early and with great clarity. We have been asked if we are being too proactive in our approach to consensus building; however, when you plan on being the next gold miner in Quebec, you really can’t be too proactive. The stakeholders in the community have a right to know what Integra’s plan is, and we felt it was our responsibility to engage in open dialogue about the plans. While things of course can change, it was clear from the response of the 300 plus attendees at our first community presentation in Val-d’Or that the support for this project exists in the community.
Q: What is. Integra’s strategy in taking an area that has changed hands a few times and making it a success story?
The Company is emulating the successes of our predecessors in Val-d’Or. The Lamaque Project happens to be relatively untested exploration ground in an area with a rich history of mining and a well-studied geological model. Our technical team has decades of experience working in-or-around Val-d’Or, and their knowledge about this style of geology has been invaluable to the Company. Integra is utilizing the knowledge of this technical team, along with Teck’s historical data from the Lamaque Mine, to advance an underexplored land package that has nearly identical geology to its past producing neighbors.
The Lamaque property was part of the Lamaque Mine land package that was mined by Teck from 1933 until the 1980s. In the late 1980s, Teck sold their Lamaque Mine to Placer Dome and at the same time partitioned out the adjacent exploration ground, which would become Integra’s Lamaque Project. Though Teck had completed some exploration drilling and small-scale mining on Integra’s property, most of Lamaque’s zones were underexplored or not discovered.
For example, the high-grade Triangle Zone was discovered by Integra with the use of a detailed airborne geophysical survey. The ground surrounding the Triangle zone is quite wet and boasts no rock outcroppings so it was never discovered by Teck. It’s incredible to think we are making discoveries 2 km away from both the city of Val d’Or and over 9 million ounces of historic production, which speaks to the significant advantages available to explorers utilizing modern technologies. The Company is excited about a number of other geophysical targets along strike of the existing zones, which it hopes to test in 2014.
Q: What makes it possible for Integra to move quickly to production, and can you get there without a major?
Production is a real scenario for Integra Gold for two reasons: grade and infrastructure. The Lamaque Project is located only 2 kilometers from one of Quebec’s most revered mining towns, Val-d’Or. Some of the World’s best underground miners live in Val-d’Or, and when the project allows them to go home to their families each night, in contrast to life on a site shift schedule, the caliber of team you can build is first rate.
When you include the number of mills in the area that are fully functional, vacant, and/or under-capacity, the major obstacle to production, the permitting, construction and financing of a mill and tailing facilities, does not exist. Integra does not need to raise the capital to build a mill, a cost that can easily top $100 million, nor build a camp to house its employees.
The second major reason that Integra can move into production quickly is grade. The PEA is calculated using a 4 to 5 g/t cut-off, resulting in indicated grades of 12.6 g/t gold and 10.4 g/t gold for the Triangle and Parallel Zones respectively. With these grades, it requires significantly less tonnage to produce an ounce. Furthermore, the mineralized zones we are focused on are above 600 meters, allowing the zones to be accessed by ramp. As opposed to sinking a shaft, ramps are significantly less expensive to build.
Total capex is estimated at $69.2 million. This figure, though daunting to some, is very low considering a 112,000 ounce per year production profile. As a result, we do not necessarily need a major to step in and finance the project. There has never been a better time to build a mine, and we are confident that we will be in full production within the next 4 years.
Q: Speaking of majors, Goldcorp and Agnico aren’t far away from your property. Do you think Interga is in the acquisition crosshairs?
I think it is safe to say that Goldcorp’s bid for Osisko has focused a great deal of attention on the Val-d’Or mining camp. Quebec is a great place to conduct business if you are a miner, as Goldcorp and now even Yamana with the help of Agnico-Eagle continue to state. Of course, I can’t say whether any majors have reached out to Integra but I can say that we believe the project is appealing for a variety of reasons, especially as the proposed production profile of over 100,000 ounces per year is enough to move the needle on most producers total production profile. While we are committed to bringing this project into production, Integra has an open door policy when it comes to the Lamaque Project and welcomes dialogue with our peers.
Q: In two years, you’ve taken your project a long way and removed a lot of risk without breaking the bank. At what point do you think you get to boast you’re part of a ‘proven management team’?
A: On of my favorite sayings in our industry is “in a strong wind even turkeys fly.” The best environment for a management team to truly prove itself is not in a bull market, but when they can show their ability to execute and deliver in a down market. Integra’s team has set itself apart in the last two years through a very difficult resource and precious metals market, and our team continues to prove itself every day.
Stephen de Jong, BComm., President and CEO
Mr. de Jong has held several senior management and advisory positions in publically listed Canadian mineral exploration companies successfully leading their recapitalization and restructuring programs. Mr. de Jong continues to prove his ability to finance mineral exploration through periods of weak metal prices and low investor sentiment having raised over $25 million in the past two years.
He is recognized by Canadian and overseas financial sectors and junior and senior mining executives as a person with
Integrity, superior management skills, and one who can attract and build a strong and capable team. Mr. de Jong has aggressively facilitated the advancement of the Company's Lamaque project towards a production decision as well as led a team responsible for the discovery of additional high grade resources.
Read more at http://www.stockhouse.com/opinion/interviews/2014/...hB3Idq0IeYbtb.99 |
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