Future uncertain for Hope Bay gold mining as TMAC seeks financial help

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TMAC Resources, owner of the Doris North gold mine at Hope Bay, needs more money to continue to expand operations and is willing to consider selling the Kitikmeot property.

TMAC Resources’ Hope Bay property, located 125 kilometres southwest of Cambridge Bay, is being shopped around for a new owner or partner.
photo courtesy of TMAC Resources

The junior miner announced Monday that it’s examining options including finding a buyer for Hope Bay, identifying a joint-venture partner, wooing a wealthy shareholder or securing some other form of long-term financing.

TMAC has improved operational performance since pouring its first gold in 2017 but the company hasn’t reached its targets, admitted Jason Neal, TMAC’s president and CEO. In revealing its 2019 fourth-quarter results on Monday, the company reported production of 24,650 ounces of gold, which was “the low end of our expectations,” Neal conceded.

The miner only recorded its first profit – $7.2 million – during the first quarter of 2019, after spending close to $500 million developing the property.

An expansion prefeasibility study is underway and is expected to be completed before April. The study will show the value of increasing gold production, including mining the Madrid and Boston deposits – for which TMAC already has regulatory permits. Neal, who has a background in mining investment banking, suggested that Hope Bay may be better suited for a company with a “multi-asset portfolio and/or a stronger balance sheet.”

In the meantime, TMAC’s stock fell to $2.85 per share on Monday after spending much of the summer over $6.

The Kitikmeot Inuit Association has a royalty stake in Hope Bay. Stanley Anablak, president of the regional Inuit organization, declined comment Tuesday on TMAC’s affairs.

A workforce of close to 600 relies on the mine site for income, but Inuit comprise only 10 to 15 per cent of those employees.

Tom Hoefer, executive director of the NWT and Nunavut Chamber of Mines, expressed optimism that Hope Bay will remain viable.

“I believe the fundamentals are there: gold, in good quantity and quality, in a gold-rich greenstone belt with growth opportunities,” Hoefer stated in regards to the 1,000-square-km property, located 125 km southwest of Cambridge Bay.

BHP and Newmont, who remains a shareholder, were among the mining giants who owned Hope Bay but never developed it. TMAC acquired the site in 2013.

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