It’s been a busy year for Kore Mining (TSXV: KORE; US-OTC: KOREF). The junior exploration and development company has completed preliminary economic assessments for two gold deposits and advanced its exploration-stage projects.
“The company has truly pursued a ‘portfolio strategy’ this year,” Scott Trebilcock, Kore’s president and CEO, said during The Northern Miner’s inaugural Global Investor webinar in mid-December.
Over 70 participants from as far afield as Italy, Nigeria, and Saudi Arabia joined the webinar to hear Anthony Vaccaro, The Northern Miner’s group publisher, in conversation with Trebilcock about the company’s gold assets. These include the Imperial and Long Valley gold deposits in California and the Gold Creek and FG gold projects in B.C., which are all 100%-owned by Kore.
“What’s important to note about Kore is that it has a portfolio of assets, meaning that we don’t have just one flagship project and some other little projects we have sitting in the background, but are working hard to create value generation from all of our assets,” he said.
The company holds combined resources of 4.9 million oz. gold and has “line-of-sight of 250,000 ounces of gold” should both its Imperial and Long Valley gold projects advance to development, he said.
Kore has also raised over $8.5 million through three private placements with billionaire mining investor Eric Sprott, $7 million of which will be used to fund exploration activities in 2021, Trebilcock said.
“The decision to stick with one investor rather than opening up the company to a broader group of potential shareholders was predicated on the philosophy of our founder and executive chairman, and second-largest shareholder, James Hynes,” he explained.
“Jim advocated keeping the shareholder register tight in 2020, which ensured close alignment between management and shareholders, and has worked out very well for us as we seek to achieve a higher valuation for our stock before looking to the markets to raise further capital.”
Sprott holds a 26% stake in the company, with management and board owning 38%, and public investors 36%, Trebilcock said.
Over time, however, Kore will reduce management’s share, he said, noting that some of the larger institutional investors will likely want to see a different governance balance.
In April 2020, the company released a PEA for Imperial that envisioned a shallow open-pit heap leach mine producing 146,000 oz. of gold per year over eight years. Initial capex was pegged at US$143 million, and the study estimated an after-tax payback period of under three years.
The PEA, which used a US$1,600 per oz. gold price, forecast an after-tax net present value of US$343 million, at a 5% discount rate, with an internal rate of return of 44%.
The project is accessed by a paved road and has a water well and power line, Trebilcock said. It also sits on land owned by the U.S. Bureau of Land Management, which reduces the risks of developing the project, he said.
The project is also close to two gold mines. Equinox Gold’s (TSX: EQX; NYSE: EQX) Mesquite gold mine lies 16 km west of Imperial and has a 10-million oz. total endowment comprising mined material, current reserves, and historic resources.
The Picacho mine, operated by Chemgold, is about 16 km east of Imperial and produced approximately 650,000 oz. of gold before closing in 2002.
“In addition to attractive economics for the project, there is a huge exploration opportunity after we staked further claims with funds from Eric in 2019,” Trebilcock said. “We now have control of a 28-kilometre belt book-ended by two significant gold mines.”
Trebilcock said that the company is looking to advance Imperial directly from PEA to mine permitting and is engaging with local stakeholders to facilitate the process.
Meanwhile, Kore is busy advancing Long Valley, and in September released results of a PEA on the project, marking its second PEA in 2020.
The early stage study envisioned a shallow, open-pit heap leach mine producing 102,000 oz. of gold annually over a mine life of seven years at average all-in sustaining costs of US$773 per ounce. Pre-production capex was estimated at US$161 million with an after-tax payback period of just under two years.
The study, which also used a US$1,600 per oz. gold price, forecast an after-tax net present value of US$273 million, at a 5% discount rate, and an after-tax internal rate of return of 48%.
“Long Valley is at a more classical stage of development compared with Imperial and is a typical PEA-stage project,” Trebilcock said. “We still need to carry out more drilling and more metallurgical testing on the project to take it to a prefeasibility study or an updated PEA further down the track.”
The company recently added significantly to the project’s claim block, staking 5,708 hectares of claims and increasing the size of Long Valley by 750% to 6,461 hectares, which, he reasoned should capture the potential upside from the resource.
A drill program is awaiting permitting and is slated to start in the second quarter of 2021.
Trebilcock noted that over the past five years, California has permitted three large-scale gold mines. Golden Queen Mining’s (TSXV: GQM.H; US-OTC: GQMND) Soledad Mountain mine; Equinox Gold’s Castle Mountain mine; and the Sutter mine, owned by Sutter Gold Mining.
“What surprises most people is that there is a significant earth-moving industry in the state and hosts hundreds of aggregate and industrial mines producing industrial minerals, including gold,” he said. “This points to a jurisdiction that understands mining and has a proven system for managing the mine permitting process.”
California, he continued, also has very stringent regulations around labour, environmental, and reclamation laws for mining companies operating in the state.
Both Imperial and Long Valley have greenfield reclamation plans that meet the standards required by regulators and, together with support from local communities, offer a “strong social licence to operate in the state,” he said.
Kore’s other assets include the exploration-stage FG and Gold Creek gold projects in the Cariboo region of B.C. The company now controls about 1,000 km of claims in the area, much of which it acquired in 2020, Trebilcock said.
“At the FG project, we’re taking a historic resource that was drilled very shallowly by previous operators,” he said. “Our theory was that no-one had ever chased mineralisation at depth, so we decided to look for some grade at depth.”
The mineralised system at FG lies along 3.6 km of strike. The company has only tested about 1.8 km of strike and is waiting for assay results from 14 out of 15 drill holes on the area, which he expects to receive in the new year.
Recently the company announced its intention to spin-out its land holdings in B.C. and creating a new entity, Karus Gold.
“About a month ago, the board authorised management to start the planning process,” Trebilcock said. “We’re now in the late stages of the process, and hopefully the board will approve the spin-out, creating a new gold company that is a pure-play exploration company with a dominant position in the area.”
Under the transaction, all of Karus’ common shares would be distributed to Kore shareholders on a pro-rata basis to their ownership in Kore, Trebilcock said. Karus would initially operate as a reporting issuer in B.C. and Alberta, ahead of a rights offering planned for early 2021, which would then be followed by listing in the first half of 2021.