IDM Mining’s (TSX: IDM) Red Mountain gold project in northwestern B.C. is “one of the few near-term development stories in Canada,” Robert McLeod, president and CEO, said in a March corporate presentation in Toronto.
McLeod is a third-generation miner, born and raised in Stewart, 18 km west of Red Mountain. His grandfather, father Ian and uncle Don were all miners. Ian also spent 16 years as Stewart’s mayor, and Don built and operated mines. The first initial of their names make up IDM.
The junior is completing economic studies and permitting at the high-grade, underground Red Mountain gold deposit, with a production decision expected in early 2017.
“This is a story that means a lot to me,” McLeod, a geoscientist, told investors. “It’s been my dream to come back to this part of the world, with a meaningful project that can have a meaningful impact on the economy of my home region.”
The 171 sq. km project is located in the Golden Triangle in Nisga’a traditional territory, where he says the junior has a “great relationship” with the First Nation.
The Golden Triangle hosts several past-producing mines, including Premier, Eskay Creek and Snip, and several large deposits, such as Seabridge Gold’s (TSX: SEA; NYSE: SA) KSM project and Pretium Resources’ (TSX: PVG; NYSE: PVG) Valley of the Kings deposit. “The Golden Triangle area is the richest area in Western Canada for gold, period,” McLeod said.
Bond Gold discovered Red Mountain in 1989, with Lac Minerals and Royal Oak conducting most of the exploration work up until 1996. Seabridge picked up the property in 2002, and optioned 100% of it to IDM in April 2014.
Before IDM, Seabridge, North American Metals and Banks Island Gold carried out engineering studies and environmental baseline work on the property.
Red Mountain has been tested by 466 drill holes and has a production-sized, 2 km underground ramp, with McLeod pointing out that $45 million to date has been spent on the property.
Red Mountain is a porphyry gold deposit with three main mineralized zones: Marc, AV and JW.
“The best thing about the orebody is that it is wide,” McLeod said. It averages 15 metres, and hits a 40-metre width in some places.
The mineralization is amenable to longhole stoping and drift–fill mining.
IDM completed a preliminary economic assessment (PEA) in July 2014, based on a resource estimate released that May. The study envisions a 1,000-tonne-per-day underground mine at Red Mountain producing 55,500 oz. gold and 170,000 oz. silver annually over five years. Start-up costs would be $76 million, with cash costs of US$455 per oz. gold, net of silver credits.
“The biggest knock on the project is its short mine life — five years. But we see enough exploration potential that we should be able to add to this quite easy,” McLeod said.
On April 4, IDM released an updated resource estimate showing contained gold ounces at Red Mountain increasing 16%, or 60,600 oz. in measured and indicated, and 31%, or 25,200 oz. in inferred.
Red Mountain now hosts 441,500 oz. gold and 1.38 million oz. silver in measured and indicated (from 1.6 million tonnes at 8.36 grams gold and 26 grams silver per tonne). It has 107,500 oz. gold and 153,700 oz. silver in inferred (from 548,100 tonnes at 6.10 grams gold and 9 grams silver).
The estimate uses a 3-gram-gold cut-off grade. The newest number includes additional drilling completed in 2014 and a revised geologic interpretation, as well as resources in two new zones: 141 and 132.
IDM will use the revised resource to update its PEA in the second quarter, followed by a feasibility study by year-end.
The upcoming economic studies will incorporate IDM’s decision to move the mill and tailing facilities to a lower elevation to reduce the risk of avalanches, so that it can operate the mill year-round. It said its preferred location at Bromley Humps on March 17.
Under this scenario, IDM would mine at 1,500 tonnes per day for eight months annually to feed a year-round, 1,000-tonne-per-day mill.
In the previous scenario, the operation would run seasonally for nine months at 1,000 tonnes per day, shutting down during the worst winter months.
As part of the feasibility work, IDM is refining its metallurgical technique. It intends to conduct a small infill drill program to upgrade the inferred resource.
McLeod notes the company is halfway through its permitting, and will submit its environmental assessment application in the third quarter. “We expect by January next year to have our EA certificate,” he said. “And then the project is further de-risked.”