Having lopped off more than half of its debt last year and with over $100 million in the bank, Premier Gold Mines (TSX: PG) is primed and ready for a big year in 2018, president and CEO Ewan Downie says.
“We paid off US$25 million of debt in the fourth quarter, so we’re making our balance sheet a lot cleaner and we’re easily able to fund our exploration development plans,” Downie says in an interview from Thunder Bay. “We’re in good shape and we’re funding all of our programs from internal cash flow that we’ve generated over the last 16 months of being a producer.”
Premier has approved a budget for exploration and development this year of US$38.8 million on several of its projects (tens of millions more dollars will be spent on other Premier properties by its joint-venture partners).
A good part of the funds it is forking out itself will be put into the ground in Nevada, where the company has joint ventures with Barrick Gold (TSX: ABX; NYSE: ABX), in addition to its wholly owned Cove project and an option to earn into another property called Goldbanks, under an agreement with Kinross Gold (TSX: K; NYSE: KGC).
“It’s going to be a big year in Nevada,” Downie tells The Northern Miner, adding that “we’ve positioned Premier perfectly for growth.”
At South Arturo, in which Premier holds a 40% stake and Barrick 60%, the joint-venture partners are building an open pit (stripping will start mid-year) in addition to developing the El Nino underground deposit, with a ramp from the bottom of an existing pit that was recently mined out. The material from South Arturo will be processed at Barrick’s Goldstrike mine, 5 km away. Development of a third open pit is also being evaluated.
“There are a lot of moving parts at South Arturo but it has the potential to be a very significant long-term producer for Premier,” Downie says.
South Arturo, 40 km northwest of Carlin in Elko County, Nev., started producing in August 2016 and churned out 57,124 oz. gold in 2017. (The company’s other mine, Mercedes, is in Mexico, and produced 82,534 oz. gold and 337,983 oz. silver last year. Premier acquired Mercedes from Yamana Gold [TSX: YRI; NYSE: AUY] in October 2016.)
Meanwhile, at Premier’s wholly owned Cove project in northern Nevada, the company plans to complete an updated resource estimate as well as a preliminary economic assessment before the end of 2018.
The Cove property, 129 km southwest of Winnemucca, hosts one of the highest-grade, undeveloped gold deposits in Nevada, the company says. Premier has budgeted US$19 million for the project this year, some of which will help drill more than 8,000 metres from surface and underground.
Cove has indicated resources of 614,000 tonnes grading 11.57 grams gold per tonne for 228,000 contained oz. gold, and inferred resources of 3.38 million tonnes averaging 12.17 grams gold for 1.32 million contained oz. gold.
Premier also expects big things from Barrick on exploration ground that surrounds its Cove project. In January, Premier signed an option agreement with the gold major where Barrick earns a 60% stake in the McCoy-Cove property by spending US$22.5 million on exploration over the next five years.
This year Barrick will fund a US$6-million exploration program, with Premier as the operator. The program will focus on finding Cove-style mineralization through surface exploration and drilling across 130 sq. km on the highly prospective Battle Mountain-Eureka trend.
Under the agreement, Premier has full ownership of the Cove deposit portion of the McCoy-Cove property that includes the high-grade Helen, 2201 and CSD-CSD Gap deposits. Premier also secured a one-time, bulk-sample processing arrangement with Barrick for the planned test-mining program at its wholly owned portion of the property.
Premier can acquire 100% of Barrick’s Rye Vein property — subject to a back-in right by Barrick — by spending US$3 million on exploration before Dec. 31, 2019.
The Rye property adjoins Premier’s Goldbanks property option, and the Rye vein has been traced on surface for over 2.5 km, with historic drilling returning gold intercepts showing grades of up to 139.2 grams gold per tonne. Rye is a gold-bearing, low-sulphidation epithermal vein system and the Rye vein is the largest known vein of this type in the district.
“We’ve really enjoyed working with Barrick at South Arturo, and in some ways we feel like we’ve learned a lot about Nevada exploration from Barrick,” Downie says. “They have a large Nevada team and have had a lot of success there, and we think they will bring a lot of expertise in terms of exploration.”
At Goldbanks, Premier holds an option to acquire a 50% interest from Kinross. Last year drilling east of the main zone at Goldbanks returned intersections of 28.95 grams gold per tonne along 1.5 metres, beginning at 415 metres in a reverse-circulation drill hole (17-11), and 245.27 grams gold along 3.35 metres, beginning at 430 metres.
Premier expects to drill on both Rye and Goldbanks in 2018.