What strikes you about David Grondin, the president and CEO of TomaGold (TSXV: LOT), is not just his youth — he has yet to turn 40 — but that he made the jump from a career in finance into the rough and tumble world of mining on the eve of the financial crisis and has managed to not just survive, but prosper.
After making it through the first five years and publicly listing in January 2012, TomaGold drilled a hole on its Monster Lake gold project in Quebec that returned an assay of 237.6 grams gold per tonne over 5.7 metres — a dazzling result that caught the eye of Iamgold (TSX: IMG; NYSE: IAG).
The mid-tier gold producer with six gold mines sprinkled across North America, Africa and South America now owns 50% of TomaGold’s Monster Lake project and recently struck a deal to earn another 25% by spending $10 million over seven years.
A second coup followed on June 23, with Grondin’s announcement that TomaGold is picking up a 39.5% stake in the Sidace Lake gold project in Ontario’s Red Lake gold camp, a property in which Goldcorp (TSX: G; NYSE: GG) owns the other 60.5%.
“One discovery and two joint ventures — not bad, you know, in a very, very, very difficult market,” the bilingual Grondin says in a telephone interview from his office in Montreal. “Some mornings I get up and say, ‘Man, why am I doing this?’ But it’s fun. When it goes well, it’s fun. I’m motivated — I’m highly motivated.”
That motivation has yet to light a fire under the junior’s shares, however, which have traded in a range of 3.5¢ to 14¢ over the last year and closed at 12¢ after the Sidace Lake acquisition. At press time TomaGold’s shares were trading at 11¢.
But Grondin is certain there is hope for the junior’s shareholders — 40% of which are institutional investors from Europe (funds), Asia (mainly funds and family offices based in Hong Kong) and Quebec (Sodémex and Desjardins, among others).
The mining executive describes Iamgold’s interest in the Monster Lake project (it also has 50% stakes in TomaGold’s surrounding properties, Winchester and Lac-à-l’Eau Jaune) as “an endorsement” that brings significant expertise.
After the gold producer struck its first of two option deals in November 2013, “they started to drill and got good grades and geophysics,” Grondin says. “They did an amazing job doing stuff that most juniors would never do because we don’t have the human capacity. They have the manpower, the resources and the specialists on their internal payrolls — they have their own geophysicists who can make decisions on the spot so they don’t have to pay a consultant to come in and look at their results.”
On June 15, TomaGold announced assay results from the joint venture’s 2016 winter drill program (8,100 metres in 21 drill holes), which was completed in April.
Craig MacDougall, Iamgold’s senior vice-president of exploration, noted that the latest drill program returned “encouraging results” from a possible second zone along the main hosting structure called the Monster Lake shear zone and in an area 200 to 400 metres north of the 325-Megane zone.
Highlights from drilling at both zones included 1.2 metres grading 20.16 grams gold per tonne, 4.3 metres grading 3.07 grams gold and 1.3 metres averaging 6.72 grams gold per tonne.
When TomaGold picked up the Monster Lake project in 2011, previous operators had drilled 30,200 metres in 224 holes.
Since then and until the end of May, the project, 50 km southwest of Chibougamau in northern Quebec, has seen another 32,400 metres of drilling in 108 holes.
There are five major gold zones over a 4.5 km gold corridor at Monster Lake (52, Megane, 325, Annie and Eratix), and more than 20 drill intersections have returned grades ranging from 10 grams gold per tonne to the 237.6 grams gold drilled at the Annie gold-bearing structure in 2012.
Other intersections since TomaGold started exploring Monster Lake have included 42 grams gold over 7.2 metres, 33.60 grams over 5.9 metres, 48.90 grams over 3.5 metres and 37.10 grams over 4.8 metres.
Elsewhere on the property, at the Lac-à-l’Eau Jaune and Winchester targets, Iamgold flew a Versatile Time Domain Electromagnetic airborne survey that identified several strong conductors that coincide with prominent magnetic anomalies similar to those observed along the Monster Lake shear zone.
For the rest of the year, the plan is to carry out a follow-up diamond drill program, more geological and structural mapping, and selected geochemical and geophysical surveys.
TomaGold has plans for its latest acquisition, too.
There have been over 90,000 metres of drilling completed on the Sidace Lake property since 1998, and a resource estimate in 2009 was prepared on the two most advanced of six prospects on the property’s 42 mining claims.
The resource outlined 1.4 million tonnes grading 3.21 grams gold for 141,300 contained oz. gold in the indicated category and another 2.1 million tonnes averaging 3.24 grams gold for 218,800 oz. inferred.
The resource was prepared from two block models, each using a 1.5 gram gold cut-off grade and a 35 gram gold high-grade cap, based on a US$800 per oz. gold price and a US dollar to Canadian dollar exchange rate of 1 to 1.2.
Grondin notes that in addition to the resource, which remains open along strike and at depth, there are another four promising exploration targets on the property, about 25 km northeast of Balmertown in the Red Lake mining district.
According to a technical report completed on the property, Sidace Lake has wide, low-grade gold mineralized zones and relatively narrow, high-grade gold mineralization within sericite-quartz-sericite schists containing minor quartz veins with accessory pyrite in a complex, sub-vertical box fold. The report also found that the average grade of the mineralized zones within the quartz-sericite schist was 1.2 grams gold.
Grondin says the next step will be to look at the property data and make an assessment of how best to proceed.
“For Goldcorp it was a dormant project … but now … I have told them that if they’re not drilling, we can suggest a program,” Grondin says. “There are two zones that have mineralization but there are another four zones that need to be drilled … there is potential to increase what we’ve got.”
TomaGold is acquiring its stake in the project from Planet Mining Exploration (TSXV: PXI). Under the deal TomaGold will issue 15 million shares to Planet for 10¢ apiece. It will also pay a finder’s fee to Transcend Capital of 1 million shares, also at a deemed price of 10¢. In addition, the property is subject to a 1% net smelter return royalty (NSR).
The Sidace Lake purchase is TomaGold’s second this year. At the end of May, the junior acquired Obalski, a 3.45 sq. km gold-silver-copper property about 3 km south of Chibougamau.
The property has seven mineralized zones, one 85-metre shaft and two ramps. A total of 230 holes have been drilled on the property for more than 60,000 metres of drilling, most of which was from surface, with initial exploration work beginning in 1928.
In 1965, United Obalski Mining Co. mined 90,093 tons (81,731 tonnes) grading 3 grams gold, 6.2 grams silver and 1.5% copper.
Grondin says he sees the same scenario at Obalski as he did when he acquired Monster Lake.
“There has been a fair amount of drilling on the Obalksi property, but most of it was shallow,” he says. “Based on a preliminary review of the data collected … the property has excellent potential for a discovery at depth, and with today’s exploration technologies, we could better target future exploration work.”
For its 100% stake in Obalski, TomaGold will issue 4 million shares and make cash payments totalling $500,000 over four years. The property is also subject to a 3.5% NSR, of which 1.3% can be bought back for $1 million.
This year’s deals on Sidace Lake and Obalski mark a sharp contrast with last year, when Grondin reviewed over 100 deals and couldn’t pull the trigger on any of them.
“You couldn’t raise money, and our stock was under 5¢,” Grondin says.
But the skies appear to be brightening.
“There are easily a good five or 10 assets in Quebec and Ontario that I could buy and have under my umbrella,” Grondin says. “I won’t mention any names now, but there are companies out there that have good assets and their market caps are really, really low … if a good asset comes to my attention, I will see if I can make a deal.”