VANCOUVER — When precious-metal producers are on the lookout for high-grade assets to augment development pipelines, it’s often been junior companies that reap the rewards. And that’s the case for Quebec-focused explorer TomaGold (TSXV: LOT; US-OTC: TOGOF) and its Monster Lake gold portfolio, 44 km southwest of Chibougamau, Que., which has drawn the attention of geographically diverse miner Iamgold (TSX: IMG, NYSE: IAG).
On Nov. 12, the companies released the terms of an option agreement that could see Iamgold earn a 55% interest in TomaGold’s Monster Lake, Winchester and Lac à l’Eau Jaune gold properties. To acquire its stake, the producer must spend $16 million in exploration work over the next five years, with TomaGold also receiving $1.6 million in staged-cash payments during that period.
“It’s really great news for our company, and a strong vote of confidence for the project,” comments president and CEO David Grondin during an interview. “Iamgold is making a large work commitment, and it’s non-dilutive for us, which was important. Even in good markets, most juniors would not have this sort of annual exploration budget, and with equity markets being tough, we were looking to option these projects in a cash-rich deal that would assure we were financially secure going forward.”
Over the past two years TomaGold has completed 7,400 metres of drilling at Monster Lake, with a focus on testing the continuity of the 52 zone at depth, as well as confirming the northern extension of the Annie zone and chasing depth extensions at the 325 zone. The company’s big strike came during its 2012 program at Annie, when it cut 5.7 metres grading 238 grams gold per tonne from 69 metres depth in hole 12-60.
The mineralized zone consists of a black-quartz vein hosted in a strongly sheared lapilli tuff. The tuff host rock is completely silicified. The mineralized section contains native gold over its entire length, as well as around 2% pyrite, 1% pyrrhotite and trace chalcopyrite.
Lac à l’Eau Jaune and Winchester are earlier-stage assets that complete the property package, with Lac à l’Eau Jaune occupying 14 sq. km northeast of Monster Lake, while Winchester comprises 20 mineral claims over 11 sq. km to the south. TomaGold announced the results of a 2,000-metre drill program at Winchester in early July, which were highlighted by 2.3 metres at 9.6 grams gold from 315 metres vertical depth in hole 13-02.
In light of the deal with Iamgold, Grondin and his team are picking up more claims in the neighbourhood. Over the past month the company has acquired 31 sq. km in the Chibougamau region’s Fancamp deformation corridor. In October the company acquired 100% stakes in the Cookie Monster and Little Monster projects due east of Monster Lake, and two weeks later wrapped up a deal with Murgor Resources (TSXV: MGR) for a 70% interest in the nearby Fancamp and Embry properties.
TomaGold received $350,000 from Iamgold upon signing its latest agreement, and completed a $954,500 private placement in late October.
With such cash in hand, Grondin says the company will fast-track a 3,200-metre structural drill initiative at Fancamp, Little Monster and Cookie Monster.
TomaGold plans on spending $375,000 on the program, which is focused on geophysical anomalies that carry a similar signature to Monster Lake.
TomaGold has traded within a 52-week window of 8¢ and 41¢, and traded for 10¢ per share at presstime.
Shares jumped to an intraday high of 19¢ per share on Nov. 12 after news of its deal with Iamgold, while trading an above-average 1.3 million shares during the session. TomaGold has 66 million shares outstanding for a $7.6-million market capitalization.