New firm signs deal to buy Nunavut’s Hope Bay gold property

A worker prepares to drill in the underground mine shaft at the Doris North mine during the first phase of development at the Hope Bay gold property. (FILE PHOTO)

A new privately held firm called TMAC Resources Inc. has signed a deal with Newmont Mining Corp. to buy 100 per cent of the mothballed Hope Bay gold property in the Kitikmeot region, the company announced Jan. 28.

Newmont, which had acquired Hope Bay from a company called Miramar, was widely expected to start moving the property into production some time last year.

Instead, Newmont announced in January 2012 that they prefer to develop more attractive gold properties in the Third World.

Since then, the project has languished in suspended animation and various Kitikmeot businesses, many of them Inuit-owned, were forced to lay off workers.

This past December, TMAC, headed by mining executives Terry MacGibbon, the executive chairman, and Catherine Farrow, the CEO, announced they had signed a letter of intent with Newmont to buy the property and bring it into production.

Under the deal, TMAC must sell at least $30 million in private shares through a $50 million share offering for which the CIBC bank will act as an agent.

Until then, Newmont will own 80 per cent of the firm’s equity, while TMAC’s managers will own 20 per cent.

Afterwards, Newmont will continue as a major shareholder in the company.

When the new firm raises the $50 million, they’ll use the money to pay for:

• opening Hope Bay’s mothballed camps;

• building ice landing strips;

• flying in underground and surface drills;

• beginning underground and surface drill exploration work;

• transporting a mill and other equipment that is now located in Pennsylvania, Lachine, Quebec and Durban, South Africa to the Hope Bay site;

• finishing a pre-feasibility study that will look at putting the Doris gold deposit at Hope Bay into production.

The 20-by-80-kilometre Hope Bay gold belt is believed to contain about nine million ounces of gold.

Prior to putting the property into care and maintenance, Newmont had developed an underground shaft at the small Doris North section of Hope Bay, in Phase I of the project.

An application to the Nunavut Impact Review Board for an environmental review on Phase II of Hope Bay, which would have seen the development of the big Boston and Windy deposits to the south of Doris North, is frozen at the moment.

The company was to have taken Phase II through the development of guidelines, but planned on stopping short of producing a draft environmental impact statement until after a decision to resume development.

That plan would have required 900 workers during construction and 540 workers for mineral production activities. Another 180 workers would have been employed in exploration.