Nunavut’s Hope Bay gold mine project transfers to new owner

These buildings at the Doris North gold mine project, seen here in October 2012, are among the assets that are to be transferred from Newmont’s Hope Bay Mining Corp. to TMAC Resources Ltd. at the end of March. (FILE PHOTO)

Hope Bay gold project has a new owner, with the March 13 announcement by TMAC Resources that it has completed the acquisition of the Hope Bay project from Newmont Mining Corp. and closed $50 million in financing.

The new privately-held firm signed a letter of intent with Newmont last December to acquire Hope Bay prior to a deadline of March 31, 2013.

Under the deal, Newmont now becomes a major shareholder in TMAC, which the mining giant viewed as the best vehicle for moving Hope Bay into production.

TMAC said March 13 that it had sold shares to raise $35 million and entered into a credit arrangement with Newmont for up to $15 million, repayable in cash or TMAC common shares.

Proceeds of the financings will be used to re-commence activities at the Hope Bay project, located on the mainland south of Cambridge Bay in western Nunavut.

The Hope Bay project, which covers an 80-kilometre greenstone belt, is believed to hold at least nine million ounces of gold.

“TMAC has fulfilled its contractual obligations to its partner, Newmont, and has secured the funding required to re-commence activities in the prospective Hope Bay greenstone belt,” said Terry MacGibbon, TMAC’s executive chairman, in the March 13 news release. “Our focus will be on deepening local relationships, completing focused regional exploration and advancing the high grade Doris deposit towards near-term production.”

The next steps include a pre-feasibility study targeted for mid-2013, and obtaining the required permits and equipment to bring Doris North into operation.

“TMAC’s objective is to sequentially develop the full potential of the Hope Bay greenstone belt, which we believe has the potential to be Canada’s next major gold district,” MacGibbon said.

Last month, the Nunavut Impact Review Board said it couldn’t transfer “the associated regulatory authorizations,” including the project certificate, until the transfer was completed.

Newmont hit the brakes on Hope Bay in February 2011, putting its completed infrastructure into care and maintenance and sending a big shock wave through the Kitikmeot region’s fragile economy, which lost about 150 jobs.

Between 2009 and 2011, Newmont spent about $290 million on Kitikmeot and Nunavut based businesses, many of them partners or subsidiaries of the Kitikmeot Corp. or the Nunasi Corp.

By the fall of 2012, work on the company’s small underground Doris North mine had ground to a halt and numerous vehicles, drills and supplies were being sold or removed.

Newmont wrote off $1.6 billion worth of its investment in the Hope Bay project and announced it would give priority to other projects within its global collection of mining properties.