It Would Be Ironic If The Russians Acquired Tagish Lake’s Gold Project In The Yukon
By Charles Wyatt
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Greg Hawkins, executive chairman of Canadian listed Tagish Lake Gold has been a very busy man of late, especially since his president, Robert Rodger, resigned towards the end of January. The company was under a lot of financial pressure at that time as it had just managed to obtain a waiver from Macquarie Bank until the end of March on the C$1.5 million interest bearing finance facility it’s taken out for the definitive feasibility study being carried out on the company’s Skukum Creek gold-silver project. It was also around then that Greg Hawkins decided not to go ahead with a proposed C$500,000 private placement while he worked out what to do about the obligations to Macquarie, the company’s cash position, and his feasibility study.
Not a pleasant position to be in, and it had clearly all got too much for Mr Rodger. He stayed on as a consultant to try to sort out the feasibility study and the ongoing permitting preparation and permissions, but the financial burden fell on Greg. He beavered away, but the pressure he was under was clearly visible in the company’s report for the three months to end January, which showed that a loss of C$400,000 and a working capital position C$3.4 million under water. By April, however, Greg could at least confirm that a number of proposals had been received from parties interested in providing finance, and he was eager to wrap things up, pay off creditors and allow the company to move ahead. The crucial thing was that he seemed to have got the support of Macquarie despite the fact that it had given notice of default on the debt facility, though this was extended until 12th May.
The latest news is that Tagish Lake has closed the first tranche of C$330,000 out of a proposed C$2.5 million non-brokered private placement. It’s a good start, but the company will need to get all the money if it’s to move back from the brink. Maybe that’s why Greg was spinning round the world so fast in recent days that even his receptionist could not keep pace. In the past week or two he has been in London as well as Russia - where he visited the giant Sukhoi Log gold deposit near Irkutsk in southeastern Siberia. He then flew back to Vancouver going the eastern route and it took him something like 43 hours. So it was no surprise that his only meetings on Wednesday, when Minews tried to make contact again, were at breakfast time with a couple of directors as he battled with jet lag. By that time his receptionist was not in the best of moods and slammed the phone down when Minews left yet another message.
Pressure gets to everyone and the frustrating thing for Greg and his team is that production at the Skukum Creek deposit is so near, but so far away. The measured and indicated resources stand at over 900,000 tonnes grading an average of 7.05 grammes per tonne gold and 203 grammes per tonne silver, with further resources in the inferred category. Not a lot, but enough for a modest mine. The preliminary feasibility study was based on mining at a rate of 270,000 tonnes per year to produce around 42,000 ounces of gold and 1.1 million ounces of silver. Mind you, this is just one of three deposits identified so far on the 178 square kilometers Skukum Mineral District so there’s obviously the potential to define further resources and extend the life of the mine. But this won’t happen until cash flow has started to put money for drilling in the till.
The other advantages of this project are that it is only 80 kilometres by road from Whitehorse, so labour, plant and expertise are close at hand. Also there is a 270 tonnes per day mill dating back to the 1980s on site, which will have to be upgraded to 770 tonnes per day. Haul roads connect the other two deposits, Goddell Gully and Mt Skukum, and some other high potential targets to the central facility. Skukum Creek itself has undergone development through adit access at two levels and a decline. The resources to be mined are above the lower adit level, so hoisting and long haulage distances are eliminated. It all seems pretty straightforward and hopefully there will be no nasty surprises in the estimated capital and operating costs when the feasibility study eventually appears. As yet, though there is no word about whether the government will chip in towards the costs of the 41 kilometres powerline that is required.
The other question mark lies over the changes in the process design connected with the production of a lead-zinc concentrate. These appear to have delayed the feasibility. None of these issues are exactly show-stoppers, but when a company has a bank on its back, every problem is a big one. Probably the best thing would be to sell a controlling interest to a well funded junior seeking early production. That may have been what Greg Hawkins was discussing in Russia. It would certainly please Roman or Boris no end to have a project in the Yukon where the Klondike gold rush started in 1897. If this is the case Greg may be quite wise to say as little as possible until the deal is done and dusted. |
