A proposed spin-off transaction that will separate International Tower Hill Mines’ (ITH-T, THM-X) advanced-stage Livengood gold project in Alaska from the company’s earlier stage properties will maximize value, the Vancouverbased company’s management says.
Tower Hill will retain the Livengood project andcreate a new company, Corvus Gold, to advance the company’s other four projects in Alaska and its North Bullfrog asset in Nevada.
“In our portfolio there’s really no value being attributed to our earlier stage exploration assets for shareholders,” Jeffrey Pontius, Tower Hill’s president and chief executive, explains in a telephone interview.
“The whole company is very focused on the Livengood asset and that is driving the valuation of the company and we believe we can unlock significant value in our exploration assets by creating a separate vehicle.”
The board has unanimously approved the proposal, which has “very, very strong support” from shareholders, Pontius adds.
Under the plan, Corvus Gold will hold the Chisna, Terra, LMS and West Pogo projects in Alaska, along with 100% of the North Bullfrog project, near Beatty, Nev. The latter project is about 14 km north of Barrick Gold’s (ABX-T, ABX-N) multimillion oz. Bullfrog gold mine.
Corvus Gold will have $8 million in partner funds to spend on exploration this year on its Alaskan projects and an additional $1 million to spend on a 10,000-metre drill program at North Bullfrog.
An indicated resource estimate from 2008 indicates that North Bullfrog has 2.02 million tonnes at an average grade of 0.88 gram gold per tonne and 0.45 gram silver per tonne. Inferred resources are 0.95 million tonnes grading 0.78 gram gold and 0.36 gram silver.
Pontius argues that the spin-off “frees up” Tower Hill’s talented exploration team to focus on the earlier stage assets while Livengood transitions into a development project.
The company is recalculating Livengood’s resource based on drilling done this winter and expects to release the results some time in mid-June. It also kicked off a prefeasibility study on the first of June to coincide with the start of the summer drill season. It has five drill rigs working on the property.
Tower Hill is also undertaking an economic study on a combined milling-heap-leach scenario and the results from that analysis should be available by the end of the second quarter or early in the third quarter. A combined operation “will produce a significantly better economic model than we have generated on the heap-leach only model,” Pontius says.
The spin-off transaction will be voted on at a special meeting of shareholders in July. Under the proposal, shareholders would receive one new share of Tower Hill and one-half of a Corvus share for each Tower Hill share.
A condition of the transaction will be that Corvus obtains conditional approval to list its shares on a major Canadian stock exchange.
Pontius will retain his current position at International Tower Hill and also be appointed chief executive and chairman of Corvus Gold.
At presstime in Toronto, International Tower Hill was trading at $7.21 per share. Over the last year, it has traded in a range of $2.81-$8.35 per share and has 65.9 million shares outstanding.
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