New Found Gold explores use of Maritime’s processing facility for early production

New Found Gold (TSXV: NFG; NYSE-A: NFGC) is considering taking its Queensway project in Newfoundland and Labrador into early production using the nearby gold processing facility held by Maritime Resources (TSXV: MAE).

On Monday, the companies entered into a memorandum of understanding (MoU) that grants New Found the right to conduct due diligence and exclusivity to negotiate a toll milling agreement at the existing Pine Cove mill located at its Point Rousse project, which Maritime recently acquired from Signal Gold.

Pine Cove is a fully permitted gold processing facility that was operating as recently as the first quarter of this year and is rated at 1,400 tonnes per day with a large capacity tailings storage facility and access to port infrastructure. The facility is located on the Baie Verte peninsula, approximately 270 km from New Found’s Queensway project by paved highway.

“Queensway is a unique project, endowed with high-grade gold mineralization and ideally located for potential development,” said New Found’s chief development officer, Ron Hampton in a press release. “This all bodes well for the potential to realize significant value through timely production.”

“In my experience the opportunity to develop an early operation, even if at a smaller scale, allows for significant risk reduction. While we have plenty of work still to do to determine the viability of any such early production scenario, the option of having access to a gold processing facility located nearby is of significant interest,” he said.

Garett Macdonald, president and CEO of Maritime, stated in a separate release: “We are pleased to announce these transactions with New Found and look forward to working with them to study opportunities for toll processing at Pine Cove. The fully permitted Pine Cove site offers enormous flexibility for gold processing.”

Concurrent with the MoU, New Found announced that it intends to invest US$2 million in Maritime by buying non-convertible senior secured notes and common share purchase warrants. A portion of the proceeds, said Maritime, will be used to complete its acquisition of Point Rousse.

Shares of New Found closed 1.0% higher by the end of Monday’s session, for a market capitalization of $1.1 billion. Maritime’s stock jumped 28.5% for a market value of $21.3 million.