Gold Fields eyes Ontario junior for growth

Gold Fields (GFI-N) has signaled interest to acquire a majority stake in Bear Lake Gold’s (BLG-V) early-stage exploration assets, driving the Ontario-focused junior’s shares up 50% on April 10.

The South African gold miner, which is eyeing growth and diversification through greenfield exploration, could earn up to 60% of Bear Lake’s four gold properties by spending $40 million in exploration and development over five years through its subsidiary, Gold Fields Abitibi Corp.

The properties include the company’s fully owned Bear Lake, Cheminis and Fernland projects, and the 75%-held Swansea property. These form part of the explorer’s Larder Lake gold project, located on the prolific Cadillac-Larder Lake break in northeastern Ontario.

On the day the option and joint agreement was announced, Bear Lake closed up 3¢ to 9¢ on heavier than usual volume of over 350,000 shares traded.

As part of the agreement, the gold major could earn an initial 51% interest by spending $25 million on the properties over three years, where it would need to commit at least $5 million during the first year. It could bring that up to 60% by spending another $15 million over the following two years.

Once Gold Fields completes the earn-in, it will become the operator of the resulting joint venture.

If the projects head to development, Bear Lake could choose to fund its share of costs through a loan arranged by Gold Fields, with the major receiving another 5% of the projects against the payment of a nominal strike price.

But, if the junior fixes its own financing it will retain a 40% interest in the properties.

The transaction, which Bear Lake board unanimously approved, is subject to Gold Fields wrapping up its due diligence enquiries by May 21 and the junior receiving all of the necessary regulatory approvals.

So far, the junior has delineated a small resource at Cheminis and Bear Lake, and with Gold Fields support could further prove up ounces in the ground.

Cheminis hosts 335,000 indicated tonnes grading 4.07 grams gold for 43,800 oz., and another 1.39 million inferred tonnes at 5.22 grams gold for 233, 400 oz. gold.

Bear Lake has an inferred resource of 3.75 million tonnes grading 5.67 grams gold for 683,000 oz.

Gold Fields’ other Canadian joint-venture agreements are on Consoldiated Woodjam Copper’s (WCC-V) eponymous projects and Cascadero Copper’s (CCD-T) Toodoggone project, all in British Columbia.

In February, the miner completed its 51% earn-in of the Woodjam North and Woodjam South properties by spending a total of $14.6 million since signing the 2009 and 2010 option and joint venture agreements. It could earn another 19% in each of the properties by spending $12 million on Woodjam North and $8 million on Woodjam South over the next four years. It will also need to complete a feasibility study on Woodjam South.

Gold Fields could acquire up to 75% of Toodoggone copper-gold project, by earning an initial 51% by spending at least $5 million on the project by March 2013. It could earn another 24% by completing a feasibility study or paying $15 million.

To date, Cascadero says Gold Field has spent $4 million on the project.