London Symposium: Japan Gold seeks new partners

Japan Gold (TSXV: JG; US-OTC: JGLDF) has begun talks with various investors looking to jointly explore for gold and develop mines in the Asian country after an alliance with Barrick Mining (TSX: ABX; NYSE: B) ended this year, a key adviser to the company said.

Vancouver-based Japan Gold and Barrick ended their exploration and development partnership at the end of October after more than five years and C$23 million ($17 million) in spending.

“We’re looking for a new strategic partner to come in,” Cailey Barker, managing director of London-based Xcelsior Capital and adviser to Japan Gold, said this week at the London Metals Symposium. “We’ve got a range of parties in our data room looking.”

Japan Gold is among a small number of Western exploration companies working in the East Asian country, where the government in 2012 amended its mining law to kick start gold mining, an industry that was mostly dormant since 1943 when gold mines were closed during World War II.

Multiple partners

Japan Gold could end up signing with more than one partner, and several Japanese and North American would-be investors have expressed interest, Barker said. The company controls about 3,000 sq. km of properties on Japan’s three main islands – including around Hishikari, a world-class 14-million-oz. mine on the island of Kyushu that has has been producing gold since 1985.

“We can continue doing what we do, keep drilling right up until getting even maybe two or three strategic partners that can come in to fund each one of these districts, and then we can really get the exploration results flowing,” Barker said. He didn’t identify potential partners.

Barrick’s investment in the alliance helped to create a comprehensive geochemical and geophysical database covering most of Japan Gold’s mineral rights. The database ultimately resulted in Barrick selecting three projects – Hakuryu, Togi and Ebino – that it considered to hold significant potential.

“What we want to do is get in there and drill, drill, drill, drill,” Barker said. “Barrick didn’t really want to commit to that next round of financing, so we have finished the alliance.”

New frontier

Japan represents an “underexplored new frontier” with some of the highest-grade gold mines in the world, Barker said. As a first mover, Japan Gold is “still very much in the early stages of exploration,” and its drill rigs are “ready to go,” he added.

Hishikari, the country’s only operating gold mine, produces about 200,000 oz. gold a year at grades of about 20 grams per tonne, Barker said. While the mine itself is owned by Sumitomo Metal Mining, Japan Gold owns land around the property.

“We picked up all the ground around that mine, there’s a whole district,” he said. “We’ve got another district in Kyushu. And we’ve also got a district up in the north, in Hokkaido.”

“We know we’ve hit gold around Hishikari,” Barker added. “We put in some holes, some shallow holes. We hit 10 to 15 metres of two to four grams. So we know the gold’s there. We’ve already hit it. What we want to do, and what we’ve just done, is put in a few deeper holes. Those results should be coming out before the year end.”

‘Easy win’

Barker likens Japan’s situation to that of Western Australia at the start of the millennium.

“Ten, 15, 20 years ago, there was no underground mining industry in Australia, particularly in gold. It was very much all open pits. Now it’s hugely developed, and that’s what I see the way Japan will be like. There’s a slightly deeper search space. It’s under-explored by modern techniques. It’s sort of like an easy win. You’ve just got to do the drilling, be systematic and hopefully the answers will come.”