Nordgold boosts stake in Columbus Gold

Russian billionaire Alexey Mordashov’s mining company, Nordgold, has increased its stake in Canadian junior Columbus Gold (TSX: CGT; US-OTC: CGTTF) to 9.96% on a non-diluted basis, and 11.18% if it were to exercise all of its warrants.

The Moscow-headquartered company acquired 4.61 million units in a private placement at 20¢ per unit on Jan. 14. Each unit consists of one share and half a warrant, with one full warrant exercisable into a share for 40¢ within a year. Columbus shares traded at 23¢ at press time.

Nordgold already owns a 55.01% stake in Columbus Gold’s Montagne d’Or project in northwestern French Guiana.

The Montagne d’Or deposit has an estimated 3.85 million oz. gold in 85.1 million measured and indicated tonnes grading 1.41 grams gold per tonne, and another 960,000 oz. gold contained within 20.2 million inferred tonnes grading 1.48 grams gold.

A bankable feasibility study in 2017 envisioned an open-pit mine producing 214,000 oz. gold a year at total cash costs of US$666 per oz., and all-in sustaining costs of US$779 per oz. gold.

Mordashov, who ranks 46th on the Bloomberg Billionaires Index and is worth an estimated US$18.1 billion, created Nordgold by spinning off the gold-mining assets of Russian steel giant Severstal in 2012, and since then has been quietly picking up stakes in Canadian mining companies.

Nordgold acquired all of the shares of Northquest that it did not already own in October 2016 — taking possession of the junior’s Pistol Bay gold project in the Arctic. Pistol Bay, on the west coast of Hudson Bay in eastern Nunavut, 80 km south of Agnico Eagle Mines’ (TSX: AEM; NYSE: AEM) Meliadine, has an inferred resource of 7.9 million tonnes grading 2.94 grams gold per tonne for 742,000 oz. gold.

Drillers at Columbus Gold’s Montagne d’Or gold project. Credit: Columbus Gold.

The Northquest acquisition followed the Russian miner’s ownership creep and eventual purchase of 100% of Canada’s High River Gold Mines. The junior held two underground mines and one open-pit mine in Russia (Zun-Holba, Irokinda, Berezitovy), and another two open-pit mines in Burkina Faso (Taparko-Bouroum and Bissa).

Another company set up by Russian company Aterra Capital owns 24.9% of Canadian junior Silver Bear Resources (TSX: SBR), which is advancing its Mangazeisky silver project in Russia’s Far East. The project, 400 km north of Yakutsk, has 1.30 million indicated tonnes grading 1,079 grams silver per tonne and 1.49 million inferred tonnes grading 504 grams silver.

Mordashov joined Severstal in 1988 and was appointed chief executive officer of the company in December 1996. He eventually took control of the formerly state-owned steel giant by buying up shares from factory workers.

Nordgold started trading as an independent public company via a listing of global depository receipts (GDRs) on the London Stock Exchange in 2012. It delisted at the start of 2017.

Mordashov now owns 99.94% of Nordgold’s 336.3-million ordinary shares.

In 2017, Nordgold produced 968,300 equivalent oz. gold from nine operating mines (five in Russia, two in Burkina Faso, and one each in Guinea and Kazakhstan) — earning revenues of US$1.22 billion.