Premier Gold Mines’ (TSX: PG; US-OTC: PIRGF) story has of a lot of moving parts that are “moving us in the right direction,” CEO Ewan Downie says in his company’s blog.
The newest such part is a $5-million cash and share acquisition of Pure Gold Mining’s (TSXV: PGM) 28 mining claims named “Buffalo” that are contiguous with Premier’s past-producing Hasaga gold property in Ontario’s Red Lake district.
The transaction expands the Hasaga property from 7 sq. km to 12 sq. km, and boosts the potential mineralization area for Premier Gold by 75% in the coveted gold district.
The drive behind the transaction has been the encouraging results coming from Premier’s 2015 exploration program at Hasaga that suggests the deposit is amenable to open-pit mining.
Recent results include 1.06 grams per tonne gold over 93 metres from the Central zone and 1.19 grams gold over 107 metres from the Hasaga porphyry.
“As the footprint of near-surface mineralization expands at both the Central zone and Hasaga porphyry targets, increasing the size of our land position simply makes sense,” Downie says.
The expanded property sits in a favourable geological setting, with several past and currently producing gold mines, and has significant infrastructure nearby such as roads, power lines and gold mills.
Premier picked up the project from Goldcorp (TSX: G; NYSE: GG) in February, noting that despite its historic production, it hadn’t been systematically explored.
The past-producing Hasaga and Gold Shore underground mines cranked out 640,000 oz. gold between 1936 and 1956, and remain open for expansion, the junior now says. It describes the former Buffalo mine as a “valid, near-surface exploration target.”
This year’s 60,000-metre drill program at Hasaga should wrap up shortly. Early next year, drilling on the newly acquired 5.13 sq. km ground will test the strike potential of the Hasaga porphyry.
“We are particularly excited about the Hasaga project, as we believe it can be a high-grade, open-pit mine with the potential for more than 1 million oz. gold,” Rob Chang, Cantor Fitzgerald analyst, comments in a note. He has a “buy” rating and $4.25 target on the stock.
The transaction could close by Dec. 18. Pure Gold will keep a 1% net smelter return royalty on the Buffalo claims, and Premier can acquire half for $1 million.
Come early 2016, Premier will transition into a gold producer at its 40%-owned South Arturo property in Nevada, where Barrick Gold (TSX: ABX; NYSE: ABX) holds the remaining 60%. On a 100% basis, South Arturo should make 200,000 oz. gold in its first year of production.
Meanwhile, Premier will wrap up a feasibility study by mid-2016 on its 50%-held Hardrock deposit on the Trans-Canada property with its partner Centerra Gold (TSX: CG; US-OTC: CAGDF).
The junior is also advancing its two exploration targets: the 100% owned McCoy–Cove gold project in Nevada, and the 44%-held Rahill–Bonanza gold project in Red Lake, with partner Goldcorp.
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