Lucky Shot gold mine plan misses target
Developers sign deed over to financer after Gold Torrent fails to sell shares; future of Alaska gold mine project in question
Last updated 7/6/2018 at 4:44am
Development of the high-grade Lucky Shot gold mine near Willow Alaska has been suspended and the future of the project is up to the Singapore-based equity firm that is the new owner.
In a June 6 announcement, Miranda Gold Corp. reported that Gold Torrent Inc., the Idaho-based company seeking to develop a small but high-grade mine at Lucky Shot, had failed to complete a share financing required to hold ownership of the development project.
Gold Torrent, which held a 70 percent interest in Lucky Shot, and Miranda, which held the remaining 30 percent, had their sights set on opening a high-grade mine at this past producing gold property in the historic Hatcher Pass region of Southcentral Alaska by the end of this year.
Only about 75 miles north of Anchorage, this 8,700-acre property blankets a large portion of the Willow Creek mining district, including the pre-World War II Lucky Shot and War Baby mines. It is estimated that from 1918 until being shut down by the federal War Production Board in 1942, these two underground operations produced some 252,000 ounces of gold from ore averaging roughly 2.2 ounces (68 grams) of gold per ton.
All told, the various mines on the Willow Creek property produced roughly 500,000 ounces of gold from ore with an average grade north of 1 oz/t (31 g/t) prior to being closed during World War II.
Miranda, which secured a 20-year lease on the Willow Creek property in 2013, said the high-grade mesothermal gold found at Willow Creek is reminiscent of Mother Lode, a famous California vein system that was traced to depths of more than 1,200 meters and for some 100 miles along strike.
Like its California Gold Rush contemporary, Miranda believes the rich gold veins at Willow Creek are likely to continue well beyond the historic workings, making the road-accessible property the ideal place for an exploration company to produce an income from a relatively modest investment.
To realize this vision, Miranda entered into a joint venture with Gold Torrent, a newly established company led by a team with experience in mine development and operation, in 2014.
Gold Torrent's plan for the Lucky Shot mine project was to develop a 200-metric-ton-per-day operation slated to produce around 10,000 oz of gold this year; 16,000 oz in 2019; 25,000 oz in 2020; and 26,000 oz in 2021.
The feasibility study for this operation, completed in 2016, estimated the development costs for this mine to be around US$18.5 million. By the end of last year this cost estimate had risen to US$26.2 million.
As a result of the increased need for cash, Miranda opted to be bought out of the Lucky Shot project for US$1 million in cash, to be paid by Gold Torrent.
Full ownership resulting from this deal was expected to make it easier for Gold Torrent to raise the funds needed to finish development of Lucky Shot and realize a cash flow from the high-grade gold veins found there.
Raising development funds through the sale of shares was also a requisite for a US$13.25-million financing deal cut with Singapore-based Cartesian Royalty Holdings earlier in 2017.
Under the agreement, Cartesian Royalty Holding funds provided Gold Torrent with a US$2 million convertible preferred note and a US$11.25 million gold and silver prepayment.
With Gold Torrent unable to meet its requirements under the agreement, it was determined that the best course of action for Cartesian was to foreclose on the Lucky Shot deed of trust it held as security.
At the request of Cartesian, Gold Torrent and Miranda signed over their respective holdings to Lucky Shot on June 13.
Miranda, which maintains a 3.3 percent net smelter return royalty on Lucky Shot, said it has agreed to work with Cartesian on scenarios that would finish the development of this high-grade gold property in Southcentral Alaska.