Nevada Gold Mines and i-80 Gold Corp. have struck a deal that gives NGM full ownership of the South Arturo Mine and gives i-80 Gold the Lone Tree and Buffalo Mountain properties. Separately, i-80 Gold is acquiring the Ruby Hill Mine from Waterton Global Resources Management.
NGM also receives a low-cost option to acquire i-80 Gold’s Rodeo Creek exploration property adjacent to South Arturo on the Carlin Trend, and i-80 Gold will have the right to use NGM gold processing facilities for a time.
“This is a win-win transaction for both Nevada Gold Mines and i-80,” said Greg Walker, executive managing director of NGM, and i-80’s CEO, Ewan Downie, echoed that sentiment in a Sept. 7 teleconference.
The arrangements with NGM and Waterton will allow i-80 Gold to eventually process gold from the company’s Granite Creek underground project in Humboldt County, its McCoy-Cove underground project south of Battle Mountain, and Ruby Deeps deposit at Ruby Hill at the Lone Tree autoclave, Downie said.
Ore from all three is needed to fill the autoclave facility, and operation of the autoclave will make i-80 Gold one of only three companies with refractory ore capabilities in Nevada, he said. The other two are NGM and First Majestic Silver, which owns the Jerritt Canyon Mine north of Elko.
Future open pit potential at Buffalo Mountain near Lone Tree also comes with the NGM deal, and Downie said NGM has already started permitting for mining that deposit.
Cash that came to i-80 Gold from South Arturo will be replaced initially with revenues from Ruby Hill and residual leaching at Lone Tree, he said.
The Lone Tree Mine along Interstate 80 west of Battle Mountain was a Newmont Corp. operation that ceased active mining in 2006, but Newmont and then NGM continued to keep the autoclave facility on care and maintenance.
NGM is a joint venture of Barrick Gold Corp., which is the operator and owns 61.5%, and Newmont, which holds 38.5%.
The large milling complex at Lone Tree is “in terrific condition,” Downie said, also stating that the facilities at Lone Tree — including the autoclave, flotation mill, heap leach facilities, warehouse, offices and training room, assay lab, fire station and railroad access — will save i-80 Gold the money it would take to build new facilities.
He estimated the cost to retrofit the autoclave facility for i-80’s needs at $150 million but to build a new one would cost up to $1 billion.
Lone Tree will become Reno-based i-80 Gold’s “company hub,” Downie said.
He said Lone Tree, which also has additional mining potential, is midway between i-80’s Granite Creek site and its McCoy Cove property. The company is completing test mining this year at Granite Creek, which is on the site of the former Pinson Mine.
Downie said Granite Creek is the priority, to be followed by underground development at McCoy Cove and permitting for underground work at the Ruby Deeps deposit at Ruby Hill.
“We expect to green light McCoy Cove sometime this year,” he said.
An underground decline at the bottom of the East Archimedes open pit at Ruby Hill could be started in late 2022 or in 2023, depending upon permitting, Downie said in the teleconference.
Ruby Hill is an open pit mine on the outskirts of the town of Eureka. Homestake Mining developed Ruby Hill, and Barrick became the operator when the company acquired Homestake. After Barrick stopped mining, the company sold the mine. Ruby Hill later became a Waterton property.
Walker said i-80 Gold’s acquisition of Lone Tree, which NGM was not utilizing, becomes a “transformational asset for i-80. In return, NGM’s acquisition of i-80’s 40% of the South Arturo Joint Venture secures additional ounces with both open pit and underground optionality for our Carlin operation.”
The deal also removes NGM’s closure liability, with i-80 providing replacement bonding for reclamation obligations as a condition of closure of the deal, which calls for i-80 to pay up to $50 million based on mineral resources from the Lone Tree property.
The arrangement also calls for NGM to enter into toll-milling agreements to provide i-80 Gold with interim processing capacity at NGM’s autoclave facilities for up to three years, depending upon when Lone Tree is operational, and at NGM’s roaster facilities for 10 years.
NGM also will subscribe for i-80 shares equal to roughly 9.9% interest for aggregate proceeds not to exceed $50 million, which will make NGM one of i-80’s largest shareholders. And NGM will reimburse i-80 Gold roughly $7.3 million the company previously advanced to NGM for South Arturo projects.
For Ruby Hill, i-80 Gold is acquiring a 100% interest in the property for up to $150 million, but the company could make milestone payments to bring the price down to $130 million.
The payments to Waterton will include $75 million in cash and $8 million in shares and later payments that are tied to mineral resources, a feasibility study, a construction decision, and commercial production, according to i-80 Gold’s announcement.
Ruby Hill “has the potential to become one of the largest gold and silver properties,” Downie said, also reporting that there is potential for base metals, and the mill could be changed over to process the base metals later.
Along with the arrangements with NGM and Waterton, i-80 Gold also entered an agreement with Orion Mine Finance for up to $240 million in acquisition and development financing, and Equinox Gold Corp. plans to participate in equity private placement through the exercise of a portion of its anti-dilute rights.
Equinox Gold acquired Premier Gold Mines earlier this year and spun off i-80 Gold into a stand-alone company.
“The financing packages secured and being pursued with Nevada Gold Mines and Orion, combined with interim processing arrangements, are meant to provide i-80 with the ability to immediately begin development of its substantial portfolio or advanced stage deposits located in one of the world’s most favorable jurisdictions for mining,” said Matthew Gollat, executive vice president of business and corporate development.