Despite the rising price of gold, Tamaka Gold's prospective Goldlund Deposit mine near Sioux Lookout isn’t expected to see production in the foreseeable future.
Tamaka's shareholders will meet in June to vote on selling the company to First Mining Finance Corp. for $60 million.
“At the moment, it’s almost a done deal since over half the shares are locked up and we only need 66 per cent so there’s not too far to go from here,” said First Mining’s vice president of investor relations Derek Iwanaka.
First Mining calls itself a “mineral bank,” a company that buys mineral properties when commodity prices are low and sells them when markets recover.
It has flipped two properties in Mexico under similar circumstances but Iwanaka said the Tamaka property will be the most expensive investment his company has ever made.
The price of gold closed at $1,212 USD per ounce on Friday and although it has fallen six per cent in the last month, it’s still 16 per cent higher than it was six months ago.
Iwanaka is seeing mergers and acquisitions picking up across Canada as investors attempt to buy low into a rebounding market.
When First Mining was considering acquisitions of its own, it found Tamaka to be among the largest available projects still held by junior mining companies.
The Goldlund property consists of 167 claims and three leases that cover approximately 26,600 hectares. Tamaka also owns three properties collectively known as the Rundle-Swayze Project located 110 kilometres southwest of Timmins.
Although his company intends to upkeep the Tamaka properties in compliance with provincial law, Iwanaka said First Mining is in the investment business, not the mining business.
“We will do some advancement or enhancements but we won’t be drilling on it or taking it to production. We’ll get someone else to do that,” he said.
“There’s no telling when we’ll monetize the property or take it to production. This could be a four of a five-year-long bull market. If that’s the case, we’re willing to hold onto this for a few years to see what happens to the markets by then.”
