Agnico Eagle buys into Yukon's White Gold district 

Canadian gold miner Agnico Eagle Mines (TSX,NYSE:AGM) is grabbing a significant land position in a well-known Yukon gold play that has already yielded two purchases by major gold mining companies.

Agnico Eagle announced Dec. 5 it has bought a stake in thousands of mining claims in the White Gold district originally owned by Shawn Ryan, the Yukon prospector whose unique soil sampling method turned him into a millionaire almost overnight. A press release states that Agnico Eagle, which owns half of the Canadian Malarctic gold mining operation in Quebec and also has the Meadowbank open-pit gold mine in Nunavut, northern Canada, bought 19.3% of the shares in a company that will soon be named White Gold Corporation, for $14.52 million.

"They have good ground position, it's an area known for having good mineral potential, and then the individuals are top-notch in their own right. So, they have a track record. Their history is phenomenal"

The CBC reports that an associate of Ryan "formed the new Vancouver based company, which then bought all of his claims in the district — 12,300 of them, spread over 21 properties. Ryan said he received $3.5 million and 7 million shares in the new company."

The pair then offered major mining companies a deal: buy shares in the company and sign onto a 3-year exploration program conducted by Ryan's company Ground Truth Exploration.

CBC quotes an Agnico Eagle spokesman saying that the arrangement suited Agnico Eagle's preference for buying early-stage projects.

"They have good ground position, it's an area known for having good mineral potential, and then the individuals are top-notch in their own right. So, they have a track record. Their history is phenomenal," said Dale Coffin, the company's corporate director of communications.

The White Gold district in the Canadian Yukon lies within the Tintina Gold Belt- a 200- by 1,200-kilometre arc that stretches from Northern B.C. to Southwest Alaska. It has estimated gold resources of 69.2 million ounces and contains large gold deposits like the Pogo, Fort Knox and True North, according to a profile on the area by INN:

“Rags to riches” story

Prospector Shawn Ryan is widely credited with the area’s first major discovery since the Klondike gold rush of the late 19th century. Ryan moved to Dawson City in the 1980s to pick mushrooms, not prospect for gold, but using a unique soil sampling method, he began chasing the source of the fabled “Klondike” gold, and bought up claims. He would option those claims to junior mining companies, and in 2009, one of those juniors, Underworld Resources, announced a spectacular drill result of 3.34 grams per tonne (gpt) over about 340 feet in the Golden Saddle zone of the White Gold property, located 47 miles south of Dawson City. The revelation that Golden Saddle contained a million gold ounces in the indicated category, graded 3.2 gpt, and an additional 407,413 inferred ounces, sparked a modern-day gold rush in the newly branded White Gold District, and turned Ryan into a millionaire almost overnight.

Underworld Resources was purchased by Kinross Gold (TSX:K,NYSE:KGC) in 2010. Earlier this year, another of Ryan's discoveries, the Coffee gold project, was snatched up by Goldcorp (TSX:G,NYSE:GG) through a $520 million takeover. Kaminak Gold became a prime takeover target in January after it announced a feasibility study on its high-grade Coffee project that suggested the mine would be paid for in just two years. Kaminak estimated gold production of 1.9 million ounces over the life of the mine.

Agnico Eagle has eight operating mines, including the Meadowbank mine in the Canadian territory of Nunavut. That mine is the company's largest, with expected production this year of 305,000 ounces. It also owns half of Canadian Malarctic, Canada's biggest gold mine, with the other half belonging to Yamana Gold (TSX:YRI,NYSE:AUY).