IDM Mining the next Wheaton River, CEO says
– Geologist shares secrets of White Gold sale, readies Red Mountain project near his hometown of Stewart, BC for prime time
– New PEA could yield cheap, high-margin gold ounces
– $10 million firm combines exploration, social license, engineering expertise
– Here McLeod and McPhie tell the IDM Mining story on video for first time
Geologist and entrepreneur Rob McLeod, 43 years old and president of IDM Mining, has a few more gray hairs than he did three years ago when the bear market that is currently crippling the mining industry began.
McLeod had become the toast of the town in 2010 following the sale of the White Gold project in the Yukon to Kinross Gold for $120-million. He had only made the discovery one year earlier.
Soon after the White Gold sale, plenty of companies wanted to be involved with McLeod and he found himself associated with no less than 8 ventures as the mining market soured in early 2011.
“I spread myself too thin,” McLeod recalled in a recent interview. “When the market turned I was overextended and couldn’t manage so many projects effectively.”
Unlike many of his mining promoter peers, McLeod refused to abandon his IDM Mining shareholders, Kinross Gold and Sun Valley Gold among them.
IDM Mining is in its third incarnation under McLeod, favoring its existing shareholder base to launch new ventures from when it could have been more profitable for McLeod personally to use other, more selfishly structured, corporate vehicles.
It’s one of the things I’ve come to admire about Rob after getting to know him. Respected exploration analyst Brent Cook brought McLeod to my attention a few years ago, telling me he was a creative prospector that our readers should follow.
When Revolution Resources (IDM Mining’s former name) appointed Mike McPhie as Executive Chairman on April 9, 2014, I heard through the grapevine that the company wanted to buy a near term production gold asset in British Columbia.
I immediately suspected the Red Mountain project, near Stewart, BC, McLeod’s home town and a project I had visited the previous year under then owner Banks Island Gold. Banks had to abandon the project after completing a robust preliminary economic assessment (PEA) on the mine, because it couldn’t get the money together and was focused on another, smaller project not far from Red Mountain called Yellow Giant.
My suspicions were confirmed with a news release that followed from Revolution several days later. The company was picking up the Red Mountain project from Seabridge Gold in a deal that included Revolution changing its name to IDM Mining, in honour of Rob McLeod’s father and uncle, Ian and Don McLeod, two mining and political legends from Stewart.
A few weeks before the Revolution announcement, I was touring Curis Resources’ Florence Copper project in Florence, Arizona, hosted by then Curis CEO Mike McPhie. I left the site visit so impressed with McPhie’s presentation that I purchased shares in Curis, and went on with other business.
Little did I know during my Arizona field trip that McPhie was giving his final presentation as the head of Curis. He resigned the following day, to everyone’s surprise, to join the engineering group, JDS Mining and Energy, as Managing Director of the firm’s copper and gold divisions.
By coincidence, I ran into McPhie a couple of days later on the street in downtown Vancouver and learned the JDS opportunity was too good to pass up.
JDS Energy and Mining was founded by engineer Jeff Stibbard, and has helped design, build and operate numerous diamond, copper, gold, and oil sands projects in Northern Canada.
By all accounts the firm, with the largest mining engineering team in western Canada (over 150 engineers on staff), is growing rapidly even in a down market. In addition to providing contracting and engineering services to global mining clients, JDS recently moved into being full operators and owners of mining projects with the successful commissioning of the Craigmont Industries magnetite project near Williams Lake earlier this year and the recent start of construction of the Silver Tip mine in northern BC. Both projects are owned and operated by the JDS group.
Jeff Stibbard was a big part of the team that designed and built the famous Ekati Diamond Mine in Canada’s far north and spent five years managing that project. In 1999 Jeff was a founder of Western Oilsands Inc. which purchased a 20% interest, along with 60% partner Shell Canada, and Chevron Texaco (20%) in the Albian Oil Sands Project in northern Alberta. Western Oilsands Inc. was eventually purchased by Marathon Oil in 2007. In 2004, Stibbard founded JDS Energy and Mining in Kelowna and Vancouver. JDS now also has offices in Tucson, Arizona, Yellowknife, NWT, and Hermosillo, Mexico.
“We’ve worked all over northern BC, we know the logistics, we know how to deal with snow and road building in alpine terrain, I mean that’s what we do for a living,” McPhie said.
With Stibbard and McPhie both in their 40s, the duo envision building a mining development and operations group to rival some of their predecessors in Vancouver, including the Hunter Dickinson Group, of which Curis is a member company.
Enter Rob McLeod and the Red Mountain project. McPhie’s first move in the JDS role was to become Executive Chairman at IDM Mining, bringing in JDS to help re-work the economics and development plan for the proposed Red Mountain mine.
Soon after McPhie’s arrival to IDM, he and McLeod sold a $3.3 million private placement, a difficult task in this market, which was more than enough to pay Seabridge Gold and get started on early development and exploration.
McPhie brings an impressive social license resume to IDM Mining and like Stibbard and McLeod, has earned a strong reputation in Canadian mining circles. He has already chaired the Association of Mineral Exploration British Columbia (AMEBC), been the CEO of the Mining Association of British Columbia (MABC), was the Chair of the Board of Governors of the British Columbia Institute of Technology (BCIT) and was a senior policy adviser with Canada’s federal Department of Natural Resources. By the time I met him in Arizona he was only 43, and clearly someone who had a lot going for him.
I wanted to find out what McPhie and McLeod were up to, so I sat down with them at the Metropolitan Hotel, with cameras rolling, to hear the story of IDM Mining.
When asked what his aspirations are for IDM, McLeod suggested investors think of Wheaton River Minerals, which became Goldcorp, and subsequently spun out Silver Wheaton.
“You start with a highly profitable, high margin mine and you can grow pretty quick. We intend on leveraging Red Mountain. In 5 years we would like to see the company as a multi mine producer.”
The company intends to have a high grade gold mine in operation at Red Mountain in less than two years, and sees great exploration potential for the property. McLeod says there are many untested exploration targets at Red Mountain because the glaciers have retreated by as much as 2 km in places since he last worked on the 171-sq.-km project (A few project photos here).
McLeod has been watching the Red Mountain project near his hometown of Stewart for years, having first worked on it as a geology student in 1992.
The project already has a measured and indicated resource of 435,400 oz. gold at 8.4 grams per ton, plus an additional 140,000 oz. gold at 5.4 g/t in the inferred category from when it was explored by Lac Minerals in the 1990s, which McLeod says is enough for development.
“So many mines start out small, then grow into bigger mines through exploration success,” says McLeod. “Start smaller then scale up, that’s the way the industry should be heading, instead of uber projects with multibillion capex.”
The Banks Island PEA envisioned an 1,800 tpd underground operation producing 115,200 oz. gold per year at US$459 per oz. gold. At US$1,360 and an 8% discount rate the mine had a $155 million NPV and a 43% pre-tax IRR, with an expected upfront capital cost of $163 million.
The company expects to publish a new PEA any day now, and McLeod tells me they are going to get the initial capex number to under $100 million. One of the big cuts will be a $35 million tunnel that was designed to reduce avalanche risks in one of the snowiest places on earth. McLeod says instead they plan to reduce operations for a couple months a year when the snow is deepest.
McLeod believes the company should have no problem funding a high-grade, underground gold mine if they can achieve their cost target.
“It is easier to raise money to build those type of projects than it honestly is to do a $2 million financing in this current market,” says McLeod, adding that funding options include further share issuances, debt, streaming deals, and private equity.
IDM’s mine-building ambitions are strengthened by their partnership with JDS Energy and Mining, the private engineering firm.
On the social license front, the Red Mountain project is situated within the Nisga’a Territory which is one of only two settled treaty areas in BC. The Nisga’a have recently signed development agreements with both Avanti Mining for their Kitsault molybdenum project and with Seabridge Gold on the KSM copper gold project, indicating a willingness to partner and work with mining companies within their traditional territory. IDM recently entered into the environmental assessment process with the BC government for the project and expects to submit their Project Description report to the regulatory agencies in early August. McPhie says the permitting process should be relatively straightforward given the low impact and small scale underground nature of the mining operation and they expect the permitting process to take between a year and 18 months to complete.
With the exploration, social license and engineering expertise in place, the company is moving ahead with early development. In addition to the PEA, IDM plans to put out an upgraded resource and full feasibility study before the end of the year. The mine already has upward of $40 million worth of development work done, including 2,000 metres of underground development, and McLeod says they have great relations with local communities.
But McPhie says they won’t rush funding and development at the expense of shareholders.
“Our key focus for investors will be to minimize dilution as much as possible so that those earnings per share numbers — that we don’t get enough of in our business —will be as high as possible.”
McPhie says IDM Mining offers something for all investors, with both near-term production potential and huge exploration upside on the project.
“We’re in a business where people buy into the upside of a dream,” says McPhie. “ And that’s what this is, a dream underpinned by the hard reality of an economic mine.”
Price July 15, 2014: C$0.25
Shares Outstanding: 38.4 million
Shares Fully Diluted: 48.9 million
Market Cap: C$9.6 million
Contact: Investor Relations +1.604-681-5672
Author owns shares in IDM Mining Ltd. and the company is a sponsor of our website, so naturally, we are biased. Always do your own due diligence. Please read our full disclosure. This article release does not constitute an offer to sell or the solicitation of an offer to buy nor shall there be sale of the securities in any jurisdiction in which such offer, solicitation or sale would be unlawful, including in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the “1933 Act”) or any applicable securities laws of any state of the United States and may not be offered or sold in the United States, or to, or for the account or benefit of a U.S. person (as defined in Regulation S under the 1933 Act) unless registered or pursuant to an available exemption from such registration requirements. Forward-Looking Statements: Some statements in this news release contain forward-looking information or forward-looking statements for the purposes of applicable securities laws. These statements include, among others, statements with respect to proposed exploration and development activities and their timing. These statements address future events and conditions and, as such, involve known and unknown risks, uncertainties and other factors, which may cause the actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the statements. Such factors include, among others, the timing and success of future exploration and development activities, exploration and development risks, financing requirements, title matters, third party consents, operating hazards, metal prices, political and economic factors, competitive factors and general economic conditions. In making the forward-looking statements, the Company has applied several material assumptions including, but not limited to, the assumptions that: the proposed exploration and development will proceed as planned; market fundamentals will result in sustained metals and minerals prices and any additional financing needed will be available on reasonable terms. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise except as otherwise required by applicable securities legislation.