Kirkland Lake Bites Off Nose to Spite Face
As a result of the takeover of St Andrews by Kirkland Lake Gold, KL ended up in a JV with Eskay Mining on their SIB project in the Golden Triangle of BC, Canada. All Kirkland Lake had to do to maintain their 20% in the project was to belly up to the bar with their 20% contribution to exploration expenses.
There have been a lot of mergers and take-overs and sometimes companies end up with a participation in a project that doesn’t fit their business model. I can’t fathom in this case that having a 20% interest in another Eskay Creek mine would be contrary to Kirkland Lake’s interests.
Eskay Mining was a $.13 stock a year ago. Eskay added Quinton Hennigh as an advisor and did what he suggested. That resulted in a 2300% gain in a year as the company’s initial drill program hit one home run after another. From all the results and technical studies, Eskay has hit another Eskay Creek but perhaps even bigger.
Kirkland Lake saw the drill results yet when Eskay Mining sent them an invoice for their 20% they chose to not pay. And in that case, they are being diluted down to a 2% NSR where ESK can buy 1% for $3 million and has a ROFR on the other 1%.
If in fact Eskay Mining has found a second Eskay Creek Mine and keep in mind, these VMS deposits almost always occur in clusters, Kirkland Lake has given up 20% of what could be a $1 billion to $5 billion project. I am guessing their 20% of exploration expenses would have cost them about $1 million to keep their interest. To do another drill program to confirm the success of last year’s program could cost another $1 million. From a mathematical psychology point of view, it might cost a total of $2 million to see if their lottery ticket would have been worth $200 million to $1 billion. The $2 million isn’t even chump change to Kirkland Lake, it’s too small to be chump change.
For Kirkland Lake to not belly up to the bar is easily the dumbest move I have ever seen a mining company make in the last twenty years. But I know the backstory and I cover it extensively in What Became of the Crow?
In the early fall of 2018 Eric Sprott chartered an aircraft and flew Tony Makuch, President of Kirkland Lake Gold, Greg Gibson and Quinton Hennigh with him to Australia. On October 3rd of 2018 Eric spoke at a mining conference in Melbourne with Makuch, Gibson and Hennigh in the front row. Eric credited Quinton Hennigh with his technical success of the development of the ultra-high grade Swan deposit at Fosterville and with pushing Eric to merger Kirkland Lake with Newmarket. Gibson and Makuch were against the merger.
That hurt Makuch’s feelings. Recently in the month or two before Novo actually began gold production in February at their Beatons Creek project in WA, Kirkland Lake dumped all their Novo shares just to spite Quinton. Anyone familiar with the Lassonde Curve will understand that that is the perfect time to be buying shares in a company at the least risk, not selling. But Kirkland Lake sold.
And in his endless brilliance Tony Makuch just passed on owning 20% of what looks like one of the greatest mining discoveries of the last fifty years because he’s jealous that Eric Sprott gave Quinton the credit for the Newmarket merger and the Swan Zone at Fosterville.
I’m familiar with idiots in mining. Most juniors are little more than lifestyle companies run for the exclusive benefit of management. Idiots are common. But passing on 20% of another Eskay Creek Mine is world class fucking stupid. I’m not shocked at Makuch, that’s pretty much what I expect out of him and Greg Gibson and I say so in my book. What Became of the Crow? has the highest rating of any book I have ever seen on Amazon and tells the story of what really goes on behind the curtain. If you haven’t read it, you should.
But Kirkland Lake is a big public mining company. Was the entire board of directors drunk or stoned when that was discussed?
I own Eskay Mining shares and am biased but they are not an advertiser.
Eskay Mining Corp