 Dow Jones on International Tower Hill
Brian Truscott
Dow Jones Newswires
Jan 9, 2009
The precious-metal mining sector needs more mid-tier players built along the lines of a Detour Gold Corp. (DGC.T), Osisko Exploration (OSK.T) or Allied Nevada Gold Corp. (ANV.T) - three companies each sitting on a resource in excess of 4 million ounces of gold.
What's more, these three mid-tiers have market caps of between C$300 million and C$700 million. That's the kind of valuation institutional investors like, because holding one stock with decent capitalization and liquidity is more favorable than holding six or eight illiquid junior stocks that might be worth roughly the same amount.
This brings us to International Tower Hill Mines Ltd. (ITH.V) and its flagship Livengood gold deposit, which is in Alaska along the Trans-Alaska pipeline route and 110 kilometers north of Fairbanks.
At the moment, this quintessential junior explorer is sitting on a market cap of C$71 million, but more importantly, the past two years or so have been spent drilling an NI43-101 resource that stood at 4 million ounces grading 0.8 grams a metric ton as of October - a doubling of the resource announced just one year before.
"Given the results we have coming out of drilling from the second half of 2008, we're expecting a similar resource expansion to some 6 million ounces when we publish a year-end resource in February," said President and Chief Executive Jeff Pontius. "Our current drilling so far shows that some of our very best grades and thickest holes are sitting on the edge of our drill pattern. There's great potential to continue to expand the deposit in a dramatic form over the next year or two."
The goal? Create a world-class gold deposit and sell it.
To whom? Well, International Tower Hill got its start in 2006, when Anglogold Ashanti Ltd. (AU) sold its interest in North American exploration. Some 13 projects, including Livengood, were pushed into International Tower Hill and Pontius, Anglogold's North American exploration manager, took key members of his team to run the fledgling company. Anglogold originally retained a 19.9% stake in International Tower Hill but a subsequent financing in 2007 reduced that level to 14.5%, Pontius said.
Livengood Looks A Lot Like Kinross' Ft. Knox Project
Having said that, the company that might have a real interest in International Tower Hill is Kinross Gold Corp. (KGC), which runs a heap-leach, open-pit mine called Fort Knox, just outside of Fairbanks.
"Fort Knox is a very similar mining scenario to what we would expect for Livengood," Pontius said. "Kinross would be a great partner - they have operating experience in the area, heap-leach-recovery experience, permitting experience and have been working in the northern latitudes for many years."
And the plan going forward?
The company's C$6 million treasury will be used to fund its 2009 winter and summer drill program - the winter dates will be used to drill frozen boggy areas through mid-April while the summer will see a combination of infill and step-out drilling to further prove up the resource.
"We have adequate money to advance the project to where we want to get it to. When we get to June, we believe we'll have a resource north of 7 million ounces," Pontius said.
And that would put the company firmly in that the mid-tier resource neighbourhood.
"We believe it's important to get to that level of resource and we believe we can get there fairly easily," he said. "At that point, we think it will bring shareholders a significant improvement in the share price... and the deposit may become a compelling story for a major acquisition by an operational mining company."
Once winter drilling is complete, another NI43-101 resource should be released in May, which will likely lead to International Tower Hill's first economic scoping study and a full economic analysis of the deposit to see its significance, Pontius said.
"When I came over from Anglogold, I brought key members that I have worked with for years. What we want to do is find assets that have value and sell those assets to producing companies and then move on and continue work to bring shareholders maximum value from the exploration phase," Pontius said.
And while Livengood - the name, by the way, comes from a simple note saying "Live n good" on a postcard sent during a by-gone Alaskan goldrush era - is the company's flagship project, Pontius is eager to move on once the asset has been well and truly defined.
"We do have other exciting projects that we need to get to work on; part of the strategy for ITH is to sell Livengood or the company with Livengood in it, but keep the rest of our exploration projects," Pontius said.
That means four 100%-owned Alaskan projects as well as a number of joint-venture projects in Alaska and Nevada.
Company Web Site: http://www.ithmines.com
Brian Truscott
Dow Jones Newswires
604-669-1595
email: brian.truscott@dowjones.com
321gold Ltd
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