Gold Mountain rallies on first ore shipment news

Gold Mountain rallies on first ore shipment news
Share this article

 

VANCOUVER – Gold Mountain Mining Corp. [GMTN-TSXV, GMTKNF-OTCQB, 5XFA-Frankfurt] said Thursday it has delivered the first shipment of ore from its 100%-owned Elk gold project near Merritt, British Columbia.

The ore has been shipped to New Gold Inc.’s (NGD-TSX, NYSE American) New Afton Mine in Kamloops, B.C., which is located 133 kilometres from the Elk mine.

Gold Mountain shares advanced on the news, rising 6.15% or $0.08 to $1.38 on volume of 139,950. The shares are currently trading in a 52-week range of $3.12 and $1.09.

Gold Mountain is a B.C.-based gold and silver exploration and development company with a focus on resource expansion at the Elk gold project, a formerly producing mine located 57 kilometres from Merritt in south central B.C.

The company is the product of a business combination between Bayshore Minerals Inc. and Freeform Capital Partners Inc. that was completed in December, 2020. As part of the qualifying transaction, Freeform changed its name to Gold Mountain Mining.

The Elk project is a past producing mine with much of the required surface infrastructure still in place that is required to restart operations.

It is situated within the Similkameen Mining District and consists of 27 contiguous mineral claims and one mining lease covering 16,566 hectares.

The first ore shipment (announced on Thursday) was mined from Elk’s 1300 vein, located at the footwall of historic Pit 2 and marks the beginning of cash-flow and revenue generation for the company.

Under the terms of an ore purchase agreement (OPA), the company will deliver 70,000 tonnes of high-grade ore annually, or approximately 200 tonnes per day to New Gold. The OPA has a term of three years and is effective upon the first ore delivery.

The OPA differs from a traditional “toll milling” arrangement in that Gold Mountain is paid based on the value of ore delivered to New Gold and bears no risk of processing recovery.

In June 2021, Gold Mountain said it has signed a letter of intent with New Gold to increase the tonnage delivered to New Afton from 70,000 to 350,000 tonnes annually, beginning in year four. The increase in tonnage delivered is subject to both the company and New Gold obtaining the necessary regulatory and Indigenous approvals.

By selling high-grade ore directly to New Gold, the company said it avoids the need for an on-site mill and tailings storage facility, an arrangement that drastically reduces the Elk Gold Mine’s environmental impact and minimizes the effects it has on surrounding ecosystems and habitats.

According to a 43-101-compliant estimate, Elk hosts 651,000 ounces gold in the measured and indicated category at 6.1 g/t gold and 159,000 ounces in the inferred category at 4.8 g/t.

A preliminary economic assessment (PEA) contemplated an initial 19,000-ounce-per-year mine that ramps up to 65,000 ounces of annual production in years four to 11. The PEA also envisages that for the life of mine, mineralized material from the Elk project will be mined by a contract partner and then delivered to New Gold’s New Afton mine.

 

Related posts

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.