Lukas Lundin (left) and Ross Beaty (right), both brought into Kaminak by Eira Thomas (centre). “Whether we need additional capital,” Thomas says, “or just advice on how we progress, they’re both seasoned veterans in the mining business and provide a lot of insight, as well as the financial backing.” 

Lukas Lundin (left) and Ross Beaty (right), both brought into Kaminak by Eira Thomas (centre). “Whether we need additional capital,” Thomas says, “or just advice on how we progress, they’re both seasoned veterans in the mining business and provide a lot of insight, as well
as the financial backing.” 

 

Eira Thomas: Coffee a Brand New Gold District

Issue 94, August 2014

Running down its treasury and racing a retreat in the ice, in 1994 a near-bankrupt diamond explorer, Aber Resources, punched one last drill hole into an island on northern Canada’s Lac de Gras.

Eira Thomas, a geology graduate whose father led Aber, was de facto leader of the field team and insisted on the final hole. It hit the richest region of what was to become Rio Tinto’s giant Diavik diamond mine, the drill core studded with a 3-carat stone.

Thomas denies it was a one-woman show, but reports that she slept with the drill core under her pillow before flying it to her father are true, she tells Global Mining Observer. In the frenzy of Canada’s diamond rush, the episode shot her to fame and she has enjoyed a high profile since.

As chief executive of Stornoway Diamonds she led a bitterly contested consolidation of Canada’s diamond juniors, remaining on Stornoway’s board until 2011. Known for her pet huskies, Thomas is also a founding director of Vancouver-based Lucara, the diamond sector’s standout success story of the last 2 years, backed by billionaire Lukas Lundin.

“As much as I’m still passionate about diamonds,” Thomas says, “for me, diamonds are a fairly small universe.” Last year she accepted the post as chief executive of Kaminak Gold, owner of the 4.2m ounce Coffee gold project in the Yukon, which it discovered in 2010. “It wasn’t a deliberate decision for me to get out of diamonds, it was more about opportunities at hand and seizing the moment."

Kaminak has since completed a preliminary economic assessment, with Coffee projected to produce an average of 167,000 gold ounces per annum over an 11-year open-pit mine life. Capital costs are budgeted at C$305m ($281m), with all-in sustaining costs under $700 per ounce and a 2-year project payback. “This really isn’t a small project,” Thomas says. “We could start smaller if we needed to, but we know we’d be sacrificing some of the economics.”

“I must admit that having worked most of my career in the Northwest Territories, I expected some of the challenges encountered there would be common in the Yukon.” But it is a misnomer that northern Canada is an exorbitant place to operate, Thomas believes.

As well as by airstrip, Coffee is accessible by barge for 5 months of the year, allowing the company to ship in bulk fuel to operate cheaply year-round. In contrast to the ice around Diavik, the rocky Yukon is also ideal for road building: Kaminak has laid local roads, negating helicopter work, and plans to build a 250km all-season access road from the south.

Costed at C$109m, the road accounts for a third of Coffee’s projected costs, or C$0.44m per km. By contrast, Stornoway recently completed a 243km road extension at its Renard project in Quebec costing C$336m, or C$1.4m per km, whilst winter ice roads servicing mines in northernmost Canada have to be rebuilt each year.

Thomas played a key role in financing Stornoway’s road build, resigning the day after it closed a co-funding package with Quebec’s government, but downplays the idea that road deals are less glamorous than diamond exploration, or that Kaminak is entering a dull phase of prolonged desktop studies.

With five drill rigs turning and Coffee open along strike and at depth, Kaminak is testing new targets aimed at adding “proximal” ounces. “We’ve got dozens of untested gold soil anomalies that could represent additional discoveries, so we view Coffee as a brand new gold district.”

Critically, Thomas has brought in the money to fund such work. In July Kaminak announced a C$13.5m placing with Lukas Lundin and mining investor Ross Beaty, lifting cash to C$27m vs. Kaminak’s C$120m market cap and funding the company through its feasibility studies.

The market has rewarded the backing, sending shares 33 per cent higher on the day of the news. “The current timeline isn’t fixed,” Thomas says, “but we’re looking to pour first gold in 2019. We know we’ve got a mine with Coffee and think it’ll be a great foundation.” 

“It was more about opportunities at hand and seizing the moment.”
“We’ve got dozens of untested gold soil anomalies that could represent additional discoveries.”

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