i-80 Gold Corp CEO Ewan Downie has the market’s attention.
Through tactical masterstrokes, Downie has positioned his company on the growth fast-track. He has transformed i-80 Gold by disposing of a non-core asset while acquiring multiple projects that will allow the company to run a major hub-and-spoke operation in Nevada.
The mining veteran leveraged his relationship with Nevada Gold Mines to negotiate an asset exchange agreement that transferred Lone Tree, with complete processing infrastructure to the company. The firm’s portfolio now has five projects — Lone Tree, Brooks/Buffalo Mountain, Granite Creek, McCoy-Cove, and Ruby Hill, with the last two projects being recently acquired to complete the pipeline.
Lone Tree will act as the hub of i-80’s operation, providing integrated processing infrastructure for all types of ore.
“I expect i-80 Gold to be one of the fastest-growing gold producers. While our 2022 production is expected to be less than 50,000 ounces of gold, it is our goal to double production each year for the next several years so that we eventually become the second-largest gold producer in Nevada,” Downie told Proactive.
The well-financed company ultimately aims to produce over 500,000 ounces of gold annually.
“That would catapult i-80 into a mid-tier gold producer and comparable companies have market caps in the billions. Our current market cap is around $650 million. I think there's plenty of upside in our stock,” added Downie.
The transformation at i-80 hasn’t gone unnoticed. Stifel GMP has raised its target price for i-80 to C$6.20 per share, up from C$4.25 per share previously, and reiterated its 'Buy' rating. Sprott has also initiated coverage of i-80 Gold with a 'Buy' recommendation and a C$6 price target, citing high-grade potential.
Proactive sat down with Downie to learn more about i-80’s natty Nevada mining complex and how it will create a mining juggernaut.
Proactive: Nevada has eclipsed Western Australia as the most attractive region for mining, according to Fraser Institute. Is it part of i-80’s strategic philosophy to have a strong footprint in the Silver State?
Ewan Downie: Yes, it is. We view Nevada as the Golden State, not the Silver State because Nevada is the largest gold-producing US state. If Nevada were a country, it would rank amongst the largest gold-producing nations in the world. While still referred to as the Silver State, Nevada is now a more significant producer of gold. Our company is 100%-focused on Nevada — we have no projects outside the state, and we have relocated our head office from Canada to Reno so that most of our people are based there. Nevada is consistently ranked as one of the top-tier mining districts in the world and the jurisdictional risk is minimal. It’s one of the best places I've ever worked in for mining and exploration.
Please elaborate on how you’ve transformed i-80 Gold by exchanging non-core assets and acquiring projects that will allow the company to run a hub-and-spoke operation in Nevada.
When we started i-80, part of the go-public transaction involved acquiring Granite Creek in mid-April 2021 from Waterton. We knew Granite Creek had the potential to be a core asset. At the time our only producing asset was the South Arturo Mine, a joint venture with Nevada Gold Mines (NGM). We owned 40% of South Arturo and NGM was the operator. It wasn't a large producing mine — relatively small-scale for our 40% — and we were able to negotiate a deal with NGM to trade South Arturo for the Lone Tree site, which has a complete processing facility, including the capability to process refractory gold ore. It has a tailings pond, an autoclave, floatation plant, heap leach facility, assay lab, and office buildings.
In the future, we will produce gold onsite — having acquired a turnkey processing facility in Nevada. Moreover, autoclaves capable of processing refractory ore are very rare. There are only five in the US, and all five are in Nevada, and until this transaction, four of the five were owned by NGM, giving them somewhat of a monopoly. When they approached us about acquiring our South Arturo project, the Lone Tree site was idle. We were able to cut a deal to get our own processing facilities and control our own destiny, a better outcome for our shareholders than being a minority stakeholder in a mine.
It was transformational for us to get Lone Tree, which will be the hub of our operations, with a central processing facility, operations office, assay lab, and warehouse for all our sites. Mineralization from Granite Creek, Ruby Hill, and McCoy-Cove will feed the Lone Tree autoclave, once restarted, and mineralization from the Buffalo Mountain and Brooks open pits will be processed at the Lone Tree heap leach facility. Lone Tree is the hub of our operations, while Granite Creek, Ruby Hill, McCoy-Cove, Buffalo Mountain and Brooks are the spokes.
How do you plan to execute i-80’s hub-and-spoke development plan?
We’ve embarked this year on building four new gold mining operations over the next three years. All four mines will ultimately feed Lone Tree. We have already started developing the Granite Creek underground mine and expect to start to ramp up into production this year. This quarter, we’re starting the underground advanced exploration to lead up to development at McCoy-Cove, and in the second half of the year, we expect to kickstart the development of the Buffalo Mountain/Brooks project. We expect to have three projects, in production or development, by year-end. This quarter we will have gold production coming from Ruby Hill and Lone Tree as we have heap leaching programs running at each site.
How big are i-80’s gold and silver resources across its five projects in Nevada?
We have nearly 6.5 million ounces of measured and indicated resources, and more than 8 million ounces in the inferred category. We are also one of the largest holders of silver resources in the state. The Battle Mountain and Carlin trends collectively represent Nevada’s most productive region, where Nevada Gold Mines produces over 3 million ounces of gold a year. NGM itself is owned by the world's two largest producers — Newmont and Barrick. They are the largest producer and resource holder in the Battle Mountain and Carlin trends, I-80 is the second-largest gold resource holder. And it's our goal to next be the second-largest producer in the region.
Two of the three underground deposits we are developing have reported high grades in excess of 10 grams per ton (g/t) gold, and our open pit grades are among the highest in the US.
Does i-80 Gold have the balance sheet to advance four project sites, restart the Lone Tree autoclave and execute on other growth initiatives?
Yes, we're in a tremendous financial position. We’ve entered into a transaction with Orion Mine Finance for a gold prepay and silver stream on Ruby Hill that will ensure a very strong balance sheet going into 2023. The only real unknown is the cost to restart the Lone Tree autoclave. As such, we have awarded the engineering study for the restart of the autoclave to Hatch Ltd. Tony Carroll, the Lone Tree project director, has been retained to move the study ahead. We won't know what our ultimate financial needs are probably until the third quarter.
In the interim, we're in a very strong financial position. This year we expect to drill in excess of 50,000 meters at Ruby Hill, McCoy-Cove, and Granite Creek. We're developing the underground mine at Granite Creek and expect to have gold production this year. When we close the Orion Mine finance piece, later this month, we will have around US$190 million in cash. We also have an accordion feature that will allow us to take another $100 million, providing us with additional financial flexibility.
You come from a mining family and started Wolfden which made large polymetallic discoveries. Later you were the founder and CEO of Premier Gold Mines which was bought by Equinox Gold (TSX:EQX) in 2021. What do you consider the biggest strength you bring to i-80 Gold?
I think one of the primary strengths I bring to i-80 are relationships. My previous companies have essentially all been acquired by bigger companies as we were growing them out. During 20 years of running public companies, I have created good relationships with a lot of the large mining companies, which is where we have acquired a lot of our projects. It has allowed us to cut deals like acquiring Lone Tree that probably a lot of other companies could not have done. I've also been fortunate to have created good relationships with a lot of the banking and investment community.
Therefore, we've always been in a fortunate position to be able to raise capital when needed. Just like here in i-80, where we have a tremendous balance sheet to provide us with a platform to build an exciting growth-oriented gold producing company.
Contact the author Uttara Choudhury at uttara@proactiveinvestors.com
Follow her on Twitter: @UttaraProactive