Kaminak Gold: What you have, who you know

After a family holiday in the Netherlands (great!) and a period of inactivity at WorldofMining.com, I’ll pick up where I left off: with Eira Thomas, CEO of Kaminak Gold and Canadian diamond pioneer.

When I interviewed Thomas in June for a Vancouver Sun feature, she had expressed some frustration at the fickle state of the Venture market.

Kaminak had just released a preliminary economic assessment on its Coffee gold-copper deposit in western Yukon with some impressive numbers.

- Life-of-mine all-in sustaining costs of $687.50/oz

- Pre-tax NPV of $522 million at a 5% discount rate and IRR of 32.8% (after-tax of $330 million and 26.2%)

- Initial capex of $305 million, with a payback of 2 years, after-tax.

The PEA was announced on June 10 and the next day, Kaminak shares surged about 29%, from 72 cents to 93 cents, before settling back to the 80-cent level in the following weeks.

Then on July 14, Kaminak released some news that seemed to move the needle in a more permanent way – a $13.5-million equity investment in the company by Vancouver mining entrepreneurs Ross Beaty and Lukas Lundin.

Beaty is flush with cash after selling his Lumina Copper to First Quantum Minerals for $470-million (he owned 26% of shares). He is also a 10% holder of Augusta Resource, which finally capitulated in its long-running battle with Hudbay after the miner sweetened its offer for the copper junior.

Lundin runs a mining empire that spans the globe, with interests in junior and producing miners in copper, gold, uranium, diamonds and more. One of his companies is African diamond producer and market darling Lucara Diamond, which has delivered shareholders a 1-year return of 188%. Thomas is a Lucara director and one of its largest individual shareholders – she owns 7.7 million shares, a 2% stake worth about $20 million. Lundin family holding companies are also the largest shareholder of Canadian diamond explorer North Arrow Minerals, which is run by Thomas’s father Gren Thomas. Eira is an advisor to North Arrow.

Beaty and Lundin will each hold 10% stakes in Kaminak following the close of the private placement, which consisted of 80-cent units (one common share and a half-warrant).

With $26 million in cash after the financing, Kaminak announced July 28 it would go straight to a feasibility study on Coffee.

It goes to show you, especially in a bear market, that sometimes it’s as much about who you know as what you have.

Kaminak shares were trading at $1 at the time of writing, up about 76% year-to-date, giving the company a market cap of $110 million. Thomas recently added to her stake in Kaminak as well, picking up 50,000 shares at $1.01 on July 17 and 18.

Disclosure: I own shares of North Arrow Minerals.

Related reading

Chasing the carat: Canada’s Queen of Diamonds comes full-circle | World of Mining

Lumina Copper: Good things come to those who wait | World of Mining

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