The pending $149-million (U.S.) sale of the Hope Bay gold property to Chinese operator Shandong Gold Mining is “very good news for everyone,” according to Tom Hoefer, executive director NWT and Nunavut Chamber of Mines.

An aerial view of the Doris North gold mine on the Hope Bay property, 125 km southwest of Cambridge Bay.
photo courtesy of TMAC Resources

Hoefer said Shandong Gold Mining – also known as SD Gold – has made several key commitments, such as completing the feasibility study to expand the mine at Hope Bay; to inject the substantial capital required; to maintain contracting benefits, including contracts involving Inuit companies; to maintain the flow of royalties fees and taxes to Inuit and territorial governments, which help fund public services to Nunavummiut; and shareholders will realize a meaningful premium.

Hoefer said Hope Bay, with its high grades of gold and large precious metal reserves, represents great “untapped potential to generate long-term benefits for Nunavut and Canada.”

Covid threatens to shut down operations

However, in the near term, Hoefer expressed concern for Hope Bay’s viability in the face of the Covid-19 pandemic.

In a news release issued Monday, TMAC Resources president and CEO Jason Neal explained that the mining rate has been slowed significantly with only about 120 workers remaining on site. Close to 60 Nunavummiut staff were sent home in late March, with pay, to reduce risk of spreading the coronavirus.

“We now expect that we will be able to run the processing plant through the end of July and are analyzing opportunities to extend further. If the risk of Covid-19 continues, TMAC may execute a controlled transition into temporary care and maintenance,” Neal advised.

Looking to the coming years, TMAC Resources wouldn’t be in a financial position to execute on a full expansion of the gold deposits at Hope Bay, so the company set out to find a buyer, which it announced on May 8 will be SD Gold.

The Kitikmeot Inuit Association (KIA), a minority shareholder in TMAC Resources and owner of the land on which Hope Bay sits, is reviewing the sale offer. KIA President Stanley Anablak stated that his organization supports the Hope Bay gold project but will endorse Shandong’s takeover only after ensuring “that our members realize maximum benefits from any sale.”

The deal is also subject to 66.6 per cent approval from shareholders voting at a special meeting tentatively scheduled for June.

Neal said, “The successful outcome we have achieved (with SD Mining) is essential to ensure that TMAC has sufficient liquidity to fund its operations, fund debt payments, resume full operations as soon as is practical and complete the feasibility study for future optimization and expansion of operations.”

Yumin Chen, chairman of Shandong Gold Group Co. Ltd., said his company plans to uphold the standards set by TMAC Resources.

“We have been impressed by TMAC’s strong relationships with its local stakeholders and responsible management of environmental and safety aspects of mining, and intend on demonstrating the same commitment as the owner and future developer of Hope Bay’s assets,” Chen stated in a May 8 news release. “We look forward to working closely with all stakeholders and local communities in Nunavut to deliver a world-class operation that will benefit the regional economy for generations to come.”

Toronto-based TMAC Resources acquired Hope Bay from Newmont Mining in 2013, making the junior mining company the first of several entities on the property over several decades to finally make mining a reality at the site.

The company struggled with efficiencies and gold recovery, however.

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Derek Neary has been reporting on developments in the North for 18 years. When he's not writing for Nunavut News, he's working on Northern News Services' special publications such as Opportunities North,...