JV Article: Yorbeau Refocuses on Consolidation and Positive Partnerships in Quebec
In December 2018, Yorbeau Resources Inc. (TSX: YRB; US-OTC: YRBAF) optioned its Rouyn gold property in Quebec to IAMGOLD Corporation (TSX: IMG; NYSE: IAG) and a month later, the two companies began drilling the property.
The Rouyn property is located roughly 4 km south of Rouyn-Noranda and covers a 12 km stretch of the gold-rich Cadillac-Larder Lake Break.
The companies now have two drill rigs turning at the property and intend to drill at least 15,000 metres to delineate a resource, first at the Lac Gamble zone and then at the Astoria deposit.
Per the agreement, IAMGOLD paid Yorbeau an initial $1 million. To earn an option to buy a 100% interest, IAMGOLD must make additional cash payments totaling $3 million to Yorbeau and spend $9 million on exploration at Rouyn over four years. It must diamond drill at least 20,000 metres within the first two years.
If IAMGOLD then decides to exercise its option to buy 100%, it must pay C$15 per ounce of gold in the resource estimate, capped at C$30 million.
"We are a small junior exploration company that had a lot of properties," Yorbeau CEO Amit Gupta explains. "We can't practically explore all these properties. It's just not physically or economically possible for a junior exploration company in today's economic climate in Canada.
"So what we've done is we've refocused by doing some consolidation and pursuing partnership deals in a more aggressive manner, and honestly in a progressive manner that's accretive to shareholders."
He offers the company's recent IAMGOLD deal as an example.
"Basically the deal came about because of iterative processes with other companies," Gupta explains.
Yorbeau Resources Inc.'s Scott deposit is in Quebec's Chibougamau belt. Credit: Yorbeau Resources Inc.
Previously, the company had two other option agreements for Rouyn that were bought out; one with Gold Fields and one with Kinross Gold. Gold Fields changed its global approach to exploration while Kinross discovered another project, and the companies' goals no longer aligned. In that regard, Yorbeau sees IAMGOLD as a better partner for the project.
"It's the right fit for us because they've got a mill close by," Gupta explains. "They're aggressively drilling, but they need to look for a property that will help feed that mill, so it's a nice partnership."
When IAMGOLD first sent its geologist to analyze Yorbeau's data, the two parties had "no real difference" in their understanding of the property. From there, inking the deal was a smooth process.
"Everybody's moving toward the same idea," Gupta says. "This is the number of ounces, this is what we think, let's go for this part first and continue on."
The company is helping IAMGOLD manage exploration and drilling at Rouyn. Although IAMGOLD has taken over the project as operator, it is using Yorbeau's staff and has partnered with Yorbeau's exploration team, led by company president and veteran gold explorer Gerald Riverin.
"Gerald and his team are still very much involved with IAMGOLD's team, and it's a very collaborative process," Gupta says. "They were very intelligent in understanding that we had legacy knowledge, and said, 'Listen while we're developing this deal we're going to leverage your legacy knowledge to the best that we can.'
"We're not miners. What we are is we're good at exploration."
A panoramic view of the Scott Lake gold project in Quebec. Credit: Yorbeau Resources Inc.
Yorbeau has created a strategic advisory board to advise the company's directors and management team. The strategic advisory board's first member is Mackenzie Watson, who previously served as Lynx Exploration's CEO and then as Freewest Resources Canada's CEO from 1985 until Cliffs Natural Resources acquired it in 2010. He is a two-time recipient of Canada's Prospector of the Year award, and Canadian Mining Hall of Fame inductee.
"When it comes to doing, especially VMS exploration, I think our team is probably second to none in the world," Gupta says. "And frankly we're going to spend our energy on effective exploration and then take those results and go to people who can actually partner into feasibility and all those more expensive steps towards creating a mine that will be in production."
The company is now shifting its focus to its Scott Lake West volcanogenic massive sulphide property in the Chibougamau belt, on the other side of the Gwillim Lake fault from its Scott Lake East property. Formerly called Scott Lake, Yorbeau has already extensively explored Scott Lake East. The company is drilling Scott West now, trying to find a way to better exploit the underlying Chibougamau belt structure. The company's vision is to create a mine with enough production that the Chibougamau belt will warrant a mill.
Yorbeau believes the structure from Scott East continues onto Scott West, but says the Gwillim fault may have shifted it.
The company plans to drill 5,000 metres at Scott West, first in shallow holes to investigate the displacement of the Gwillim fault, but then in deeper holes and wedge cuts to explore the Scott horizon down plunge from the known resource. It theorizes that Scott West may host a source to some of the mineralization found at Scott Lake.
According to a 2017 Scott Lake resource estimate, the project contains 3.5 million indicated tonnes grading 0.95% copper, 4.17% zinc, 0.2 gram gold per tonne and 37 grams silver per tonne as well as 14.2 million inferred tonnes at 0.78% copper, 3.19% zinc, 0.2 gram gold and 22 grams silver.
A preliminary economic assessment the company completed at Scott Lake the same year assigned the project a $146 million pre-tax net present value at an 8% discount rate and a 16.5% pre-tax internal rate of return. The project would generate more than $519 million in net cash flow.
The company is also looking to the eastern extreme of the Chibougamau belt to explore its 16.7 sq. km KB zinc-copper property, 35 km east of the town of Chibougamau. It's currently doing geophysical work at KB, and intends to drill the property later in the year.
"Chibougamau is a mining town," Gupta says. "To focus on the structure is a great thing for us because it's something good for the town. We have the Cree that have their village nearby, and we can focus on jobs in a collaborative way, rather than just try to do something on a typical NSR or payment basis.
"It's a really nice story for the region, both from a mining perspective and from a regional perspective."
The company has other projects on its radar, in particular its Beschefer property, although says it will likely shift focus there in 2020. The property is located in northwestern Quebec, about 10 km southeast of BHP's decommissioned Selbaie zinc-copper mine. It sits just east of SOQUEM's B-26 copper-zinc-gold deposit.
"After SOQUEM has finished doing their work in the Beschefer area, then we'll know where we stand with that property," Gupta says.
Shares of Yorbeau are trading at 3 ? with a 52-week range of 1 ? to 5 ?. The company has a $10 million market capitalization.
"Myself and my family, we have about 11% of the company," Gupta says, "so we're quite passionate about making sure that Yorbeau as a junior exploration company is successful for shareholders, ourselves and our employees."
- The preceding Joint-Venture Article is PROMOTED CONTENT sponsored by Yorbeau Resources Inc., and compiled in cooperation with The Northern Miner. Visit www.yorbeauresources.com for more information.