WEB EXTRA: Shawn Ryan On The Yukon
How do you feel about the Yukon right now?
The place is starting to ramp up. I think we’re just at the beginning of the next cycle and this should go for at least two to three years. But it’s starting. It’s kind of like the 2008 and 2009 era. Everybody was wondering what was going on, because it crashed, but it picked up quite quickly again.
Is that because of the gold price’s rise or is it really the interest from Goldcorp’s acquisition of Coffee?
If you look around North America, there’s hardly a spot where we’ve found brand new gold discoveries in a brand new camp. Even though the Klondike’s old, literally this is brand new for finding hard-rock deposits. We have two of them now, very close to each other, with two different majors buying into it. You scour North America and I don’t think there’s another spot you’ll see that has these.
Kinross is one and now Goldcorp is the second one. They’ve got some good ounces in there. Now the big boys are in and that’s what we needed in the Yukon. That’s brought a lot of confidence back to the camp. It hasn’t quite taken off yet, but it’s just on the edge.
What has Kinross been doing with White Gold?
They sidetracked. What happened was, after they bought it, they were all excited: “This is 1.5 million ounces.” But that same season, they actually bought out the big Red Back [project] in Africa and they sunk billions into that, and they pretty much shelved the Yukon because they thought the White might have between two and three million ounces if they kept drilling, but they were only up to 1.5 million. But the one in Mauritania, the Red Back, there were potentially five million ounces and they thought they could see 16 million ounces and then they went and blew their wad there and realized there was hardly anything there. So now they’ve lost billions in write-offs. When they bought the White, they were $25 [per share] and last winter they were $3 [per share.]
[Editor’s Note: Kinross was trading at between $17 and $20 per share when it was in the process of acquiring White.]
So they’re just kind of getting themselves back, picking the pieces up. But it’s still a good deposit and what it’s going to do is develop that camp, because Goldcorp is the back end. The road’s coming from Dawson—the road is actually going to go by the White, like 15 miles out. But you could actually drive from White to the main road that they’re putting in there, because most of that road is already in. That deposit is economical enough and we’re finding more ore around it, like on another property across the river from it. So the idea is that I could see either Goldcorp buying them out or going into a JV [joint venture]. Once Goldcorp has Coffee up and running, well you’re 15 miles away, it’s easy enough to go and develop another one close by, so I could see that happening.
So these are the beginning stages—this is how a camp develops. And then what happens is, anything I find now from here on in, even if it’s 200,000 or 300,000 ounces—let’s say a small pit area that wouldn’t have been economical five years ago—now, going forward, that becomes feed for the mill.
So, hypothetically, Goldcorp would keep buying these up and put all that ore through its Coffee mill infrastructure and it’s gravy from then on?
That’s right. It’s the beginning. That’s how the Timmins camp is. Goldcorp was trucking ore from miles away to the mill for feed. So theoretically, Coffee’s got a ten-year mine life, but they’ll find more ore, so it’ll probably go to 15 [years] easy. But then you see if the White comes in, there’s probably five to eight years’ worth of mine life there. All of a sudden, they find something else. So I see it potentially going on for another 25 to 30 years here, once it gets going because the reality is, we’re still just dealing with the surface mineralization. Is there a blind orebody 400 feet below surface? Nobody’s even thinking of that yet.
And then you just poke around while you’re mining it?
And you find more. Historically, exploration was done by the mine. It was never a junior. The juniors kind of came in flavour about 15 years ago. Before, all the majors had their own exploration team running around. They kind of still do, but they don’t do as much. They mostly buy properties now and then the juniors came in and filled that void of looking for deposits. So Goldcorp and Kinross—they’re such big land packages that they’ve got—theoretically, once they get going, they’ll be able to keep drilling in their backyard for 20 years.
I was talking to Catharine Farrow, CEO of TMAC, and it sounds exactly like what they’re doing. They’re permitting their main Doris deposit, but they’ve got a couple other areas—the Boston and Madrid deposits—that they’ll keep working away at while they’re mining Doris. They’re promising what they’ve got at the start and then saying they’re going to keep looking and keep amending their project and water license the whole way through. They’re being very upfront and not promising the world.
Exactly. Ironically, because I’m originally from the Timmins camp 20 years ago, they’ve opened up mines there with two years’ worth of reserves and the mine went on for 30 years. [Laughs.] They just keep expanding it. But the Coffee project is a big mineralized system, so there’ll be lots of ore found there.
You know, when we first started, I said, “Well, if this was the Timmins camp—where it’s a hard-rock camp—there’s mines everywhere.” Anywhere you look, you can see a couple headframes sometimes. So that gives confidence to all of the other companies to just keep drilling and keep digging deeper.
We have literally between 13 to 20 million ounces of placer gold coming from here. And Bonanza Creek has about six million. Well if that was Timmins, there would be two to three headframes on that creek and you’d be drilling like crazy. And you’re telling me there’s not one hole drilled around here? I’m saying, “What happened?” And they said, “No, no, it’s all gone. It’s all eroded.” That’s what the world figured—the market, the geologists figured.” I’m going, “Who the hell spread that bad rumour? This is a rumour.” I said, “This is like Sasquatch hunting. We’re seeing all these tracks—all this placer gold—with no evidence of the beast.” But the beast does exist out here. It dumped in here from somewhere.
That’s why the White was the actual first evidence of a small little footprint. Now it’s just south of the Klondike, so it’s not the source of the mother gold of all the placer, but it was in a placer district—the Thistle area. But its surface expression was 37 metres—37 metres on a little saddle that poked its nose out of the tip of the iceberg. And then it got bigger and bigger and it got up to 50 or 60 metres wide. But the whole deposit was 500 metres wide, it dipped in the ground by 500 metres and it was an average of about 50 metres thick. That plate had 1.5 million ounces—that’s when it dawned on you: “Well, okay now, if this is in the Klondike and you had a few of these and look at how subtle these things hide, well this is possibly what could explain the placer gold and why you’re getting millions of ounces in some of these creeks.”
So we had now the first picture of the beast that possibly could look like what produced some of the placer gold in the Klondike. Once we found that, it was pretty funny because then we went on to say, “Well, you know what, I think I got its big brother about 15 miles away.” And everyone’s going, “No, no, you find one in your lifetime, you’re super lucky. Two? Forget it.” A lot of people didn’t believe it, but I’m laughing. “No, it’s on the other side of the hill.” It’s pretty funny that they’re found like that. And then we found the third one on the other side, everyone was looking towards the Coffee and the other one was right on the other side of the river from it.
It’s like what we see with diamond exploration around the NWT mines. Everyone starts staking around the producing operations.
It works. But you’ve got to get them first ones found. Now, what’s going on in the whole market is, with that last push of 2010, 2011 and part of 2012, the party came down. What’s interesting is that, because I optioned my projects, most of them didn’t get to the finish line with the option. Well, I get the projects back. So now, a lot of these companies have spent millions of dollars [on them]—it’s kind of like building a race-car and they get three-quarters of the race-car built and they just had to put gas in and put some tires on the thing and they gave up and then we get the project back.
Shawn Ryan was our November Icebreaker, see the original story here.