David Grondin, CEO of TomaGold (V.LOT) , used to be a stock trader and he knows how the junior market works. “You have guys who buy at the market open and are out of the position by lunch having made half a cent. It’s great for liquidity but it’s tough to get traction.”
Running a junior gold exploration company in some of the toughest market conditions in years means Grondin has no choice but to pay close attention to the market as it churns away at the price of Toma Gold’s shares. But, at the same time, Grondin is in a quite remarkable position because of Toma Gold’s Monster Lake deal with major IAMGOLD (T.IMG).
IAMGOLD is drilling the Monster Lake property in Quebec and, February 5, 2015 delivered results. Significant results. One drillhole returned 9.18 meters of 46.33 gpt gold including 2.2 meters at 182.8 gpt.
Craig MacDougall, Senior Vice President, Exploration for IAMGOLD, stated, “Our first exploration program completed in 2014 on this project has delivered encouraging results by successfully extending the high grade 325 – Megane zone at depth below previous drilling where it remains open. In addition our exploration program has identified several new gold-bearing structures and a number of target areas for further exploration.”
Along with the drilling, IAMGOLD deployed field geologists to take a careful look at what else the Monster Lake property might contain. “Results from surface channel sampling of outcrops exposed in shallow trenches cut perpendicular to the observed trend, include: 1.25 metres grading 16.3 g/t Au, 0.30 metres grading 4.53 g/t Au and 0.60 metres grading 2.09 g/t Au in Trench 7; and 1.0 metres grading 2.83 g/t Au and 1.0 metre grading 2.09 g/t Au in Trench 9. These new showings have not been previously drill tested and represent priority targets for follow up.”
IAMGOLD is committed to a 17.5 million dollar drilling and exploration program at Monster Lake in order to earn a 50% stake in the property. What this has done is ensure that there has been a significant work campaign with mapping, ground geology and the reprocessing of old data. “They bring a different set of eyes to Monster Lake”, said Grondin, “Majors have more time than we do. They can bring in consultants to look at the data and they can put teams of geologists on to the property.”
Apparently IAMGOLD likes what it is seeing and plans a 5000 meter winter drilling program for the Monster Lake property. “There are targets which they can only access in winter. They need frozen ground to move the rigs into some of the targets.” This winter will certainly have the ground frozen: with the wind chill Monster Lake running -45 degrees Celsius. February 25, 2015 IAMGOLD announced that it was recommencing drilling on the Monster Lake property.
“A junior has to hit every time. A major can explore.” said Grondin. “At Monster we have good expectations, the property is evolving. We don’t always see visible gold but there is gold. In the bonanza hole there are a few specks of VG but it is the assays which tell the story.”
With Monster Lake Toma Gold is kept informed every step of the way. “We don’t have to “do” anything but we share ideas. IAMGOLD has a lot of people working on the project.”
Toma gold has a number of other assets in Quebec. “On our Cookie Monster property we could move a drill. But we don’t want to run through our cash.”
“It is like a casiers à homards, a lobster trap. You can get in but you can’t get out. That is how a lot of people are seeing junior exploration projects. Even when you have good news people see it as a liquidity event and sell your shares. In Canada everyone seems to think they are in the same lobster trap. Outside Canada people are more confident.”
For Grondin and Toma Gold it is all about balancing attractive opportunities against cash on hand and against the relative strength of the market. With Monster Lake proceeding and producing excellent results Grondin does not have to be in a hurry.
At time of writing TomaGold is trading at $.08 with a market cap of 6.43 million dollars.
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