This gold junior will come screaming out of the bear market…

Tommy Humphreys
0 Comments|April 15, 2014


Red Mountain, Mining

Revolution Resources is acquiring the Red Mountain gold project near Stewart, BC, and renaming itself to IDM Mining. Here is a photo of the project I took in April, 2013, when it was owned by another company.

Long suffering investors in Rob McLeod’s Revolution Resources will get another kick at the can, and we think it’s a pretty darn good one.

The company announced today that they are acquiring the high grade, low cost Red Mountaingold deposit near Stewart, BC, Mr. McLeod’s home town. Revolution also intends to raise $5.03 million in a financing led by Haywood Securities ($0.24 per Common Unit or $0.31 per Flow Through Unit, with a 15 month half warrant at $0.36 post 6:1 consolidation).

Additionally, the company is changing its name to IDM Mining. Mr. McLeod tells me the IDM name is for his dad and uncle, Ian and Don McLeod, two British Columbia mining pioneers.

This is after the appointment last week of Michael McPhie to the role of Executive Chairman at the company. Mr. McPhie previously led the financing, team building and permitting efforts of copper developer Curis Resources. Mr. McPhie is now a managing director with JDS Energy and Mining, a respected and successful mining engineering and investment firm led by Jeff Stibbard.

JDS will become Operations and Mine Development Advisors to the company, according to a one sheet provided by CEO Rob McLeod by email (Download here).

Early in his career, Mr. Stibbard was a protege of Don McLeod, sources tell us.

Red Mountain

Map via Revolution Resources

Map via Revolution Resources

The Red Mountain gold deposit has Measured and Indicated Resources of 435,395 ounces of gold at 8.4 g/t, and Inferred resources of 140,122 ounces at 5.4 g/t Au. A 2012 PEA estimated that production costs would be $459 per ounce, with CapEx of $162.7 million.

Lac Minerals advanced the project in the 1990′s, going as far as to build a production sized decline ramp into the deposit. Lac was sold to Barrick Gold in 1993, and by 1997, Red Mountain was put on the back burner. A couple of junior companies, as well as Seabridge, have held it since.

Selfie at Red Mountain

Selfie atop Red Mountain

I visited the project last year when it was held by Banks Island Gold, who soon after dropped it due to expensive carrying costs, to focus on their Yellow Giant asset.

Revolution (soon to be IDM Mining) appears to have inked a slightly more favourable deal to acquire the deposit from Seabridge compared to Banks Island. They will pay Seabridge $2 million ($1 million within 90 days, $1 million within 1.5 years), issue 29,733,000 pre-consolidation shares, and incur $7.5 million in exploration and development expenditures over 3 years. Seabridge also retains a stream to acquire 10% of gold production at $1000 per ounce, up to a total of 50,000 ounces. Alternatively, Seabridge may elect to receive a $4 million payment at the commencement of production in exchange for buy back of the gold stream.

Investors can expect plenty of newsflow from Red Mountain this summer as infill drilling gets underway.

“Our objective is to advance Red Mountain to a positive production decision in the near term,” said Michael McPhie, newly appointed Executive Chairman of Revolution and the Managing Director of JDS Gold Ltd. “The 2014 work program will include detailed engineering and delineation drilling with the objective of upgrading the existing resource and moving the project down the path to development.”

CEO Rob McLeod sees exploration potential outside of the existing resource, and is optimistic that glacial retreat since work stopped in 1996 may result in more gold being found on the project. According to the news release, “Glacial retreat over the past couple of decades has resulted in discoveries of additional mineralized zones at Seabridge’s KSM Project and Pretivm’s Valley of the Kings Deposit.”

McLeod also touched on a more personal note in the news release.

“It has been my ambition over the past 20 years to return to explore the Red Mountain Project near my hometown of Stewart, where I first started my career as an exploration geologist in 1993.”

Readers unfamiliar with Mr. McLeod should know his previous company, Underworld Resources, was a resounding success after it struck white gold in the Yukon and sold to Kinross in 2010, enabling him to launch Revolution.

Revolution’s backers, including Kinross, Sun Valley Gold, and others, have seen Revolution’s share price trend with the rest of the junior mining market since January, 2011, with RV shares falling from a high of $0.85 to as low as $0.01 in November, 2013.

It is typical of junior mining executives in Canada to abandon their existing shareholders and share structures when launching new companies after previous ones fail, or stall.

I asked Mr. McLeod why he chose to use Revolution to launch this idea, when he could have easily positioned himself and Mr. McPhie in a new vehicle that the gentlemen owned the majority of.

“Because shareholders deserve another kick at the can,” Mr. McLeod said.

IDM Mining will have a low cost project with exploration upside, but more importantly it will be led by a great team of mining executives in their early to mid forties who are hungry for more success.

With Mr. McLeod’s track record as an exploration geologist and family history in the mining business, especially near Stewart, BC, Mr. McPhie’s strong financial, team building, and permitting experience, and the impressive mine development track record of JDS and Mr. Stibbard, the new Revolution Resources, or IDM Mining, gives shareholders a very good kick at the can indeed. A team like this shouldn’t be ignored, even in a lousy junior market environment.


Disclaimer: I do not yet own Revolution. This article is not intended to meet your specific individual investment needs and it is not tailored to your personal financial situation. Nothing contained herein constitutes, is intended, or deemed to be — either implied or otherwise — investment advice. This article reflects the personal views and opinions of Tommy Humphreys and that is all it purports to be. While the information herein is believed to be accurate and reliable it is not guaranteed or implied to be so. The information herein may not be complete or correct; it is provided in good faith but without any legal responsibility or obligation to provide future updates. Neither Tommy Humphreys, nor anyone else, accepts any responsibility, or assumes any liability, whatsoever, for any direct, indirect or consequential loss arising from the use of the information in this article. You are responsible for your own actions. 

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