Nordic pours gold at Laiva

Nordic Gold (TSXV: NOR; US-OTC: FIEIF) recently poured its first gold at its restarted Laiva gold mine in central Finland. Roughly 25 people attended the live-streamed event in person, with the company pouring 1,234 oz. of doré.

“We were very happy with the results that we got,” Nordic Gold president and CEO Michael Hepworth says in a telephone interview with The Northern Miner. “The previous operator, when they were in production, they were getting 80% gold. But the doré that we poured was 90% gold, so we beat past quality levels. This is not the biggest pour, but for a first pour, we’re pretty comfortable with it.”

Before shutting down in early 2013, Laiva produced 75,000 oz. gold.

Nordic Gold — formerly called Firesteel Resources — joint ventured the project from its former operator, Nordic Mines AB, in September 2017.

Nordic Gold acquired an initial 60% of Laiva by investing $20 million in stages into the project. The company bought out the other 40% interest in February 2018 by issuing Nordic Mines 66 million shares.

Since then, Nordic Gold has refurbished Laiva’s plant and tabled a preliminary economic assessment for the project. According to the June 2018 study, Laiva has a $69-million, after-tax net present value at a 5% discount rate and a 36.5% after-tax internal rate of return. Nordic expects to produce 456,600 oz. gold over a six-year mine life at a US$974 per oz. all-in sustaining cost, with payback in 2.1 years. The Finnish government also approved a $155-million tax loss provision when Nordic joint ventured the project in 2017, which will offset some taxes now that the mine is back in production.

Hepworth says Nordic Gold has three objectives at Laiva.

“The first thing is making sure that the plant and mine are operating at optimum efficiency,” he says. “That’s goal number one. It does take some time to settle down. It’s not like a car where you put the key in the ignition and turn it on, and everything runs. With this you’re constantly tweaking and refining.”

He says the company aims to reach commercial production at Laiva by the end of February 2019, and produce 67,000 oz. in its first year of production.

“The second thing we need to do is prove up more gold,” Hepworth says. “We’ve got an area that we call the Gold Corridor that’s about 5.3 km long. We’ve only drilled about 1.2 km of it, but the geology is consistent throughout the 5 km, so we think there’s a good chance that there will be additional gold there.”

The company plans to infill drill the north side of its north pit and the northwest side of its south pit. It’s also investigating a northerly extension of the north pit called New Hope. Hepworth says the current pits are constrained only by drilling. With the deepest holes at Laiva extending 150 metres below surface, the resource remains open at depth and to the east. The company says it has found higher grades at depth, but needs to do more drill testing.

As of an August 2017 report, Laiva has 3.79 million measured and indicated tonnes grading 1.23 grams gold per tonne for 151,000 oz. gold, as well as 9 million inferred tonnes grading 1.53 grams gold for 445,000 oz. gold.

The company has two other gold properties less than 4 km southwest of Laiva called Musunneva and Kaukainen, and another gold property 12 km south of Laiva called Oltava. The three properties combine for 43 square kilometres. All the properties are permitted for drilling.

Kaukainen and Musunneva show the same mineralization as Laiva, and Nordic says both properties could host future open pits. Previous operators drilled Oltava, but never enough to define a resource. It shares a similar geochemical signature with Laiva.

That said, Hepworth notes the company will focus its near-term exploration on areas close to the mine. The company wants to explore areas that are already permitted for mining.

“The final thing,” Hepworth says, “is looking for a way to refinance the gold forward sale, because it’s expensive money, and what we need to do is replace that with more market related funding. The internal rate of return for the gold forward sale lender is about 17%, and we can probably get it somewhere between 4% and 5%.”

To fund Laiva’s restart, Nordic entered a $20.6 million forward-gold purchase agreement with Pandion Mine Finance, repayable via 70,000 oz. gold at spot price, less a discount. Its first payment is due in January 2020.

Shares of Nordic Gold are trading at 10¢ with a 52-week range of 6¢ to 17¢. The company has a $19-million market capitalization.

“We’ve gone from care and maintenance to actually producing gold in about 11 months, which says that we can deliver on our objectives,” Hepworth says. “We’ve got a good operating team and we’re able to get things done.”