Meet the new boss, same as the old boss.
The old New Britannia gold mine in Snow Lake has new owners once again, but the CEO of the newest buyer was also the CEO of the last company that bought the property.
David Rigg is CEO of Liberty Mines Inc., which has entered into an agreement to acquire the Snow Lake gold mine from QMX Gold Corp. for $20 million.
The deal is scheduled to close in November contingent on a number of factors, including Liberty's ability to come up with financing for the transaction.
Rigg was CEO of Alexis Minerals (as QMX was then called) in early 2010 when it bought the property from Garson Gold and is intimately familiar with the property.
Rigg was unavailable for comment, but a release from Liberty makes it clear it intends to leverage Rigg's knowledge of the property, stating, "The 2010 feasibility study of the Snow Lake property will be the basis upon which Liberty Mines expects to recommence production activities."
Rigg was in charge when the feasibility study was being produced and stepped down as CEO of QMX in early 2011 to become chairman of the board.
With gold trading on Thursday around $1,365, it is worth at least $200 per ounce more than it was when the mine's feasibility study was done, which may make it seem even more likely it is a viable project.
Not surprisingly, provincial mining officials were excited about the possibility of a new player involved in the property that has proven and probable reserves of 450,000 ounces of gold and expectations of plenty more in the region.
Ed Huebert, of the Mining Association of Manitoba, said "We're very optimistic. We see this having the potential of really adding value in Snow Lake."
He said it is not uncommon for properties to be held by numerous different owners before production can commence. Gold production took place at the Snow Lake mine from 1949 to 1958 and then from 1995 to 2005.
The town of Snow Lake is already in buildup mode with the successful development of HudBay Minerals' Lalor gold/zinc/copper mine just outside of town.
Alexis paid Garson about $32 million in a stock transaction when it acquired the mine in 2010 and spent a sizable amount in an attempt to prepare it for production. Unconfirmed reports indicate QMX has laid off about 15 people who were working at the mine doing pre-production work at the site.
The 2010 feasibility study called for pre-production capital costs of about $41 million. QMX needed to raise about $20 million in equity to trigger a $45-million loan it had negotiated with Credit Suisse.
But the capital markets have been avoiding the junior mining sector like the plague. As well, QMX had capital needs at another small gold-producing mine in Quebec that some say put a drag on its chances to get the Snow Lake mine going.
Although Liberty also needs to raise the purchase price and startup capital, some believe it will have a better chance accessing the required capital than QMX had.
Liberty is 60 per cent controlled by Jien International Investments, a Toronto-based company that is a wholly owned subsidiary of Jilin Jien Nickel Industry Co., Ltd. a company based in Shanghai.
Liberty also owns two former producing nickel mines and a concentrator near Timmins, Ont.