On June 9 Artemis Gold signed an asset purchase agreement to buy New Gold’s Blackwater gold project for $190 million. The project is located in central British Columbia, 112 km southwest of Vanderhoof.

Per the agreement, Artemis Gold will pay New Gold $140 million in cash once the acquisition is finalized and will make a second payment of $50 million one year after closing. New Gold will also receive $20 million, or 9.9 per cent, of Artemis Gold’s issued and outstanding shares, whichever is less at the time of closing as well as a royalty for gold produced at Blackwater.

A 2014 feasibility study estimated that once completed, the proposed open-pit mine and 60,000 tonne-per-day process plant would produce 7 million ounces of gold and 30 million ounces of silver over a mine life of 16 years. The study estimated capital costs to be $1.9 billion. Blackwater has a measured and indicated mineral resource of 9.5 million ounces of gold and 70.13 million ounces of silver from 90.9 million tonnes grading at 0.3 and 4.3 grams per tonne, respectively. Annual gold production is estimated at 485,000 ounces, with an all-in sustaining cost of US$685 per ounce in its first nine years. The study also reported a pre-tax net present value of $1.0 billion at a five per-cent discount rate, a 11.3 per cent internal rate of return and a payback period of 6.2 years before tax.

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New Gold acquired the Blackwater project in 2011 and received federal and provincial environmental assessment certificates last year, and began working on meeting permit requirements. In the company’s MD&A report for 2019, the company began discussing alternative project scenarios with lower initial capital costs, and stated it was “considering other strategic alternatives with respect to the Blackwater project.” Project costs for the first quarter of 2020 totaled US$8.1 million, compared to US$1.9 million in 2019, mostly due to continued work on meeting environmental assessment conditions and conducting participation agreements with First Nations communities. New Gold CEO Renaud Adams said the sale would help the company meet its goal of generating free cash flow in 2021.

"The proposed acquisition of Blackwater is the first meaningful step in our strategy to develop a first-tier gold deposit in one of the world's premier low-risk mining jurisdictions,” Steven Dean, chairman and CEO of Artemis Gold, said. “Our focus will be the methodical de-risking of the project development to enhance net present value, optimize internal rate of return and minimise equity dilution to shareholders.” Dean was the CEO of Atlantic Gold prior to its acquisition by St Barbara Limited in 2019.

Some of these development activities include securing project debt financing for initial capital expenditures, contracting infrastructure projects to third parties and undertaking a high-density grade drilling program prior to construction. The company will also be using an initial lower target for capital expenditure and conduct one or two more expansions in order to reach the production outlined in the feasibility study.

Once the Blackwater acquisition is complete, the company will be focusing on completing project financing, meeting permit requirements and establishing relationships and engaging with local Indigenous communities. In the next three months the company also intends to conduct an updated pre-feasibility study of the project.