International Tower Hill Mines

Down the path to production with International Tower Hill Mines

As Jeffery A. Pontius, President and CEO of International Tower Hill Mines (ITH) says that operations in Alaska are “a pretty unique club of junior companies with plus-10 million ounce deposits.”

ITH, a junior with an enormous principle project in Alaska, is most certainly a member of this club. IRJ spoke with Pontius in Colorado as he travelled back from the BMO Capital Markets Conference in Miami, to hear more about how ITH is moving this, its Livengood Gold Project steadily down the path to production.

Creating ITH

Situated 70 miles from Fairbank, Alaska, is the Livengood Gold Project, that represents a return to Alaska for Pontius who began as a geologist there in the 1970s. It was in Alaska that Pontius worked for a number of resource and exploration companies, including a long tenure with mid-tier miner NARCO. Working with NARCO also brought him to work on the Cripple Creek Gold Project in Colorado; a large bulk tonnage project that, following a discovery in 1990, enjoyed an increased resource in excess of 10 million ounces.

“During that period of time the company was acquired by what was called Independence Mining Company. It was basically a company owned by the Minorco Group, operating out of Luxemburg,” Pontius says. “Minorco was an offshore arm of Anglo American back when I joined them in ’93 when they made the acquisition of the Cripple Creek project.”

The genesis of Pontius’ work with Anglo began with him travelling to Nevada to run United States exploration for the company in 1997, then exploration for North America for Anglo Gold in 2004. Amidst a strategic shift in 2006, Pontius was working in the Tintina Gold Belt which runs from northern British Columbia through to and including Alaska. A successful exploration targeting exercise had identified a number of very interesting projects within the region.

“At that stage we acquired the land and started with the earliest-type exploration on those,” Pontius recalls. “I was very keen on those projects and when Anglo ran into a strategic shift they were doing there was an opportunity for me to acquire these assets and we’ve entered them into a shell company called International Tower Hill.”

Anglo received six million shares in exchange for those exploration projects and ITH set about raising that vital venture capital. Pontius says that the first capital raising totalled US$10 million and enabled ITH to conduct exploration on a number of these projects.

“In 2007, we were fortunate enough to make a major discovery on our Livengood project; another large bulk tonnage-type gold deposit that was from a standpoint of size and grade, very similar to the Cripple Creek operation which Anglo had in production and was, and is, a successful mine for the company right now,” Pontius says.

Today, the Livengood Gold Project is the key investment asset in ITH’s portfolio and is accompanied by a continued supportive relationship with shareholders including Anglo. The company is moving swiftly along that path to production.

Livengood continues to grow

Pontius says that ITH has aggressively pursued Livengood throughout the last two years and will continue to do so this coming year. “In October, we had a resource at a 0.5 gram cut-off combined, indicated and inferred resource of 12.5 million ounces, so it’s a very large deposit and it’s continuing to grow,” he explains.

“We’re now moving it down the path to determine the best way to extract the gold and the most profitable configuration for the mine. We conducted our first economic study for the project in late 2009 and that looks very encouraging to us.” ITH is currently integrating a mill into the conceptual design, which is going to improve the economic performance of the asset quite dramatically. This study will be available in April, and Pontius says that this will award “greater clarity of how we’re going to develop the asset.”

“Livengood is 100 per cent of the value of the company right now. For ITH that is the future and that is the focus. Every dime we’ve got has really been devoted to that,” Pontius continues. “Last year we drilled about 65,000 metres. This year for exploration we’ve currently got 50,000 metres and another 10,000 metres for mine development work.” This 50,000 metre programme, under ITH’s 2010 drilling programme for Livengood, commenced in February and is set to continue on through November as part of the resource expansion.

“We have four drill rigs out there right now; three reverse circulation rigs and one core rig,” Pontius says. “The deposit is open in a number of directions. We have not gotten our arms around it yet so we really don’t know the size of it. And this next phase of exploration is really geared towards trying to get a good understanding of the overall area that will be hopefully included in the mine, and to make sure that we’re addressing all the higher grade parts of this deposit.”

Results from these drill holes are expected within March and focus largely on what ITH calls the South-West Zone. This is the highest grade part of the deposit and the current focus direction for resource expansion.

The path to production, new projects and partners

With Livengood firmly rooted in the ITH spotlight, Pontius explains that the other interesting projects in the company portfolio are undergoing the joint venture process in order to raise funding.

“What we’ve done structurally within the company, is take all those projects and enter them into a wholly-owned subsidiary of ITH called, Raven Gold,” he says. “We’re looking at the opportunity of spinning Raven Gold out and divvying the shares of that new company to the ITH shareholders. This would provide them with another vehicle that would be more focused on early-stage exploration and not developing a large mine like Livengood that’s going down the path to production, but more early stage investment and discovery.”

Central to this potential opportunity is, of course, shareholder benefits, which Pontius consistently underlines. One such shareholder, Anglo, exemplifies the wealth of interest in ITH and more specifically, the progress going on at Livengood. In mid-February of 2010, Anglo chose to maintain its interest level in the project which stands at about 13.3 per cent of the company.

“We gave them notice a couple of months ago to which  they responded positively and are in the process of acquiring a block of shares to maintain that interest in the project,” Pontius says. “We have a very good relationship with Anglo and they’re a very good shareholder.”

Meanwhile considering Livengood, Pontius says their key short-term strategic goal is to improve and clarify the company’s understanding of the deposit. “We’ll be initiating a pre-feasibility study here shortly, and after we get our next preliminary economic analysis done, which is happening in the next couple of months or so, that will really be moving the project down the path towards production,” he reveals.

“We are hoping to get to that (better understanding) with our next preliminary economic analysis (PEA) which is slated to get finished in April. From that point on that will be the catalyst to trigger the pre-feasibility study to really bring the project along the line to get it into production.”

With the production goal in sight, Pontius again highlights ITH’s standout position as a small junior with a market cap of around US$400 million and a large deposit of over 10 million ounces.

“The project has gotten a lot of interest and visibility in the producing sector, and we’re not precluding the fact that if down the road as we continually take this project on, if there was some sort of offer for the shareholders, it would be up to them to decide if it is adequate for them or not,” he says, again underlining all progress with shareholder benefits as a first priority.

“We’re keeping the door open to people that have interest in the project and we regularly get groups out there to our site but really right now we’ve got our heads down and we’re pushing forward on bringing this product along the development route.”

An exclusive club of companies? Yes, but also a highly sought-after and promising position for any burgeoning production project. ITH have the programmes, plans and shareholders in place—and pushing Livengood down the path into production looks certain.