Paulson lifts stake in International Tower Hill with Alaska gold project

[Ben Graham]

International Tower Hill Mines (TSX: ITH, NYSE-AM: THM) tapped leading shareholder and hedge fund Paulson and Co. to raise a large chunk of its financing this week for the Livengood gold project in Alaska that’s also bolstered by rising prices for the yellow metal.

The Vancouver-based company raised $118 million including $74.8 million in its offering of common shares at $2.22 in the US while Paulson completed a $40 million private placement at the same price. The hedge fund then injected a further $3.3 million to increase its stake to 35%.

Tower Hill’s 2023 technical report for Livengood anticipated a $1.93 billion initial capex and a $2.35 billion after-tax net present value at a gold price of $2,500 per ounce. It found that slight decreases in the base case gold price could make the project uneconomic, as a previous 2017 study had demonstrated.

In addition to advancing feasibility studies and major permitting work for the gold resource, Tower Hill plans to expand testing to determine whether it can recover antimony from its stibnite veins. The company said in a filing this week that while extensive work is required before recoverability, or tonnage, grade, and resource estimates could be developed, initial metallurgical study supports more testing. It also plans to assess potential flowsheets, flotation methods, and concentrate characteristics.

Shares gain

Shares in International Tower Hill Mines hit a new all-time high of C$4.15 on Wednesday in Toronto after the capital raising before easing to C$4.07 the next day. It has a market capitalization of C$1.05 billion ($760 million).

The company has allocated about $50 million for feasibility and technical studies, $35 million for permitting and community engagement and the rest for general purposes, it said this week. Tower Hill’s 2024 and 2025 budgets allowed just over $3 million in spending on community engagement and environmental work in support of future permits.

Gold prices have sailed past major milestones in the past year, topping $5,000/oz. this week as central banks and other investors have shored up reserves in the face of increasing economic uncertainty.

Partner sought

The company had said in its most recent annual report that it was open to an alliance to develop the project” with a “strategic partner with a long-term development horizon who understands the project is highly leveraged to gold prices.” It hasn’t shared further details.

Paulson already owns 40% of another Alaska gold project, Donlin, which is located about 550 km from Livengood.

Located in southwest Alaska’s Kuskokwim gold belt, Donlin is expected to become one of the biggest producers of the yellow metal in the Americas. Majority owner Novagold Resources (TSX: NG) expects construction at Donlin to begin in 2027, with commercial gold production starting in 2031 and lasting 27 years.