THE concept has always been a winner -- reopen a gold mine in Snow Lake, Man., that's been shuttered for 10 years but still has all the infrastructure in place and about 750,000 ounces of indicated gold reserves.
The only problem for QMX Gold Corp. (formerly called Alexis Minerals) is that investors have gone cold on new mine developments in Canada.
Francois Perron, CEO of QMX, spoke to a small group of would-be investors in Winnipeg Monday.
Perron said he is confident he can put the funding in place this year to open the mine. But he admits the clock is ticking.
Last year, QMX secured a $17.5-million bridge loan to pay off a former loan with enough money left to continue mine-preparation efforts.
The company also has much of the details in place for a $45-million loan from Credit Suisse, but it needs to raise the final bit of equity -- about $25 million to $30 million.
"It is a bankable operation," he said. "That tells you it is a good project."
Last fall, QMX produced a prospectus in an attempt to raise new equity but took it off the market in October when it was clear market conditions were very unfavourable.
He said he is now going to Plan B, which is a search for private-equity financing or a joint venture.
"The mine used to be owned by a 50-50 partnership between High River and Kinross, so why not?" he said.
He is also convinced there are much more resources available to be mined at the property. That's because the last time the property was mined -- when it was called the New Britannia Mine -- gold was selling at $300 per ounce and ore bodies that might not have been profitable to mine at those prices would be very profitable at the $1,650 per ounce gold is now selling at.
QMX also operates a small gold mine in Val D'Or, Que. Since Perron took over the company a couple of years ago, he has helped turn around that mine so it is no longer losing money.
Perron believes when the Snow Lake Mine finally operates, it can generate pre-tax cash flow of $150 million per year. He hopes he'll be able to convince some deep-pocketed investors of the prospects before that bridge loan needs to be paid back in late 2014.