Metals were down on the week, albeit marginally. Gold is holding above the $1,700/oz. level and the all-important $1,670-$1,680/oz. level while silver continues to hold in strong. It is currently holding (barely) the $25/oz. level, but it wouldn't be abnormal should it go lower and test $24/oz. Many would argue that this is healthy, which is in the camp we're in. If silver does break below $25/oz., it would likely fall a bit and ideally see an intraday lower around the $24 level, reverse course and close higher than the previous day's close.
As far as the miners go, they did sell off rather hard this week. It is worth reiterating that this could be the last great buying opportunity, but only time will tell.
$EQX, $GLDX, $GRSL, $MTA, $MMX, $NFG, $OSK, $ROXG, $SLVR, $TXG, $VGCX, $WM, $WDO, $WPM
Equinox Gold: Published the results of the FS for the Castle Mountain Phase II expansion. This will be the last cornerstone asset Equinox Gold will build. The Los Filos expansion on-going, the construction of Hardrock to begin within nine months, and the Aurizona underground to be developed beginning as early as 2022. The initial capital costs to build Phase II have increased some at $510m. However, this is if Equinox buys its mining equipment outright. Should it decide to lease it, initial capital costs will be $389m. LOM AISC has also increased a bit, from approx. $780-$790/oz. to $860/oz. in the latest FS. Costs for mining companies have been going up, so this increase is due, at least in part, to that.
However, the FS for Castle Mountain Phase II also highlights a longer mine life (14yrs) with 2-3yrs of residual leaching and rising. Additionally, average annual production during phase II has marginally increased from 203k oz. Au to 218k oz. Au. Assuming a $1,750/oz. gold price deck, the IRR and NPV5% are 24% and $1.03B. This, however, assumed the mining equipment is bought, not leased.
Gold X Mining: While the company is currently in the process of being acquired, it updated the Toroparu High-grade geological model. Highlights include:
- Modeling of 2020 drill results has identified high-grade pipe structures at the intersections of newly identified east-west oriented sub-vertical structures and the previously disclosed1 northwest – southeast-oriented structures over the extent of the 3 km strike length of the Toroparu Main and NW Zones.
- These high-grade structural pipes occur in a repetitive pattern across the gold mineralized Toroparu Trend (Fig. 3, 4), significantly increasing the possibility that Toroparu is amenable to shallow bulk and selective underground mining methods.
- The high-grade mineralized pipes range from 5 g/t to more than 20 g/t of gold over mineable widths, often surrounded by a lower grade (~0.5-5.0 g/t Au) halo of mineralized material. Drilling to date has shown the higher-grade structures demonstrate continuity up to 100 meters vertically.
We like this asset very much, and only time will tell if Gran Colombia is the best company to advance the project towards production. Given that there is an existing FS, Gran Colombia can advance this project forward rather quickly. We do believe Gran Colombia will first finish the Phase II diamond drill program and commence construction sometime in the 2H 2022.
GR Silver: Reported results from the company's current core drilling program, demonstrating wide intercepts of silver mineralization from underground drilling at the Plomosas Silver Project. The underground drill hole results reported in this News Release are part of the drilling program that will be incorporated with existing historical drilling data to support the upcoming resource estimate on the Plomosas Project. This is one of two areas with resource estimates underway; the other is in the San Juan Area, located 2.5 km from the Plomosas Mine Area. The highlight drill hole was 13.5m @ 377 g/t Ag and 1.50% Zn.
Metalla Royalty & Streaming: Announced two separate royalty transactions on the Alturas-Del Carmen & Amalgamated Kirkland Projects. It also closed the CentroGold royalty acquisition. It completed the acquisition of an existing 0.5% NSR Royalty on a portion of Barrick Gold’s Alturas-Del Carmen Project ("Del Carmen") for a total consideration of C$1.6 million in cash from Coin Hodl. In addition, Metalla has completed the acquisition of an existing 0.45% NSR Royalty on Agnico Eagle Mines' Amalgamated Kirkland and Kirkland Lake Gold's North AK Property located in Kirkland Lake, Ontario, for C$0.7 million in cash from private third parties.
Maverix Metals: Announced record financial results for the full-year 2020. The company set records across the board, including revenue of $51.7m, operating cash flow of $36.5m, record AuEq production/sold of 28.9k AuEq oz.
New Found Gold: Announced assay results from two drill holes at the Lotto zone, part of the on-going 200,000m diamond drill program. Highlights include 3.20m @ 51.3 g/t Au and 3.10m @ 53.3 g/t Au. This is exciting as there is continuity of high-grade gold developing on this north-south striking veins set at Lotto. The Lotto baseline fault appears analogous to the Keats Baseline fault, which is host to Keats' high-grade discovery.
Osisko Mining: provide new analytical results from the on-going drill program at its 100% owned Windfall gold project located in the Abitibi greenstone belt, James Bay, Quebec. Significant new analytical results include 99 intercepts in 50 drill holes (8 from surface, 22 from underground) and 20 wedges. The intercepts are located inside the defined February 2021 mineral resource estimate. Select highlights from the infill drill program include:
- 2.2m @ 35 g/t Au
- 2m @ 78.4 g/t Au
- 2m @ 148 g/t Au
- 6m @ 70 g/t Au
- 2m @ 45.5 g/t Au
- 2.5m @ 39.4 g/t Au
- 2.1m @ 76.3 g/t Au
- 4.1m @ 71.2 g/t Au
- 2.5m @ 696 g/t Au
- 2.3m @ 49 g/t Au
- 2.1m @ 73.50 g/t Au
- 2.1m @ 507 g/t Au
- 3.7m @ 74.3 g/t Au
- 2.3m @ 43.7 g/t Au
Roxgold: Has taken several key steps in advancing Séguéla towards project construction (with a short-build out period) in the coming months. Roxgold has awarded preferred contractor status to Lycopodium Minerals Pty Ltd. and is currently negotiating the engineering, procurement, and construction agreement for the 1.25Mtpa carbon-in-leach processing facility and other supporting infrastructure to be constructed at Séguéla. The pre-production capital estimate, which is expected to be in-line with the previous estimate of $142M.
Silver Tiger: Intersected 1.6 meters grading 1,355.4 g/t silver equivalent in the Sooy Vein and 2.3 meters of 870.7 g/t silver equivalent in the Sooy Footwall Zone in Drill Hole. This hole was drilled on Section 4812.2N to test the Vein and the Footwall Zone about 90 meters to the south along strike from Discovery Hole ET-20-202. Drill Hole ET-21-211 has intersected 1.3 meters grading 1,346.7 g/t silver equivalent within 4.9 meters grading 384.9 g/t silver equivalent and was collared on Section 4850N to test the Vein and Footwall Zone about 50 meters to the south along strike from Discovery Hole ET-20-202.
Torex Gold: Reported exploration results from the Media Luna 2020 infill drilling program. The primary purpose of the infill program was to upgrade Inferred Mineral resources to the Indicated category within Media Luna Upper. The program follows on the 2017-2019 infill program carried out in Media Luna Lower, which resulted in a maiden Indicated resource of 2.24 million gold-equivalent ounces. Highlights include:
- 13.66m @ 6.16 g/t Au, 79 g/t Ag and 3.58% Cu (12.73 g/t AuEq)
- 13.22m @ 8.45 g/t Au, 18.8 g/t Ag and 1.09% (10.38 g/t AuEq)
- 11.92m @ 11.25 g/t Au, 12.5 g/t Ag and 0.64% Cu (12.40 g/t AuEq)
- 5.24m @ 45.39 g/t Au, 33.8 g/t Ag and 2.48% Cu (48.33 g/t AuEq)
- 14.59m @ 9.37 g/t Au, 190 g/t Ag and 6.60% Cu (22.05 g/t AuEq)
- 16.57m @ 9.16 g/t Au, 9.4 g/t Ag ad 0.85% Cu (10.60 g/t AuEq)
- 8.92m @ 31.70 g/t Au, 27.4 g/t Ag and 1.17% Cu (33.86 g/t AuEq)
- 9.15m @ 8.55 g/t Au, 111 g/t Ag and 3.0% Cu (14.62% g/t AuEq)
- 22.95m @ 25.46 g/t Au, 36.3 g/t Ag and 0.835 Cu (27.21 g/t AuEq)
Victoria Gold: Reported a much-improved Q4 relative to Q3, the first full quarter operating at commercial production. Victoria sold 40k oz. Au in Q4 (production of 42.44k oz. Au). Q4 saw production increase 20% while all-in sustaining costs (AISC) fell 15%. Due to the company's seasonal stacking plan, 2021 production will be weighted more toward the two h of the year. Q4 AISC was $1,120/oz. and while a significant improvement relative to Q3, it remains well above those outlined in the feasibility study. Victoria generated $20.6m in free cash flow in Q4 due to higher sustaining capital costs. Cash and equivalents were $56.1m at year-end after repaying $39.8m of principal against the company's debt facilities.
In 2021, the company estimates production to be between 180-200k oz. Au @ AISC of $1,050-$1,175/oz. Costs will be elevated once again due to higher sustaining capital costs for one-time infrastructure spending, including the truck shop's construction ($8m) and water treatment plant ($11m). The company is targeting two objectives, project 250k (increase average annual production to 250k oz. Au) and project 2040 (increase the mine life to 2040).
The company should easily be able to achieve 250k oz. Au p.a. There are several higher-grade zones such as Nugget-Raven and Lynx, which should increase production. Victoria can also start year-round stacking instead of not doing so for the coldest three months of the year (Jan-Mar). Regarding project 2040, this also appears achievable as the company continues to drill, expand and discover new zones such as Nugget-Raven, Lynx, Olive-Shamrock, Eagle West, Eagle Extension, and Bluto. The main Eagle pit is currently planned to 350m depth, but mineralization is known to continue to 650m depth.
Wallbridge: Announced a significant wide intersection from a newly-discovered depth extension of the Tabasco-Cayenne Zones at the Fenelon Gold Property, expanding strong gold mineralization to a vertical depth of 1,000 meters. These include 42.50m @ 3.71 g/t Au (including 19.50m @ 6.11 g/t Au) in the recently discovered eastern high metal factor domain of the Tabasco-Cayenne zones, approx. 100m below a previous intersection of 35.55m @ 4.16 g/t Au. Follow-up drilling is planned in this eastern high metal factor domain to be included in the maiden mineral resource estimate targeted for Q3 2021. In 2021, the company plans to complete approximately 170,000 meters of drilling approx. 10-15% of the drilling program will be devoted to regional exploration on its district-scale, underexplored land package on the Detour-Fenelon Gold Trend.
Wesdome: Announced underground exploration drilling results from a new high-grade gold discovery in the Kiena Deep A Zone footwall at the company's 100% owned Kiena Mine Complex in Val d'Or, Quebec. Until only recently, definition drilling of the A Zone focused on converting the large inferred resource to indicated as part of the on-going pre-feasibility study. This recent shift to focus the drilling on exploration resulted in drilling holes through the A zones into the untested footwall rocks. Improved drilling practices and the use of drilling wedges permitted the drills to penetrate this footwall area effectively. They resulted in the discovery of at least two new zones of high-grade gold mineralization. Highlights of the recent drilling are as follows:
- 22m @ 11.90 g/t Au
- 5.90m @ 28.90 g/t Au
- 18m @ 16.7 g/t Au
Wheaton Precious Metals: Along with Franco-Nevada and Osisko Gold Royalties to a lesser degree, the company has been growing its asset portfolio rather significantly over the past several years. In 2020, Wheaton inked the Marmato gold-silver stream in Colombia and the Cozamin silver stream in Mexico. These two assets added marginal production. Cozamin (840k oz. Ag p.a. or 12.5k oz. AuEq) added immediate production, and Marmato provided Wheaton with medium-term growth beginning in 2024 (9.5k-to-10.5k). Both assets have material upside, and it wouldn't be surprising to see Wheaton increase its silver stream with Cozamin.
When the Cozamin deal was announced, both parties mentioned they were in advanced stage talks for Wheaton Precious Metals to acquire a gold stream to finance a portion of the capital costs to build the Santo Domingo mine in Chile. This week, the two parties announced that in exchange for total payments of $290m by Wheaton to Capstone, Wheaton would be granted a 100% gold stream, dropping to 66.67% once 285k oz. Au has been delivered. Average annual production over the first five years of production is expected to be 35-40k oz. Au and 25-30k oz. Au over the first 10yrs. Based on the current mine plan, production would drop-off significantly after that; however, higher production levels could be maintained dependent on exploration success. Wheaton will remit $30m upon closing and the other $260m in staged payments based on construction-milestones. Staggered payments reduce the risk to Wheaton on what will be yet another long-lived asset in the portfolio. The initial mine life is 18yrs. The first full year of production will be in 2024.
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