Companies started to report Q1 production results in what was otherwise a quiet week. Gold and silver prices saw nice rebounds, but it is unlikely we have resumed the uptrend. That isn't to say we haven't put in a bottom; instead, the most likely scenario is sideways trading for at least a while longer. If the 10yr yield trends higher, it could push gold down below $1,670/oz. Jobless claims rose more than expected, showing how much more fragile the system is relative to what mainstream media is saying.
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Abitibi Royalties: The company announced its 2020 reserve and resource estimates and the royalty production schedule over the next three years (2021-2023) covered by the company’s NSR interests. The reserve and resource estimate for its royalties are as follows:
- 2P reserves, M&I, and Inferred resources on its Barnat, Odyssey, East Malartic & Jeffrey (3% NSR): 75k oz. Au, 344k oz. Au and 4.254m oz. Au.
- M&I and Inferred Resources on its Gouldie (2% NSR): 65.9k oz. Au and 600 oz. Au.
Estimated production on royalty-covered land for 2021 is estimated at 10.85k oz. Au and 13.73k oz. Ag. Production in 2022 and 2023 is estimated at 14.6k oz. Au and 34k oz. Au and 13.4k oz. Ag and 27.4k oz. Ag.
Calibre Mining: Rio Tinto and Calibre initiated the 2021 exploration program on the Borosi exploration project. Rio Tinto has the right to earn a 75% interest by spending $45m over eleven years in the project. There is prospective near-surface copper-gold mineralization. Calibre has spent $20m over the past ten years on the project and discovered the Cerro Aeropuerto and Primavera copper-gold porphyry in 2011. A 5,500m exploration program is planned for 2021.
Endeavour Silver: Reported significantly higher Q1 production over the comparable period in 2020. Endeavour produced 1.05 oz. Ag and 11.1k oz. Au, an increase of 22% and 31%. The company held back 523.24k oz. Ag and 1,123 oz. in bullion inventory and 6.58m oz. Ag and 566k oz. Au in concentrate inventory. Management withheld metal from sale during the price correction over the last two weeks of March and plans to sell the withheld inventory as it believes prices will rebound in Q2.
Hecla Mining: Announced robust silver production and lower gold production for Q1 2021. Silver production increased 7% to 3.5m oz. Ag due to higher output at Lucky Friday as it ramps back up to full capacity. Gold production fell 12% to 52k oz. Au. Higher cost production was reduced at its Nevada Gold operations, and Fire Creek will be placed on care and maintenance in Q2. Hecla continued to generate free cash flow as its cash position increased to more than $135m.
Kirkland Lake Gold: Reported strong production in Q1 2021, although output will be more heavily weighted towards the second half of the year. Q1 production was 302k oz. Au, which exceeded Q1 guidance of 270-290k oz. Au. The Macassa #4 shaft project remained ahead of schedule, with shaft sinking reaching the 5,000 ft. level as of quarter-end. The project remains on track for completion in late 2022, with significant growth to be realized beginning in 2023. Production will pick up later in the year as lower grades are expected at all three cornerstone assets early in the year. Estimated production in the 1H of the year is 600-650k oz. Au and 700-750k oz. Au in the back half. AISC will average over $900/oz. in the 1H of the year (highest in Q1), improving to approx. $700/oz. in the 2H, with annual AISC estimated to be approx $800/oz. for the full-year.
Osisko Mining: Published a robust preliminary economic assessment (PEA) on its world-class Windfall project. Per the study, average annual production over the first 7yrs will be 300k oz. Au, over the initial 18yr mine life. Initial capital investment is estimated at $432m. The NPV5 and IRR using a $1,500/oz. gold price is $1.2b and 39.30%. One measurement of capital efficiency we look at is the NPV-score or NPV/Initial Capital Investment at Windfall has a score of 2.7x (anything over 2.0-2.10x is a highly economic project, though a conservative gold price must be used). If we assume a more realistic gold price of $1,700/oz., the NPV and IRR increase to $1.75b and 50%. The average life of mine production is 238k oz. Au @ AISC of $611/oz. There remains significant regional exploration potential, so gold production may not fall off during the later years.
PureGold Mining: Reported high-grade drill intercepts returned from underground drilling completed during Q1 2021. This drilling targeted zones close to new ramp development and adjacent to planned stoping areas to expand available reserves and increase grades in the near-term mine plan. Highlights include:
- 1m @ 56.6 g/t Au
- 7.9m @ 8.7 g/t
- 4m @ 7.50 g/t
- 1.1m @ 13.4 g/t
- 1.0m @ 11.5 g/t
- 1.8m @ 10.50
Roxgold: Reported very robust Q1 production numbers at its Yaramoko mine. Preliminary production results from Yaramoko were 35.3k oz. Au @ 8 g/t, positioning Roxgold to achieve and possibly beat full-year production guidance of 120-130k oz. The company had $59m of cash and gold on hand, with a net cash position of approx. $25m. The company has an additional $20m of undrawn revolving credit. With its current cash position, ongoing free cash flow generation, and the undrawn portion of its credit facility, the company could issue some equity to finance the construction of Seguela. More likely, it’ll be able to access a larger debt facility or a combination of both.
Roxgold also announced a new discovery at Seguela, highlighted by:
- 13m @ 15.6 g/t Au at (Sunbird)
- 18m @ 3.5 g/t Au (Sunbird)
- 4m @ 8.1 g/t Au (Sunbird)
- 14m @ 4.1 g/t Au (Sunbird)
- 5m @ 6.2 g/t Au (Sunbird)
- 6m @ 10.80 g/t Au (Koula Underground Extension).
Sandstorm Gold Royalties: The smallest of the “Big 5” royalty and streaming company’s announced record sales and revenue in Q1 2021. The company sold approx. 17.4k AuEq oz., generating revenue of $31m. Sandstorm also announced its normal course issuer bid (NCIB) after its existing expires on April 5, 2021. The current NCIB provides Sandstorm with the option to purchase up to 17.2m of the company’s common shares.
Silver Tiger: Intersected 14.2m @ 519.5 g/t AgEq including 5.6m @ 1,010 g/t AgEq. Other highlights include 2m @ 1,443 g/t AgEq within 12.6m @ 266 g/t, 7.7m @ 304.6 g/t AgEq including 1.10m @ 1,015.9 g/t.
Skeena Resources: Announced an updated mineral resource estimate (MRE) for the Eskay Creek Au-Ag project in the Golden Triangle. The 2021 MRE was derived from 651k meters of historical surface and underground drilling with an additional 104.7k meters of surface diamond drill holes. Total M&I resources are 3.9m oz. Au @ 3.1 g/t and 101.6m oz. Ag @ 82.1 g/t.
Torex Gold: Reported Q1 2021 production of 129.5k oz. Au, which is the company's highest first quarter of production on record. Torex is on track to achieve its full-year production guidance of 430-470k oz. Au.
Victoria Gold: Reported Q1 operational highlights. This year's seasonal operations plan included the curtailment of ore stacking in heap leach pads during the 90 coldest days of the year (January-March). During this time, the company conducted maintenance and optimization programs on the crushing and stacking facilities were finalized with ore stocking resuming ahead of schedule. Q1 production totaled 26.76k oz. Au @ 0.87 g/t with an elevated strip ratio of 2.9:1. 2021 guidance is for the production of 180-200k oz. Au @ $1,050-$1,175/oz.
The company has initiated Project 250 to increase the average annual gold production of the Eagle Gold Mine to 250,000 ounces of gold by 2023. The two primary opportunities to increase output are scalping fine ore from the crushing circuit and adjusting the seasonal stacking plan. Scalping of fine ore is expected to reduce wear and energy requirements as well as increase the overall capacity of the crushing circuit. Further investigation is underway on the year-round stacking of ore to the heap leach pad. Year-round stacking alone should allow for increased production in Q1. We expect Q1 AISC to be quite elevated despite above-average grades.
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