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Silver Seeker Issue #80: Summer Doldrums Come to an End, Metals Close the Week Strong

With the summer doldrums coming to an end as we head into the long Labor Day weekend, the metals and mining stocks continued to trade in a relatively tight trading range for most of the week, with both gold and silver breaking out on Friday. With Jackson Hole out of the way, which had a bullish (Dovish) tone, things are looking up over the next couple of months and again in Q1 2022. Ideally, we would like to see both gold and silver break their current downtrends this month and believe we will see just that. This week was another light week regarding material mining news, but things should be picking up after labor-day.

$IAU, $AGG, $AUN, $BRC, $CBR, $FCO, $ITRG, $KNT, $KL, $LGD, $SCZ, $SILV, $TXG, $TUD, $VZLA, $VGZ

I-80 Gold: The spin-off company following the Premier Gold acquisition by Equinox reported high-grade intercepts in open-pit drilling at Granite Creek in Nevada. Hole iGM21-01, drilled from the bottom of the historic CX-Pit, intersected two zones of mineralization: 7.5m @ 3.17 g/t Au and 51.1m @ 6.80 g/t Au. We are quite excited about I-80 gold, given its quality portfolio of assets in Nevada, including one producing mine (El Nino @ South Arturo JV) and its three core projects, all of which are permitted for development. The Company's medium-longer term objectives are to increase production over 200k oz. Au p.a., increase reserves and resources to greater than 10m oz. Au and build a multi-mine producer. I-80 has lower capital/high return projects and is run by a competent management team and an important backer, which has committed to retaining a 30% interest, Equinox Gold. Its cash position currently stands at $55m.

I-80's projects are highlighted by some of the highest-grade open-pit projects in North American, as well as some of the highest-grade underground projects. For example, Granite Creek [U/G] has an M&I and Inferred grade of 10.49 g/t Au and 11.90 g/t Au and has an open-pit M&I and Inferred resource grade of 1.95 g/t Au and 1.61 g/t Au and total resources of 1.3m oz. Au. Further, McCoy-Cove has an underground M&I and Inferred resource grade of 10.9 g/t Au and 10.80 g/t Au for a total of 3.4m oz.

African Gold Group: The Company announced a 44% increase in M&I resources for the Kobada Gold Project to 1.71m oz. Total resources have increased to more than 3.1m oz. Au, which also includes a 26% increase in inferred resources of 1.43m oz.

Aurcana Silver: The Company reported that the processing plant initiated commissioning with development ore on Friday, August 27, 2021. This is an important milestone in the restart of full operations, with stope ore to be processed in the near future.   The Company plans to continue to ramp up to the full production rate of 270 short tpd over the month of September.

The Company is also pleased to report that initial assay results from the 1800 drift level show an average undiluted grade over 78 feet of drift of 54 ounces per ton AgEq per short ton (ST). The actual measured vein width in this area is 1.19ft compared to the modeled vein width for the same 78 feet of 0.23 feet and an undiluted grade of 26.9 ounces per short ton over for the same drift section. Assay data lags actual development, and the Company looks forward to reporting more assay results shortly, but visual inspections each shift indicate that this strong mineralization continues. Concentrate shipments are anticipated to begin in the first half of September. Trafigura Trading LLC is the off-taker for 100% of the concentrates and will pay 95% of the contained metal value based on the mine site concentrate assays at the time of shipment, with final settlement based on smelter returns.  

Blackrock Silver: The Company reported some excellent drill intercepts, yet the stock didn't move on the news. Blackrock announced new high-grade silver and gold drill intercepts from its core and RC drilling program at its Tonopah West project. These new results demonstrate robust continuity of high-grade mineralization at both the DPB and Victor targets; additional infill drill results highlight the world-class potential for this deposit as the Company works towards the delivery of a maiden resource estimate. Highlights include:

  • Six 1Kg/tonne AgEq intercepts reported across both the DPB and Victor target areas.
  • Denver vein returned 7.4m @ 2 g/t Au and 181 g/t Ag
  • 3.3m @ 2.25 g/t Au and 223 g/t Ag
  • Drilling on the Victor vein returned three 1Kg intercepts.
  • Victor/Murray vein returned 1.7m @ 3.93 g/t Au and 660 g/t Ag
  • Thirty-two drill holes are pending.

Cabral Gold: Provided assay results from seven more reconnaissance RC holes at the MG gold-in-oxide blanket and a drilling update at the Cuiú Cuiú gold district in northern Brazil. Highlights include:

  • Results have been received from seven additional follow-up RC drill holes testing the MG gold-in-oxide blanket target, which directly overlies the primary MG gold deposit. Drilling continues to return remarkably consistent gold grades over an area of at least 400 x 500m.
  • Significant results on two N-S sections through the middle portion of the blanket include 13m @ 0.6 g/t gold, 7m @ 0.5 g/t gold and 34m @ 0.7 g/t gold in RC-132 and 46m @ 0.5 g/t gold in RC-135. These recent drill results suggest that the blanket remains open to both the north and south in several areas.
  • Following the recent arrival of two more diamond drill rigs, the total number of rigs on-site and currently operating at Cuiú Cuiú increased to five, including three diamond drill rigs and two RC drill rigs, which are testing multiple targets.

Fabled Silver Gold: Announced results of its 1,200m underground drill program at its Santa Maria project in Mexico. The Company hit mineralization outside of the Santa Maria structure boundaries. The highlight drill results from this release include: 2.35m @ 0.49 g/t Au and 360 g/t Ag, 4.55m @ 0.42 g/t Au and 111 g/t Ag including 1.5m @ 0.71 g/t Au and 309 g/t Ag. Underground drilling is taking place from drill stations in the ramp or in mined-out areas, where previous property holders took bulk samples. The ramp is centered down the Santa Maria vein to access mineralized material as the previous operators advanced the ramp. This has resulted in the higher-grade portion of the Santa Maria Vein being absent from the beginning of the majority of the drill holes.

The Company knows from previous holes drilled in this program that the Santa Maria vein and Santa Maria Dos veins are the footwall and hanging wall of a mineralized structure. The purpose of the program is to determine the widths of this structure. As the ramp is restrictive, useful available drill locations will become sparser, and the Company is planning to establish new "proper" drill bays for future holes.

Integra Resources: Intersected high-grade Au-Ag in ten additional drill holes at Florida Mountain. Florida Mountain drill highlights include:

  • 31.24m @ 3.13 g/t Au and 104 g/t Ag.
  • 5.18m @ 24.64 g/t Au and 295 g/t Ag.
  • 9.39m @ 12.50 g/t Au and 156 g/t Ag.
  • 5.94m @ 2.55 g/t Au and 860 g/t Ag.
  • 17.98m @ 3.66 g/t Au and 860 g/t Ag.

These drill holes illustrate high-grade Au-Ag mineralization below the Florida Mountain Deposit. The PFS remains on track for completion in Q4.

K92 Mining: The Company continued to announce excellent high-grade drill results at the Judd Vein system. Highlights include:

  • 8.51m @ 48.56 g/t Au, 47 g/t Ag and 0.54% Cu on the J1 Vein.
  • 3.70m @ 52.27 g/t Au, 39 g/t Ag, and 0.60% Cu on the J1 Vein.
  • 8.35m @ 17.87 g/t Au, 28 g/t Ag, and 0.67% Cu on the J1 Vein.
  • 4.91m @ 18.22 g/t Au, 39 g/t Ag, and 1.94% Cu on the J1 Vein.
  • 1.90m @ 25 g/t Au, 22 g/t Ag, and 1.07% Cu on the J1 Vein.

The mineralization is similar to Kora, an intrusive Au-Cu-Ag epithermal vein system. Judd is open both up-dip and to depth, along strike, has been mapped over a +2.5km strike length while also representing a new mining front, with first stoping planned for Q4 and flat backing on the 1235 Level ahead of long-hole stoping underway.

Kirkland Lake Gold: This was a big week for Kirkland Lake Gold regarding Fosterville and Detour Lake. Drilling from recently completed P3912 drill drive intersects high-grade, visible-gold (VG) mineralization down-plunge of Swan Zone, 500m from deepest Mineral Reserves. New high-grade, VG-bearing intercepts were also reported along Cygnet Fault system ~150 m footwall to Swan Zone. Results support the potential for growth in Mineral Reserves and include identification of multiple new splay structures and opportunities for further extension of the fault system to the north. Lastly, new VG mineralization intersected up to 1m down-plunge of existing reserves along the Currie Fault at Robbin's Hill. Highlight drill intercepts include:

  • 6.4m @ 9.6 g/t Au
  • 2.2m @ 51.7 g/t Au
  • 1.4m @ 258 g/t Au
  • 1.5m @ 142 g/t Au
  • 3.3m @ 49.4 g/t Au
  • 2.5m @ 81.3 g/t Au

At Detour Lake, Kirkland announced a 10.1m ounce increase in M&I resources, an increase of 216% to 14.718m oz. Au @ 0.80 g/t Au. Of the 14.71m oz. Au, 12.2m oz. had an average grade of 0.98 g/t Au and 2.5m oz. Au @ 0.42 g/t Au. On June 30, inferred resources totaled 1.115m oz. Au @ 0.81 g/t Au. The substantial increase in M&I resources will drive an increase in reserves, which will be updated from the December 2020 estimate of 15.775m oz. Au in Q1 2022. Kirkland has completely turned around the operational performance at this Tier-I mining asset.

Most M&I resources are in the Saddle Zone, between the existing main pit and planned west pit locations, which was underexplored. The Super-Pit scenario will likely play out as Kirkland will first increase production to 800k oz. Au @ AISC of $800-$900/oz. With production slated to achieved 800k oz. Au in 2025, Kirkland now envisions further increasing production to 900k oz. Au with an average AISC of $775/oz. over the next five years. In the 1H 2022, Kirkland will file a new life of mine plan, which could very well see Detour Lake producing close to 1m oz. Au for one or multiple years.

Furthermore, additional future growth could be found in what has proven to be high-grade underground mineralization, which are many multiples higher than the O/P reserve/resource grade. This will require 200-400k meters of drilling over the next five to seven years. Excluding the potential underground component, the Company expects to increase the NAV at Detour Lake by $750-$1B. This is just within the next five years, so a super-pit development scenario could add far more value. Kirkland Lake remains one of the highest quality names (based on the quality of assets) among senior gold producers.

Liberty Gold: The Company announced the discovery at the Rangefront target on its Black Oxide deposit in southeastern Idaho, confirmed with the release of the first tranche of 2021 RC drill results. The D-4 discovery drill holes were drilled from the first site established in the new permit area targeting a 1,250m gap in drilling along the 4km long-dominant mineralization trend at Black Pine. Highlights from this release include:

  • 86.9m @ 0.91 g/t Au
  • 21.3m @ 2.03 g/t Au
  • 24.4m @ 1.23 g/t Au
  • 50.3m @ 1.37 g/t Au

Santacruz Silver: Reported Q2 financial results. The Company saw revenue increase 131% year/year to $13.7m, gross profit increased by $3m to $3.8m relative to the comparable period in 2020. Further, after quarter-end, the Company completed a share-for-debt settlement totaling $3.1m. While the Company is headed in the right direction after acquiring the Zimapan operation, it will first have to optimize the project to see the full benefits. During Q2, the operation saw increased tonnage due to the continued development of the Lomo del Toro zone, resulting in increased material processed and higher average silver head grades. Development work continues to yield positive results. The Company envisions an increase in production from 15Ktpm to 20Ktpm by the end of Q3 with a concurrent increase of 5Ktpm in overall production tonnages targeting 70Ktpm by the end of Q4 should continue a positive trend of increased cash flow generation. Granted, Santacruz Silver is a low-quality silver producer but should prices go parabolic; it will perform. However, the Company isn't out of the woods yet as the Company had a negative working capital position at quarter-end combined with lower silver prices thus far in Q3, given its AISC are high.

SilverCrest Metals: Along with MAG Silver, SilverCrest Metals is developing one of the most exciting silver projects of scale. SilverCrest anticipates completing the mine build and commissioning the mill in mid-2022, ramping up operations in the second half of the year. The Company remains one of the best-capitalized development companies with cash and equivalents of $207m. The project was forecast to have initial capital requirements of $135-$140m but approx. $65m has been incurred. SilverCrest completed its second scheduled tranche drawdown of $30m on its $120m project financing facility. SilverCrest anticipates drawing down $90m from the credit facility by year-end when construction will be approx. 80% complete. Once in production, the Company will have a material net cash position, which usually isn't the case for a single asset company completing a mine build.

Torex Gold: The Company released its 3-year production outlook for the ELG complex, including the previously announced expansion of the El Limon open-pit. This positions Torex ideally for a smooth transition between the ELG Complex remaining mine life and the development and ramp-up of Media Luna. Torex provided the following production forecast from 2022-2024:

  • 2022 production of 450k oz. Au
  • 2023 production of 425k oz. Au
  • 2024 production of 325k oz. Au

The open-pits will be exhausted by mid-2024, while the ELG underground will operate at least through the end of 2024 but likely longer based on exploration results. Further, during the transition period, lower grade stockpiles will feed the mill as required. Torex's financial position is improving quickly, with more than $195m in cash and $150m available on a fully undrawn revolving credit facility. Assuming a $1,800/oz. gold price, Torex should generate $850-$1,050m in cash flow between now and the end of 2024.

Tudor Gold: Reported the second set of results from the 2021 resource expansion and definition drilling campaign for the Goldstorm deposit at Treaty Creek. The project is on-trend from Seabridge Gold's massive KSM project. Recent Treaty Creek drill highlights include:

  • 972m @ 1.265 g/t AuEq.
  • 219m @ 1.287 g/t AuEq.
  • 118.6m @ 0.721 g/t AuEq (Near-Surface).
  • Copper mineralization observed with 405m @ 0.618% Cu.
  • The Goldstorm Deposit remains open in all directions and at depth.

Vizsla Silver: The Company has expanded the Napoleon Resource area to 1,000m with an average grade width of 3.5m @ 482 g/t AgEq. Step-out drilling has extended high-grade mineralization 50m to the south, while infill drilling illustrates a continuous panel of mineralization. Highlights include:

  • 5.93m @ 185 g/t Ag and 11.35 g/t Au + base metals.
  • 1.46m @ 188 g/t Ag and 10.74 g/t Au + base metals.
  • 1.40m @ 114 g/t Ag and 6.49 g/t Au + base metals.

Mineralization targeted for resource delineation now extends over 1,000m in length, 370m deep, and remains open to the south and at depth.

Vista Gold: The Company began engineering work in July to complete a feasibility study (FS) for its Mt. Todd project. This well the Company find a partner to develop the project as it will provide increased confidence regarding project designs and cost estimates, increasing reserves, and improving overall economics. The mine plan is being updated using a gold price more reflective of the current gold price environment. This change is expected to increase gold reserves and extend the mine life. Engineering studies to evaluate autonomous truck haulage and trade-off studies to assess the potential benefits of contract mining and a third-party owner/operator of the power plant are also being completed. The DFS is on schedule and expected to be completed in Q1 2022.

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