Artemis Gold (ARTG-V) Aug 26, '20 Revised PFS for Blackwater Project web.tmxmoney.com
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Artemis Gold prefeasibility study of its Backwater gold project in central British Columbia has yielded a promotable bottom line. The study, which proposes a three-phase development program, is based on a reserve of 334 million tonnes averaging 0.75 gram of gold and 5.8 grams of silver per tonne, about eight million ounces of gold and 62 million ounces of silver, which is the bulk of the 12.7-million-ounce gold-equivalent resource currently deemed present.
Artemis proposes to build a 15,000-tonne-per-day mine that would cost just under $600-million to get running. Another $420-million will be needed to expand the operation to over 32,500 tonnes per day in year six and nearly $400-million more, spent before year 11, will boost the mining rate to nearly 55,000 tonnes per day. The increased mining rates will reduce operating costs -- fortunate since the average grade will decline from nearly 1.6 grams per tonne initially to just 0.55 gram per tonne over the final dozen years of the 23-year plan.
Mr. Dean, chairman and chief executive officer, was predictably pleased with his study, lauding the "robust economics that management believed were achievable" when he and his crew acquired the project earlier this year. That acquisition closed just this week; a deal in which Artemis paid $140-million in cash and issued 7.41 million shares to New Gold Inc. (New Gold gets another $50-million in a year and it also holds a streaming royalty on the future mine -- a royalty that could prove costly to Artemis if it does not get Blackwater into production within seven years.)
Artemis's prefeasibility study compares well with one completed seven years ago by New Gold. That feasibility study proposed a 60,000-tonne-per-day, $1.9-billion mine that would average over 400,000 ounces of gold and 1.75 million ounces of silver over a 17-year run. Artemis, with its thinner treasury, will spread its production over a 23-year period, achieving its best production and highest free cash flow during the five years after the first expansion. This is a "disciplined approach," Mr. Dean says, and the discounted net present value of $2.2-billion after taxes suggests it will work -- assuming the price of gold in Canadian dollars stays above $2,000.
It has been a good year for Artemis and its shareholders. The company launched last fall and traded just above the $1 mark until mid-spring, as Artemis was putting together the Blackwater deal. Word of the acquisition sent Artemis's shares to $3.50 and continued good news and great promotion has sustained the rally since then. It has also been a good year for Mr. Dean, who draws a $350,000 salary paid to his private company, and who also collects stock options to cover additional services provided.
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