IAU, OGC x 2, RSG
In all my years following the junior resource sector, I cannot recall any company doing the equivalent of what Nevada gold miner i-80 Gold aka IAU has just done: release no fewer than 3 PEAs in 9 days.
The latest is for the Mineral Point Au/Ag deposit on their Ruby Hill property, which is envisioned as one of their two open pit oxide mines. They say it has the potential to become their flagship asset, but based on the numbers in the PEA this going to take a lot of optimization.
Mineral Point is seen as having a 17 year mine life producing about 280k oz Au a year at a cash cost of $1270/oz Au. The new Resource Estimate says it has an Indicated Resource of 3.4M oz Au and 104M oz Ag, plus and Inferred Resource of 2.1M oz Au and 92M oz Ag. Processing will be done using in-site heap leach.
Those number look promising, the economics not so much. Construction capex is estimated at over $700M while at their base case of $2175/oz Au the IRR is only 12%. If they use current prices, the IRR edges up to a barely acceptable 27%.
Although the project is big enough that a 27% IRR would be acceptable, there is a lot of work left to be done to improve ir further. There will be a major drilling programme to upgrade Inferred Resources and more metallurgical testing feeding into a PFBS. Meanwhile permitting is underway.
Message 35036983
OceanaGold aka OGC released two significant PRs.
First up was their annual Mineral Reserves and Resources report, and there the news was good. Note that as of this year the reserves are now based on a gold price of $1750/oz, up from $1500/oz last year.
The numbers are good. P&P Reserves increased 27% to 6.2M oz Au net of depletion, and with a 15% higher grade. M&I Resources increased by 8% to 8.9M oz Au net of mining depletion. Also note that in 2025 OGC will be making a major effort to increasing these numbers with their highest exploration budget in 5 years.
Message 35035220
OGC also released their Q4 and annual results, and here the numbers were not as good.
Q4 production of 151k oz Au and 3.1 kt Cu was roughly in line with expectations and allowed OGC to meet 2024 guidance. Likewise Q4 cash costs of $875/oz Au were in line and allowed them to meet 2024 guidance, while FCF and earning were as expected. Thanks to generating all that cash, they are doubling the dividend and planning up to $100M worth of shares this year.
Those numbers were fine.The problem comes with the latest revision to 2025 guidance, which comes with reduced production and increased costs. To mitigate this, they also released preliminary guidance for 2026 which has higher production and much lower costs.
So the news is not so good for the near term, but if you concentrate on the long term prospects for OGC like I do, there is enough good news to at least make up for the bad.
Message 35035336
FWIW, in response Scotia issued a new analyst report on OGC calling the impact Mixed, but maintaining OGC at Sector Outperform with a $6.25 target. The next day they put out another analyst report on OGC. This time they were more concerned about the projected increased capex spend impacting FCF, and kept OGC at Sector Outperform but lowered their target from $6.25 to $6.
FWIW, in response BMO also issued a new analyst report on OGC which also uses the word Mixed. They kept OGC at Outperform but dropped the target by 50 cents to $5.75.
Rocky Shore Gold aka RSG, which recently rebranded from HMLO after pivoting to gold prospects in Newfoundland, this week gave us a perfect example of why it is a good idea to have stink bids in on quality spec stocks, particularly ones that have recently rum.
RSG had risen as high as 9 cents a share recently, but had settled back to around 7 cents. The n somebody decided they wanted out and all of a sudden you could get all the RSG shares you wanted for 4 cents apiece, at least for a few hours. By the next day the share price was back to 7 cents.
Alas, I did not have a stink bid in this time. |
