CMM - post by Production5
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10) ``Upon commencement of gold production at the Lamaque gold mine, senior management will focus its energy on expanding production at Lamaque.``
Our Lamaque mill is officially capable of processing 3,000 tpd of high grade our.
At 95% recovery and 4.78 g/t grade, that`s 157,000 ounces of annual production.
No point wasting such capabilities with a $1,165 gold price available. If they have success with the new drill program (in moving more near-surface ounces into P&P) then I hope management will be able to implement a new mine plan to scale up from 105,000 ounces of production to 150,000 ounces within the next couple of years (prior to the shafts being ready).
If so, we could become a mid-tier gold producer just from organic growth alone, with 180,000 ounces of production (150K Lamaque and 30K San Juan).
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Thoughts on today`s NR
1) ``is pleased to announce that the mill facility at its 100% owned Lamaque gold project located in Val-d'Or, Québec, Canada is fully operational``
I don`t get the impression that the market entirely appreciates the significance of that statement. In my view, this is a major hurdle/accomplishment. Even from a distance, I have observed countless number of start up mine operations experience either hard to locate (and correct) vibration problems or serious recovery issues or other processing problems. The companies that owned those particular start up operations either got severely crippled or were partly eaten by sharks.
2) ``is currently processing 900 to 1,100 tonnes per day of ore from current production and existing stockpiles``
A 900 - 1,100 tpd run rate represents production run rate of 47,000 to 57,000 ounces for Lamaque (assuming they hit the targeted 95% recovery rate and 4.76 g/t grade). I can only assume they did not go full out with 1,200 tpd because they want to ensure they can maintain that pace until Bedard Dyke ore mining comes online (and is ramped up to a reasonable level), otherwise I guess if they push the 1,200 tpd too early then they might use up too much of the stockpile and not be able to maintain these levels until BD arrives.
3) ``The executive team is extremely pleased with results to date at Lamaque, and we can now focus on reaching further milestones as we progress through 2010.``
This likely means that Finskiy and Scola are extremely pleased also. If the people with the most money invested (and with inside info) are please then that is likely a positive development for us small shareholders.
4) ``The Company currently has a workforce of 180 on site, including staff, union employees and general contractors. This workforce is focused on mine expansion, mill facility upgrades, site reclamation and monitoring and general site maintenance.``
The company had 115 employees at Lamaque at the beginning of April. They now have 180, once they include general contractors. I don`t think the difference of 65 is all contractors. My guess is they have made some good strides in April in hiring a good number of employee miners in anticipation of mining the Bedard Dyke.
Also, from the last couple of NRs, I get the impression that they seem to be partnering well with the Quebec government. Not only has the government purchased the 1M tonne waste rock from Century (for road building purposes) but Century seems to going strong (with them) in reclamation of the unused parts of the property and just making the pit area look more pleasing to drivings on the hwy.
5) ``The development crew underground continues to mine in three separate stoping complexes.``
This is positive, as they were about to get into the 3rd stoping area (in the last update). Still going strong with 3 stopes, it likely means the original stope (at the beginning of March) is still a strong ore provider.
6) ``The low profile underground mining equipment to be used to increase efficiencies and production in the Lamaque #2 zone is expected to arrive at the minesite within days and on schedule.``
Yes, on schedule, but would have nicer to get earlier in April though. It`s understanable as I think most of it is coming all the way from South Africa. Plus, we are still very fortunate to have our order filled so quickly after financing got closed off (especially with the mining business booming again).
7) ``The Company continues with its final mine planning for the Bedard Dyke and expects to collar the portal in the very near future.``
I don`t mind if the BD mine plan takes a bit longer to fine tune or implement. This is going to be an important mining area for the company in the future. Also, later on down the road they will need to put in the crown pillar to mine under the hwy and such, and to also initiative long-hole stope mining (which will be a big step for us, both efficiency wise and increased tonnage).
8) ``The Company is also now preparing to commence a 150,000 foot (45,000+ meter) exploration and definition drill program in May 2010 at Lamaque, and is expected to continue over a three-year period.``
I wouldn`t be surprised if the last 3 drill holes for BD gets released with launch of this new exploration program.
9) ``At its San Juan gold mine, the Company will be ramping up exploration efforts on specific targets to evaluate the large property position.``
It should be exciting to find out which targets they select at San Juan. You can see my post from a few weeks ago regards to tires they might want to briefly kick down in Peru.
10) ``Upon commencement of gold production at the Lamaque gold mine, senior management will focus its energy on expanding production at Lamaque.``
Our Lamaque mill is officially capable of processing 3,000 tpd of high grade our. At 95% recovery and 4.78 g/t grade, that`s 157,000 ounces of annual production. No point wasting such capabilities with a $1,165 gold price available. If they have success with the new drill program (in moving more near-surface ounces into P&P) then I hope management will be able to implement a new mine plan to scale up from 105,000 ounces of production to 150,000 ounces within the next couple of years (prior to the shafts being ready). If so, we could become a mid-tier gold producer just from organic growth alone, with 180,000 ounces of production (150K Lamaque and 30K San Juan).
11) `On the exploration and geology front, the Company controls significant property positions in Canada, Peru and the United States that have been barely explored, and provide additional excellent discovery upside for the Company as we look to appoint a new VP Geology in the near future,`
Once Lamaque is more established, I would like to see us get going with our Northbelt (Yellowknife), NWT property, either with a JV partner running with it or us driving it alone (100%).
I`m ok either way, despite Peggy`s reputation in that part of the wooks. There are no gold mines in the area anymore. The economic crisis has beaten down places like. Creating jobs (without sacrificing the environment of course) should be a top priority in northern Canada. The Federal government earlier in the year allocated funding ($12M I think) towards beefing up northern administrative departments in Canada to allow for projects to processed faster, especially in the mining industry. They want to make northern Canada more business friendly, while still not harming the environment.
I think a JV situation works best for us, but I don`t mine Century moving the property forward by itself with Finskiy and Scola being the investor face and significant shareholders in the company.
Everything I have seen about Northbelt makes me believe that we have significant potential for a mine on this property (this could be our 4th organic mine - see Carolin below for the 3rd mine).
The property has a 15 kilometre strike length, in a 10M (+) ounce production (proven) volcanic belt. There are already 2 established non-43101 deposits already delineated on the property.
One of the mineralized structures has 135,000 ounces (4.0 g/t grade) at relatively shallow depths. What`s really exciting about it is that it is both open along strike (open in all directions) and at depth. The second deposit has about 45,000 ounces (about 10 g/t grade) and is likely open also.
There are numerous gold showings along the property also.
There is also a large zinc showing, but that`s secondary as it is not our focus right now. At the very least, I would like to see either us or a JV partner get up there and start punching holes at least in the 135,000 ounce structure (if not both deposits) where we know for sure it is open in all direction. Hundreds of exploration companies waste millions of dollars trying unsuccessfully to find ore bodies. We have already found at least a couple of ore bodies on this property (potentially a lot more). No point wasting it with $1,165 gold.
If we are not going to consolidate the small producers in the Val d`Or area for a while then I would like us to bring Carolin / Module back in-house (via takeover). We still own most of the Carolin Mine.
Module has done a good job under the circumstances - they have struggled mightily with raising funds.
Carolin will never be a spectacular mining operation but it could still be very fruitful. I really like the exploration results shown by Module.
I think the property has 700,000 - 1,000,000 ounce potential.
With advancement of exploration, I think it can be a 50,000 - 60,000 ounce operation that can be fast tracked into production. This can be Century`s 3rd organic mine. However, a lot of exploration work needs to done and I don`t think Module is in a position to move aggressively (like Century will be).
I think it`s almost zero risk for Century to bring in-house.
Century can still keep the Module geologist to be dedicated with running with the project. Module has a market cap of only about $1.6M. Century can probably bring them in-house for far less than $5M. Best I can understand, the Deutsche Bank agreement allows for acquisitions of $5M (or less) at anytime. Module shareholders get to share in the upside to all of Century, while Century can ensure that Carolin moves aggressively forward, and hopefully becomes our 3rd organic mine. Carolin already has a lot of infrastructure in place (as a past producer). As a result, it should be less costly to develop than a brand new mining operation. Of course, it`s totally impossible to know right now, but my guess would be in the $20M - $40M range (excluding exploration costs). It`s the type of small organic growth that Century should be able to handle through cash flow over time.
12) No mention in the NR about starting to review strategic opportunities. You almost get the feeling that the other small producers are not quite ready to pool their assets together with Century to form a powerful $2 - 3 billion gold mining player.
I`m ok with that also. I am also ok if they want to team up with another company. As I`ve identified above, Century has plenty of organic opportunities to work with. I don`t have a problem with Century just sitting back and growing it`s cash position - maybe do a one time dividend payout to shareholders (as a reward to all of the long suffering Century shareholders).
If the small Val d`Or area producers (and their shareholders) don`t want to cut a deal with Century, and don`t want Peggy, Finskiy and Scola to use their connections to arrange debt financing deals for them then I`m ok with that.
However, I`m looking at their numbers and it makes me wonder how they are going to move forward without taking a hit. It also gives me the impression that Peggy and Finskiy are just going to sit back for a while and let them feel the pain until them come to their senses.
Best I can tell, Alexis Minerals (AMC) had a $4.2M debt due today and $2.1M due in July. They also have $13.7M in current payables. They need to raise $33.7M to develope the Snow Lake Mine.
It`s not clear how much more they need to move their Lac Pelletier operation forward (they are in feasibility phase) but I remember seeing an old number of $8M. They also need to perform vital exploration on at least a couple of their key development properties. I think they still have a bit of cash, but I guess is that it`s very little relative to cash needs. They currently have almost 220M shares outstadning. At a $.30 share price, if they were to cover all these cash needs via PP then that works out to 205M more shares with say 103M full warrants (assuming half warrants per share given).
Northern Star Mining (NSM) has a $42M debt amount ($31M * 1.375 redemption rate - best I can tell) coming due mid next year.
It`s hard to believe that Richmont Mines (RIC) would want to truck their ore 110 km and 100 km for processing when their are more economical solutions available, but who knows, maybe they do.
Posted by production05 at 11:57 AM 1 comments
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