Thursday 27th October 2016

Resource Clips

November, 2011

Streaming Through Difficulties

November 30th, 2011

Thompson Creek Sees 3Q 2013 Copper-Gold Production

By Ted Niles

Thompson Creek Metals Company Inc TSX:TCM derived two advantages from its acquisition of Terrane Metals in October 2010. An outstanding asset in the Mt Milligan copper-gold project, due to begin production 3Q 2013, and an opportunity to broaden the company’s focus from pure molybdenum producer. Nevertheless, 2011′s growing pains have been sharp, and shares of Thompson Creek have lost half their value. “We’re living in an inflationary world in terms of building these mines,” Chairman and CEO Kevin Loughrey remarks. “It’s just something we have to live with.”

A number of factors have conspired against the company, including the recent drop in value of the Canadian dollar, but the main culprit is the recent increase to capital expenditures at the Mt Milligan project. Located 90 kilometres north of Prince George, BC, it has NI 43-101 proven and probable mineral reserves of an impressive 6.02 million ounces gold and 2.12 billion pounds copper. A 2009 feasibility study estimated a 22-year mine life with annual production of 194,500 ounces gold and 81 million pounds copper. Capex for the project was originally set at $915 million, but Thompson Creek announced May 6 that this had risen to $1.27 billion, due to increases in the cost of labour and material as well as the exchange rate.

Thompson Creek Sees 3Q 2013 Copper-Gold Production

A lacklustre 3Q performance from the company’s two molybdenum mines—Idaho’s Thompson Creek and BC’s Endako—has only exacerbated the problem. “Looking at it in a vacuum,” Loughrey says, “it was a tough quarter with production down and costs up.” Delays in the mill-expansion program at Endako have resulted in a 15% capital-cost increase from the original estimate of $550 million. However, Loughrey argues that setbacks at the Thompson Creek mine are more appearance than reality. “We sequenced things at Thompson Creek differently primarily for safety. And the mining engineers would say that, from an efficiency standpoint, this is the best way to do it. In other words, at the end of the year, we’ll have spent less money doing it that way. If you step back from the results a little bit and look at the entire year, it’s exactly where we thought we would be.”

These increased costs have left Thompson Creek with a funding problem. According to the company’s 3Q investor report, estimated capital expenditures exceed its cash resources by $83.3 million. Furthermore, the company’s depressed share price prevented it recently from exercising $220 million in warrants.

“As a result of not getting the warrants and the capital projects inflating a little bit, we’re kind of close financially,” explains Loughrey. “If the molybdenum price rebounded strongly enough for a while, we probably wouldn’t need the financing. Not wanting to count on that, we think it’s appropriate that we do some additional financing. So we’ll be out looking to see what we can do with the gold in terms of assuring that we have enough cash in hand to get those projects built.”

So Thompson Creek will likely enter into another gold-streaming arrangement, similar to the one it made with Royal Gold Inc TSX:RGL when it acquired Mt Milligan in 2010. For total consideration of $311.5 million, Royal Gold acquired the right to 25% of the payable gold from the project. Given that gold is much more valuable than 13 months ago, Thompson Creek would likely pull off another streaming financing—estimated by RBC Capital Markets analyst Fraser Phillips at between $100 million and $300 million—with a smaller stream.

Seeking Alpha’s Vince Martin maintained November 23 that while the company’s funding issue is very real, the gold-streaming option presents “a very clear solution,” adding, “When the concern over the funding gap finally disappears, what will remain is a vastly undervalued company.”

Funding shortfall aside, Loughrey is pleased with progress at Mt Milligan. “We’re very much on schedule, maybe even a tad ahead of schedule in most respects there,” he reports. “The engineering work is about 75% done, which is huge because everything else follows engineering. We did a study of every major mine plan that we could find over the past year, and not one of them had come in on budget. Over half of the material that we need for Mt Milligan has been purchased, and over half of the cost of that $1.27 billion is committed. The price is firm, so that leaves less than half subject to inflationary pressures.”

We’re quite pleased with where we are strategically. We have some tactical issues to deal with but that’s why they call it work —Kevin Loughrey

Loughrey is confident that next year’s production projections for the Thompson Creek and Endako molybdenum mines, 26 to 28 million pounds at $8 a pound, will be met. “We can already see that we’re starting on our way back, and 2012 will be a more typically sequenced year,” he says.

Regarding the market for molybdenum generally, Loughrey adds, “It has apparently bottomed out and has started to move back up. We think it’ll continue, but we see caution in the marketplace. I always point out that the difference from this and 2008 was that then the actual demand dropped off the table. There was no demand; we had lots of inventory; and so we were in this destocking phenomenon. But we don’t have any inventory now, so that’s much different.”

“If this is uncertainty and weak economic activity,” Loughrey concludes, “then we can withstand this. We won’t do great, but we’ll do okay. But I believe there’s more upside potential now than down frankly. We’re quite pleased with where we are strategically. We have some tactical issues to deal with, but that’s why they call it work. I think we’ll emerge really nicely.”

At press time, Thompson Creek had 167.9 million shares trading at $7.15 for a market cap of $1.2 billion. Third-quarter financials released November 7 revealed 3Q revenue of $154.8 million (compared to $161.8 million for 3Q 2010). The company sold 9.6 million pounds of molybdenum (10.3 million pounds in 3Q 2010) and produced 3.7 million pounds (8 million pounds in 3Q 2010). Foreign exchange losses were $23.9 million. Net income was $45.6 million, $0.27 per share ($31.1 million in 3Q 2010). The company had $365.4 million cash and equivalents September 30 and total debt of $368 million, compared to debt of $22 million December 31, 2010.

Finlay reports BC Results of 29.37 g/t Silver, 0.43 g/t Gold, 0.19% Copper over 76m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningFinlay Minerals Ltd TSXV:FYL announced assays from its Silver Hope Property in central BC. Results include

29.37 g/t silver, 0.43 g/t gold and 0.19% copper over 76 metres
(including 42.67 g/t silver, 0.49 g/t gold and 0.29% copper over 31.4 metres)
9.23 g/t silver, 0.06 g/t gold and 0.14% copper over 165.1 metres
(including 14.81 g/t silver, 0.05 g/t gold and 0.2% copper over 46.3 metres)
6.48 g/t silver, 0.01 g/t gold and 0.25% copper over 238.3 metres
(including 10.81 g/t silver, 0.02 g/t gold and 0.47% copper over 91.3 metres)
498 g/t silver and 0.22% copper over 2 metres
5.66 g/t silver, 0.02 g/t gold and 0.19% copper over 72.1 metres
(including 5.93 g/t silver and 0.23% copper over 41 metres)

Director John Barakso commented, “The Silver Hope Property sits in the largest sulphidation system that I have seen in British Columbia. With persistence, Finlay Minerals has yielded a copper-molybdenum porphyry discovery in 2010 and a new gold-silver-copper discovery in 2011.”

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John Barakso

by Greg Klein

Luna reports Brazil Gold Assays including 1.69 g/t over 71m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningLuna Gold Corp TSXV:LGC announced results from the Piaba Deposit of its Aurizona Gold Mine in Brazil. Highlights include

1.69 g/t gold over 71 metres
5.43 g/t over 19 metres
(including 11.9 g/t over 2 metres)
4.04 g/t over 23 metres
(including 12.4 g/t over 6 metres)
2.49 g/t over 28 metres
(including 5.93 g/t over 3 metres)
3.54 g/t over 18 metres
(including 6.84 g/t over 2.5 metres)
1.53 g/t over 38 metres
(including 9.78 g/t over 0.5 metres)

President/CEO John Blake remarked, “We are on target to finalize the NI 43-101 resource update in early December. These new drill results, inclusive of high-grade holes located well outside the boundary of our current resource estimate, are of major significance. They further extend the strike length of the Piaba Deposit beyond the limits announced earlier this month and continue to demonstrate Aurizona’s growth potential. The management is very encouraged by the continued positive trend in drill results and we look forward to further development possibilities.”

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Investor Relations

Read feature story on Luna Gold Corp.

by Greg Klein

Great Panther reports Mexico Results of 13.28 g/t Gold, 1,493 g/t Silver over 5.6m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningGreat Panther Silver Ltd TSX:GPR announced assays from its Guanajuato Mine in Guanajuato State, Mexico. Results include

13.28 g/t gold and 1,493 g/t silver over 5.6 metres
34.22 g/t gold and 45 g/t silver over 2.7 metres
17.15 g/t gold and 36 g/t silver over 3.5 metres
44.76 g/t gold and 46 g/t silver over 1.2 metres
27.04 g/t gold and 112 g/t silver over 1.75 metres
16.13 g/t gold and 50 g/t silver over 2.3 metres
5.56 g/t gold and 11 g/t silver over 5.2 metres
9.05 g/t gold and 11 g/t silver over 2.3 metres

The project has October 2010 proven and probable reserves totalling 320,200 tonnes grading 2.19 g/t gold for 22,530 gold ounces and 282 g/t silver for 2.9 million silver ounces. The measured and indicated resource is estimated at 399,000 tonnes grading 2.12 g/t gold for 27,200 gold ounces and 287 g/t silver for 3.68 million silver ounces. The inferred resource is estimated at 212,000 tonnes grading 4.39 g/t gold for 30,000 gold ounces and 106 g/t silver for 726,000 silver ounces. The reserves are included in the resource estimate.

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Great Panther Silver Ltd

by Greg Klein

Carpathian reports Romania Assays of 0.79 g/t Gold, 0.15% Copper over 711m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningCarpathian Gold Inc TSX:CPN announced results from its Rovina Valley Project in west-central Romania. Assays include

0.79 g/t gold and 0.15% copper over 711 metres
(including 1.05 g/t gold and 0.18% copper over 359 metres)
0.85 g/t gold and 0.21% copper over 518 metres
(including 0.9 g/t gold and 0.22% copper over 433 metres)
0.9 g/t gold and 0.15% copper over 487 metres
(including 1.39 g/t gold and 0.2% copper over 117 metres)
0.83 g/t gold and 0.14% copper over 493 metres
(including 0.96 g/t gold and 0.15% copper over 347 metres)
0.92 g/t gold and 0.16% copper over 353 metres
(including 1.46 g/t gold and 0.21% copper over 107 metres)
0.74 g/t gold and 0.16% copper over 355 metres
(including 0.96 g/t gold and 0.21% copper over 140 metres)

CEO Dino Titaro commented, “We continue to be pleased with the drilling results from the Ciresata porphyry, and while the drilling focus has now shifted to the nearby Colnic and Rovina porphyry deposits for use in the ongoing prefeasibility study, we believe the 2011 drill program has enhanced the size of Ciresata and its contribution to the prefeasibility study. At least one drill rig will remain committed to testing satellite targets in the Ciresata area through the end of 2011 and into next year.”

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Mike O’Brien
or Shobana Thaya
Investor Relations

by Greg Klein

Sulliden reports Peru Assays up to 0.59 g/t Gold over 202.5m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningSulliden Gold Corp TSX:SUE announced results from its Shahuindo Property in northern Peru. Highlights include

0.59 g/t gold and 12.7 g/t silver over 202.5 metres
(including 2.18 g/t gold and 89.9 g/t silver over 15 metres)
1.61 g/t gold and 11.8 g/t silver over 64.5 metres
(including 6.3 g/t gold and 46.6 g/t silver over 13.5 metres)
1.61 g/t gold and 11.8 g/t silver over 64.5 metres
(including 6.3 g/t gold and 46.6 g/t silver over 13.5 metres)
1.25 g/t gold and 8.6 g/t silver over 46.4 metres
0.68 g/t gold and 12.6 g/t silver over 75 metres
(including 1.62 g/t gold and 10.3 g/t silver over 21 metres)

The project has a June 2011 resource estimate of 1.97 million ounces gold and 27.98 million ounces silver indicated and 1.44 million ounces gold and 38.58 million ounces silver inferred. A February 2010 preliminary economic assessment projects average annual gold production of 105,000 ounces at a cash cost of $403 an ounce. Using a gold price of $875 an ounce, the pre-tax NPV comes to $119.1 million at an 8% discount rate generating an IRR of 43.3%. A feasibility study is planned for completion in 2012. Sulliden completed a $50-million share offering Tuesday.

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Caroline Arsenault
IR Manager

or Scott Moore
VP of Corporate Development

by Greg Klein

International Minerals reports Nevada Gold Results as high as 0.7 g/t over 328m

November 30th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningInternational Minerals Corp TSX:IMZ announced assays from its Converse Gold Project in northern Nevada. Results include

0.7 g/t gold over 328 metres
(including 1.1 g/t over 17 metres)
0.9 g/t over 149 metres
(including 1.5 g/t over 31 metres)
15.8 g/t over 3 metres
0.6 g/t over 43 metres
1.8 g/t over 12 metres
1.3 g/t over 15 metres
1 g/t over 17 metres

Using a 0.27 g/t cutoff, the project has an August 2011 resource estimate of 225 million tonnes grading 0.49 g/t for 3.52 million ounces gold measured, 106 million tonnes grading 0.48 g/t for 1.63 million ounces indicated and 32 million tonnes grading 0.44 g/t for 0.44 million ounces inferred. The company anticipates completing a preliminary economic assessment in December to evaluate the viability of an open-pit, heap-leach processing operation.

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Paul Durham
VP of Corporate Relations

or Oliver Holzer
Marketing Consultant

by Greg Klein

Grade A

November 29th, 2011

Eastmain Advances Quebec Gold Projects

By Greg Klein

“What sets this project apart from many others is the grade of the open pit,” says Eastmain Resources TSX:ER President/CEO Donald Robinson of his flagship Clearwater Gold-Tellurium Project in the James Bay region of Quebec. “Right now, it’s 5.7 grams gold per tonne, which is three to five times higher than many of the projects out there. So our No. 1 goal is to make the resource bigger. We’ve been doing that over the last five months.”

Eastmain Advances Quebec Gold Projects

As of April, the open-pit resource estimate for Clearwater’s Eau Claire Deposit came to 2.73 million tonnes grading 5.72 g/t for 502,000 gold ounces measured and indicated and 1.4 million tonnes grading 2.83 g/t for 127,000 gold ounces inferred. Eau Claire’s underground resource came to 630,000 tonnes grading 6.46 g/t for 130,000 gold ounces measured and indicated and 3.92 million tonnes grading 7.21 g/t for 910,000 gold ounces inferred.

“It was clear that the greatest potential would come by expanding the near-surface, open-pittable resources,” Robinson reports. “We’ve outlined an area immediately to the west of the defined resource that’s at least 500 metres long. We’ve got about 60 drill holes into it so far. The best hole is just under 18 grams across 12 metres. There’s more than two dozen holes that have visible gold in quartz-tourmaline veins. The footprint of the pit looks like it’ll grow at least twice as big as it was.”

Assays released November 7 include

  • 5.82 g/t gold and 12.3 g/t tellurium over 16.5 metres
    (including 25.1 g/t gold and 54.2 g/t tellurium over 3.5 metres)
  • 15.5 g/t gold and 19.9 g/t tellurium over 3.5 metres
  • 3.38 g/t gold and 4.08 g/t tellurium over 13 metres
    (including 35.6 g/t gold and 51.9 g/t tellurium over 1 metre)
  • 19.2 g/t gold and 88.8 g/t tellurium over 2 metres
  • 2.24 g/t gold and 1.53 g/t tellurium over 12 metres

Robinson hopes to have an updated resource by June 2012, this time including tellurium. Exploration Manager Catherine Butella explains, “Tellurium has been a by-product of the copper-refining process, but now with the new leach methods, it’s no longer extracted that way. Right now tellurium is sold on base-metals spot prices, but it’s perceived to have a lot more worth. There are certain experts who think it’s going to be priced like a precious metal. It’s used in passive solar power, as a coating on windows, the coating on the back of DVDs and CDs, and it’s going to be used as the new phase change technology [used in rewritable DVDs and CDs]. It’s got a lot of uses, and there’s very little around. It’s one of the rarest metals out there.”

Robinson waxes optimistic about the possible production scenario. “At these kinds of grades, a mill at 2,000 tonnes a day will generate 100,000 ounces annual production. The capital cost of this project has advantages, not only because you don’t have to build a 60,000-tonne-a-day mill, but because we’re two kilometres from a road and five kilometres from the cheapest power in the world. It gets even more exciting—our largest stockholder is building the first mine in the district, 50 kilometres to the north.” Goldcorp TSX:G, which holds 8% of Eastmain, has slated its Éléonore Gold Mine for 2014 production.

Next in importance after Clearwater is the company’s self-titled Eastmain Gold-Silver-Copper Project, which has an historic, non-43-101 resource estimate of 800,000 tonnes grading 9.95 g/t gold for 255,750 gold ounces.

“We just completed 14,000 metres of drilling at Eastmain.” Robinson says. “The property comes with 100 square kilometres, and the mine trend is at least 10. There are underground workings and there’s a ramp into the property. There’s a mine camp that was built; it’s permitted; there’s an airstrip, fuel farm and—God love the Quebec government with their Plan Nord—they’re now converting the old winter road that services the property into a permanent road.”

The company also acts as project operator on Éléonore South, holding 36.8% in the JV with Goldcorp (36.8%) and Azimut Exploration TSXV:AZM (26.4%). The early-stage gold project lies adjacent to Goldcorp’s Éléonore development.

This year we’ve had the largest program in the history of the company, 46,000 metres of drilling and a $10-million budget. We’ll do it again, at least as big, in 2012 —Donald Robinson

Last August, Eastmain JV’d with Honey Badger Exploration TSXV:TUF, granting it an option to earn an initial 50% in the Radisson Gold Project. Eastmain holds 12 properties altogether, all in Quebec’s James Bay region, some of which are also available for options.

“This year we’ve had the largest program in the history of the company, Robinson says, “46,000 metres of drilling and a $10-million budget. We’ll do it again, at least as big, in 2012.”

At press time, Eastmain had 95 million shares trading at $1.26 for a market cap of $119.7 million. Analysts believe the share price will rise higher. Robinson explains, “Casimir Capital have a target of $2.25, Macquarie have just upped their target to $2.75, and Rodman & Renshaw out of New York have a target of $2.82.”

Robinson concludes, “We’re in the best mining district in the world; we have mine-ready infrastructure and two high-grade gold deposits. They look like they’re mineable using open pit methods, and Clearwater is going to be a mine. We’ve been endorsed by one of the largest gold miners in the world, and a number of research firms follow us. There’s a lot of third-party scrutiny on us, and so far they like what they’ve seen.”

CBM Asia signs Agreement to sell Indonesia Coalbed Methane Gas

November 29th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningCBM Asia Development Corp TSXV:TCF announced that project operator, Medco Energi Internasional Tbk, has signed an agreement with Indonesia’s upstream oil and gas regulator, BPMigas, to conduct the sale and purchase of coalbed methane gas produced during dewatering at the Sekayu PSC (production sharing contract) in Indonesia. CBM Asia has a 12% interest in the Sekayu PSC with an option to acquire another 12%.

CBM Asia Chairman Scott Stevens tells, “The negotiation was between Medco, as the operator, and BPMigas—which is the government. We’re happy with the agreement. It shows that the government is really motivated to get early production and remove any possible roadblocks.

“The government has really been bending over backwards to try to accelerate commercial production from coalbed methane. It can be a slow process, but with coalbed methane the Indonesian government recognizes it’s different. You can get quick commercial production from a pilot. With coalbed methane you typically do the core holes—like we just did—and next you move into the pilot-production phase. Typically, that gas gets flared or vented. In this case, we have an option to work with GE which manufactures portable 3-megawatt [gensets]. They would provide that onsite, and then we would sell gas to the engine, and that would be linked into the grid. So there could be power development as early as 3Q 2012.

The [Indonesian] government has really been bending over backwards to try to accelerate commercial production from coalbed methane—Scott Stevens

“We’re designing the [pilot] wells right now with Medco,” Stevens continues. “In 1Q 2012 they drill them, and then they put them on production. Typically, there’s a few months of water production and low gas production. We’re hoping it’ll be pretty quick. That’s the main goal for that block. It’s the furthest along towards commercialization.

“The other block is in Kutai West. It is quite close to the Bontang LNG plant, and right next to BP—which is already commercial. We are supposed to be spudding the first core hole at Kutai West next month. That’ll give us the gas content, then we can get the NI 51-101 resource study sometime next year. We’re still in the early phases of working out a seismic- and core-hole drilling program at the two blocks that we have the 70% working interest and operatorship of. That’ll happen next year.”

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Read more about CBM Asia

Alan Charuk

Disclaimer: CBM Asia Development Corp is a client of OnPage Media.

by Ted Niles

Helio reports Namibia Results including 1.8 g/t Gold over 28m

November 29th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningHelio Resource Corp TSXV:HRC announced assays from the Gold Kop Target of its Damara Gold Project in central Namibia. Results include

1.8 g/t gold and 5 g/t silver over 28 metres
(including 6 g/t gold and 11 g/t silver over 5 metres)
5.3 g/t gold and 23 g/t silver over 6 metres
(including 25.5 g/t gold and 117 g/t silver over 1 metre)
1 g/t gold, 7.5 g/t silver and 0.14% copper over 18 metres
0.4 g/t gold over 41 metres

The project is located between Anglogold Ashanti’s Navachab Mine and Auryx Gold Corp’s Otjikoto Project. The Gold Kop Target geology is similar to that of Navachab, which has been in production since 1989.

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Richard Williams
or Irene Dorsman

by Greg Klein