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Posts tagged ‘Silver Standard Resources Inc (SSO)’

Gwen Preston looks back on PDAC and an exciting week

March 15th, 2016

by Gwen Preston | | March 15, 2016

What a week it was! Another PDAC is in the books. And a good one. It was undoubtedly small—fewer booths, attendance of just 22,000 compared to an average of 29,000 over the last five years—but the buzz was inarguably better than last year.

Gwen Preston looks back on PDAC and an exciting week

Mining deals flowed with PDAC buzzing in the background.

I comment on my PDAC impressions after going through the mining news events of the week. As usual, news flow ramped up during the world’s biggest mining conference so there was lots to talk about, and all I got to were the four biggest stories.

Others also deserve comment. Canamex Resources (TSXV:CSQ), for example, published a PEA showing how they could turn their Bruner gold project into a 46,500-ounce-per-year producer for a capital cost of just US$33.4 million. If built, the mine should be able to generate a 39% after-tax internal rate of return and operate for six years. It would be a simple oxide heap leach operating on patented land, which eases permitting considerably.

Those are pretty good numbers. The asset and company are small for my tastes but Canamex deserves credit: it not only survived the bear market but advanced its asset to the point where it supports an economic PEA. If the team can now establish a path to production, starting with accessing the cash needed to take the next step, its share price may well respond. This is, after all, a simple gold project in Nevada, one of the most desirable mining jurisdictions in the world.

That’s one example of interesting news. There was no shortage: companies arrived at PDAC armed with new drill results, property deals, exploration plans, financings and resource estimates.

Deal flow was the most exciting part. I go through three new deals below (Silver Standard buying Claude, Endeavour buying True Gold and Lundin moving on Timok), but financings were also hot. Pretium raised US$130 million, Franco pulled in an oversubscribed US$920 million and Kinross raised US$250 million. I like to see money moving. This sector seizes up otherwise.

No wonder PDAC-ers were pumped. Or cautiously optimistic, in the very least…. Continue reading this article on

A Taste For The Market

February 22nd, 2012

Levon Publishes a Mexico Silver-Gold-Base Metals Project PEA

By Ted Niles

Levon Resources’ TSX:LVN preliminary economic estimate of its Cordero project was originally intended for internal use only. President and CEO Ron Tremblay admits that normal procedure is to drill off the resource before working on the economics, but Cordero is unusually large. He explains, “We’ve just started our Phase 4, 130,000-metre drill program, so there’s an awful lot more drilling to do before we’re ever going to be in a position to actually figure out how big this thing is going to be. But we needed to put something together to show the market, investors and institutions that, yes, the economics are there, and this is what they look like for the first four stages.”

The 20,000-hectare Cordero project is located on the Chihuahua side of the Chihuahua-Zacatecas Silver-Gold Belt in Mexico. The Belt hosts, among others, Goldcorp’s TSX:G Peñasquito Mine and Camino Rojo projects, as well as Silver Standard’s TSX:SSO Pitarilla and San Agustin projects. Cordero has indicated resources of 310.87 million ounces silver, 908,000 ounces gold, 5.4 billion pounds zinc and 2.87 billion pounds lead and inferred resources of 139.9 million ounces silver, 229,000 ounces gold, 2.15 billion pounds zinc and 1.21 billion pounds lead.

Levon Publishes a Mexico Silver-Gold-Base Metals Project PEA

Levon’s January 30 PEA—which focuses only on the near-surface 30% of the resource—estimates a pretax net present value of $652.6 million at a 5% discount rate and an internal rate of return of 19.5%. Capital costs are projected to be $646.8 million, operating costs $13.82 per tonne, with a 5.5-year base-case payback. Potential metal production over Cordero’s 15-year mine life is estimated at 131.16 million ounces silver, 190,000 ounces gold, 1.37 billion pounds zinc and 1.03 billion pounds lead. Tremblay comments, “We ended up working on a smaller pit design for the time being to give us an idea of where we’re at in the first stages. Ultimately, we’ll be looking at a much larger pit and a much larger mill, but we’re very happy with the way it’s come together.”

Levon is in “good shape” financially, Tremblay reports. “We’ve got just over $60 million in the bank. The Phase 4 program [is] a $25-million budgeted program that will probably take us sometime into 2013.” The company intends to update the Cordero resource “in the not too distant future” based on results received January 7 and again at the conclusion of the Phase 4 drill campaign. Two rigs are turning at the project, and a third has been mobilized.

Results of the Phase 3 drill campaign released March 31 include:

  • 89.6 grams-per-tonne silver equivalent over 42 metres
  • 306.1 g/t AgEq over 8 metres
  • 68.8 g/t AgEq over 132 metres
  • 95.6 g/t AgEq over 42 metres
  • 57.9 g/t AgEq over 62 metres
  • 37.4 g/t AgEq over 136 metres
  • 57.8 g/t AgEq over 82 metres
  • 120.9 g/t AgEq over 108 metres
  • 74.5 g/t AgEq over 54 metres
  • 137.9 g/t AgEq over 74 metres
  • 353.2 g/t AgEq over 8 metres

Tremblay told in April 2011, “We’ve had over an 80%-success ratio on our drilling. You just don’t see that. And some of that is drilling where we’re trying to delineate the zones. We think we’ve delineated in one area, then we step-out another 100 metres, and all of a sudden you’re into it again.” The comparison has been made between Cordero and Goldcorp’s aforementioned Peñasquito Mine but, Tremblay declares, “Peñasquito had two mineralized intrusives. We’ve got six.”

The infrastructure is good. “We have power; we have water; we have a good area for the tailings,” Tremblay reports. “We’re close to a good-sized city, Parral, which is only 35 kilometres away, and we’re only 10 kilometres off the main north-south highway. All the necessary ingredients to build a project without any extraordinary expenses.”

Ultimately, we’ll be looking at a much larger pit and a much larger mill, but we’re very happy with the way it’s come together —Ron Tremblay

Levon will build the project, but it probably won’t take it to production. “We’re not a mining company; we’re an exploration company,” Tremblay declares. “We’ve signed a number of confidentiality agreements, [so] all we can say is that we have quite a number of large companies that have a keen interest in our project.”

One such company might be Goldcorp, which acquired Canplats Resources and its Camino Rojo project—located on the same trend—in April 2010.

With the company’s graduation to the TSX February 9, Tremblay is confident the market will react favourably to the PEA. “If you look at the NPV for the base case, after taxes you’re looking at about $5-per-share value, so obviously we’re undervalued,” he concludes. “We’ve just put out the news, and it takes the market and analysts time to digest this. They’ll start giving their opinion to the public, and we should start to grow.”

At press time, Levon Resources had 198.8 million shares trading at $0.90 for a market cap of $179 million. The company’s other properties include the Norma Sass property, as well as the Ruf and Eagle claims in Nevada and the Congress property and BRX/Wayside claims in BC.

La Belle Providence

November 16th, 2011

Aurizon Produces Low-Cost Quebec Gold

By Greg Klein

Ten projects notwithstanding, there’s no mistaking Aurizon Mines’ TSX:ARZ focus. They’re all funded by the flagship Casa Berardi Gold Mine, and they’re all in the same province. Speaking from his Vancouver HQ, the company’s Australian President/CEO talks about why he likes working in Quebec. Yes, it offers some of the world’s cheapest electricity, but George Paspalas gets to the heart of the matter, “People in Quebec generally understand how important mining is, and they embrace it.”

Paspalas adds, “The province has a very onerous regulatory process, but it’s a jurisdiction where, if you’ve done everything thoroughly, you get a permit. And then there’s the historic mining activity—which means there’s gold in the ground.”

Luna Gold Plans to Upsize Brazil Production

That’s especially true when you’re located in the bountiful Abitibi region, as are most Aurizon projects. Casa Berardi’s share of that gold in 2010 came to 141,116 ounces, an amount projected to hit 165,000 this year. The underground operation now produces the stuff at a cash cost of US$497 an ounce and, over the first nine months of 2011, created a cash flow of $72.3 million and net profit of $22.1 million, up 220% and 217% respectively over the same period in 2010. Up to 12 rigs are now expanding the underground resource as well as open-pit potential and have extended the mine life from 2016 to 2020. The next resource/reserve update is scheduled for 1Q 2012.

Aurizon’s hopes for its Joanna Project, however, have met with delay. Originally slated to begin producing an annual 100,000 gold ounces in 2013, Joanna’s feasibility study stalled last August due to higher-than-anticipated capital and operating costs. Nevertheless, the project’s Hosco Deposit boasts an in-pit resource estimated at 2.25 million ounces measured and indicated and 309,000 ounces inferred. Aurizon believes Hosco has underground potential, too. Three kilometres away, the Heva Deposit’s resource is estimated at 270,000 ounces indicated and 480,000 inferred. Drilling continues on both deposits, while Hosco’s feasibility is now scheduled for 2Q 2012 release.

After Joanna comes Marban. Located in Abitibi’s Malartic Mining Camp, it’s a joint venture with project operator NioGold Mining TSX:NOX. Aurizon is currently earning a 65% interest. Marban has a 2009 open-pit resource of 303,000 gold ounces indicated and 179,000 ounces inferred. Its underground resource comes to 296,000 ounces indicated and 182,000 inferred. An updated resource is expected by year’s end, while another 34,000-metre drill program begins this month.

Marban assays reported September 19 included one especially high result:

  • 906.23 grams per tonne gold over 2.9 metres
    (including 2,610 g/t over 1 metre)

Paspalas emphasizes that the uncapped grade has to be treated with caution. “Sometimes you hit a narrow vein or structure that’s carrying a whole bunch of gold like that, and you have to be very careful how you treat it,” he says. Even so, “Geologists just love this because it enables them to build up a structural model around how the fluids flowed and all that sort of stuff. They’re good numbers, but more importantly, structurally, it says there could be something there that fed this vein, that fed this structure. If you could find that, it would be rather exciting.”

If we want to build another mine, we’ve got the people. Casa Berardi was built on budget, on time, and the people who did that are still with the company —George Paspalas

Marban assays reported November 16 included:

  • 9.8 g/t gold over 5.8 metres
  • 8.3 g/t over 4.6 metres
    (including 30.5 g/t over 1.1 metres)
  • 1 g/t over 36 metres
    (including 5 g/t over 2.1 metres)
  • 1.5 g/t over 22 metres
    (including 1.8 g/t over 12.1 metres)

Just 10 kilometres north of Joanna, in the Destor-Porcupine Break, Aurizon is paying its way to another 65% interest. The project is the Fayolle Property, and the partner is Typhoon Exploration TSXV:TYP, which has two rigs drilling both infill and new targets to produce an initial resource estimate.

Aurizon has seven other Quebec projects, all nascent, either in the earn-in stage or subject to a letter of intent prior to earn-in. “These are very efficient, small exploration companies,” Paspalas says. “They’re very effective at good-value drilling. So we’ve been able to manage all these joint ventures without tying up our own resources.”

How does Aurizon choose its partners? “In a lot of cases they come to us,” he explains. “We’re known for being a pretty respectful partner, so we get a lot of people knocking on the door with opportunities.

“Our goal is to earn 65% by doing a feasibility study,” he adds. “Then, with a positive study, we decide where we want to go—do we go to 100%; do we want the partner to fund? In a lot of cases, these are small companies that would have trouble finding money to build a mine. We ask the partner, ‘Do you want to be part of this? Can you be part of this?’ And then we go from there.”

Paspalas joined the company last August, having served as COO for Silver Standard Resources TSX:SSO after holding senior positions with Placer Dome. “What attracted me to Aurizon is the potential for growth but also the people,” he declares. “They’ve got a lot of experience, and they’ve stayed with the company a long time. If we want to build another mine, we’ve got the people. Casa Berardi was built on budget, on time, and the people who did that are still with the company.”

This human resource, not to mention the mineralized resource and the mining-friendly jurisdiction, add up to some tangible figures. “We’ve got a very good asset with at least 10 more years of mine life. It’s making gold for sub-$500 an ounce, so it generates very good cash flow. We have a squeaky clean balance sheet, no debt, no hedging and $175 million in cash,” Paspalas concludes.

At press time, Aurizon had 163.02 million shares trading at $6.28 for a market cap of $1.02 billion.

Int’l Tower Hill reports Alaska Results as high as 1.56 g/t Gold over 76.2m

November 7th, 2011

Resource Clips - essential news on junior gold mining and junior silver miningInternational Tower Hill Mines Ltd TSX:ITH announced assays from its Livengood Project near Fairbanks, Alaska. Highlights include

1.56 g/t gold over 76.2 metres
(including 8 g/t over 4.6 metres)
1.31 g/t over 74.7 metres
(including 3.11 g/t over 12.2 metres)
3.34 g/t over 30.5 metres
(including 17.27 g/t over 4.6 metres)
0.87 g/t over 106.7 metres
1.04 g/t over 61 metres
0.71 g/t over 85.3 metres
1 g/t over 51.8 metres

Using a 0.7 g/t cutoff, the project has an August 2011 resource estimate of 149 million tonnes grading 1.09 g/t for 5.2 million ounces gold measured, 42 million tonnes grading 1.1 g/t for 1.5 million ounces indicated and 39 million tonnes grading 1.1 g/t for 1.4 million ounces inferred.

CEO James Komadina tells, “These results are a compilation of all the summer drilling work, and we wanted this included in the database for our prefeasibility study. That’ll be issued in roughly a month’s time.

“The results indicate that we have an opportunity during some period of the initial mining phase to have grades significantly higher than the life-of-mine grade. When you look at the higher-grade intercepts and the commodity prices, they really do reflect on your payback period and also on the internal rate of return.

“We can usually start drilling in late March or early April,” he adds. “Things tend to get weathered-out by mid-October, late October. We’ve got three rigs that are finishing up some work right now, and probably within the next 10 days or so they’ll de-mob. You don’t get a lot of snow there per se, not the three- or four-foot cover that other regions get.

The results indicate that we have an opportunity during some period of the initial mining phase to have grades significantly higher than the life-of-mine grade—James Komadina

“We’re 70 miles [113 kilometres] north of Fairbanks and roughly 150 miles [241 kilometres] south of the Arctic Circle. The road from Prudhoe Bay [an Arctic Ocean port] to the south has to be kept open 24-7, 365. It runs adjacent to our property. In terms of infrastructure, Fairbanks is a great city to work out of. It’s around 70,000 people, so almost anything we need we can access from there. Also we’re part of the supply chain for Kinross’ TSX:K Fort Knox Mine.

“I think most people underestimate the value of doing a prefeasibility study before feasibility,” Komadina says. “In a PEA, the accuracy is plus-minus 35%. Most PEAs are done on a factored basis—Mine A is of a certain size and costs this much, Mine B is different, and so on. When we issued our PEA in August, we changed our strategic direction. Instead of being a heap leach that gradually transfers into a mill, we decided to go directly into milling. There really aren’t any comparables for this size of operation. We went out and developed capital costs, we got bids for all our major pieces of equipment including the mine fleet. So the PEA was probably more accurate than people would normally expect.

“For a PFS, the accuracy is about plus-minus 25%,” he explains. “When you get to a feasibility study, it’s about plus-minus 15%. And it’s only when you finally issue construction contracts that you’re plus 10%, minus 5% on your estimates. So with the prefeasibility study, you find out what you don’t know. That’s the real benefit. When you walk through a PEA, you find the parameters you would expect to see. With the prefeasibility study, if you see some numbers you don’t like, you get more engineering and technical evaluation. When you finally get to the feasibility study with that plus-minus 15% accuracy, you’ve got hefty technology behind it to say the numbers are sound. I think the prefeasibility study is a necessary step in the development process.”

The company expects permitting to last from early 2013 to mid-2016.

“My entire career has been with seniors—AngloGold NYSE:AU, Gold Fields NYSE:GFI and Newmont TSX:NMC. Far too often the juniors say we’re drilling this year, and we’ll be in production next year. But that doesn’t turn out to be the case. We committed to do an environmental impact statement. It takes about a year to put together an application. It takes about three years to wind its way through the process. When you finally get the decision, that’s the important part. I don’t know if there’ll be many more mines, if any, that get permitted under the National Environmental Policy Act. Typically there are two routes to go, the environmental assessment and the environmental impact statement. If you follow the Romarco TSX:R story, they attempted to permit the mine in South Carolina through an EA. [Read more here.] That didn’t work. The agency told them to do an EIS. Their stock reflected that change in timing. I’d rather tell you what I think the timeline will be, given what we know now,” he says.

“We have a highly experienced management team. We just added Tom Yip. He’s got 25 years’ experience as a CFO. Most of his time has been with Echo Bay and Asarco. We recruited him out of Silver Standard TSX:SSO in Vancouver. Tom Irwin came to us out of Amax and the state of Alaska [Department of Natural Resources], so he knows the permitting side of the business. We brought on Hal Galbraith to be Manager of Mining. He came to us out of Asarco in southern Arizona. We’re about to announce a new general counsel in a couple of weeks’ time. He’ll also be a key individual in permitting. We bring on people who’ve done this work before, so the learning curve is short.

“The forecast is 2016 construction. You have to do detailed engineering before ordering a mine fleet, because a fleet this size is about a year’s delivery and there’s about 100 weeks’ delivery on grinding mills. This sector has such a tremendous demand for engineering skills and this type of equipment. You can’t buy used equipment of this size. Those are things that really impact the schedules.

In conclusion he says, “We’re really happy with the drilling results this year and we’ve also done some geophysical work. Over the course of the winter, we’ll analyze that geophysical package and come up with some new district-wide resource targets that we can drill early next spring. It’s a matter of examining the growth potential of the Livengood district. We’ve got a good handle on how big Livengood is, and now it’s a matter of finding out what else the district might hold for us.”

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Shirley Zhou
VP of Corporate Communications

by Greg Klein


August 24th, 2011

Pretium Hits Bonanza Grades in BC

By Ted Niles

Gold and silver equities continue to disappoint, but Pretium Resources and its Brucejack and Snowfield gold-silver projects are a conspicuous exception. Pretium—or Pretivm as the company prefers it to be spelled, the better to evoke the word’s Latin meaning of ‘value’—made its initial public offering of $6 per share in December 2010. Eight months later, shares have risen 48%. On August 12, Casey Research’s Louis James lauded Pretium as “a clear value proposition.” On July 18, analyst Brian Quast announced that CIBC World Markets had initiated coverage of the company, commenting, “Pretium represents one of the best call options in the gold developer space.” And while Face the Analyst’s Jay Taylor can’t actually be seen swooning during his July interview with Bob Quartermain, it should be noted that the camera isn’t always on him.

How to explain Pretium’s highly auspicious rollout? Louis James gives us the first reason: Pretium has “the right people in place.” The most important being Bob Quartermain, Pretium’s President and CEO. Quartermain earned his reputation with Silver Standard Resources—a company which, when he joined as President in 1985, had a market cap of $1.5 million; this exceeded $2 billion when he retired in 2010. Most notable of his accomplishments at Silver Standard was the development of the Pirquitas Mine in Argentina. Pirquitas started commercial silver and tin production in December 2009 and ranks among the largest silver mines worldwide. Notice, too, that Quartermain’s current management team at Pretium includes many of his Silver Standard colleagues.

Pretium Hits Bonanza Grades in BC

The second reason, as you might have guessed, is the resource. Pretium acquired the Brucejack and Snowfield projects—both located 65 kilometres north of Stewart, BC—from Silver Standard with the proceeds of its December IPO, and the properties’ already impressive resources were updated by Pretium in February 2011. At a 0.3 g/t cut-off, Brucejack contains 8.18 million ounces gold and 116.2 million ounces silver measured and indicated, and 12.56 million ounces gold and 151.2 million ounces silver inferred. At the same cut-off, Snowfield contains an astonishing 25.92 million ounces gold, 75.8 million ounces silver and 2.98 billion pounds copper measured and indicated, as well as 9.03 million ounces gold, 50.9 million ounces silver and 1.1 billion pounds copper inferred.

Thus was Pretium able to IPO at the price that it did. Quartermain explains, “In consultation with our financial advisors, the suggestion was that this was a reasonable share price. It’s a function of the value we had in it. The asset, with the 40-somewhat million ounces of gold justifies the price, and the market was willing to pay for it.”

He continues, “With the Brucejack and Snowfield projects we have one of the world’s largest undeveloped gold projects—about the fifth-largest in North America. That’s what we wanted: a large project that gave our shareholders insurance in a rising gold environment. As gold prices continue to stay strong and improve there will be more recognition coming to Pretium because of the large in-ground resource we have, and the potential for the development of a small high-grade project going forward.”

Brucejack, particularly that “high-grade project” contained within it, is now the focus of Pretium’s attention. A June 2011 preliminary economic assessment of the high-grade resource estimated production of 173,200 ounces gold and 1.12 million ounces silver annually for the first 10 years, with a total mine life of 16 years. The pre-tax net present value of the resource was estimated at $662 million, with an internal rate of return of 27.1%—assuming a gold price of $1,100 per ounce and a silver price of $21 per ounce. Capital costs would be $281 million.

The importance of the high-grade aspect of the project cannot be overemphasized, as it offsets the drawbacks of Brucejack’s location. As Louis James told the Gold Report, “I had been aware of Snowfield/Brucejack when it was still in Silver Standard. We never bought because we just weren’t sure a mine would ever actually get built in this remote part of the world, especially with the low grades. But when you have really high grades, you can build a mine anyplace. Places like Eskay Creek were once very remote, but average grade was over an ounce per ton. That’s what it took to operate in that area. Grade solves a lot of problems, and Brucejack certainly has that potential.”

With the Brucejack and Snowfield projects we have one of the world’s largest undeveloped gold projects—about the fifth-largest in North America —Bob Quartermain

Pretium is undertaking a 70,000-metre drill program, consisting roughly 80% to 90% of infill drilling, which Quartermain expects to be finished no later than October. He says, “Once all that drilling is completed, we will then go through it and do a new resource calculation; both a high-grade resource calculation of the Brucejack area, as well as a resource on the bulk-tonnage, one-gram material surrounding the high grade. With those two resources, which we hope to have 4Q 2011 or 1Q 2012, we would go back and update the preliminary economic study on Brucejack.”

August 22 assays from Brucejack’s Valley of the Kings zone include 2,810 grams per tonne gold and 1,030 g/t silver over 0.5 metres and 1,094 g/t gold and 263.5 g/t silver over 2 metres. August 11 assays include 6,670 g/t gold and 3,630 g/t silver over 0.5 metres, 1,640 g/t gold and 423 g/t silver over 0.5 metres and 1,200 g/t gold and 686 g/t silver over 0.5 metres. July 27 assays included 4,060 g/t gold and 1,660 g/t silver over 0.5 metres and 1,070 g/t gold and 255 g/t silver over 0.5 metres. June 8 results included one interval of a whopping 18,755 g/t gold and 9,312 g/t silver over 0.6 metres. Quartermain remarks, “We’re very encouraged by the results. We continue to have high-grade, visible-gold hits in the Valley of the Kings. They are showing that we are getting some continuity of this high-grade mineralization, which will certainly help in supporting a high-grade underground operation at Brucejack.”

Regarding production, Quartermain admits that Snowfield would require “a much bigger partner.” But as for Brucejack, “With the management team that has come over in part from Silver Standard—and with the work we did at Silver Standard previously in building the Pirquitas mine—the construction and building of the high-grade opportunity at Brucejack is certainly something that we have the capacity to do.”

“If someone were to approach us about the opportunity of partnering up in the high-grade, we’d certainly look at that,” Quartermain says. “We’ll see how the project evolves.”

Quartermain concludes, “I’m very encouraged. I entered into negotiations with Silver Standard to buy the property in October and basically purchased it in December. We’ve been working on it a little more than six months, and during that time we’ve increased resources by 35% and have had some of the highest gold intersections on the property to date. And, fortunately, with the money we raised on the IPO and a small flow through we did in July, we have all of the cash that we need to drill the project this year and hopefully advance it almost through to feasibility next year. We don’t have to go back to the market in the near term, so we can manage shareholder solutions. In that respect, we’re protected from the volatility of the market.”

At press time, Pretium had 86.9 million shares trading at $9.85 for a market cap of $855.6 million.