This was a soul-crushing week for precious metal investors, although this type of volatility can be expected in this industry. The Fed remained dovish, but the market took their comments as hawkish, which they certainly weren't. A bit more than half of FOMC members thought there could potentially be two rate hikes by the end of 2023. Even if the Fed does hike two, three, or even four times, the system is so leveraged that the Fed will be forced to cap the 10-yr yield; otherwise, they risk a severe economic downturn and market crash.
Weeks like this are why it is never a bad idea to have some dry powder (cash) as there are some excellent buying opportunities. It is the 10-yr yield that matters as gold is highly correlated to the inverse of real rates as measured by the 10-yr yield less the inflation rate. At this point, we see gold trading between $1,750-$1,850/oz over the summer months, although if we break $1,750 on a sustained basis, we will re-evaluate. We also see silver trading in a relatively wide range over the next couple of months as physical demand remains exceptionally robust, likely between $24-$28/oz. Time will tell.
$ABRA, $AGI, $BSR, $ESNR, $NFG, $ODV, $OSK, $OCG, $PVG, $ROXG, $TXG, $VGZ, $AUY
AbraSilver Resource Corp: The company continues to expand the resource base at its Diablillos project in Argentina. A new MRE is scheduled to be published in Q3, 2021, which in all likelihood will illustrate significantly more gold and silver resources vs. the most recent MRE, that published in 2018. In addition to what should be a considerable increase in gold and silver resources, grades are expected to be higher as well. An updated PEA is scheduled to be published before year-end, which will show a significantly more valuable mining operation. Key highlights in this press release are wide, high-grade oxide intercepts:
- 72m @ 166 g/t Ag and 1.60 g/t Au (3.20 AuEq g/t)
- Including 12m @ 350 g/t Ag and 7.27 g/t Au
- And 35m @ 206 g/t Ag and 3.11 g/t
- 14m @ 176 g/t Ag and 3.45 g/t Au
- Including 7m @ 257 g/t Ag and 6.14 g/t Au
Alamos Gold: Reported drill results from surface and underground drilling at the Island Gold mine, extending high-grade gold mineralization in Island East and West. Included in this release was Alamos Gold’s best hole ever drilled (grade x length) at Island Gold. Drill highlights include: 21.33m @ 71 g/t Au (39.24 g/t cut), 5.98m @ 34.87 g/t Au (Island East) and 2.43m @ 28.74 g/t Au (Island West).
Bluestone Resources: Reported assay results from its 2021 infill drill campaign at Cerro Blanco that focused on the Salinas silica cap, a layer of near-surface, low-grade disseminated mineralization 100-150m thick that overlies the high-grade quartz-adularia vein swarms. This recent drilling was undertaken to support the upcoming feasibility study for a surface mining scenario. Remember, it was approx. 5-months ago when Bluestone announced its pivot away from building an underground mining operation to a surface (open-pit) development scenario. While the timeline to construction has been pushed back, average annual production will be more than twice that envisioned in the underground scenario. More importantly, the open-pit scenario's NPV5% is three times that of the underground. Results from this release include:
- 140m @ 1.1 g/t Au
- 57.6m @ 3.1 g/t Au
- 189m @ 0.80 g/t Au
- 7.6m @ 30.20 g/t Au
E79 Resources: Reported initial assay results from the first two drill holes at its Happy Valley Gold Prospect on its Myrtleford property in Victoria, Australia. Drill highlights include:
- 0.70m @ 99 g/t Au
- 0.60m @ 147 g/t Au
- 11m @ 160.45 g/t Au
These first two holes confirm the extension of mineralized structures well below historic mining levels. These results confirm the company's belief that high-grade gold mineralization exists at depth below historic gold mining areas. The current program will generate structural, lithological, alteration, and geochemical information to determine their relationship to gold mineralization at Happy Valley. This information will provide a model for exploration along strike and a broader model for the Company's Myrtleford prospects.
New Found Gold: Announced assay results from an additional nine holes drilled at the Keats Zone. These holes were drilled as part of the company's ongoing 200,000m diamond drill program at its Queensway Project, located on the Trans-Canada Highway 15km west of Gander, Newfoundland. Highlights include:
- 3.80m @ 11.69 g/t Au
- 7m @ 11.17 g/t Au
- 2.05m @ 20.74 g/t Au
- 8.05m @ 21.36 g/t Au
- 12.85m @ 14.92 g/t Au
These results again demonstrate grades increase at depth. It is too early to tell if this occurs throughout most of the system, but thus far, it does look as though grades increase at depth.
Osisko Development: Along with Argonaut Gold (Magino), Equinox Gold (Greenstone), IAMGOLD (Cote), Osisko Mining (Windfall), New Found Gold (Queensway), Great Bear (Dixie), Osisko Development is advancing one of Canada’s next generation of gold mines at Cariboo. Cariboo remains on track to achieve its first production in 2023. The company has undertaken a 200,000m exploration drill program focused on infill drilling and resource expansion drilling. Ten drill rigs are currently at Cariboo. 85,000m have been drilled thus far in 2021, although assay results have only been reported for the first 11,600m, with results for 73,400m pending. Recent drill highlights include:
- 6m @ 15.89 g/t Au
- 7.20m @ 14.64 g/t Au
- 4.25m @ 7.66 g/t Au
- 6.60m @ 4.63 g/t Au
- 2.50m @ 56.35 g/t Au
- 10.75m @ 9.49 g/t Au
- 8.60m @ 15.90 g/t Au
Osisko Development remains on track to achieve producer status in 2021 from at least one operation, potentially two. The company is on track to achieve production at Bonanza Ledge II in Q2/Q3 2021 and could reach first production before year-end at its San Antonio mine, if not 1H 2022.
Osisko Mining: Announced a significant new high-grade gold discovery has been made north of its Windfall gold project in the Abitibi greenstone belt. Reconnaissance drilling approximately one kilometer north of Windfall identified the discovery area, Golden Bear, located along a sub-parallel splay of the Windfall Bank Fault. Along with the Lynx discovery in 2016, Golden Bear could significantly enhance project economics. The discovery hole was 6.7m @ 27.4 g/t Au, or 17.2 g/t Au cut to 100 g/t. The full implications of this discovery are unknown, but it could mean the addition of a second mining front, which would support a mill expansion once optimized.
Outcrop Silver: The company its sixth discovery at the Santa Ana project in Colombia. Highlights/assay results from this release include:
- Discovery holes:
- 1.18m @ 410 g/t AgEq and 0.30m @ 6,052 g/t AgEq. (San Antonio)
- 0.95m @ 10.783 g/t AgEg. (Megapozo)
- 1m @ 6,400 g/t AgEq. (La Ivana)
- 5.16m @ 800 g/t AgEq. (Roberto Tovar)
- 1.20m @ 1,486 g/t AgEq (El Dorado)
- 1.79m @ 1,329 g/t AgEq (San Juan)
- San Antonio, Roberto Tovar, and San Juan shoots indicated a periodicity of 3 shoots occurring within 1,250m along the Santa Ana system.
Pretium Resources: Announced that it continues to intersect high-grade gold mineralization in Phase 2 of the North Block resource expansion drill program at the Brucejack Mine in British Columbia. Phase 2 of the North Block resource expansion drill program comprised 22,964m in 83 drill holes. Drilling from the 1150 level intersected the extension of the Domain 13 Stockwork, which is currently being mined in the Valley of the Kings. Drilling from the 1070 level intersected the recently identified corridor of gold mineralization in the footwall of the Domain 13 structure. This corridor features coarse electrum in northwest-oriented quartz-carbonate veins within a broader halo of lower grade gold mineralization. Drill highlights from Phase 2 include:
- 15m @ 561.6 g/t Au
- 19.5m @ 306.6 g/t Au
- 14m @ 191.6 g/t Au
- 51m @ 31.6 g/t Au
- 17.5m @ 61.7 g/t Au
- 18m @ 15 g/t Au
- 42.5m @ 24.5 g/t Au
- 8m @ 38.9 g/t Au
- 3m @ 750 g/t Au
This is excellent news for the company. However, we have to remember when Pretium first started drilling Brucejack and Valley of the Kings, it also has massive bonanza grade intercepts, but due to the nuggety nature of the deposit, head grades were far less than the reserve grade. In other words, in all likelihood, this will lead to an increased mine life but not higher average annual production.
Roxgold: The company (soon to be Fortuna Silver, following the close of the pending acquisition) reported additional high-grade intercepts at its key development project, Seguela in Cote d'Ivoire. This is exciting as the release includes drill results from the newly discovered Gabbro North prospect and step-out and infill drilling at the recently discovered Sunbird prospect, and depth extension drilling at Koula. Highlights from this release include:
- 8m @ 39 g/t (Gabbro North)
- 6m @ 5.3 g/t Au (Gabbro North)
- 12m @ 15.1 g/t Au (Sunbird)
- 9m @ 11.7 g/t Au (Sunbird)
- 6m @ 8.6 g/t Au (Sunbird)
- 6m @ 6.8 g/t Au (Sunbird)
- 11m @ 7.2 g/t Au (Koula)
The Seguela deposit continues to grow with a possible increase in the average resource grade in the next MRE. Fortuna does plan to also focus on the underground component as well as the open pit. It wouldn't be surprising to see average annual production increase to somewhere between 160-180k+ oz when fully optimized. Au at attractive costs.
Torex Gold: The company with the largest operations and deposits in Mexico's Guerrero Gold Belt (GGB) reported an updated resource estimate for its flagship development project, Media Luna. The project now has an Indicated resource of 3.54m oz. AuEq @ 5.27 g/t, a 58% increase relative to the previous MRE. The gold equivalent resource base consists of approx. 61% Au, 31% Cu, and 8% Ag. Torex also increased Inferred resources to 2.48m AuEq oz. @ 4.08 g/t. The FS remains on track for completion in Q1 2022. It is expected that Torex will utilize its Muckahi mining system to develop Media Luna, which is currently going through the final stages of testing at the El Limon Deep underground mine. This has the potential to unlock significant value and disrupt the underground hard rock mining industry. It is estimated utilizing the company's proprietary mining system will results in up to a 30% reduction in initial capital expenditures, up to a 30% decrease in mining costs, and up to an 80% decrease between the time project construction and first production. For those who care about ESG, this will also reduce greenhouse gas emissions up to 95%.
Vista Gold: Announced it had received approval of the Mining Management Plan (MMP) by the Northern Territory Government for its 100% owned Mt Todd gold project located in Northern Territory, Australia. The MMP (similar to a mine operating permit in North America) is the final major authorization required to develop the Mt Todd mine. The receipt of this approval marks the achievement of a significant de-risking milestone that has been the company's focus for the last three years.
Yamana Gold: Announced that it has agreed to acquire from Globex Mining Enterprises Inc. the Francoeur, Arntfield, and Lac Fortune gold properties adjoining the Company's Wasamac project, as well as additional claims in the Beuchastel township to the east of the Wasamac project. Yamana will pay an initial C$4m on closing, which can be paid in shares at the discretion of Globex, with the remaining C$11m payable over four years in cash or shares, again at Globex’s discretion. Globex will retain a 2% royalty, of which 0.50% can be repurchased at any time for C$1.5m.
Following an in-depth review of the 2018 Feasibility Study, Yamana has identified opportunities to optimize the processing plant design, incorporate increased levels of automation in the underground mine, and optimize the materials handling system to increase the planned throughput rate to 7,000tpd. In addition, the processing plant and associated infrastructure have been designed at a nameplate capacity of 7,500tpd, representing further production upside. Higher throughput supports the company's vision of Wasamac as a 170,000 to 200,000 ounce per year producer with all-in sustaining costs well below the company's average. The company has also identified opportunities to convert additional mineral reserves at the same average gold grade to maintain an initial reserve life higher than Feasibility Study throughput and production levels referred to above for more than ten years. Once online, this should help the company obtain a higher multiple. It will have two sizeable assets in Canada (50% of the long-lived Canadian Malartic mine and Wasamac), which will account for approx. 465-470k oz. Au of annual gold production. This will also serve to make Yamana a consistent 1m oz. gold producer.