While gold was more or less flat this week, the silver price continued to fall, hitting a low of $22.83/oz. in the spot market on Friday. More noticeably, the mining indices took a much larger hit, even gold companies which saw gold trade essentially flat to marginally lower. Mining stocks are often a leading indicator for metal prices, although this correlation isn't too strong. However, it could very well be portending lower gold prices, likely in the short term. The fundamentals remain as bullish as ever, but that doesn't mean we will see higher prices imminently. The XAU mining index is currently trading [Thursday and Friday] below that seen in late March even though gold prices are approx. $90-$100/oz. higher. Suppose prices of mining stocks don't rebound significantly by mid-October or so. In that case, the valuation disconnect between gold and gold stocks will likely widen as tax-loss season begins [October/November].
$ABRA, $USAS, $EOX, $AG, $GGD, $KNT, $KORE, $LAB, $MAU, $SSRM, $SSVR, $VZLA
AbraSilver Resource Corp: The company announced it executed an Option to acquire additional prospective claims near its La Coipita project located in the San Juan province of Argentina. In addition, AbraSilver requested, through the original owners of La Coipita, New Areas of additional mining tenure consolidating the two main blocks of the property. A drill program is expected to begin before year-end.
America’s Gold & Silver: Troubles continue for the company due to recovery rates at its flagship Relief Canyon Project. On August 13, 2021, the Company and the Board of Directors decided to temporarily suspend mining operations at Relief Canyon to prioritize capital for the Cosalá Operations restart while it continues leaching operations and ongoing metallurgical test work. For Q2, the company reported revenue of $9.50m and a net loss of $17.8m. The Galena complex remains the only asset that continues to perform extremely well regarding the restart of operations. The recapitalization plan is proceeding well with the company realizing higher year/year production in Q2 vs. Q2 2020. An updated MRE is expected shortly, incorporating the significant exploration success at Galena. Phase II drilling began with the first hole testing down-dip extension of the high-grade Silver vein 500m below the drill station. The most recent high-grade drill results from the Silver vein include:
- 3.8m @ 3,345 g/t Ag and 2.80% Cu
- 4.1m @ 2,460 g/t Ag and 2.1% Cu
- 2.2m @ 3,966 g/t Ag and 4.0% Cu
- 1.5m @ 1,747 g/t Ag and 2.0% Cu
- 1.9m @ 1,185 g/t Ag and 1.4% Cu
- 2.1m @ 738 g/t Ag and 0.50% Cu
Euromax Resources: The company announced a new decision in its legal process to reinstate the company’s Ilovica 6 concessions. The company has received official notification of the decision by the Higher Administrative Court of the Republic of North Macedonia to rule in favor of Euromax and overturn the previous ruling by the Lower Administrative Court. The case was originally brought by the company challenging the legality of the Government of North Macedonia's termination of the Ilovica 6 Exploitation Concession, one of two concessions concerning the Ilovica-Shtuka copper project. The case will now return to the Lower Court to be reheard. In a separate case, Euromax had also challenged the initial decision by the Ministry of Economy to reject the company's application for an exploitation permit for the Ilovica 6 concession. On December 20, 2020, the Higher Court also ruled Euromax's favor in that case.
First Majestic Silver: Reported Q2 financial results and announced its second quarterly dividend payment. In Q2, the company produced 3.274m oz. Ag and 46.5k oz. Au. This included two months of production from the recently acquired Jerritt Canyon mine. First Majestic generated record revenues of $154m in Q2. Cash costs and AISC were $13.89/AgEq oz. and $19.42/AgEq oz. The company generated operating cash flow of $51.2m before taxes. At quarter-end, the company had cash and equivalents of $227.1m and a working capital position of $276.3m in addition to $40m available through its revolving credit facility for total liquidity of $316.3m. The company also announced a cash dividend payment of $0.006/share, higher than its inaugural dividend, equal to 1% of net revenue. First Majestic is already seeing operational improvements at Jerritt Canyon (although it will take some time to optimize). Still, AISC is expected to be higher than normal in Q2 due to a $12.3m lift on the tailing impoundment that is currently being constructed.
GoGold Resources: Announced results from seven new drill holes from the Casados deposit in the North Ricos North project. Highlights include:
- 19m @ 0.54 g/t Au and 131.5 g/t Ag
- 9.50m @ 0.50 g/t Au and 233 g/t Ag
- 41.6m @ 1.25 g/t Au and 218 g/t Ag
- 19.2m @ 0.53 g/t Au and 185 g/t Ag
K92 Mining: Reported strong Q2 results, achieving record throughput (53% higher vs. Q2 2020). The company produced 25k AuEq oz. in Q2 (22.15k oz. Au, 1.098m lbs. Cu, and 14.9k oz. Ag). Cash costs and AISC came in at $736/oz. and $1,057/oz. Production during the quarter was materially impacted by a surge in COVID-19 cases in Papua New Guinea and the suspension of expatriate travel between Australia and Papua New Guinea from mid-March to mid-May. The second half of the year is expected to be more robust, production-wise, with Q4 being the strongest. As the company continues its material expansion at its flagship Kainantu Gold mine, its balance sheet remains strong with $56m in cash and no debt. Although production was 25k AuEq oz, the company only sold 20.5k AuEq oz., generating operating cash flow of $15.2m. Following the positive drilling, underground development, and metallurgical results at the Judd Vein System, the first production stoping is now planned for Q4. Development on the J1 Vein is underway on its second sublevel, the 1265 Level, and Judd has been prioritized to eliminate its core logging and assaying backlog.
KORE Mining: The company provided a project update for its Imperial Project in California. The Imperial team is continuing to work closely with the Bureau of Land Management to permit regional exploration drilling in the 28-kilometer Mesquite-Imperial-Picacho District and permit drilling to advance the existing Imperial gold deposit toward feasibility and mine permitting. The following are part of the Imperial Project update:
- Reporting results from regional exploration drilling target generation program with details to follow as they become available in the coming weeks.
- BLM review of a large, combined drill program has experienced delays due to the complexity of overlapping and varying regulations in addition to the effects of COVID-19 on the BLM's internal review processes.
- BLM has changed its view on the mill site validity from the positive 2002 mineral validity examination, and the company is considering other nearby mill site locations.
- Anticipate that KORE will submit an Environmental Assessment report for Regional Exploration Drilling in Q4 2021.
- Working with BLM to determine the best path forward to permit Imperial Zone Drilling.
KORE has been awaiting BLM approval for cultural and biological assessments in support of permitting a large drill program under a plan of operations submitted in November of 2020. The proposed program had consisted of more than 160 drill pads spread over 14km and including both Regional Exploration Drilling and Imperial Zone Drilling locations. Regional Exploration Drilling consisted of new discovery targets on the Mesquite-Imperial-Picacho trend at the Mesquite East and Ogilvy areas. The Imperial Zone Drilling was designed to support a resource upgrade and engineering to support a feasibility study and mine permitting.
Labrador Gold: Announced additional high-grade intercepts of near-surface gold mineralization at its Kingsway project. These results are part of the company’s ongoing 50,000m drill program. Drill highlights include:
- 4.28m @ 44.08 g/t Au ~ This highest gram-meters (grade x width) drilled on the property. (HTC zone)
- 0.40m @ 40.85 g/t (HTC zone)
- 2m @ 7.43 g/t (Big Vein zone)
- 0.50m @ 15.55 g/t (HTC zone)
Montage Gold Corp: Reported a maiden mineral Indicated resource estimate at the company's Kone Gold Project in Cote d'Ivoire. The updated MRE includes Indicated resources of 4.27m oz. Au @ 0.59 g/t Au and an Inferred resource of 320k oz. Au @ 0.45 g/t. The company successfully converted 100% of what were its previous Inferred resource and additional resource growth. While low grade, the strip ratio is less than 1:1 (waste: ore). This updated MRE will be used for the upcoming FS, targeted for year-end 2021. Per the PEA published in May, project highlights include:
- Gold production of 3m oz. Au over a 14.7-yr mine life.
- Average annual production of 250k oz. Au during the first 5yrs and 205k oz. Au average over the LOM.
- Using a $1,600/oz. gold price yields an after-tax NPV and IRR of $652m and 31%, increasing to $1.015b and 46% using a gold price of $1,850/oz.
- Average AISC of $835/oz over the first 3yrs with a LOM AISC of $975/oz.
- Strip ratio: 0.93:1
- Initial capital investment: $490m
SSR Mining: The mid-tier gold producer announced positive exploration results for the Cakmaktepe extension project (Ardich) part of the Copler District. The results build upon the PEA reported in the Copler District Mast Plan technical report in 2020, in which the Ardich deposit contributed 1.23m oz. Au (M&I) and 0.35m oz. Au (Inferred), providing an after-tax NPV5 of $431m.
Ardich is an organic growth initiative for SSR, with the PEA highlighting the potential for 1.1m oz. Au of gold production over an 11-year mine life for an Initial capital investment of $50m. Further drilling and technical studies are ongoing to better define the value of this near-mine opportunity, with a maiden MRE in 2022. Permitting is also being advanced, with a target for first gold production in 2023. The following are highlights from this release:
- 40.7m @ 7.48 g/t Au
- 24.5m @ 4.18 g/t Au
- 62.7m @ 2.98 g/t Au
- 54m @ 3.68 g/t Au
- 49.8m @ 2.20 g/t Au
Summa Silver: Reported results from a property-wide soil geochemical survey from its Hughes Property at Tonopah, Nevada. Over 2,700 samples were collected over a 5Km2 area representing the first-ever soil survey across this highly prospective land package. Numerous multi-element soil anomalies are defined by high concentrations of arsenic, copper, and lead. The new soil anomalies coincided with hydrothermal alteration zones at surface and the recently identified geophysical anomalies. The coincident anomalies are interpreted to represent concealed, structurally controlled alteration zones host to possible epithermal-related mineralization.
Vizsla Silver: Provided an update on its progress at Panuco and outlined key objectives. On-site work programs remain suspended through August with a phased restart planned for September 1, and upon restart, the company will continue its fully funded 100,000m drill program. Resource drilling at Napoleon and Tajitos is focused on a combined resource target area of approx. 1,500m long by 350m deep. Vizsla intends to report a maiden resource by the end of Q1 2022. Preliminary metallurgical testing on representative samples from Napoleon is underway, with results anticipated in Q4. Exploration drills continue to test zones proximal to the resource target areas and other high-priority regional targets. The company is preparing for property-wide electromagnetic (EM) and airborne magnetic surveys in late 2021 once the wet season has ended. Following the company exercising its option to own 100% of Panuco in late July, the company has a current cash position of C$57m.
The company has developed an attractive pipeline of exploration targets, given the vastly underexplored nature of the district. Only 33 of 117 known targets on the property have been drilled by Vizsla. The application of rigorous geological mapping and sampling procedures that prioritize higher tonnage potential over higher grades continues to be the primary focus for near-term exploration at Panuco.
There are currently four exploration rigs devoted to testing new target areas along four major vein corridors at Panuco. Significant exploration targets and current drill locations include;
- Napoleon Corridor
- Josephina vein: a silver-rich, sub-parallel vein situated 150 meters west of the Napoleon discovery.
- Papayo: A mineralized sub-zone of the Napoleon Vein located 600 meters north of the Napoleon discovery zone.
- Ojo de Agua: Another Napoleon Vein sub-zone, located 850 meters south of the Napoleon discovery zone.
- Cinco Señores Corridor
- Located east of and adjacent to the Napoleon Corridor, Cinco Señores hosts the Tajitos Vein situated along the southern bounds of the corridor. While the majority of Cinco Señores drilling completed to date has focused on advancing the Tajitos Vein, a collection of eight new EM targets have been identified at the northern end of the corridor.
- Cordon de Oro Corridor
- Host to multiple historic workings, including the San Antonio, Mojocuan, and Aguita Zarca mines, located in the central portion of the Panuco district. Recent drilling targeting the depth extension to the San Antonio vein intersected a high-angle splay off the main corridor returning 2,649 g/t AgEq over 0.78m true width, contained within a broader interval grading 1,283 g/t AgEq over 2.07 m true width from 99.0m. The company plans to follow up on this near-surface mineralized zone with exploratory expansion drilling in the coming months.
- Animas Corridor
- The Animas Vein Corridor, located on the eastern portion of the Panuco District, is the property's most well-developed and explored area. Over seven separate mineralized zones along a 4.4-kilometer section of the Animas Vein have been mined by previous operators down to the water table (250m depth average depth).
- Multiple zones of interest have been identified at the northern end of the corridor, including the Rosarito, La Bomba, and Cuevillas zones, all marked by historical small-scale mining. Drilling is currently centered on the Rosarito target, where twelve holes have now been completed (all assays remain outstanding). Drilling will resume in this area upon the restart of on-site work programs.