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850kt is not a big mill, the mill doesn't care if its op or ug ore, 1.7-3.5 g/t is not high grade by UG standards, the mining method from the AR is not selective, the small equipment is most likely to cater for an undersized decline (tunnel) which will be the bottleneck? At $1700-1800/oz gold price and a 3Moz reserve (JORC compliant- it should be well understood and drilled out, thats what classifies it as a reserve)- when is the right financial circumstance?
@IndoMiner : The reason that the ore throughput doesn't match the plant capacity may have something to do with the exhaustion of the old opencast low-grade high-tonnage mine, for which the plant was built, and the transition to the present higher-grade underground mine with its selective mining using small equipment that can operate within tunnels. Tonnage can be increased by developing many veins simultaneously, but the company has not made the capital investment needed for that. It might be done in the future, given favourable financial circumstances, but in any case it would best be left until the topography of the vein system is better understood, following a thorough drill programme.
Their AISC is at 974 p/oz to produce 80,000 oz pa. ALTN is at about that and only produced 17,000 oz ! Current year should see over double that produced and substantially lower costs are forecast through economies of scale....
Do you reckon you can make money, service your debt starting at 1.7 g/t taking until 2028 to get to 3.3 g/t- how much free cash can you get with these grades?
To make 1 oz, they need to mine and mill 23 tonnes at 1.7 g/t at 80% recovery (31.1 (g/oz)/(1.7 g/t x 80%) and incur the costs associated to do this.
So 23t/oz x (mining/t + milling/t +support/t)= $/oz (cost to produce), understanding 500,000t milling capacity is small so economies of scale are a challenge- go look at a some Canadian 43-101s to get some ideas on costs for a small underground operations, alternatively Resolute announcement 14/10/2020 page 5 for Tabakorni gives good insight into forecast ug costs .
Interested in what you conclude. Apply same logic with 3.5 g/t and see why grade is king- 8 years to get to just less than average JORC grade- go figure.
" they have already told us they are mining ore zones 3-8 (2.29 g/t), ore zone 10 (2 g/t) and ore zone 11 (2.29-2.33 g/t) which corresponds with the recovery currently being achieved."
DofM, where did you get this information from please?
The grades associated with the ore zones seem very low. The lowest grade I could find - albeit on a per level basis - was 2.69g/t at 250-300 masl.
DofMeister, thanks for the pointer to the grade info.
"Just increased my holding to 1.1% of the share capital."
That would be over £400,000!!
Bald E, if you look at the 2019 AR it has the same diagram of the mine layout as the 2020 AR, but with the indication of grades for each ore zone, increasing with depth. You can see what they are currently mining from the 2020 AR. Just increased my holding to 1.1% of the share capital.
Dofmeister, you seem to have more information than me....or read the report(s) when I glossed over them.
Your explanation make sense....although it would be good to know when they will be reaching the higher grade ore (>2.5 g/t).
Where did you get your information please?....it will save me having to search through countless documents.
Indo, they have already told us they are mining ore zones 3-8 (2.29 g/t), ore zone 10 (2 g/t) and ore zone 11 (2.29-2.33 g/t) which corresponds with the recovery currently being achieved. We also know that the grades improve with depth.
Gold in the ground is the miner's asset that he monetizes by mining. JORC attempts to give owners and investors confidence that the asset has been estimated with sufficient rigor to achieve the JORC statement, thats the underlying foundation for JORC. Page 3 of AR indicates they are at RL 100m on the left hand ore body and Rl 200m on the right with the center ore body looking ready to go. So you ask a good question- where's the grade? Good question for the recently appointed Director he must be wondering also? Surely you guys are entitled to some kind of explanation?
Indeed the Renaissance note raises more questions than answers for me. Mined ore is only around 550kt pa for the next 3 years rising to around 750kt in 2024. That's pretty disappointing with all the investment (and continued investment). But they are doing around 600kt now and have 700kt already prepared for this year . Grade doesnt reach 2.0g for another 4 years. Yet in the AR the CEO say "extracted ore which should result in a noticeable improvement of grades in Q2 2021." (Doing 1.75g now) Grade improves with depth anyhow so we should be seeing incremental improvements anyway before any operational initiatives to up the grade. Personally thought the note was a bit underwhelming in the short to medium term in terms of performance.
IndoMiner, it looks like you know your stuff. I defer to your superior knowledge.
The obvious questions of management are:
1. why the milled grade is so much lower than JORC value?
2. What are they doing to increase milled grade?
3. Will ALtyn ever reach or get near the JORC grade? If not why not....if yes, in what timescale.
The latest 'independent' report either doesn't believe the JORC values are correct or that in the next 3 years ALtyn will struggle to reach even approximately half that value - reason unspecified!!...or does the report contain a reason?
Usual for this lot ? Never quite get it how they keep mislead I remember another quote about a dividend a few years back WHERE IS THAT ? more chance of Jesus walking on the moon ? If you believe these clowns then at your own peril , probably just raising funds so they can t sit on their fat arses and us lot can go to hell !
So a JORC compliant resource is what is in the ground, a reserve takes the resource and applies modifying factors that take into account geotechnical issues, hydrology, ore loss, dilution, mining method and applies mining, milling and overhead costs to determine the cutoff grade which ultimately determines the average reserve grade, the drilling density determines the level of confidence proven being the best and probable at a lower confidence level. This is all done by a Competent Person defined by JORC who signs off on this reserve estimate, the CP has the appropriate relevant mining experience to apply the modifying factors appropriately- so I still don't get it. See page 17 of annual report, incredibly the ore reserve statement has tables labelled mining resources but the term proven and probable refers only to reserves not resources (how can you get this so wrong again) noting that 90% of the ore is classified as proven, the highest confidence level in the JORC at 3.61 g/t. All forecasts imply grades half the average JORC reported grade for next 3 years, plus the last 4 years?
Well someones telling porkies on the grade
AR Altyn CEO
"extracted ore which should result in a noticeable improvement of grades in Q2 2021."
(Already doing 1.75g)
Its going to take 4 years to get to 2.0g
Altyn Q&A RNS last year
With investment and less dilution grades should reach 2.89g
I don't think 3.53 g/t is the head grade....isn't it the average grade of proved & probably reserves?
500,000ktpa at 3.53 g/t (head grade), 80% recovery would be circa 45,000 Oz per year. Food for thought!
So combined with the plan to increase mined ore perhaps they should have another plan to increase the grade (to run simultaneously)?!
IndoMiner, good question. Obviously either the head grade figure of 3.53 g/t is not correct or they are struggling to reach that figure (and will continue to struggle according to the report).
I sort of assumed that the maximum grade of the ore bodies is circa 3 g/t. When they mine this is reduced because will obviously remove more material than just the high grade ore. The newer equipment is supposed to improve the surgical removal of the high grade ore....but I doubt it will ever reach the 100% gold containing ore.
I seem to remember that when the production shifted from open pit to underground the grade of the ore was supposed to increase, because there was higher grade ore deeper down. But I don't think it ever really happened (I may be wrong & there was a slight increase). ALways plenty of excuses though....but ultimately the new equipment is supposed to fix them and lead to higher grade ore although I'm not sure about 3.53 g/t. At the moment I would be 'happy' with > 2 g/t.
But you are 100% correct...a 'simple' way to increase gold production is to increase the head grade of the ore. The 'independent' report would suggest this isn't really going to happen in any significant way....probably edge towards 2.0 g/t and a little above (I presume).
How can you have a 3.8Moz reserve and head grade of 3.53 g/t and continue to produce less than 30koz with a mill capable of 850ktpa for 3 years after 4 years of underground mine development already? 3.53 g/t x 850,000tpa x 80% recovery/31.104= 77,183 oz, what am I missing?
"It does, the only quite surprising thing are the production targets for the next three years, which barely move from current production - 26koz this year, 28koz 2022, 29k0z 2023"
It would seem that the 'independent' research is being conservative & probably realistic (based on Altyn's past performance).
It would suggest (to me) that they expect production levels for the next 3 years to remain at or near 500,000 tonnes per year, with grades at or near 1.8g/t and recovery rates at or near 80%. Realistic and conservative IMO.
That gives the management the opportunity to over-deliver...something so far they have never managed to do, probably because they have over-promised.
Market seems to be waiting too. Probably for consistent results and a realistic roadmap.
Great help share price down ? Gold price up our price down ?
"...under the agreement for sponsored research has produced and initiated independent research on AltynGold."
'Sponsored independent' research....hmmmmm, an interesting concept!
Another stock picking site gives Altyn the thumbs up.
It does, the only quite surprising thing are the production targets for the next three years, which barely move from current production - 26koz this year, 28koz 2022, 29k0z 2023 - only in 2024 does production jump to 45koz.
Is this management sandbagging or should production be considered to be only stable for the next 3 years.
Makes for very good reading. Short, medium and long term looks great. ATB