Cobus Loots, CEO of Pan African Resources, on delivering sector-leading returns for shareholders. Watch the video here.
Wondergoals, good find. Looks like Condor has set up a local facebook page and a local website to communicate local news at the mine https://www.minalaindia.com.ni
Just about every World Bank project gets a complaint from the political opposition masquerading as an environmental NGO. That's what's happening at La India. The Complaint Advisory Ombudsman is an independent part of the World Bank. They listen to both sides of a complaint and see if there is any merit and offer a dispute resolution service http://www.cao-ombudsman.org
Permits have been granted, around 500 people attended the PC. 700 locals have applied for jobs
B2Gold has problems with both mines in Nicaragua, they are losing money. See today's results. Condor can solve those problems by acquiring one of B2Gold's loss making mines or trucking high grade ore from La India to El Limon or La Libertade or a J/V.
B2Gold's estimated All in Sustaining cash costs (AISC) for full year 2018: $1,185 La Libertad and $1,385 to $1,435 for El Limon. on aggregate they are losing money and this excludes head office cost allocation and drilling/studies. Why? the ore is very low grade, they are running out of ore. Libertad Q3 grade 1.29g/t gold vs 2.07g/t year on year. Revenues are below the breakeven costs.
Condor's permitted open pit reserve is 675,000 oz gold at 3.1g/t gold, 140% higher than Libertad. Condor's resoruce is 2.4M oz gold at 4.0g/t gold and can double to 5M oz gold
The new high grade feeder pit on Mestiza, looks like 100k oz gold at 6 to10g/t gold
Surely: B2Gold has to replace unprofitable ore with profitable ore? It is not so much a question of plant capacity but best economics. Stop processing 1.29g/t uneconomic ore and process 7g/t economic ore and come to a profit sharing agreement with Condor? Note 31.104 gramme = 1 ounce gold. one gramme = roughly $40. Do B2Gold want to process ore worth $52 per tonne or $280 per tonne particularly when processing costs are fixed?
B2 would want La India Project: 2.4M oz gold going to 5M oz gold, permits etc not the management, the Board of Condor would all out of a job if B2 buys. B2 has a strong track record of building and operating mines. A past dispute isn't an issue as the Board goes.
Slim, the new "Expansion Study" of 75k oz gold pa sees production 60% from open pit and 40% underground. La India is purely an open pit. The strip ratio at El Limon is high at 16:1 and therefore the operating cost is more e.g. moving 16 tonnes of waste rock (no gold) for every 1 tonne of mineralised ore containing gold. the sustaining capital is more because there is a larger mining fleet e.g. ware and tear of vehicles. However, it is a high grade open pit. This implies the operating costs and sustaining capital costs for underground are very expensive/high e.g. it's deep ore? sustaining capital is always expensive in underground mines: ramp development every year to open new underground areas etc
B2Gold looks set to expand production 75% at El Limon Mine in Nicaragua. See announcement and Northern Miner article. Highly encouraging for Condor.
In February, B2Gold Corp. (TSX: BTO; NYSE: BTG) announced an initial open-pit inferred resource for the newly discovered El Limon Central zone at its El Limon mine in Nicaragua.
This week the gold producer announced the results of an expansion study that evaluated the life-of-mine options for combining El Limon’s remaining underground inferred resource (17 million ounces of gold) with the new inferred resource for the Central zone (5.13 million tonnes grading 4.92 grams gold per tonne for 812,000 ounces of contained gold).
Based on El Limon’s combined inferred resource from both open pit and underground (6 million tonnes grading 4.3 grams gold for about 829,000 ounces of gold), the expansion study recommended the expansion of the existing plant from 485,000 tonnes per year to 600,000 tonnes per year and the addition of a third stage of milling for a fine grind. (The finer grind would improve recoveries of mineralized material from both open pit and underground and allow the company to reprocess high-grade historic tailings.)
The study concluded that for capex of just US$35 million, El Limon’s life-of-mine would be extended to 21 years (10 years producing 75,000 oz. gold per year, followed by 11 years of reprocessing historic tailings for production of 18,000 oz. gold per year).
Excluding expansion capital costs, direct cash operating costs per oz. would come in at below US$600 per oz. and all-in sustaining costs would be around US$900 per oz.
At a gold price of US$1,300 per oz., the study forecast an after-tax net present value of over US$135 million at a 5% discount rate, which would generate an after-tax internal rate of return of about 28%.
Brian Quast of BMO Capital Markets described the expansion “as a step in the right direction for BTO to hit its long-term 1 million oz. per year target,” and Tara Hassan of Raymond James said she was “encouraged” by the study’s results.
“While El Limon currently represents only 3% of our net asset value, we view the results from the study positively and expect to revisit our valuation for El Limon to reflect the results,” Hassan wrote in a research note to clients.
“Although B2Gold has performed well in recent weeks,” she continued, “we continue to view the company’s current discounted valuation to be an attractive entry point into one of the better positioned intermediate producers given a track record of operational execution and strong organic growth opportunities.”
B2's Q3 results last week. "On October 5, 2018, the Company was granted the mine permit for the Limon Central Pit. Infrastructure development and pre-stripping operations at Limon Central will commence immediately." THEY ARE IMMEDIATELY COMMENCING PRE-STRIP = EXPANSION
"The Company is currently conducting engineering and metallurgical studies on the Central zone to evaluate the potential to expand the mill throughput, thereby increasing annual gold production. Initial in-house results indicate a robust case for economic expansion. The results from these studies are expected to be released in the second-half of October 2018". EXPECT A POSITIVE STUDY BY END MONTH = EXPANSION = CONFIDENCE IN NICARAGUA OR THEY WOULD NOT BE PRE-STRIPPING
B2's Q3 results were out last week. The mine looks to be running out of ore and is around breakeven. Mali is set to produce 425,000 oz gold in 2018 at AISC $600, their focus is on big mines. The combined AISC in Nicaragua is $1,100 per oz gold compared to $690 in Condor's PFS.
In the third quarter of 2018, La Libertad Mine in Nicaragua produced 21,995 ounces of gold, 39% (14,207 ounces) below original budget.
The mine permit for the new Jabali Antenna Pit continues to be delayed. Due to resettlement.
The planned mill feed for the quarter of higher grade open-pit and underground ore was replaced with lower-grade spent ore. The resulting head grade for the quarter was 1.29 g/t versus a budget of 2.07 g/t.
AISC $1,050 to $1,100 for 2018, which means La Libertad is hardly making money
Seingred, The point you raise via the link is of increased ownership of mineral resources by the DRC of up to 25% and increased royalties. Note the DRC increased the royalty on cobalt sales to 10% from 3% this year, killing the economics of investments already made. Credit to Nicaragua, the Mining Law allows 100% ownership, the Government delayed permits for 2 years, it had the Company in a vulnerable position and didn't ask for 10% to 20% free carried interest nor have they increased royalties. Despite the scare mongering by many posters on this BB, the Government hasn't asked for any ownership or increased royalties. Give credit were credit is due. Could this change? The Aussie Government introduced a supertax in the last commodity cycle and UK introduced a windfall tax on North Sea Oil, we can never say never, but the chance has been and gone, the mine is permitted. i don't see taxes increasing under Ortega who is in power until November 2021.
Shareminator, to quote your post on Thursday: "Would you invest in a well ran explorer in Syria or Yemen? Head in the sand for now then, you never know, aliens might appear and fund La India through to production." the 277 figure is the Nica Act figure or US Government figure and far more reliable than a human rights NGO.
The comparison with Syria is misleading, false and alarmist. Private equity funds, gold stream providers will provide money to finance the mine. Private equity debt funds can provide debt to finance a BFS. See Cardinal Resources US$30M debt from Sprott Finance. There is no point in issuing equity at these levels.
The mining industry operates in far worse jurisdictions. Randgold in the DRC and Fresnillo in Mexico. Permits have been granted to extract 600,000 oz gold, that's just the starter pit. Plans are to extra 2M oz gold. Ortega isn't going anywhere for 3 years, buy which time a mine will be built.
Keep things in perspective. There have been some ludicrous comparisons between Nicaragua and Syria. The revised Nica Act mentions 277 killings since April. A tragic loss of life. The barricades were removed 10 weeks ago, only a few tragically killed since then, but freedom of movement has returned. The Syrian civil war has seen 400,000 killed, 5.6M fled the country and 6M displaced internally https://www.cnn.com/2013/08/27/world/meast/syria-civil-war-fast-facts/index.html
29,000 people were murdered in Mexico in 2017. Dozens or mining companies operate in Mexico, which are funded by overseas investors. Gold producers manage this risk
http://time.com/5111972/mexico-murder-rate-record-2017/
I have read the revised Act. We have known about the Nica Act for 12 months. In my view it is discounted in the share price and one of the reasons the shares are a quarter of the valuation of the TSX peer group. The Nica Act, If it is passed, which is probably more likely given the 277 deaths, including 22 policemen (this is the number in the revised Act, not the 500 claimed by the opposition). It means the US will use its influence at International Finance bodies e.g. the World Bank to stop loans to the Government of Nicaragua. This means World Bank funds for infrastructure eg roads and for financing education of Ministries will stop, assuming the rest of the shareholders in the World Bank agree. Maybe they won't.
The Nica Act also targets senior members of the Sandanista Party and Nicaraguan Government funds held in the US. The point of the Nica Act is to apply pressure to Ortega to agree to free and fair elections, an independent judiciary and it calls for justice for those that have been killed.
The Nica Act doesn't prevent bank loans, private equity financing or gold streams. it effectively targets Government to Government lending.
A gold steam could be used to finance a BFS without diluting shareholders/issuing new shares. Permits have been granted to extract 600,000 oz gold over a 6 or 7.5 year period depending on whether production is 100k oz or 80k oz gold per annum. at $1,250 gold that $750M extracted over a 6 year period. See Denver Gold Forum presentation, videoed, on Company's website. Why doesn't the Company sell 10% of its gold in the ground for deliver in 3 years? would receive approximately $70M. Gold streams are a common why of financing gold mines and BFSs. B2Gold forward sold $100M gold to finance its new mine in Mali.
AISC is $700 per oz gold. Free cash flow of 600,000 oz x $550 = $330M in 6 years. Add in feeder pits and it increases 25% or $70M to $80M per annum.
One of MC's better presentations, must help having permits after a 2 year delay. The strategy has changed, this is the first time he has been clear on ways to unlock value, which should provide catalysts:
1. The current PFS is 80k oz gold from an open pit. Expect a new PFS to be 100k oz gold p.a for 6 years, a 25% more in a reserve annual production. no more drilling required. just mine faster.
2. Feeder pits have 250k oz gold. Adding feeder pits to a PFS within 9-12 months? assume 180k to 200k oz recovered gold is 40k oz gold pa for 5 years.
3. he says 120k oz gold in a PFS vs 80k oz today +50% increase in reserve production pa. must boost NPVs and IRRs as the capital cost might be 10% more for a 50% increase in annual production.
4. add 1M oz gold to the resource. gets to scale of 3.4M oz gold for the majors
5. demonstrate a major gold district of 5M oz gold. Cacao is highlighted
Silence from MC? He gave a presentation and Q&A last week at the SHARES investor evening. An interview with BW Mining Show a few weeks ago. He gives a recorded or live presentation at the Precious Metals Summit today and another at the Denver Gold Forum next week. Not sure what you want
Wondergoals, good comment. May i add the strategy appears to be to maximise the value of the share price ahead of a construction decision and maximise the share price before construction finance is raised. We know the main construction finance, doesn't have to be raised for 18 months. The strategy must be to get the share price up as detailed in your comment. My interpretation is:
1) complete the BFS – important to further de-risk the Project with a BFS, but a BFS won’t massively re-rate the company
2) update the PFS as it is almost 4 years old, December 2014. There have been material changes e.g no resettlement, new location of processing plant, grant of permit etc. The SHARE presentation states 80k or 100k oz per annum for a single pit. Production to 100k oz gold per annum a 25% increase from the current 80k oz gold in the PFS will boost the NPV and IRR.
3) a second PFS to increase the reserves 30% + by adding in the feeder pits. Maybe within 9 months? The powerpoint says 30k to 40k oz gold from feeder pits. The second PFS sizes production at 120k oz gold per annum a 50% increase on the current PFS. This will be more attractive to the gold producers. Further boost to NPV
4) add 1M oz gold resource, by expanding the current resource areas, taking the Company to 3.4M oz gold
5) demonstrate a 5M oz gold district
What else can get the share price up?
1)Condor has applied for new concessions to the north and south of the current land package. Will these be granted? Presumably Condor is staking along strike as it thinks there is more gold and a bigger Gold District.
2) a 10% shareholding by a gold producer would be a great validation
3) Enter a JV with B2Gold on the 3 feeder pits. Why not let B2 have 250k oz gold in the 3 feeder pits? Cashflow within 12 months form 20k to 30k oz gold? Condor would still retain the main La India open pit, permitted producing 100k oz gold pa.
4) A new discovery on the 313 sq km project. Another La India vein of over 1M oz gold
Big Jamie/Wondergoals, the share price would be near 60p/70p after the grant of permits if the gold price was where it was on 17 April 2018 at $1,350 oz vs $1,195 today. The gold price is off 11.5%. The HUI gold index of gold explorers off 25% since the start of the year. The US dollar is very strong due to a strong economy and trade tariffs (there is an inverse correlation between the dollar and gold), gold shorts are at a record, interest rates in the US are on the rise.
between 18 and 22 April approximately 45 people were killed in Nicaragua, the figure has risen to between 200 and 450 killed depending on who you believe. The situation has calmed down, but political uncertainty/risk has risen since the 18 April. This combined with the lower gold price has put investor interest on hold until the situation becomes clearer.
August is a seasonal week month to generate new interest in shares due to the holiday period
Permits de-risk the Project. A re-rating will happen once gold stabilises and is preferable over $1,300 and there is clarity on Nicaragua
ElectricLion. Yes, any acquisition must on a fully dilution basis for options and warrants, but the valuation range of $150M to $200M is net of any cash held by the Company, on an Enterprise Valuation basis. If an acquirer pays $200M of the asset and if there is $10M cash in the Company, they pay an additional $10M for the cash e.g. total purchase price is $210M. All options and warrants are out of the money with exercise prices at a significant premium.
it is better to think of the consideration paid by a trade buyer that the price per share. If an extra 1M oz gold mineral resource is added, increasing the mineral resource to 3.22M oz gold, there is clearer visibility to a 5M oz gold district and the mineral reserve (PFS) increases to over 1M oz gold by including the feeder pits, the company should sell for between US$150M and US$200M. Both take time and money, which means dilution. Permits need to be granted and the current political situation stabilised. Finally, gold needs to be in favour to maximise the price.
The NPV should go through the roof if there is 120,000 oz gold production per annum from day 1 as cashflow is being brought forward.. Comprises 80k to 100k from the main La India open pit and 20k to 40k oz gold from feeder pits. yes, the capex maybe a bit more, but big synergies on the opex.
Drilling cost US$200 per meter, it depends on the total drilling required. your estimate of US$5M to add 1M oz gold is as good as anybodies.
a major should buy at a big premium, justified because they have a seat at the table of a potential 5M oz world class gold deposit. then funds will have to buy in the market as they won't be offered stock.
The relevant part is it looks like Condor is sizing 50% more open pit gold production from day one. Approximately 120k oz gold production p.a. from the main pit and feeder pits. Compares to 80k oz gold p.a. in the PFS. Much more attractive as a "Base Case" and to potential acquirers and before underground mining is added.
“Now we can either mine at the PFS level, or do it in six years at a faster mining rate of 100,000 oz. of gold a year,” Child says. “We’re trying to get that optimal schedule.”
The company also wants to further drill its feeder pits with the hope of adding another 20,000-40,000 oz. gold per year and another million oz. gold to the overall resource. It says it has a lot of drill-ready targets. Once it gets its permits, however, it will still need to raise more cash.
The company raised £2.5 million in March, but says that only allows it to get its permits with up to 18 months of working capital.