@aprogerson - Mon 21:01
In RNS Number : 5344A
Caracal Gold PLC
03 February 2022 - Move to Accelerate Expansion at Kilimapesa Gold Mine
https://www.londonstockexchange.com/news-article/GCAT/move-to-accelerate-expansion-at-kilimapesa-mine/15313595
Specifically in the 'Key Highlights' section, second point, is the statement:
'Run-of-mine (ROM) production from the existing open pit and underground mining operations already at levels to support a 100% increase in the milling circuit capacity from 500tpd to 1,000tpd' - This seems fairly unequivocal to me that the BoD had evidence in their hands that the required gold ore production of sufficient grade was already a given, just from Kilimapesa Hill, when the Phase 3 go ahead was okayed.
I realise this doesn't seem to reconcile with the Q1 2022 production figures reported, but firm information on where the ore was coming from seems IMO a given, before the 1000ozs/m - 2000ozs/m ramp up decision could be made.
As such I would be interested in anyone else's view on what this statement actually means?
ATB & GLA
@MrJinx
An important point MrJinx, but hopefully, having taken precautions to avoid such a situation with the Strategic investor, the BoD would ask for equally strong guarantees from anyone else in a similar position as a result of a JV.
@RedRoy
Many thanks RedRoy, for responding. My ramblings very often end up the final post on a thread, so I often feel on a different wavelength to others on this BB, which is a pity because I 100% believe in, and I am fully committed to Caracal. So I did just have to voice my opinion though, because it does seem counterintuitive to walk away from proven gold reserves, but I do firmly believe that Kilimapesa has surprised even our Bullish BoD on how soon it has given up some of it's riches. Lets face it, if I remember rightly the IPO documents referred to an 18 month drilling program, but the influx of further talent, with extra skill and experience has grown that to 2 years on double shifts - an increase by a factor of 2.6, just for exploration and at a cost of $300,000/m, so a +$7M price tag without any deposit definition drilling that would also be necessary. Add to that the statement that contract drillers will be brought in in Tanzania for the final work on the 4 well drilled locations in Nyakafuru, shows to me the unbridled confidence of the BoD that the money will be well spent in Kenya, rather than elsewhere.
Finally though, I fully agree that Nyakafuru itself, will prove the skillset of the whole Caracal team in opening up mining operations in Tanzania, which as you point out looks like a game of snakes and ladders, but the prize IMO is well worth the effort now the tide in Tanzania seem to have turned to favourable once more.
ATB & GLA
@JerseyCrew
You are completely correct, no one begrudges Our Queen taking a richly deserve Bow before the whole of the UK and indeed the World, and personally I wouldn't want to cut that short for even a moment.
But you are also completely correct, the 'Caracal itch', just won't go away, so our main hope is that the market re-opens with a mild post celebration euphoria, rather than jaded by a hangover, and finally decides that a reshaped Caracal is actually a pretty decent prospect - throw in the next round of Assay results, and who knows what might happen (perhaps 4p Q3 and 10p by the end of the year :o).
Realistically, though for me, looking back at 1p and forwards to 2p will be a great start
ATVB
I didn't think I could ever say it on this BB, but personally, I never thought I would be so happy to see Caracal to step back from 320,000ozs of gold at Simba, particularly when the potential after drilling was projected into the +1Mozs region, and to do it not just once, but twice in one go, by taking Nyakafuru Reefs off the table as well.
I know it sounds crazy, as we do want more gold reserves, but clearly the market is lukewarm on reserves alone ATM, at least as far as Caracal is concerned, and Nyakafuru Reefs looks to be mired in either politics, or claim disputes at the moment. Add into this the distinct possibility that Kilimapesa is going to add a much anticipated boost to resources followed by the best part of 2 years drilling on priority prospects still to come - lets face it we might just find a 'Simba' sitting in our own backyard.
The clincher though for me, on the total sense in this seemingly retrograde step, was Robbie's own recent statement, that it takes between 36 to 60 months to move from gold discovery, to mine production, and clearly with Caracal's existing Kilimapesa base even producing 2000ozs/m, this IMO, would currently be too big an ask.
So yes, I honestly believe that Caracal is now stronger and better able to make serious progress in both Kenya and Tanzania, and still retain the possibility of revisiting this decision later, or just doing something that is a better fit for Caracal at that time.
ATB & GLA
@Suggins
I must admit, I'm not even sure how you can 'sign up' a young man like Dan Kazungu, who clearly has much still to give, and will no doubt one day return to serving his country again.
So for my part after listening to him talk about his East African vision for Mining, I do feel that Caracal is truly blessed to have Dan on board during this formative period for the company. What is also clear is that Dan's vision for mining in East Africa transcends that of Robbie's by several orders of magnitude and he genuinely sees a brighter future for millions of Africans in dozens of African countries, by using a well managed mining industry to unlock the potential wealth under their feet.
The fact that Dan and Robbie's individual visions align, neither of them seeming to eclipse the other, even though they have different aims, offers massive potential for a synergy that could allow Caracal exponential growth in the region.
2022 will be good for Caracal, just based on the seeds already planted, but IMO the true 'Dan Kazungu' effect has only just begun to shine through the fog, and whilst I believe that Robbie's mining team is second to none and would succeed by their efforts alone, Dan's vision, delivered with his passion and charisma, in places that Caracal alone could never reach, has the potential to take Caracal into a completely new dimension.
Exciting Times.
GLA
@Suggins
I totally agree that only by producing 1000ozs in a one month timescale do you actually demonstrate hitting the target, but, I also accept the argument that you can demonstrate the run rate is a 1000ozs/m by having sufficient ore of the specified grades and getting close but failing to hit the target do having problems.
What is clear is that the the current set up had reached that 95-100% maximum throughput point where only an increase in the input grade of ore, or upgrading the equipment capacity will increase the total gold ounces/month through this method.
A well rounded pitch from Robbie, which covered all the bases.
Let's hope that the StockBox interview adds a little extra, as hopefully it is going to be released just after the next tranche of Assay results?
Robbie, 'A very important point to make...The majority of the ounces (of gold), with our program are going to come out of this HL facility which we are constructing, and HL is low capex, low opex - the disadvantage of HL is that you sacrifice a bit on recovery but it's low capex, low opex, so yes we expect that number ($1200 -$1250 ASIC) to come down between now and the end of the year when we get to that magic number of 24,000ozs a year'
@JerseyCrew
All joking aside, the daft thing is, if Caracal can actually increase gold production to 24,000oz p.a. and the resource to +2Moz at Kilimapesa Hill within the 12-18 month timetable. And additionally have a roadmap to raising production to +50,000oz p.a. and building a JORC compliant resource base of +3Moz at Kilimapesa alone within the 18 months, it truly will be a 'Top Stock' by any measure in it's class.
At that time, those of us staring at the SP today, will truly count ourselves blest, to have hung on through this storm, and Tanzania will just be the enormous cherry on a thickly iced cake - and who knows Robbie might actually be within touching distance of his dreamed of 80-100M Mcap.
@JerseyCrew
Thanks for the extra info, JerseyCrew. I certain didn't think anything sinister was going on, I was just considering what could be important enough to command so much of Robbie's time.
Personally I still think that the only problem that Caracal actually has, is it's history.
By that I mean just not enough history to establish clearly, 'what Caracal is', by demonstrating it - so just 9 months after the launch statement, ' we aim to rapidly increase production to +50,000oz p.a. and build a JORC compliant resource base of +3Moz within 12-18 months. We have already started an optimisation strategy at the Kilimapesa Gold Mine, where there is significant expansion potential and ability to increase gold production to 25,000oz p.a. and the resource to +2Moz'.
Great progress seems to be taking place but bizarrely, I personally believe that the BoD have actually been surprised by the pace at which the initial targets have been reached. So when they had just demonstrated the ability to reach the 1000ozs/m target, they had seen enough evidence to convince themselves that, 'gold production of 24,000oz p.a. and increasing the resource to +2Moz at Kilimapesa Hill'. was already attainable. Unsurprisingly the phase 3 development is triggered, but that in turn means that all the fixes identified to hit the 1000ozs/m target regularly, were no longer appropriate, so the short term effect is Kilimapesa is producing the ore but not the gold as yet. This means that the narrative of Caracal as a growing gold producer currently lacks visible proof, that you don't have to read between the lines to see.
And whilst I applaud the efforts of the many expert gold investors here trying explain the numbers by working through the arithmetic, with the current rate of change of so many of the factors involved, differential calculus would struggle with the task.
Personally I don't think anyone could have predicted the SP drop we have experienced, and for myself though, I have always believed that once gold production levels stabilise, the SP will inevitably rise, because at the moment we suffer all of the pitfalls of an explorer with none of the benefits of a producer.
Overall though I have complete faith in Robbie, but he could certainly aid the situation by providing clearer more compartmentalised messaging, which leaves no doubt what is happening in the Kilimapesa mining license area; The broader Kilimapesa Exploration area; and then talking about the Tanzanian situation, as IMO the Caracal message has drifted as the BoD has strengthened; new management expertise has been added; and the drilling program increased and has progressed favourably - All factors that should have been beneficial.
As a result I certainly hope that the upcoming 'face to face' StockBox Interview will add both detail and clarity.
I saw this posted on the 21st May over on ADVFN BB - I don't know if it breaks any rules reposting it, and I cannot comment on it's provenance as I wasn't the original poster....
'Mark EJ Fairbairn
@MarkEJFairbairn
·
Very happy to have finally met Robbie McCrae the CEO of
@CaracalGoldplc
in person
We sat down for a good 40 minute interview on Kilimapesa
I learnt a lot more about the project and Caracal's proposition so keep an eye out over the next week on
@StockBoxMedia
#GCAT'
Nothing earth shattering as you can see, but it did get me thinking a couple a thoughts, and I was curious what others might think?
1. Why has Robbie flown to London?
Clearly it cannot be just to appear in person in a couple of interviews, even if it was an excellent PR piece, meeting the presenters face to face, but it surely has to be for something significantly more important than just PR at this stage? Don't think I'm knocking good PR opportunities, but we know that Robbie is a workaholic and completely fixated on building the Caracal Gold, that currently exists mostly as the BoD's vision, so what are we not yet seeing here?
2. Why record an interview for future viewing, which clearly cannot contain market sensitive information, which hasn't already been RNS notified ?
Unless, as has been mentioned, it's a general pitch for Caracal, which presumably is going to be released immediately after the news of some potential SP catalyst, expected to take place soon (during this week)?
So I don't know if it is just my flight of fancy, but my take is that to be in London then, only makes sense if the time spent there was of significantly greater value than the same time in East Africa (e.g. attending something, signing something, meeting someone - which had to happen in the UK). Robbie doesn't strike me as a, 'cheap flight for a long weekend's sight seeing and shopping', kind of guy, but I may be over reading this - so anyone else care to stick a pin in my bubble?
Apologies to those who have already seen this, as it appeared a couple of weeks ago, but I only spotted it whilst I was reviewing some of the old Stockbox interviews with Caracal, whilst awaiting the latest offering.
So it's only one man's theory, but I have heard other variations on the theme of the return of a gold standard, but this one is passionately argued (at great length, from about 1/3 of the way in), and adds in an intriguing conspiracy theory as well:
https://www.kitco.com/news/2022-05-05/Gold-price-is-manipulated-by-the-Fed-suspects-mining-tycoon-Frank-Giustra-but-suppression-can-t-last-forever.html
Certainly food for thought?
ATB & GLA
@aprogerson
Yes I had to listen and re-listen to both of Robbie's April presentations around about 20 times, his accent is so soft that even now a few of the exact words have eluded me, but thankfully none at the important places.
As you rightly point out though, I'm not actually saying much that you haven't already said, but just putting it in a timeline to give context. Thanks for your many informative posts by the way.
ATB and GLA
@Legalwolf
You are correct in one aspect of Robbie's reporting - he uses the identical terminology interchangeably, so the Phase 3 expansion of Kilimapesa is itself divided into three phases:
Phase 1 of 3 => The Heap Leach
Phase 2 of 3 => The upgraded Tailings circuit
Phase 3 of 3 => The upgraded Milling circuit
You say Tanzania is not specifically mentioned, but of course it is, just not in the answer to the development and expansion program, but Robbie had already stated that Frank was running his ruler over it, and would give his report to Robbie, following which, at the end of May Caracal will, 'announce the closure of the deal and present the work program and what we are doing'
All fairly unequivocal, but perhaps not joined up there in a way that brings it together neatly - SO ROBBIE IF YOU ARE READING THIS, PLEASE CLARRIFY BOTH THE KILIMAPESA FUNDING SITUATION AND THE OUTLINE PLANS FOR TANANZIA IN YOUR NEXT PRESENTAION, LATER THIS WEEK - THANKS.
But for me LegalWolf the information is all there if you are prepared to follow the trail.
@Swampmonster and Legalwolf
Here is a more or less verbatim transcript of the Q and A in Question:
Q: How do you intend to fund the development and expansion program?
A: Most of what we have done to date has been funded by working capital, All the drilling we have been funding out of working capital, Funds that we have been generating from the mine - So Far on the heap leach its been done. The big expansion, we are going to have to come to the market to raise money to fund it, we are not making enough money to fund the developing of a completely new mine. The first thing we need is to know how much money we need and we are very close to finalising those numbers I had the numbers on my screen while I was waiting for this conference to begin, I've been working with the team on them for the last 2 weeks. Rhiian has given me a commitment that by the middle of next week, we already have those numbers refined, what they are doing now is overlaying the the project program over those numbers. When we announce the expansion program, we will announce how we will fund the expansion program.
So we know Robbie is talking about the funding of a 'completely new mine', and that, 'the team are working on overlaying the numbers on the project plan', at that time - so well after the Phase 3, Kilimapesa expansion had been approved.
Finally the clincher for me is, 'When we announce the expansion program, we will announce how we will fund the expansion program'. I think we can safely say that the Kilimapesa phase 3 plan had been announced for some while at this stage?
So IMO we are still awaiting a plan for the Tanzania Mine expansion, and the funding is being considered at this time, and will be announced soon.
ATB and GLA
Thanks for your kind comments Beyondthesea, it's one of the most useful attributes of a good BB, the fact that there are so many pairs of eyes looking for information that is useful in getting a better perspective on things.
So likewise, thanks for bringing the latest presentation to our attention.
Personally I'm glad it was suitably understated, and didn't make a big thing of how the current price of Potash would boost the NPV - Instead reading it was like watching a race horse being led round before the start of the race - you know just by looking at it that it's ready to go and a good bet to reach the finishing line quickly.
ATB and GLA
@westie50
Interestingly westie50, the article you spotted is just the latest in a series of announcements which show OCP's, and therefore Morocco's direction of travel not just this year, but over many years, as Morocco seeks to transcend it's old role as purely a supplier of raw materials, into one where those materials are processed locally providing jobs, and adding value, before resale - as this much earlier article indicates:
https://www.moroccoworldnews.com/2020/09/317680/made-in-morocco-mining-boom-demands-focus-on-value-added-products
Lets face it, OCP are already exporting their expertise in fertilizer production within Africa, which is a hallmark of of a market leader, and now with this Brazilian JV, they are clearly advancing their plans to become the World No. 1 in fertilizer industry.
IMO they would not be advancing at an accelerating pace without have given serious thought on how and where, they would secure the supplies of all the required raw materials. As such it would seem inconceivable that OCP does not already have a view on where the Khemisset mine would fit into their plans going forwards, particularly now, at a time where the previously stable Potash market has been driven into uncertainty, by sanctions and war.
So whilst it is easy to say that Khemisset is two years away from production, GC has already stated that baring unforeseen difficulties there was the potential for speeding up the mine construction itself, so in partial answer to your question westie50, if OCP were to consider a JV, it is conceivable that they could process some ore themselves, for their purposes, in addition to the Khemisset process facility.
Either way IMO, and as stated by many others, a Potash supply in your own jurisdiction, seems at some stage, a no-brainer for OCP.
@westie50
Whilst the circumstances are saddening, OCP's opportunistic approach to growth can only be seen as a boost to the Khemisset project, because OCP can hardly be unaware of the potential synergistic relationship sitting right on their own doorstep, while their need for raw materials continues to grow?
@Beyondthesea
Thanks for drawing our attention to this article, as like 'ideas' points out, it is pretty unequivocally positive, and all the more encouraging coming from our top Moroccan representative, who has no doubt, an excellent perspective of all the local factors in play.
As a result of reading the article I had a quick search to see what else was lurking in the Medias24 archives, in particular to see if they had consulted MD Morocco, Laheen Alloubane on any other occasion, nothing specific to him, but I came across this article, which could have been ancient history by now, but I believe is very much still a live issue. As far as I am aware, everything still to play for, and $40M+ in the pot - perhaps Rupert is heavily involved in this one with Laheen?
https://medias24.com/2019/12/11/potasse-emmerson-pourrait-beneficier-de-subventions-pour-le-projet-de-khemisset/