Gold Summary for Nov. 14, 2017
NEW YORK spot gold gained $1.90 to $1,279.80 on Tuesday. The TSX Venture Exchange slid 7.80 points to 794.95 while the TSX Gold Index added 0.70 point to 193.56. Yamana Gold Inc. (YRI) led Canadian golds lower, dropping nine cents to $3.31 on 5.83 million shares, while Agnico Eagle Mines Ltd. (AEM) went the other way, gaining 47 cents to $57.83 on 528,000 shares.
Dr. Alexander Becker and Brian Slusarchuk’s Kenadyr Mining (Holdings) Ltd. (KEN), unchanged at 13.5 cents on 432,000 shares, has received assays of up to 5.35 grams of gold per tonne over 29 metres from its 10th drill hole at the East zone on its Borubai project in the Kyrgyz Republic. In June, the company received assays of up to 8.15 grams of gold per tonne across 50 metres in the first of nine holes it drilled this year. Two weeks ago, assays from the following eight holes also showed gold, although with lesser grades averaging between one and 2.5 grams per
tonne across solid intervals.
Three of the 10 holes reported so far produced intervals averaging over 10 grams per tonne over shorter intervals: 12.8 grams per tonne across 18 metres in the first hole, 10.41 grams per tonne across five metres in the eighth hole and 10.54 grams per tonne over four metres in the final hole. The Borubai project surrounds the new TBL mine, developed by Zijin Mining Group Co. Ltd, which holds a reserve of 4.95 million tonnes averaging 7.02 grams per tonne.
Dr. Backer, chief executive officer, and Mr. Slusarchuk, president, say that the mineralization in the orebody surrounding the TBL mine appears to continue in two directions along strike onto the company’s Borubai licence. He says that the gold encountered in the East zone appears to be an en echelon body separate from TBL, so they are treating it as a new discovery. Investors are treating that news as encouraging but their reaction this year has been bearish: Kenadyr’s now 13.5-cent stock began trading at $1 in April.
The company did not pay any salaries to its previous crew last year when it was a cash shell, but through the first half of 2017 it paid nearly $190,000 in management fees and nearly $120,000 to its directors.
Christian Milau’s Trek Mining Inc. (TREK), down one cent to $1.01 on 281,000 shares, has received the last permit needed to build its Aurizona mine in Brazil. (The “its” is soon to become “ours.” Trek is merging with Newcastle Gold Ltd. (NCA: $0.78) and Anfield Gold Corp. (ANF: $0.375) and will rename itself Equinox Gold Corp. Trek and Newcastle’s shareholders will each hold 44 per cent of Equinox’s stock while Anfield’s backers will hold the remaining 12 per cent. Mr. Milau, CEO of Trek will continue in that role with Equinox, and Greg Smith, Trek’s president, will also keep his job, while Ross Beaty, Anfield’s major shareholder, will invest $20-million into Equinox and become chairman — or in the language of Howe Street — its “strategic leader and shareholder.”)
Mr. Milau says that his company also has the financing in place to build the Aurizona mine, which carries an estimated capital cost of $130.8-million (U.S.) according to a feasibility study completed in July. Aurizona, which is expected to start production late next year, is proposed to be an open-pit mine operating at 8,000 tonnes per day, producing an average of 136,000 ounces annually over a projected life of 6.5 years. Trek’s study projected a discounted net present value of $197.1-million (U.S.) after taxes.
The salaries of Equinox’s crew are unknown, but pay cuts appear unlikely. Mr. Smith hired on at $250,000 per year as CEO a year ago. He subsequently handed that title over to Mr. Milau early this year and became president, a switcheroo that usually involves a larger total expenditure, often without any pay cuts.
Peter Dougherty’s Argonaut Gold Inc. (AR), up three cents to $2.47 on 690,000 shares, has agreed to acquire the Cerro del Gallo (CDG) gold project in central Mexico from Primero Mining Corp. (P: $0.08). Argonaut will pay $15-million to do so, although it expects to recover $1.7-million of value added tax, cutting its gross cost to $13.3-million. Mr. Dougherty, the company’s $375,000-(U.S.)-per-year president and CEO, says that he and his crew view the project as a low-risk, high-reward investment for his shareholders.
CDG cleared feasibility five years ago as a proposed 12,500-tonne-per-day open-pit, heap leach mine that would average 95,000 ounces of gold equivalent over seven years, with the possibility of an expansion that could double its life to 14 years. The project hosts a reserve of 32.2 million tonnes at 0.7 gram of gold per tonne and an additional measured and indicated resource of 47.9 million tonnes at 0.6 gram per tonne, for a combined 1.63 million ounces.