Gold Sum­mary for Oct. 12, 2018

Stockwatch Daily - - MINES & METALS - By Stock­watch Busi­ness Re­porter

NEW YORK spot gold fell $6.20 to $1,217.40 on Fri­day. The TSX Ven­ture Ex­change rose 7.14 points to 698.60 while the TSX Gold In­dex lost 1.48 points to 168.52. Cana­dian golds fol­lowed bul­lion lower to­day, with Alamos Gold Inc. (AGI) shed­ding 19 cents to $6.38 on 2.21 mil­lion shares. Cen­terra Gold Inc. (CG) bucked the trend, adding 19 cents to $5.39 on 2.58 mil­lion shares.

Ross Beaty and Chris­tian Mi­lau’s Equinox Gold Corp. (EQX), up two cents to $1 on 1.04 mil­lion shares, has sold 102.6 mil­lion shares at 95 cents, raising $75-mil­lion (U.S.). The cash is for the ac­qui­si­tion of the Mesquite gold mine in Cal­i­for­nia, as per a month-old de­fin­i­tive agree­ment with New Gold Inc. (NGD: $1.05). Equinox agreed to pay $158-mil­lion (U.S.) in cash for Mesquite and in ad­di­tion to the eq­uity sale, Equinox is set­ting up a $100-mil­lion (U.S.) credit fa­cil­ity with the Bank of Nova Sco­tia and a $20-mil­lion (U.S.) credit fa­cil­ity with Sprott Pri­vate Re­source Lend­ing LP.

The Mesquite mine hosts a re­serve of 65.1 mil­lion tonnes at 0.54 gram of gold per tonne, or about 1.1 mil­lion ounces. As well, the mine hosts an­other 80.2 mil­lion tonnes mea­sured and in­di­cated at 0.46 gram per tonne and 8.9 mil­lion tonnes in­ferred at 0.38 gram per tonne, pro­vid­ing an­other 1.29 mil­lion ounces. New Gold’s most re­cent guid­ance pro­jected Mesquite as on track to pro­duce be­tween 140,000 and 150,000 ounces of gold this year, some­what higher than its 10-year av­er­age of 135,000 ounces pro­duced at an av­er­age all-in sus­tain­ing cost of $870 (U.S.) per ounce.

Mr. Mi­lau, chief ex­ec­u­tive of­fi­cer, de­scribed the ac­qui­si­tion of Mesquite as one that would bring im­me­di­ate pro­duc­tion and cash flow to Equinox, adding that it was a “per­fect fit for our port­fo­lio of gold as­sets” and would ad­vance the com­pany’s strat­egy of be­com­ing a ma­jor gold pro­ducer over the next few years.

The Van­cou­ver-based Mr. Mi­lau ar­rived in the spring of 2017. He earns $300,000 per year in salary. Greg Smith, pres­i­dent, earns about $240,000 per year in salary. Mr. Beaty, also of Van­cou­ver, was ap­pointed as chair­man early this year. He is a ma­jor share­holder, hold­ing over 50 mil­lion shares.

Sean Roosen and John Burzyn­ski’s Osisko Min­ing Inc. (OSK), down 19 cents to $2.56 on 1.31 mil­lion shares, has reached Zone 27 with its ex­plo­ration ramp at the Wind­fall Lake gold project in Que­bec. Osisko will now start col­lect­ing its planned 5,000-tonne bulk sam­ple from Zone 27, with pro­cess­ing of the rock sched­uled to oc­cur in Novem­ber. Mr. Burzyn­ski, pres­i­dent and CEO, says that the Zone 27 ge­ol­ogy com­pares very well with what had been pre­dicted by the com­pany’s mod­el­ling based on drill re­sults.

At last re­port, Wind­fall Lake held 2.38 mil­lion tonnes in­di­cated at 7.85 grams of gold per tonne and an­other 10.6 mil­lion tonnes in­ferred at 6.7 grams per tonne, for a com­bined 2.9 mil­lion ounces of gold. Zone 27, which is a higher-grade por­tion of the Main zone at Wind­fall, ac­counted for just 375,000 of those ounces, with 628,000 tonnes in­di­cated at 8.69 grams per tonne and 852,000 tonnes in­ferred at 7.28 grams per tonne.

The Toronto-based Mr. Burzyn­ski has been with the com­pany since 2010. He had been chair­man, but he took the role of CEO in 2015 when his pri­mary em­ployer, Osisko Gold Roy­al­ties Ltd. (OR: $10.72) re­struc­tured the ar­range­ment be­tween it and its sub­sidiary. Mr. Burzyn­ski was get­ting $300,000 per year, but he got a boost to $500,000 per year in 2016. Mr. Roosen, also of Toronto, col­lects $55,000 per year in fees. He took over from Ned Good­man who is now called chair­man emer­i­tus. (“Emer­i­tus” is Latin for “vet­eran sol­dier,” but to­day it is a syn­onym for “lend­ing your good name for free.”)

Ed Kruchkowski’s Decade Re­sources Ltd. (DEC), up one-half cent to 5.5 cents on 44,000 shares, has re­ceived as­says of up to 10.6 grams of gold per tonne over 7.26 me­tres from a hole drilled into the Water­pump zone at its Red Cliff project, near Ste­wart in north­west­ern Bri­tish Columbia. Mr. Kruchkowski, pres­i­dent, says that he is “very en­cour­aged” with the ini­tial as­says from Red Cliff, although much of his en­cour­age­ment stemmed from the as­says ob­tained ear­lier this year. There could be more en­cour­age­ment to come, as the com­pany is wait­ing for as­says from the fi­nal 22 holes, which are ex­pected “in the com­ing weeks.” Mr. Kruchkowski is look­ing to the Montrose zone par­tic­u­larly, as the com­pany re­ported vis­i­ble gold in at least one of the pend­ing tests.

The Cal­gary-based Mr. Kruchkowski, who has been with Decade for over a decade, has been draw­ing just

$24,000 per year in salary for the past few years. (His pri­vate com­pany did bet­ter, billing Decade for nearly $150,000 in ser­vices last year.) He is also the pres­i­dent and CEO of Moun­tain Boy Min­er­als Ltd. (MTB: $0.055), with which he and his pri­vate com­pany have sim­i­lar ar­range­ments.


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