Pan American Silver posts record Q4 cash flow

Pan American Silver Corp. [PAAS-TSX, NASDAQ] has reported record cash flow in the fourth quarter of 2019 and said it is raising its quarterly dividend by 43%.

The dividend increase and record cash flow were among the highlights of the company’s fourth quarter and 2019 year-end financial results, which were released after the close of trading on February 19, 2019.

Pan American shares advanced on the news, rising 0.30% or 10 cents to $32.68 on volume of 1.2 million. The shares are currently trading in a 52-week range of $13.83 and $32.91.

Pan American recently acquired Tahoe Resources Inc. in a US$1 billion transaction that created the world’s second largest primary silver producer. The company owns and operates mines in Mexico, Peru, Canada, Argentina and Bolivia. It also owns the Escobal Mine in Guatemala, which is not operating right now.

During the third quarter, 2019, the company said its Timmins West and Bell Creek (together Timmins) are no longer classified as held for sale, and net income generated by Timmins is now included in the company’s income statement in the normal course of business. Ore from both mines is processed at the Bell Creek mill.

Net cash generated from operating activities in the fourth quarter of 2019 of US$129.5 million was the highest in the company’s history. That brought net cash generated from operating activities in 2019 was US$282 million.

Net earnings in the fourth quarter of 2019 and full year 2019 were US$51.7 million (25 cents per share) and US$112 million (55 cents per share) respectively. Net earnings in the fourth quarter included a US$40.1 million impairment charge related to the Manantial Espejo Mine in Argentina due to the increase in export taxes and the challenging business conditions in Argentina, the company said.

This was partially offset by US$33.7 million in investment income, largely related to the company’s 17% equity interest in New Pacific Metals Corp. [NUAG-TSXV; NUPMF-OTCQX]. New Pacific Metals is a Canadian company engaged in the exploration and development of precious metal mining properties in Bolivia, Canada and China. The company’s flagship project is the Silver Sand property in the Potosi Department of Bolivia. Its largest shareholders are Silvercorp Metals [SVM-TSX, NYSE American] and Pan American.

Meanwhile, Pan American reported consolidated annual silver and gold production of 25.9 million ounces and 559,200 ounces respectively, as previously disclosed on January 15, 2020.

Silver segment cash costs and all-in-sustaining costs (AISC) in 2019 were US$6.39 and US$10.46 per silver ounce sold respectively.

Gold segment cash costs and AISC in 2019 were US$712 and US$948 per gold ounce sold respectively.

Pan American also said its board of directors has approved an increase in the cash dividend from $0.035 to $0.05 per common share, for approximately $10.5 million in aggregate cash dividends, payable on March 12, 2020 to holders of Pan American common shares at the close of trading on March 2, 2020.

White Gold Corp. Further Extends VG Deposit Mineralization and Advances New High Priority Targets in Close Proximity to VG Deposit on QV Property

White Gold Corp. [TSX.V: WGO, OTC – Nasdaq Intl: WHGOF, FRA: 29W] (the “Company”) is pleased to announce positive RC drill results on its recently acquired VG Deposit located on the QV Property. The drilling extended known mineralization which remains open in all directions and shows similarities to the nearby Golden Saddle deposit. The QV Property was acquired in early 2019 and contains the VG Deposit, which hosts an historic inferred gold resource of 230,000 oz at 1.65 g/t Au(1) and several highly prospective undrilled targets in close proximity. The QV Property is historically underexplored and demonstrates strong similarities and prospective geology as that found on both the White Gold and JP Ross properties. Drilling in 2019 was designed to step-out on the VG deposit along strike to the NE and SW, and to infill gaps in the deposit’s historic resource model. The Company’s fully-funded $13 million 2019 exploration program, backed by partners Agnico Eagle Mines Limited (TSX: AEM, NYSE: AEM) and Kinross Gold Corp (TSX: K, NYSE: KGC), includes diamond drilling on the Vertigo target (JP Ross property), Golden Saddle & Arc deposits (White Gold property) as well as soil sampling, prospecting, GT Probe sampling, trenching and RAB/RC drilling on various other properties across the Company’s expansive land package located in the prolific White Gold District, Yukon, Canada.

Highlights Include:

• QV Property was acquired in early 2019 and includes the VG Deposit which hosts a historic Inferred gold resource of 230,000 oz at 1.65 g/t Au. The property has geologic similarities to both the newly discovered Vertigo target as well as the Company’s flagship White Gold property which has a mineral resource of 1,039,600 ounces Indicated at 2.26 g/t Au and 508,700 ounces Inferred at 1.48 g/t Au. The QV is vastly underexplored and a high priority for follow-up exploration.

• 2019 activity included 870m of RC drilling across 8 holes, designed to step-out along the strike of the deposit to the NE and SW, and to infill gaps in the deposit’s historic resource model. LiDAR was also completed over the southern portion of the property and a total of 1,466 soil samples were collected.

• Golden Saddle style gold mineralization was intercepted in every hole at the VG deposit. Results confirmed continuity of mineralization and extended the current deposit limits. The VG deposit remains open in both directions along strike and downdip.

• 2019 Drill highlights include QVVGRC19-005 which intercepted 50.3m of 2.07 g/t Au, QVVGRC19-007 intercepting 38.10m of 1.97 g/t Au, QVVVGRC19-006 intercepting 36.58m of 1.42 g/t Au, QVVVGRC19-002 intercepting 33.54m of 1.09 g/t Au, and QVVVGRC19-001 intercepting 10.67m of 2.09 g/t Au.

• Multiple underexplored, high-priority targets exist surrounding the VG resource on the QV property, including the Tetra, Shadow and Stewart gold targets, which warrant follow-up exploration based on exploration performed to date.

Images to accompany this news release can be found at http://whitegoldcorp.ca/investors/exploration-highlights/.

“We are very pleased with the results of our 2019 RC drill program on the recently acquired VG Deposit. The program further expanded the footprint of the deposit, which continues to remain open along strike and at depth and refined the geologic model for continued follow up work. Furthermore, the mineralization, alteration, geochemistry and structural controls of the VG are remarkably similar to our flagship Golden Saddle deposit just 10km to the south,” stated David D’Onofrio, Chief Executive Officer. “This property has seen very limited exploration to date and we are confident that our team is well positioned to maximize the value of the VG deposit and the several other highly prospective and untested new targets on the property through leveraging our innovative data driven exploration methodologies.”

The VG Deposit

The historic Inferred Mineral Resource estimate for the VG deposit is 230,000 ounces of gold (4,390,000 tonnes at an average gold grade of 1.65 g/t), as of June 3rd, 2014. The Mineral Resource estimate was prepared for Comstock Metals Ltd. by Lions Gate Geological Consulting Inc. and reported in its press release dated July 8th, 2014, and is based on Comstock data (including collar, survey, lithology and assay data), using the Inverse Distance Squared (ID2) method with appropriate estimation parameters in accordance with industry standards. The estimate needs to be verified by the Company by conducting detailed data and QA/QC validation, including location, geological, density and assay data. More recent drilling data will be incorporated into a future resource update. A qualified person for the Company has not done sufficient work to classify the historical estimate at QV as current Mineral Resources, therefore the Company is not treating the historical estimate as current Mineral Resources and the historical resource should not be relied upon.

  • See Comstock Metals Ltd. Technical report titled “NI 43-101 TECHNICAL REPORT on the QV PROJECT”, dated August 19, 2014, available on SEDAR.

2019 Exploration Summary

A total of 870.2m of RC drilling over 8 holes was completed on the VG Zone. The holes were designed to step-out on the deposit along strike to the NE and SW, evaluate gaps in the historic resource model, and twin historic diamond holes for QA/QC purposes. Individual assay results for the 2019 program ranged from trace to 11.9 g/t Au with additional detail provided below.

The results from 2019 activities, in addition to the 2017 historic drilling performed after the historic resource calculation was completed, prove that the VG deposit is open along strike to the NE, continues to be open at depth, and has great potential to expand and upgrade the current resource area with future activity. The QV also hosts several highly prospective new targets which remain underexplored further adding to the property’s potential for new discoveries.

The mineralization on the VG deposit is hosted along a NE trending, gently south dipping structural zone that has been traced for over 700m at surface and consists of disseminated to vein-controlled pyrite with brecciation, stockwork quartz-carbonate veining, and sericite alteration.

Mineralization on the VG consists of a several tabular, NE trending, shallowly N dipping bodies of mineralization associated with strong quartz-sericite-illite alteration with brecciation and stockwork to lode style quartz veining and disseminated to fracture controlled pyrite and rare visible gold. The mineralization is coincident with anomalous Mo (+/-Pb) and strongly resembles mineralization on the Golden Saddle Deposit; approximately 10km to the south and is open along strike and at depth. The mineralization occurs adjacent to the Telegraph Fault, a NE trending, subvertical normal fault that has locally offset the mineralization.

A summary of significant assay results is presented in Table 1 and a description of the holes is below.

QVVGRC19-001 is a 50m step out located on the southeastern margin of the VG deposit on the VG South body. The hole returned 10.67m of 2.09 g/t Au from 4.57m depth; including 1.52m of 7.83 g/t Au from 10.67m depth. The intercept confirms mineralization on the VG continues along strike to the east of the historic resource area and is still open along strike.

QVVGRC19-002 is a 110m step-out to the northeast of the VG deposit and returned 7.62m of 4.03 g/t Au from 86.87m depth; including 3.04m of 7.80 g/t Au from 89.92m depth. This intercept occurs within a broader envelope of anomalous mineralization (>0.1 g/t Au) and the overall interval averages 1.09 g/t Au over 33.54m from 65.53m depth. The intercept confirms mineralization on the VG continues along strike to the NE of the historic resource area and is still open along strike and down dip.

QVVGRC19-003 is located 205m west of QVVGRC19-002 and was drilled to test along the western edge of the historic resource pit. The hole returned 13.71m of 0.67 g/t Au from 36.58m depth, with individual 1.52m sample values up to 2.41 g/t Au.

QVVGRC19-004 is located 135m W-NW of QVVGRC19-002 and outside the historic resource pit. The hole was terminated prior to target depth due to poor ground conditions.

QVVGRC19-005 was drilled as a twin of historic hole QV12-006 for QA/QC purposes. The hole returned 50.3m of 2.07 g/t Au from 70.1m depth; including 3.05m of 7.88 g/t Au from 76.2m depth, 12.19m of 3.29 g/t Au from 102.11m depth and 4.57m of 5.46 g/t Au from 103.63m depth. This compares favorably with the intercept of 41.43m of 2.00 g/t in historic hole QV12-006

QVVGRC19-006 infilled a 95m gap between historic holes QV12-006/008 & QV12-001/002/004. The hole returned 36.58m of 1.42 g/t Au from 80.77m depth; including 9.14m of 2.71 g/t Au from 86.87m depth. This result confirms grade continuity and compares favourably with grades from surrounding historic drill holes.

QVVGRC19-007 was drilled as a twin of historic hole QV12-002 for QA/QC purposes. The hole returned 38.10m of 1.97 g/t Au from 21.34m depth; including 9.14m of 3.70 g/t Au from 28.96m depth and 3.05m of 3.68 g/t Au from 48.77m depth. The hole also intercepted a 9.14m zone of 0.99 g/t Au from 68.58m depth. These results are both slightly higher than the results from QV12-002 which were 40.40 m of 1.64 g/t Au and 8.40m of 0.68 g/t Au from the two zones respectively.

QV Drill Highlights:

Individual assays for the reported results ranged from trace to 11.9 g/t Au. The most significant results for drilling on QV included in this release are summarized in the table below. True thickness is estimated to be between 90 – 95% of the reported intercepts:

The 2019 drilling program successfully confirmed historic results, continuity of mineralization and extended the current deposit limits. The VG deposit remains open in both directions along strike and downdip.

Historical work on the VG Deposit

The most recent historic work on the property prior to its acquisition by the Company in 2019 occurred in 2017 and included six diamond drill holes on the VG which expanded the footprint of known mineralization beyond the limits of the prior historic resource calculation. Significant results from the 2017 program included 1.42 g/t gold over 45.5m from 67.5m down hole in hole QV17-018, which expanded the mineralization 125 metres down dip from previous drilling and 1.48 g/t gold over 51.2m from 98m down hole in hole QV17-019, which expanded the mineralization 45m west of previous drilling.

Additional work on the QV Property has included soil sampling, GT Probe sampling, trenching, IP-Resistivity surveys, airborne magnetic-radiometric surveys, geological mapping/prospecting and minor RAB drilling. This work has defined other priority targets with similarities to the Company’s Golden Saddle deposit and recently discovered Vertigo zone warranting follow up exploration including the Stewart, Tetra and Shadow targets.

QV Property

The QV property covers 16,335 hectares (40,000 acres) and is 10km north of the Company’s White Gold property which hosts its Golden Saddle & Arc deposits, 20 km southwest of the Company’s Vertigo discovery on its JP Ross property, and 44 kilometres northwest of Newmont Goldcorp’s (TSX: NGT, NYSE: NEM) Coffee project. At least 3 other high priority targets are currently recognized on the property including the Stewart, Tetra, and Shadow zones. Additionally, large portions of the QV property are historically underexplored and are open for potential new gold discoveries. Strong geological similarities have been noted between the QV property and the Company’s adjacent White Gold and JP Ross properties.

In 2019, airborne LiDAR was completed over the southern portion of the property and a total of 1,466 soil samples were collected over two grids on the QV property. The most significant results were from a previously unsampled area in the central portion of the QV property and included samples ranging from trace to 106.2 ppb Au. This includes expansion of the Tetra zone approximately 500m to the west, and the Tetra target now covers a 1,500m x 600m area and is associated with an E-W trending magnetic low interpreted as a potentially mineralized structure.

Follow up work on the Tetra and other targets across the QV property will be a priority for future exploration campaigns. Further detail on the high priority targets is outlined below.

Stewart Target: Located 5km N-NW of the VG and consists of a 1.5km, E-W, trending gold in soil anomaly, with values from trace to 274.1 ppb Au and anomalous Bi-Ag-Te-Mo. The target occurs adjacent to a Jurassic intrusive that may be associated with mineralization in the area.

Tetra Target: Located 8km N of the VG and consists of a 1.5km, E-W, trending gold in soil anomaly, with values from trace to 151.5 ppb Au. The target occurs along an interpreted E-W oriented fault based on magnetic data for the area and is open and unexplored to the west.

Shadow Target: Located 12 km north of the VG zone and consists of multiple gold in soil anomalies, ranging from trace to 514ppb Au and up to 2.7km long, associated with a series of NW and ENE trending structures. Strongly anomalous Ag-Pb-Bi+/-As+/-Mo also occur in the area, and the overall geochemical and structural setting is similar to the Company’s Vertigo discovery 23km to the east.

QA/QC

The analytical work for the 2019 drilling program was performed by ALS Canada Ltd. an internationally recognized analytical services provider, at its Vancouver, British Columbia laboratory.  Sample preparation was carried out at its Whitehorse, Yukon facility. All RC chip and diamond core samples were be prepared using procedure PREP-31H (crush 90% less than 2mm, riffle split off 500g, pulverize split to better than 85% passing 75 microns) and analyzed by method Au-AA23 (30g fire assay with AAS finish) and ME-ICP41 (0.5g, aqua regia digestion and ICP-AES analysis). Samples containing >10 g/t Au will be reanalyzed using method Au-GRAV21 (30g Fire Assay with gravimetric finish).

The reported work was completed using industry standard procedures, including a quality assurance/quality control (“QA/QC”) program consisting of the insertion of certified standard, blanks and duplicates into the sample stream.

About White Gold Corp.

The Company owns a portfolio of 22,040 quartz claims across 35 properties covering over 439,000 hectares representing over 40% of the Yukon’s White Gold District. The Company’s flagship White Gold property has a mineral resource of 1,039,600 ounces Indicated at 2.26 g/t Au and 508,700 ounces Inferred at 1.48 g/t Au. Mineralization on the Golden Saddle and Arc is also known to extend beyond the limits of the current resource estimate. Regional exploration work has also produced several other prospective targets on the Company’s claim packages which border sizable gold discoveries including the Coffee project owned by Newmont Goldcorp Corporation with a M&I gold resource(2) of 3.4M oz and Western Copper and Gold Corporation’s Casino project which has P&P gold reserves(2) of 8.9M oz Au and 4.5B lb Cu. For more information visit www.whitegoldcorp.ca.

(2) Noted mineralization is as disclosed by the owner of each property respectively and is not necessarily indicative of the mineralization hosted on the Company’s property.

Qualified Person

Jodie Gibson, P.Geo., Technical Advisor, and Andrew Hamilton, P.Geo., Exploration Manager, for the Company are each a “qualified person” as defined under National Instrument 43-101 Standards of Disclosure for Mineral Projects, and each has reviewed and approved the content of this news release.

Contact Information:

David D’Onofrio
Chief Executive Officer
White Gold Corp.
(647) 930-1880
ir@whitegoldcorp.ca

 

Cautionary Note Regarding Forward Looking Information

This news release contains “forward-looking information” and “forward-looking statements” (collectively, “forward-looking statements”) within the meaning of the applicable Canadian securities legislation. All statements, other than statements of historical fact, are forward-looking statements and are based on expectations, estimates and projections as at the date of this news release. Any statement that involves discussions with respect to predictions, expectations, beliefs, plans, projections, objectives, assumptions, future events or performance (often but not always using phrases such as “expects”, or “does not expect”, “is expected”, “anticipates” or “does not anticipate”, “plans”, “proposed”, “budget”, “scheduled”, “forecasts”, “estimates”, “believes” or “intends” or variations of such words and phrases or stating that certain actions, events or results “may” or “could”, “would”, “might” or “will” be taken to occur or be achieved) are not statements of historical fact and may be forward-looking statements. In this news release, forward-looking statements relate, among other things, the Company’s objectives, goals and exploration activities conducted and proposed to be conducted at the Company’s properties; future growth potential of the Company, including whether any proposed exploration programs at any of the Company’s properties will be successful; exploration results; and future exploration plans and costs and financing availability.

These forward-looking statements are based on reasonable assumptions and estimates of management of the Company at the time such statements were made. Actual future results may differ materially as forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to materially differ from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors, among other things, include:; expected benefits to the Company relating to exploration conducted and proposed to be conducted at the Company’s properties; failure to identify any additional mineral resources or significant mineralization; the preliminary nature of metallurgical test results; uncertainties relating to the availability and costs of financing needed in the future, including to fund any exploration programs on the Company’s properties; business integration risks; fluctuations in general macroeconomic conditions; fluctuations in securities markets; fluctuations in spot and forward prices of gold, silver, base metals or certain other commodities; fluctuations in currency markets (such as the Canadian dollar to United States dollar exchange rate); change in national and local government, legislation, taxation, controls, regulations and political or economic developments; risks and hazards associated with the business of mineral exploration, development and mining (including environmental hazards, industrial accidents, unusual or unexpected formations pressures, cave-ins and flooding); inability to obtain adequate insurance to cover risks and hazards; the presence of laws and regulations that may impose restrictions on mining and mineral exploration; employee relations; relationships with and claims by local communities and indigenous populations; availability of increasing costs associated with mining inputs and labour; the speculative nature of mineral exploration and development (including the risks of obtaining necessary licenses, permits and approvals from government authorities); the unlikelihood that properties that are explored are ultimately developed into producing mines; geological factors; actual results of current and future exploration; changes in project parameters as plans continue to be evaluated; soil sampling results being preliminary in nature and are not conclusive evidence of the likelihood of a mineral deposit; title to properties; and those factors described in the most recently filed management’s discussion and analysis of the Company. Although the forward-looking statements contained in this news release are based upon what management of the Company believes, or believed at the time, to be reasonable assumptions, the Company cannot assure shareholders that actual results will be consistent with such forward-looking statements, as there may be other factors that cause results not to be as anticipated, estimated or intended. Accordingly, readers should not place undue reliance on forward-looking statements and information. There can be no assurance that forward-looking information, or the material factors or assumptions used to develop such forward-looking information, will prove to be accurate. The Company does not undertake to release publicly any revisions for updating any voluntary forward-looking statements, except as required by applicable securities law.

 

Neither the TSX Venture Exchange (the “Exchange”) nor its Regulation Services Provider (as that term is defined in the policies of the Exchange) accepts responsibility for the adequacy or accuracy of this news release.

 

HudBay CEO scores first big win in Peru

HudBay Minerals Inc.  [HBM-TSX, NYSE] has secured the surface rights for a satellite deposit located near the company’s flagship Constancia copper-gold mine in Peru.

This marks the first big win for Peter Kukielski who was recently named permanent President and CEO of HudBay after serving as interim CEO since July, 2019 following the departure of predecessor Alan Hair.

HudBay said the community of Chilloroya has formally approved a surface rights agreement with HudBay for the Pampacancha satellite deposit. With the completion of this agreement, the company said it expects to be mining ore from the deposit in late 2020.

HudBay is an integrated mining company, primarily producing copper concentrate (containing copper, gold and silver), zinc concentrate and zinc metal. The company owns four polymetallic mines, four ore concentrators and a zinc production facility.

The operations are located in northern Manitoba and Saskatchewan, Peru and Arizona.

“We are very pleased to have reached a Pampacancha agreement with the community,” Kukielski said. “I have been impressed with the team’s work and appreciate the years of effort to achieve this goal. Pampacancha adds high-grade copper and gold ore into the Constancia Mine plan, lowering future cash costs for the mine and increasing operating cash flows at Constancia. Not only was Constancia one of the best project development and ramp-up successes of recent project builds, Constancia is also one of the lowest cost open pit copper mines in South America,” he said.

“This could not have been achieved without our long-term commitments to, and partnership with, our local communities, and this successful agreement further validates our social acceptance to operate in Peru,” Kukielski added.

News of the deal was announced after the close of trading on February 18, 2020. On Wednesday February 19, HudBay shares advanced 3.7% or 15 cents to $4.20 on volume of 1.45 million. The shares are currently trading in a 52-week range of $3.81 and $10.42.

Constancia is primarily a copper mine, situated in southern Peru and consists of the Constancia and Pampacancha deposits. The secondary metals are molybdenum and silver. Commercial production was achieved in April, 2015.

The Pampacancha deposit is expected to serve as a material grade sweetener to the Constancia ore feed over the 2021 to 2025 period. The capital expenditure associated with the project is expected to be US$70 million, according to a Scotiabank report.

 

First Majestic’s silver focus pays off in 2019

First Majestic Silver Corp. [FR-TSX; AG-NYSE; FMV-FSE] on Wednesday February 19 said 2019 was stellar year as the company generated record revenues and winding up with the highest cash balances in the company’s 18-year history.

First Majestic is a Mexico-focused mining company. It owns and operates six producing silver mines. They include the Parrilla, San Martin, La Encantada, Del Toro and Santa Elena silver mines.

Its asset portfolio also includes the San Dimas Mine following the acquisition of the site’s former owner Primero Mining Corp. in May 2018 for $187 million in common shares of First Majestic. Under a new streaming agreement, Wheaton Precious Metals Corp. [WPM-TSX, NYSE] is entitled to receive 25% of the gold equivalent production from San Dimas.

“Production [in 2019] also achieved a new record of 25.6 million silver equivalent ounces following grade and metallurgical recovery improvements at our Santa Elena and La Encantada operations,” said First Majestic CEO Keith Neumeyer.

“These operational improvements helped to drive a 15% reduction in our [all-in-sustaining costs] AISC for the year to US$12.64/oz, making it the lowest AISC per ounce since 2016 and a healthy beat to our annual cost guidance range of US$12.98 to US$13.94/oz,” Neumeyer said.

“We continue to lead the industry as the purest silver producer and remain focused on improving margins through the adoption of new technology.”

On Wednesday, First Majestic shares eased 8.5% or $1.15 to $12.31 on volume of 2.2 million. The shares trade in a 52-week range of $7.39 and $16.50.

First Majestic achieved total production of 25.6 million silver equivalent ounces, a 15% increase over 2018, and reaching the top end of the company’s 2019 guidance range of 24.4 million to 26.0 million ounces.

The company’s silver production reached 13.2 million ounces, a 13% increase over 2018. That number was in line with the company’s guidance range of 12.8 to 13.5 million ounces.

Revenue of US$363.9 million in 2019 was a record, and marked a 21% increase from 2018.

The company posted adjusted net earnings of US$7.3 million or $0.04 per share, after excluding non-cash and unusual items.

The 21% increase in full year revenue, compared to 2018, was attributable to a full year of operations at San Dimas under the ownership of First Majestic, plus a 92% increase in production from La Encantada following a revised throughput methodology which the company said improved recoveries significantly.

The increased revenue was also due to increased production at Santa Elena as well as a 6% increase in the realized silver price in 2019, which averaged US$16.40/oz for the year.  That compared to an average of US$15.26/oz in the first half of the year, and US$17.55 in the second half of 2019.

EMX selling Norwegian metal projects to Pursuit Minerals

EMX Royalty Corp. [EMX-TSXV, NYSE American] has executed an agreement to sell three nickel-copper-cobalt projects in Norway to Pursuit Minerals Ltd. [PUR-ASX], a battery metals-focused company which trades on the Australian Stock Exchange.

The Espedalen, Hosanger, and Sigdal projects each contain magmatic nickel-copper-cobalt sulfide deposits, associated with mafic-ultramafic intrusive complexes in southern Norway. Platinum group elements (PGEs) and gold are also enriched in some of the deposits although historic sampling for PGEs and gold was limited their endowments remain poorly documented.

Each of the projects host areas of historic mining and drill-defined zones of sulfide mineralization. Nickel mining in the Espedalen area, for example, was intermittently active from 1848 to 1918. In that time, 100,000 tonnes of nickel was produced, averaging 1.0% nickel, 0.4% copper and 0.6% cobalt.

The agreement provides EMX with an equity interest in Pursuit, a 3% net smelter return royalty on each of the three projects, and other considerations, including annual advance royalty and milestone payments. Pursuit may also issue up to 9.9% of its issued and outstanding shares to EMX as certain conditions of the agreement are satisfied.

EMX shares advanced on the news, rising 1.9% or $0.05 to $2.65. The shares are currently trading in a 52-week range of $1.43 and $2.77.

EMX is a precious and base metals royalty company with a diversified portfolio of royalty, mineral property and investment interests spanning five continents. Its two key assets are the Leeville royalty in Nevada and Timok Project royalty in Serbia. Those projects are the focus of exploration and development by Nevada Gold Mines LLC and Zijin Mining Group Ltd., respectively.

The Norwegian projects being sold to Pursuit occur amongst a cluster of nickel deposits and mafic intrusive complexes that is considered to be the eastern extension of the same trend that hosts the Voisey’s Bay nickel deposits in Labrador, Canada.

Pusuit will have an option to acquire 100% project interests in the Espedalen, Hosanger, and Sigdal projects under the following terms:

Upon execution of the agreement, Pusuit will make cash a cash payment of $25,000 and issue 20 million shares to EMX.

Pursuit will then have a 12-month option period during which it must spend a minimum of $250,000 on the projects.

Once that option is exercised, Pursuit will issue up to 20 million shares, capped at 9.9% of its issued and outstanding shares.

By exercising the option, Pursuit will vest a 100% interest in each project, with EMX retaining a 3% NSR royalty, 1% of which may be purchased by Pursuit under certain conditions. AAR will commence on the second anniversary of the agreement, starting at $25,000 per project and increasing at $5,000 annually.

On the second anniversary of the agreement, Pursuit will issue to EMX another tranche of shares equal in cash value to the 20 million Pursuit shares issued to exercise the option (as determined by the price of the shares when issued at the exercise of the option).

If the option is exercised, Pursuit will commit another $500,000 in exploration expenses by the second anniversary and drill at least 1,000 metres per project each year until a pre-feasibility study is completed.

Milestone payments of $500,000 will be made to EMX upon each of the following milestones: a) completion of a preliminary economic assessment, b) delivery of a positive feasibility study.

CGL, TMX and the rule of law

By Adam Pankratz

At last week’s Oscars Leonardo DiCaprio sat front row, as he always does. The Hollywood star’s influence in film is well known, but lately he and numerous activists have extended their gaze to blocking Canada’s resource development. Mr. DiCaprio has a rare talent for flying in on a private plane, denouncing fossil fuels, declaring steadfast support for indigenous populations and then immediately jetting off to an exclusive party in St. Tropez. Yet despite these obvious inconsistencies his and like messages seem to be sticking in certain quarters and cross-country chaos is the result for Canada. Logic, facts and respect have departed the resource development field to the detriment of the rule of law, First Nations communities, and all Canadians.

The latest spark to set off the blaze of activist protests to “Shut down Canada,” has been the RCMP enforcement of a court injunction – which was granted back in December – to remove protesters from the Unist’ot’en site on Wet’suwet’en territory near Smithers, BC. The country-wide protests result from the willful ignorance of reality and facts, which now characterize anti-resource development activism in Canada. Protesters blockaded streets, ports, bridges, and rails allegedly to demonstrate their solidarity with First Nations groups and opposition to pipelines. Yet, these protesters conveniently and consistently ignore two important aspects of resource development when it suits them: the rule of law is a two-way street, and many First Nations strongly support the projects protesters are determined to stop.

Let’s begin with the rule of law, as the consequences to it being undermined will have the most grievous effects on our country. Though the most recent protest rounds are ostensibly more about the Coastal Gas Link (CGL) project, they must be viewed together with the Trans Mountain Pipeline Expansion (TMX) as part of a larger discourse of anti-resource development activism and its current disregard for the courts.

In 2018, when the courts ruled that the government had failed to adequately consult First Nations groups on TMX, pipeline opponents celebrated. Their celebration was justified. Consultation had been inadequate and the courts recognized this. The affirmation of a duty to meaningfully consult and respect the rights of indigenous peoples was a good thing. Without the rule of law and respect for the courts, the 2018 TMX decision would not have had the impact it did. This would be detrimental to all.

Sadly, it seems the current protesters are only interested in the rule of law when they win. Yet, respecting a court ruling is perhaps even more important in loss. The rule of law must go both ways at all times.

The Federal Court of Appeal ruling that the second consultation on TMX was “reasonable”, “meaningful” and “anything but a rubber stamp exercise,” validated the government’s consultation process with First Nations when proposing energy infrastructure projects that affect their territory. Though groups opposed to the pipeline may not like it, this judgement must be respected in the same way the 2018 ruling was by those who wanted the pipeline to proceed.

The Wet’suwet’en issue represents a variation of the same problem. The court injunctions granting the CGL access to construction camp 9A through Wet’suwet’en traditional territory must be respected if the rule of law has any value. Refusals to accept the injunction and the resulting arrests are not, as some will say, the death of reconciliation, but an easily foreseeable consequence of ignoring a court order.

The overwhelming First Nations support for the aforementioned projects and the opportunity they provide is also routinely dismissed out of hand. Former Chief Councillor of the Haisla Nation and current MLA Ellis Ross has been one of the most eloquent voices in support of the CGL and what it means to local indigenous communities. Chief Michael LeBourdais of the Whispering Pines First Nation is a strong advocate for First Nations ownership of the TMX. Both are clear about the prosperity these projects bring to their regions and people, and the stake it gives First Nations in the economic future of BC and Canada. They are supported in their view by all twenty elected councils of First Nations along the CGL pipeline route and all forty-three of the Nations along the TMX route.

Both Mr. LeBourdais’ and Mr. Ross’ messages are routinely ignored by the pipeline protesters, politicians opposed resource development, and even, in Mr. Ross’ case, the United Nations. Why? Because their on-the-ground reality does not fit the narrative the opposition has constructed for themselves and the world. Benefit to local First Nations communities be damned if it gets in the way of activist propaganda. This was exemplified in the saddest way only a few days ago when Mr. Ross, while trying to access the BC Legislature, was yelled at by a student to stand up for indigenous rights.

The pipeline debate has been contentious, passionate and emotional. For these reasons, clear-eyed decisions by the courts and respect for the facts are essential. Respecting the rule of law must apply to both sides and both sides must acknowledge the benefits to First Nations communities, just as both sides wrestle with climate change. The protesters and environmental activists on this issue are not dealing in reality, facts or respect. As Mr. DiCaprio’s elder colleague Jack Nicholson might say: “They can’t handle the truth.”

 

Adam Pankratz is a lecturer at the Sauder School of Business at the University of British Columbia. He is on the board of directors at Rokmaster Resources Corp.

Americas Gold eyes 500% production increase

Americas Gold and Silver Corp. [USA-TSX; USAS-NYSE American] on Monday February 18 announced the first gold pour at its Relief Canyon Mine in Nevada and said it has completed initial construction within the estimated budget of $28 million to $30 million.

The Relief Canyon Mine is located at the southern edge of the Pershing Gold and Silver trend, along the Humbolt Range, approximately 95 miles northeast of Reno. The project consists of an open pit mine and heap leach processing facility. Americas landholdings cover approximately 25,000 acres that include the Relief Canyon Mine asset and lands surrounding the mine in all directions.

“This land package provides the company with the opportunity to expand the Relief Canyon deposit and to explore and make new discoveries on nearby lands,” the company said.

On Monday, the company said the Relief Canyon ramp-up is proceeding well with approximately 200,000 tonnes stacked on the leach pad. The mine is now running 24 hours per day and will enable the operator to reach design capacity of 14,500 tonnes per day.

Americas said its precious metals production is expected to significantly increase over the next two years as production ramps up at Relief Canyon, coupled with an anticipated increase in silver production from the Cosala Operations in Sinaloa, Mexico, starting in the second half of 2020.

The company’s gold equivalent production is expected to increase from approximately 14,000 ounces in 2019 to a range of 60,000 to 70,000 ounces in 2020 and 90,000 to 110,000 ounces in 2021. This marks more than a 300% and 500% increase, respectively, in gold equivalent production compared with 2019.

“Our two-year outlook demonstrates that 2020 will be a transformational year for the company with further significant increases expected in 2021,” said Americas President Darren Blasutti. “Relief Canyon will provide considerable exposure to gold and increase the company’s forecasted consolidated revenue to approximately 70% from precious metals based on current prices,” he said.

The two-year outlook does not include production from the Galena Complex in Idaho, following the announcement of the recapitalization plan for 2020.

The company said silver production from the Cosala Operations increased by 28% to 572,036 ounces in 2019 from 448,150 ounces in 2018.  However, the company said cash costs and all-in sustaining costs were negatively impacted by lower zinc and lead prices as well as increased concentrate treatment charges.

Recapitalization of the 60%-owned Galena Complex began in mid-October 2019 with the focus over the next 18 months on mine development, new equipment purchases and exploration to define and expand silver resources. As a result, the company has suspended disclosure of certain operating metrics such as production, cash cost and all-in-sustaining cost for the Galena Complex.

On Monday, America’s share price eased 4.5% or 18 cents to $3.85 on volume of 1.1 million. The shares are currently trading in a 52-week range of $1.97 and $5.20.

Orocobre to acquire Advantage Lithium

Australia’s Orocobre Ltd. [ORE-ASX] said Monday February 18 that it has struck a definitive deal to acquire 100% of the issued and outstanding shares of Advantage Lithium Corp. [AAL-TSXV, AVLIF-OTCQX] that it does not already own.

Orocobre is not only Advantage Lithium’s partner at its flagship Cauchari lithium project in northern Argentina, it also owns a 33.3% interest in Advantage.

Orocobre’s producing Olaroz lithium facility lies only 20 km from Cauchari.

The Olaroz Lithium Facility is situated at an altitude of 3,900 metres above sea level and produces lithium carbonate from the Salar de Olaroz brine resource, which contains high concentrations of lithium and potash brine.

In 2016, Orocobre divested several of its lithium brine exploration projects to Advantage in exchange for shares in Advantage. Additionally, Orocobre and Advantage entered into a joint venture agreement to develop the Cauchari Project, which is owned 25% by the Australian company. The other 75% is held by Advantage.

Cauchari contains 4.8 million tonnes of Measured and Indicated lithium carbonate equivalent resource. On top of that is an inferred LCE resource of 1.5 million tonnes, plus a Measured and Indicated potash resource of 14.9 million tonnes.

On Monday Advantage shares jumped 13.4% or $0.045 to 38 cents on volume of almost 1.3 million. The shares are trading in a 52-week range of 14 cents and 63 cents.

Under the terms of the agreement with Orocobre, Advantage shareholders will receive 0.142 shares of Orocobre for each Advantage share. Based on the closing price of Orocobre shares on the ASX of A$3.29, this equates to a value of approximately 42 cents per Advantage share.

The transaction will allow Orocobre to continue to develop the Olaroz/Cauchari basin in a cost-effective manner that will optimize extraction of the resource to the benefit of shareholders, local communities, the Provincial and National governments of Argentina and other stakeholders, Orocobre said in a press release.

“The transaction further consolidates Orocobre’s leading position within the region as a low-cost producer of lithium chemicals,” the company said.

In addition, Orocobre will acquire Advantage’s other lithium exploration properties in Argentina, including the Antofalla and Incahuasi projects.

Brines (in salt ponds) and spodumene (hard rock) represent the two main sources of commercial lithium production.

Investor interest in this sector is tied to the fact that lithium is a key ingredient in the production lithium-ion batteries used to manufacture electric vehicles.

Integration of Cauchari with Olaroz enables Orocobre to deliver optimal basin management and maximizes the long-term productive capacity of the Olaroz/Cauchari basin, Orocobre said. “The development of Cauchari will be considered within future plans for the Olaroz Lithium Facility,” the company added.

Sandstorm to trade on NYSE; posts record year

Sandstorm Gold Ltd. [SSL-TSX; SAND-NYSE American] on Friday February 14 said 2019 was a record-breaking year for the company.

It sold attributable ounces of 63,829 in 2019, achieving both a new record and an 11% increase from 57,646 ounces in 2018, which had previously ranked as the highest yearly total in the company’s history.

Sandstorm also posted record revenue of $89.4 million, a 22% increase from $73.2 million in 2018. Net income of $16.4 million was well ahead of $5.9 million in 2018.

The shares advanced on the news, rising 3.8% or 35 cents to $9.49 on volume of 618,502 shares traded. The shares trade in a 52-week range of $9.90 and $6.70.

Sandstorm is a royalty financing company that seeks to acquire gold and other metals purchase agreements and royalties from companies that have advanced stage projects or operating mines.

In return for making upfront payments to acquire a gold stream, Sandstorm receives the right to purchase, at a fixed price per ounce, or at a fixed percentage of the spot price, a percentage of a mine’s gold, silver and other commodity production for the life of the mine.

The company has a portfolio of over 190 royalties, producing cash flow from 23 producing mines.

Contributions from the Yamana Gold Inc. [YRI-TSX; AUY-NYSE] silver stream was the main driver of growth in the number of ounces sold during 2019. Sandstorm also received its first delivery from Yamana’s Cerro Moro Mine in Argentina during the second quarter of 2019. Cerro Morro was expected to produce 6.0 million ounces of silver and 130,000 ounces of gold in 2019.

Based on the company’s existing royalties, attributable gold equivalent ounces sold for 2020 is expected to be between 60,000 and 70,000 ounces. That number is expected to increase to 125,000 ounces by 2024, the company said.

Meanwhile, Sandstorm reported better than expected fourth quarter revenue of $24 million, beating the consensus estimate of $23 million.

By comparison the company posted revenue of $17.5 million in the fourth quarter of 2018.

The company also said it sold 16,113 attributable gold ounces in the fourth quarter, up from 14,182 ounces in the same period last year.  Of the gold equivalent ounces sold by Sandstorm during the fourth quarter of 2019, approximately 23% were attributable to mines in Canada, 18% were from the rest of North America, 44% was from South America and the balance of 15% was from other countries.

Net income in the quarter jumped to $5.3 million in the quarter from $2.7 million a year ago.

The company said its revolving credit facility was amended allowing the company to borrow up to $225 million with an additional uncommitted accordion of up to $75 million, for a total facility of $300 million for acquisitions and general corporate purposes. The tenure of the facility is four years and is extendable by mutual consent of Sandstorm and the banking syndicate.

Sandstorm also said it has received approval from the New York Stock Exchange to transfer the listing of its common shares from the NYSE American Exchange to the NYSE. The company expects to begin trading on the NYSE on February 21, 2020.

Power Metals stock continues surge; advancing cesium projects

Power Metals Corp. [PWMTSXV; PWRMF-OTC; OAA1-FSE] announced the strategic review committee has decided to focus on our cesium mineralization in the spodumene pegmatites at the Case Lake Project located 130 km northeast of Timmins, Ontario.

In late trading on Friday February 14, Power Metals gained 9 cents up to 27 cents on a volume of 4,736,000 shares traded.

Cesium is incredibly valuable as there are only three cesium mines in the world and Power Metals owns three of the five cesium occurrences in Ontario: the 100%-owned West Joe, Tot Lake and Marko’s pegmatites. Power Metals’ West Joe Dyke at Case Lake was discovered in August 2018. The 2018 drill program intersected high-grade cesium mineralization in six drill holes at West Joe: PWM-18-111, 112, 116, 123, 124 and 126 with up to 14.70 % Cs2O over 1.0 metre in drill hole PWM-18-126. The 2018 drill program was targeting lithium mineralization and Power Metals was encouraged when cesium mineralization was intersected in the same drill holes.

Cesium is extremely rare – the United States Department of the Interior included lithium, cesium and tantalum on its list of Critical Minerals.

West Joe Dyke contains Cesium (Cs) mineralization as shown by the presence of pollucite in drill core and exceptionally high-grade Cs intervals:

  • 70 % Cs2O over 1.0 m, 13.0-14.0 m, PWM-18-126
  • 40 % Cs2O over 1.0 m, 10.0-11.0 m, PWM-18-112
  • 74 % Cs2O over 5.0 m, 11.0-16.0 m, PWM-18-126

The Cs grades at West Joe are comparable with that at Pioneer’s Sinclair Mine which has been exporting their high-grade cesium at > 10% Cs2O to Sinomine Specialty Fluids, but also has low grade material at ~3.5% Cs2O stockpiled.

Cesium is used as cesium formate brines to act as heavy mud for high pressure, high temperature offshore oil drilling to lubricate drill bits and prevent blowouts. The cesium formate mud is rented to oil companies and recycled after use. Cesium isotopes are also used in atomic clocks which are important in cell phone networks, internet, Global Positioning Systems (GPS) and aircraft guidance systems.

Cesium bromide is used in infrared detectors, optics, photoelectric cells, scintillation counters, and spectrophotometers. Cesium is also used in the glass for night vision googles.

Power Metals Marko’s pegmatite is located on its Paterson Lake property, 60 km north of Kenora, northwestern Ontario. In 2001, cesium was also identified in drill hole SR-12 with 6.37 % Cs2O over 1.0 and 7.35 % Cs2O over 1.0 metre. Marko’s pegmatite is open to the west along strike of the dyke with the potential to find more cesium mineralization.

Power Metals’ Tot Lake pegmatite is located 30 km northeast of Dryden, northwestern Ontario. Pollucite was found in outcrop at Tot Lake in 1964, but it has not yet been drilled. Tot Lake pegmatite is underexplored with three drill holes drilled in 1964 for lithium and three drill holes drilled in 1978 for tantalum.