RJK expands land position, acquires kimberlite showing

RJK Explorations of Kirkland Lake, Ontario, has increased its land position around its Bishop diamond claims near Cobalt. A minimum of 17 potential kimberlite targets plus the Kon kimberlite showing were acquired.

The Kon kimberlite is the only known kimberlite south of Cobalt between the Lake Timiskaming and Montreal River faults. It has never been drilled or sampled. RJK can earn a 100% interest.

The Kon kimberlite is the only known kimberlite south of Cobalt between the Lake Timiskaming and Montreal River faults

RJK also optioned the Peddie kimberlite pipe from First Cobalt and can earn a 50% interest in that property.

A third agreement with Power Group allows RJK to sink one diamond drill hole as a phase one commitment. Follow-up work could earn RJK a 60% interest in a joint venture with Power.

RJK hopes to locate the source of the Nipissing yellow diamond that was found some time during the development of the silver mines at Cobalt.

(This article first appeared in the Canadian Mining Journal.)

Great Bear raises $14.6M with flow-through private placement

Great Bear Resources (CVE: GBR) of Vancouver has raised $14.6 million for its exploration projects – chief among them the Dixie property – near Red Lake. The company issued 1.75 million flow-through shares at a price of $8.35 per share. The deal is expected to close on or about Nov. 17, 2019.

Great Bear has enjoyed considerable success at Dixie and announced very promising drilling results three times in the third quarter of this year. The best assay reported in October 2019 from Dixie was 30.81 g/t gold over 2.5 metres in a newly discovered high-grade sub-zone.

Great Bear is also earning a 100%, royalty free interest in the Pakwash, Dedee and Sobel properties in the Red Lake camp.

(This article first appeared in the Canadian Mining Journal)

Amex Exploration announces 100,000 metre drill program for Perron

Montreal-based Amex Exploration (CVE:AMX) has announced the details of a fully-funded 100,000 metre drill program for its 100% owned, 4,518 hectare Perron gold property located 110 km north of Rouyn-Noranda, Quebec.

This news follows the closing of an oversubscribed C$8 million bought deal private placement on Nov. 7, whereby the company issued approximately 4.4 million flow-through units at a price of C$1.80 per unit (consisting of one common share and one half of a warrant). The underwriters have also partially exercised the option to increase the offering size by agreeing to purchase an additional 545,500 units for C$981,900. Closing is expected around November 19. The shares are currently trading at C$1.05.

Of the 40,000 metre 2019 meter drill program, 27,500 metres have been drilled to date. The work is focusing on three gold zones discovered in 2019 at Perron – the Eastern Gold zone, the Gratien zones as well as the Grey Cat zone. The company has identified gold mineralization over an approximate strike length of 3 km along the Perron fault within the Beaupré block which is bounded by the Normetal and Perron faults. Together, the two faults span over a 15 km strike at the Perron property. Modeling has identified additional exploration targets along the faults.

The 60,000 metre drill program planned for 2020 is aimed at ongoing definition and expansion of the gold zones which are open on strike and at depth with the aim of producing an eventual NI 43-101 resource estimate. The company also plans to start a regional exploration drill program to test targets along the Perron and Normetal faults and to initiate a drone magnetic survey to identify gold associated structures.

Based on the exploration work completed to date, structures within the Eastern Gold zone have been traced over a strike length of up to 300 metres and from surface to a depth of up to 585 metres. Highlight intercepts include 56.75 g/t gold over 8.5 metres and 30.98 g/t gold over 8.5 metres. The mineralization at the Gratien zones has been traced over 1 km with a number of high grade chutes identified. At the Grey Cat zone, mineralization has been identified over a 175 metre strike length, starting at surface and extending down to a depth of 400 metres.

Eric Sprott is currently the company’s largest strategic shareholder, holding 13% of the shares outstanding on a fully diluted basis.

(This article first appeared in the Canadian Mining Journal.)

Global iron ore production to grow 0.9% annually until 2018 – report

Global iron ore production will grow modestly over the years due to mine expansions in Brazil and increasing output from India, according to Fitch Solutions’ latest industry trend analysis.

Meanwhile, output growth in China will decline on the back of falling ore grades and high costs of production, analysts said.

Global iron ore production will grow modestly from 2,850mnt in 2019 to 3,119mnt by 2028, representing average annual growth of 0.9% during 2019- 2028, which is a significant slowdown from an average growth of 2.9% during 2009-2018, Fitch forecasts.

Supply growth will be primarily driven by India and Brazil where major miner Vale is set to expand output with its new mine.  Vale’s supply will continue to dominate global output. On the other hand, miners in China, which operate at the higher end of the iron ore cost curve, will be forced to cut output due to falling ore grades.

Analysts expect iron ore production in Australia to grow minimally during 2019-2028, averaging an annual 0.4% growth, compared with 10.4% growth over the previous 10-year period

Fitch revised its 2019 iron ore production forecasts downwards for Australia from 903.6mnt to 882mnt due to Cyclone Veronica and other operational difficulties affecting output at major mines.

Analysts expect iron ore production in Australia to grow minimally during 2019-2028, averaging an annual 0.4% growth, compared with 10.4% growth over the previous 10-year period, due to mothballing of mines from junior miners, while major players will stick to their production growth targets to crowd out high cost producers.

In April 2019, Rio Tinto lowered its 2019 iron ore production guidance by 14mnt as a result of Cyclone Veronica and a fire at its Cape Lambert port facility, followed by BHP who cut its iron ore production guidance for 2019 due to the impacts of tropical cyclone Veronica by 6.0-8.0mnt, Fitch reports. And in June 2019, BHP reported a return to full production capacity at its Western Australia Iron Ore (WAIO) operations, reflecting a 12% increase from March 2019.

Fitch expects Brazil’s iron ore production growth will rebound in the coming years following 2019, due to low operating costs and a solid project pipeline. Brazil will benefit from producing high-quality iron ore increasingly favoured by Chinese steel producers.

Fitch forecasts Brazil’s iron ore production to decrease to 443mnt in 2019 then return to growth, reaching 567mnt by 2028, averaging 1.5% compound annual growth.

The Brumadinho dam collapse sparked a flurry of investigations into Vale’s operations, leading to executive removals, idling operations, and fines on the horizon, Fitch says. The disaster triggered an initiative by Vale to decommission its remaining upstream tailings dams over the next three years, effectively cutting off 40mnt of iron ore per annum. Since the announcement, multiple operations have been idled, causing further supply disruptions.

The Brucutu mine was idled for six weeks, allowed to re-open, then idled again days later following another court ruling, then finally re-opened in June.  Fitch expects to see continued regulatory scrutiny over Vale and the iron ore sector as the government grapples with the deadliest environmental disaster in the nation’s history.

Read the full report here.

Aurion shares rise on multiple high-grade drill results

Aurion Resources (TSXV: AU) has received assays from nine drill holes at the Aamurusko Northwest (NW) prospect on its wholly owned Risti project in northern Finland, the Canadian-based gold miner announced Monday. Further drilling has returned multiple high-grade, near-surface intercepts: 23.41 g/t Au over 11.10 m, 6.84 g/t Au over 19.00 m and 16.17 g/t Au over 4.00 m.

Shares of Aurion Resources rebounded on the latest results, rising by much as 8% during Monday’s session and returning to a week high of C$1.72 a share. The company’s market capitalization is C$137.7 million.

Drilling has demonstrated continuity of the high-grade mineralized zones Aamurusko NW, and intersecting quartz veins in excess of 5 m wide speaks to the robust nature and potential of this gold-bearing system, the company noted.

“We have only scratched the surface of this target but believe we have defined a significant zone of mineralization,” Aurion president and CEO Mike Basha commented. The company has since moved the drill rig to the Aamurusko Main target area, where — according to Basha — it expects to have similar success.

These additional holes follow-up the company’s drill results reported earlier this year, which included 13.31 g/t Au over 19.54 metres and 10.60 g/t Au over 3.40 metres. To date, 84 of the 99 drill holes completed at Aamurusko (Main and NW) have intersected gold mineralization, 28 of which have intercepts of 15 g/t Au or higher.

The Risti project in Finland has been mentioned by Aurion to be geologically similar to several gold-rich orogenic gold belts around the world like the Timmins camp in Ontario. The company has been actively exploring in the Scandinavian nation since 2014.

Argonaut Gold to hedge gold from El Castillo

After a challenging second quarter at its El Castillo complex in Mexico, Argonaut Gold (TSX: AR) will hedge part of the operation’s remaining life-of-mine production.

The company told shareholders in late August that it had entered into a series of “zero-cost, collar option contracts” covering 145,500 oz. gold through mid-2022 from its El Castillo mine, which along with its San Agustin mine, makes up the El Castillo mining complex, 100 km north of Durango.

Argonaut has set the floor price of the monthly gold collars at US$1,450 per oz., and the ceiling price of the collars from US$1,630 per oz. in the fourth quarter of 2019 to US$1,760 per oz. for the first half of 2022. The company will realize the actual gold sales price if the gold price stays within the range of the collars.

Management said that the “price-protection program” on part of El Castillo’s remaining life-of-mine production would “ensure profitability” and “extend the mine life at our highest-cost operation.”

During the second quarter, the El Castillo mine produced 14,758 equivalent oz. gold at cash costs of US$976 per ounce. Costs were elevated due to higher waste-to-ore ratios, the company said.

The San Agustin mine produced 14,800 equivalent oz. gold at cash costs of US$910 per ounce. Higher waste-to-ore ratios were also a factor in San Agustin’s cash costs, but an underperforming third well also contributed.

Altogether, the El Castillo mine complex (El Castillo and San Agustin) produced 28,017 equivalent oz. gold at cash costs of US$945 per oz. sold, compared with 26,518 equivalent oz. gold at cash costs of US$638 per oz. gold sold during the second quarter of 2018.

“There is no doubt it was a challenging quarter operationally, particularly at our San Agustin mine, where we experienced a shortage of water that impacted our ability to get ounces under lease, and, therefore, forced us to slow down our crushing and stacking rates to avoid short cycling of the leach pad,” Pete Dougherty, the company’s president and CEO, told analysts and investors on an Aug. 7 conference call.

Argonaut Gold’s San Agustin gold project in Mexico’s Durango state. (Image courtesy of Argonaut Gold).

During the quarter, Argonaut completed two heap-leach expansions at El Castillo and a leach-pad expansion at San Agustin. It also finished a $15-million crushing and stacking expansion at San Agustin that will help the mine move from 20,000 tonnes per day to 30,000 tonnes per day.

“Last year, we drilled a third well to meet our solution flow-rate requirements for the increased crushing throughput of 30,000 tonnes per day. Although this well tested positive, after sustained pumping, it did not meet our requirements,” Bill Zisch, the company’s chief operating officer, said on the call. “Therefore, we incurred cost to drill, blast, mine, crush and stack ore on the leach pad, and have experienced a delay in recovering and selling the ounces.”

Zisch noted that the company was completing the drilling of a fourth water well (which was completed on Sept. 6), and that Argonaut should hit 30,000 tonnes per day at San Agustin before December — a three-month delay. With the additional water well, the company said it anticipates catching up on recovered ounces in the second half of the year.

Argonaut’s La Colorada mine in Mexico’s Sonora state produced 12,200 equivalent oz. gold at US$894 per oz., in a 7% increase from the year-earlier quarter, due to an increase in the waste-to-ore ratio. “At La Colorada during the first quarter of the year, we ran into a situation where we were struggling to strip waste fast enough to keep up with ore requirements to the crusher,” Zisch said. “To compensate for this, when we could, we supplemented with low-grade stockpile material — this led to less tonnes and a lower grade going to the pad during the first quarter, which meant lighter second-quarter production. We are now operating on wider laybacks, and have better access to ore.”

For the year, Argonaut expects to produce between 200,000 and 215,000 equivalent oz. gold at cash costs of between US$800 and US$900 per oz. sold — up from its previous estimate of US$775 to US$875 per oz. sold. All-in sustaining costs are forecast to rise from US$975 to US$1,075 per oz. gold sold to between US$1,025 and US$1,125 per oz. gold sold.

Argonaut said costs will trend lower in the second half of the year, with enough water at San Agustin to meet planned solution flow rates of the expanded 30,000-tonne-per-day crushing and stacking rate; lower crushing costs at El Castillo, due to run-of-mine ore available in phases nine and 10 of the pit; higher production from the lower-cost San Agustin mine, and lower production from the higher-cost El Castillo mine; and improved grades and a lower waste-to-ore ratio at La Colorada.

Argonaut’s El Castillo open-pit gold mine. (Image courtesy of Argonaut Gold).

The company said it expects to report significant free cash flow next year. “With approximately 60% of our 2019 capital spent through the first six months of the year, and next year’s capital reduction by approximately US$25 million, we are poised to generate significant additional free cash flow during 2020,” Dougherty said. “So while the second quarter was challenging, on a go-forward basis we are in a great position.”

The company’s development assets include the Magino project in Ontario and the San Antonio project in Baja California Sur, Mexico.

At the end of June, Argonaut had US$24 million in cash, with US$14 million drawn on its revolver, and US$23 million in value-added tax receivables.

Net income in the second quarter reached US$5.4 million, or 3¢ per basic share, in an increase from $0.4 million, or nil per share, in the second quarter of 2018.

Argonaut acquired El Castillo in December 2009. The open-pit gold and silver mine started commercial production in 2008. The San Agustin gold and silver open-pit mine was acquired in December 2013. Commercial production at San Agustin began in October 2017.

(This article first appeared in the September 30, 2019 edition of The Northern Miner

Illegal mining operations in Ecuador down by 60%

Ecuador’s Agency for Mining Control and Regulation ARCOM reported that illegal mining operations in the country went down by 60% during the period January-October 2019, compared to the same period in the previous year.

In an official document, the agency revealed that it carried out 418 campaigns aimed at dismantling illegal mining activities. Over 180 people were arrested and presented before the Attorney General’s office for prosecution. 

Depending on the size of the operation, illegal miners could face anywhere between one and seven years in prison, as per Ecuador’s Integral Penal Code. 

ARCOM also reported having seized 49 units of mining equipment and 628 tonnes of ore. The latter will be given to the National Mining Company to be processed and commercialized and the funds obtained from the sale will be delivered to the National Treasury.

Forty-seven gold ingots stolen from Fresnillo’s Mexican subsidiary

Local media in Mexico report that armed men robbed a truck carrying 47 gold ingots from the Noche Buena mine, operated by Minera Penmont, a subsidiary of precious metals miner Fresnillo (LON:FRES).

The incident took place Friday evening in the Caborca-Sonoyta section of the International Highway in the northwestern state of Sonora.

The cargo was valued at approximately $26.1 million. Three security guards received non-life threatening injuries during the robbery.

According to Proceso magazine, Minera Penmont is asking state authorities to run an investigation to find out who are the masterminds behind the robbery and who are the people that actually carried it out. 

Noche Buena produced 18% of Fresnillo’s total gold in 2018, which amounted to 167,208 ounces, and generated over 9% of total adjusted revenue. The open-pit, heap leach operation is located in the Herradura District, some 23 kilometres from Penmont’s Herradura mine.

A solution in Wyoming to keep coal going

As seven US-based coal companies went broke between 2018 and 2019 and the short-term outlook for the black mineral in terms of demand and profitability looks bleak according to Moody’s Investor Services, the state of Wyoming is supporting an innovative solution whose goal is to provide an environmentally friendlier way to continue exploiting the fossil fuel.

The project is called the Integrated Test Center and it is very close to being opened at the 385-megawatt Dry Fork Station operated by Basin Electric Power Cooperative. The plant is located near the city of Gillette and it processes sub-bituminous coal from Western Fuels’ Dry Fork mine.

Wyoming’s reserves add up to approximately 1.27 trillion tonnes of coal

The Integrated Test Center or ITC provides space for researchers to test, in a real-life setting, carbon capture, utilization and sequestration technologies using 20 MW of actual coal-based flue gas, which is a combination of ambient air, water vapor and carbon dioxide. This is about 5% of the total flue gas emitted at Dry Fork.

The way it works is that a steel duct connects the plant’s gas flue to the ITC. Technology positioned inside the plant’s exhaust flue allows researchers to divert flue gas to their testing facility when and as needed, where carbon dioxide molecules can be pulled and utilized.

The idea is for them to come up with solutions to use the captured CO2 for other purposes such as producing fertilizers, fish food, building materials such as concrete, and plastic products. 

“If we are going to meet the growing demand for clean, reliable energy, there is no doubt carbon sequestration and advances in coal technology will need to be a part of our nation’s energy portfolio,” said Matt Micheli, who is the energy and natural resources partner at the law firm Holland & Hart in Cheyenne and who has been keeping a close eye on the project.

“There is nearly universal support for these efforts in Wyoming. Currently, Wyoming produces more than 40% of the nation’s thermal coal. This coal production provides high-paying jobs for our Wyoming families and pays for our schools, our roads and our state and local government. Many of our communities rely almost entirely on coal production,” Micheli told MINING.com.

Coal by the numbers

The ITC is a +$20 million public-private undertaking that has funding from the Wyoming State Legislature, the Tri-State Generation and Transmission Association and the National Rural Electric Cooperative Association.

Wyoming is the state that leads coal production for electricity generation. It is home to the US’ top 10 producing coal mines, all of them located in the Powder River Basin. Total output from the region was 294 million tonnes in 2018, from a nationwide total of 686 million tonnes.

Despite the large numbers, the U.S. Energy Information Administration reported that last year, only 623 million tonnes of coal were consumed, which represents a 42% decline since its peak in 2005 and the fifth straight annual decline. 

Coal’s share of electricity generation was 28% last year, down from 48% in 2008. The EIA also forecasts that the fuel’s cut in the energy mix will be 25% this year and 22% in 2020.

Orvana Minerals to suspend operations at Los Tojas in Bolivia, stock down

Orvana Minerals Corp. (TSX: ORV) announced Friday that it will suspend mining operations at its Las Tojas gold mine in Bolivia effective on or before December 31, 2019.

Orvana said it is suspending operations at the mine, wholly owned through its subsidiary Empresa Minera Paititi, SA, (EMIPA) because of a higher than expected ore-grade operational mining dilution with more narrow, erratic and discontinued mineralized structures, which is resulting in uneconomic unitary cost per ounce.

The Canadian-based junior miner said that notwithstanding the suspension of mining operations at Las Tojas, the previously announced development and engineering of the oxides stockpile that has accumulated from past mining activities at Don Mario continues to advance.

Earlier this year, Orvana posted a relatively strong fiscal second quarter ended March 31, with good performance from its two operating mines – Don Mario and the El Valle gold-copper mine in Spain.

At Don Mario during the second quarter, Orvana produced 9,564 oz. gold, or 11% less than in the first fiscal quarter but almost the same as the year-go quarter.

“Given the anticipated near-term transition into our Oxides Stockpile Project, it is the right decision to suspend operations at Don Mario to mitigate a higher unitary cost burden onto the Company,” Juan Gavidia, Orvana’s CEO said in the media release. “Subject to a favourable outcome of the analysis of the feasibility of the oxides stockpile, we are committed to funding and building the Oxides Stockpile Project, which is expected to commence in early FY2021, with 33 months of expected low-cost gold and copper production.”  

Gavidia added that operations at Elle Valle remain stable, and delivery of gold production “remains sustainable.”

Orvana’s shares closed Friday down 22%. The day’s trading volume reached 743,300. The average volume is 121,714. The company has a C$19.6 million-market capitalization.

(With files from The Northern Miner)