Barrick, Newmont joint venture in Nevada clears all hurdles

Newmont Goldcorp (NYSE:NEM)(TSX:NGT) and Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD), the No. 1 and 2 bullion producers, have cleared all the regulatory conditions to combine their operations in Nevada ahead of schedule.

The U.S. Federal Trade Commission, said the companies, granted an early termination of the waiting period under the Hart-Scott-Rodino Act on April 19.

The new business, yet to be named, will be owned 38.5% by Newmont Goldcorp and 61.5% by Barrick, which will also be the operator of what the partners say it’ll be the world’s largest gold producing complex.

The “historic” business combination (as the duo called it) is expected to generate savings of $500 million a year within the first full five years. It includes Barrick’s Goldstrike, Cortez, Turquoise Ridge, and Goldrush and Newmont’s Carlin, Twin Creeks, Phoenix, Long Canyon, along with associated processing plants and infrastructure of both companies.

Excluded from the joint-venture, for now, are Barrick’s Fourmile project and Newmont’s Fiberline and Mike deposits. It also does not include Newmont’s Cripple Creek & Victor mine.

The agreement follows Newmont’s rejection of Barrick’s $18 billion hostile bid last week, countering with a proposal for a JV with a 55% interest for Barrick.

Newmont’s contra-offer wasn’t immediately welcome by the Toronto-based miner, which wanted a higher percentage and control of the venture.

After exchanging quite a few mutual verbal offences, the chief executives of the long-time rival miners reached a consensus over dinner in New York last month.

Practical measures required to integrate the joint venture assets and establish the new business are now being taken, the partners said, and they are anticipated to be complete within the current quarter.

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Sandspring rethinks Toroparu in Guyana

Sandspring Resources (TSXV: SSP; US-OTC: SSPXF) is putting the finishing touches on a preliminary economic assessment (PEA) for its Toroparu gold project in Guyana that rescopes the project’s prefeasibility study (PFS), and includes a third gold pit. It aims to table the study in a couple of months.

“All we’re really doing is building this same concept, the same conceptual operating plan that we had in 2013–2014 — we’re just building it in two separate phases,” Sandspring CEO Rich Munson says in an interview with The Northern Miner.

Sandspring tabled its PFS in 2013, outlining a US$691-million, after-tax net present value (NPV) at a 5% discount rate, and a 23.1% after-tax internal rate of return (IRR) at US$1,400 per oz. gold, but with a US$464-million, pre-production initial capital expenditures (capex).

The company went public in 2009 after working in Guyana since the late 1990s as ETK. In the 80s and 90s, it was the largest uranium producer in the United States.

It built a 260 km road from a deepwater port to the project and drilled out a resource before realizing it needed to take the company public to keep advancing the project.

After its PFS, the company signed a precious metals streaming agreement with Wheaton Precious Metals (TSX: WPM; NYSE: WPM). Wheaton bought 10% of the project’s life-of-mine gold production at US$400 per oz. gold and half of its silver production at US$3.90 per oz. silver for a US$15.5-million early deposit that Sandspring has already received, and US$138 million in project installments.

Sandspring Resources’ Toroparu gold project in Guyana. Photo by Sandspring Resources.

The deal finances 30% of the project, although Munson says the two companies will have to “readjust the parameters of the amount of money they’ll be bringing,” because Wheaton’s contribution was based on a larger capex. That said, he thinks “they’ll bring a pro-rata amount that’s about the same.”

Development at Toroparu stalled during the market downturn. In 2015 the company survived by Munson drawing down on his home equity line of credit to advance money to Sandspring. That same year, Frank Giustra came in and took a 9.3% position in the company. With his help, the company raised enough money to drill some satellite targets.

“We’ve always been struggling to find a way to start this up at something less than 23,000 tonnes per day,” Munson says. “How can we get started with something small, but yet doesn’t destroy the upside of the deposit?”

Part of the problem was a copper component at the main Toroparu deposit.

“It’s not a lot. There’s about half a billion lb. copper,” Munson says. “But it’s right in the core of the deposit, so it’s very hard to start up without flotation and leach at the same time. Now with the satellite deposits, we can start up gold only at about half that rate — 11,500 tonnes per day.”

The main satellite deposit is called Sona Hill. It contains 11.7 million measured and indicated tonnes grading 1.04 grams gold per tonne for 394,000 oz. gold and 11.6 million inferred tonnes at 0.95 gram gold for 356,000 oz. gold.

The project’s resource is split between three proposed open pits — Toroparu, SE Zone and Sona Hill — with most of the tonnage and contained gold at the main Toroparu pit.

In total, the project has 252.5 million measured and indicated tonnes grading 0.91 gram gold for 7.35 million oz. gold, and 128.9 million inferred tonnes at 0.76 gram gold for 3.15 million oz. gold.

Sandspring Resources’ Toroparu gold project in Guyana. Photo by Sandspring Resources.

It also has 240.7 million measured and indicated tonnes at 0.81 gram silver and 0.08% copper for 6.28 million oz. silver and 444 million lb. copper, as well as 117.3 million inferred tonnes at 0.07 gram silver and 0.04% copper for 276,000 oz. silver and 104 million lb. copper. Sona Hill contains no copper or silver.

Sandspring plans to mine Sona Hill along with the Toroparu main pit and SE Zone simultaneously, opening up some of the higher-grade, gold-only zones around the main pit before starting an expansion phase in year five.

“The model shows that we will self-finance the expansion as well as self-finance construction of our run-of-river hydro project,” Munson says, “which is near us, and we’ve been working on it for quite a while.”

The run-of-river hydro project would net Sandspring US$500 million in power savings over the mine life. It signed a memorandum of understanding with the Guyanese government in 2013 that gives the company the exclusive right to develop the project.

The Kurupung river project would be located 50 km southwest of Toroparu and cost $120 million to $130 million to build. It would lower the company’s cash cost from US$700 per oz. gold in the PFS to US$565 per oz. gold. Combined with the Wheaton investment, it would lower Sandspring’s all-in sustaining costs from US$922 per oz. gold to less than US$800 per oz. gold.

“That run-of-river of course would replace diesel, which we would otherwise be burning for the entire life of the project,” Munson says. “It brings a really interesting green dimension.

“Even if we bring it on in year eight of this extended mine life, it still would save us about US$400 million of operating expenses, and almost eliminate our carbon foot print from the middle of the rainforest.”

The company would still rely on diesel as back-up power.

“The name Guyana in one of the Amerindian languages means land of many waters,” Munson says. “There isn’t one hydro project in this country. This would be the first commercial one.”

Last year, Gran Colombia Gold (TSX: GCM) bought 14.78% of Sandspring, with warrants that could increase its ownership to 20.83%. It holds 18% of the company. As part of its deal, it also picked up Gran Colombia’s Chicharron silver project in Colombia.

The company looks to put Chicharron into production soon. The project is located 4.4 km east of Gran Colombia’s Maria Dama processing facility. Gran Colombia confirmed high-grade silver mineralization at the project’s Guia Antigua mine in its 2017–2018 exploration program.

“It’d be small — 50 to 100 tonnes a day — but for a little company like us, it pays the bills,” Munson says. “If we don’t need that cash to pay the light bill, then we could drill with it.”

Guias Gold operated the mine from 2014–2016 reporting average grades of 466 grams silver and 7.44 grams gold. It produced 78,500 oz. silver and 1,170 oz. gold from 6,000 tonnes grading 404.9 grams silver and 6.05 grams gold.

The company mined 12 tonnes per day using non-mechanized methods. It primarily mined a 1- to 3-metre-wide quartz vein, with minor carbonate.

Sandspring acquired the project in 2018 for 36 million shares and US$1 million in cash. It recently finished an eight-hole drill program at Chicharron to determine where the vein is offset, and which direction it’s going.

“We can go to work right away because we’re included in Gran Columbia’s environmental permits,” Munson says. “Our goal is to put a contract miner in there starting the second quarter of this year, and go to work.”

Sandspring shares are trading at 24¢ in a 52-week range of 17¢ to 35¢. The company has a $49-million market capitalization.

“In what I call the days of wine and roses back in late 2013, we had a $400-million market cap, and we were trading at $4 a share,” Munson says. “Today we’re 25¢, and I still own the same shares I got in 2009.

“We’re just going to progress. We’ll go to a PEA, and then because of all the work we’ve done, we’ll go to final feasibility. There’s no need to go back to another PFS.”

This story by Richard Quarisa first appeared on

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Weekend Show – Sat 20 Apr, 2019

Hour 1 – Upbeat US Data Stagflation, and Resource Stock Hot Spots
Full Hour 1

Well it was another sideways week for many sectors, including the US markets. Unfortunately the gold stocks started to get hit in the last couple days of trading this week but are still very much within this long term range.

Please keep in touch by emailing me at I love hearing from all of you! And everyone have a great Easter Long Weekend!

  • Segment 1 – Marc Chandler, Managing Partner at Bannockburn Global ForEx recaps some US economic data that surprised to the upside. We also look to Europe and its recent weak data.
  • Segment 2 – Nichols Pardini, Managing Partner of The Davos Investment Group shares his thoughts on stagflation and the situation the US is in.
  • Segment 3 – Byron King discusses a recent report out of the Mackenzie Institute regarding a significant decline in reserves on the books of major mining companies.
  • Segment 4 – Chris Taylor, President and CEO of Great Bear Resources updates us on the recent announcement of doubling the current drill program to 60,000 meters. Click here to visit the Great Bear website and read the news on the updated drill program.

Marc Chandler
Nichols Pardini
Byron King
Chris Taylor – Great Bear Resources Update

These charts are a big reality check for gold mining stock bulls

Despite a widely held view that gold should be trading north of $1,400 this year, since the February peak well short of that target, prices have gone in the other direction.

Gold mining stocks have fared slightly better after a flurry of mergers and acquisitions at the top end rekindled interest in the sector despite the lacklustre performance of the metal and all those burnt fingers from the M&A frenzy during the boom years.

A new report by McKinsey asks: "Can the gold industry return to the golden age?”  The way to do this, according to the consultancy, is by solving the “looming reserve crisis.”

This chart is big reality check for gold mining stock bulls

Source: McKinsey & Company

That crisis is in the offing because large gold companies (the report analyses the 20 largest gold miners) have cut exploration budgets by 70% since the go-go years, McKinsey says. At the same time, major greenfield discoveries have become ever more elusive.

This has resulted in reserves at the majors declining by 26%, or 254 million ounces since 2012, to the lowest level since 2007.

McKinsey answers the report's central question and calls for organic strategies including exploration innovation, advanced analytics and new technology including the internet of things (IoT) and blockchain.

But, say the authors, gold mining’s top tier will also have to make acquisitions – inorganic strategies – to top up reserves provided “management teams rebuild trust with shareholders and investors.”

That may not be so easy, given the industry’s track record.

This chart is big reality check for gold mining stock bulls

Source: McKinsey & Company

In the decade leading up to the 2011’s gold price peak above $1,900 an ounce, the industry saw over 1,000 acquisitions with a combined price tag of $121 billion (2011 alone saw $38 billion worth of deals done) at premiums of 30% or more.

As the chart shows were it not for M&A activity these companies’ gold reserves would have stayed flat. The belief in the industry clearly was that gold could only go up – the average price paid per ounce reserve in this peak period was often more than 300% higher than deals executed a decade earlier, says McKinsey.

A full 80% of the transaction value of the eight largest deals between 2001 and 2011 has been impaired. Combine that with the industry-wide downturn in metal prices and you get this eye-watering chart.

This chart is big reality check for gold mining stock bulls

Source: McKinsey & Company

The large gold mining companies have been mending fences with investors, McKinsey points out, by cutting capital expenditure and slashing costs. Weighted average all-in sustaining costs were reduced by 21% to $879 an ounce between 2012 and 2017.

The 20 largest gold companies spent $12 billion on new projects in 2016, $18 billion less than in 2012 when the gold price was suffering the first of a series of anni horribilis.

Whether skittish gold sector investors will allow these companies to ratchet up spending again is the proverbial $129 billion question.

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Canarc’s stock jumps on PEA at New Polaris

Canarc Resources (TSX: CCM) has wrapped up a preliminary economic assessment of its New Polaris gold project in northwestern British Columbia that indicates the project could produce 80,000 ounces of gold per year over an 8.7 year mine life. By market close the Vancouver-based  junior's stock had jumped 20%.

The study assigns New Polaris a $216 million after-tax net present value at a 5% discount rate and a 38% after-tax internal rate of return. It would cost $111 million to build and process 750 tonnes per day at a 90.5% recovery rate to achieve after-tax payback in 2.7 years.

The study eliminates the need to ship concentrate along the Taku River to a third party treatment facility, which the company had contemplated in past studies on the project. It would instead use bio-oxidation followed by a leaching process to produce doré bars at site.

Canarc initially explored the project’s C vein system between 1988 and 1997, infill drilling it between 2003 and 2006. The current resource consists of over 170 holes.

The project contains 1.68 million indicated tonnes grading 10.8 grams gold per tonne for 586,000 oz. gold. The project also contains 1.48 million inferred tonnes at 10.2 grams gold for 485,000 oz. gold.

The company is considering a feasibility work program at New Polaris that would include 24,000 metres of infill drilling and cost about C$10 million.

(This article first appeared in The Northern Miner)

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Brixton to search for Atlin placer gold source

By Peter Kennedy

A Brixton geologist examines a rock sample at the Atlin Project in northwest British Columbia. Source: Brixton Metals Corp.

Brixton Metals Corp. [BBB-TSXV; BXTMF-OTC] said Thursday April 18 that it has started exploration work at its wholly-owned Atlin goldfields project near the town of Atlin in northwestern British Columbia, and within the traditional territory of the Taku River Tlingit First Nation.

Since 2016 Brixton has consolidated approximately 1,000 km2 of mineral claims, covering most of the Atlin gold camp, which has been a venue for placer gold production for the past 120 years.

Brixton’s goal is to discovery the bedrock sources for the gold mineralization using modern systematic exploration techniques.

Brixton is a precious metal exploration and development company with a focus on advancing its wholly-owned projects towards mine development. Its shareholder group includes Bay Street financier Rob McEwen, Pan American Silver Corp. [PAAS-TSX, NASDAQ], and Hecla Mining [HL-NYSE].

On Friday, the shares eased 3.45% or $0.005 to 14 cents. The 52-week range is 13 cents and 24 cents.

The company was in the news last year when it tabled initial drill results that the company said confirm the presence of high cobalt and low silver veins on its wholly-owned Hudson Bay Project, which is located near Cobalt in northeastern Ontario. Hudson Bay is part of what is known as the Langis-Hudson Bay silver-cobalt project. It was a high-grade silver mine with cobalt produced as a by-product. Hudson Bay is located near the Langis Mine, which produced over 10.4 million ounces of silver and 358,340 pounds of cobalt.

The Atlin gold project is an early stage gold exploration play in search of Barkerville-style or California-style mother-lode gold deposits, the company has said. It covers 979 km2.

The Atlin camp is the second largest gold producer in British Columbia on record, with a reported placer gold production of over 600,000 ounces between 1898 and 1946 from creeks in the area. It also holds the provincial record for the largest nugget, weighing 2.6 kilograms.

Several of the creeks crossing Brixton’s claims have seen historic placer production of up to 44,109 ounces on McKee Creek.

In 1988, Homestake Mineral Development Co. outlined the Yellowjacket gold zone by drilling 58 diamond drill holes, intersecting gold to a depth of 140 metres. More recently, samples taken by Brixton from the LD showing in 2017 returned a high of 293 g/t gold. By comparison, historical drilling in the Yellowjacket Zone returned up to 5.57 metres of 509.96 g/t gold.

On Thursday, Brixton said construction has begun on a new 35-person exploration camp located at the Yellowjacket Mine (a permitted 200-tonne-per-day mine and mill currently on care and maintenance). The mine is road accessible and located 9 km from the town of Atlin.

The company said exploration work planned for this year includes 3,000 metres of core drilling across four targets, including LD and Yellowjacket. The other two targets are Pictou and Imperial. Diamond drilling is expected to commence in late June.  At LD and Pictou, a series of short drill holes will be utilized to test for vein continuity below historic trenches and to partially test gold-in-soil anomalies generated by Brixton in 2018.

The LD showing is approximately 12 km from Atlin and is road accessible. The Pictou showing, located 2 km from Atlin, is also road accessible. Historic records dating back to 1899 reveal the discovery of gold-bearing quartz veins through 29 metres of underground workings. Chip sampling of outcrop in the vicinity of the adit returned 11.75 g/t gold and 4.48 g/t gold last year.

Exclusive Insights on the Gold Market – Thu 18 Apr, 2019

Recapping The Set Up For Gold, Silver, and The Stocks

I chatted with Craig Hemke today about the overall set up of the precious metals and the underlying stocks. We start with the Comex contracts and a stat that Craig shared on Twitter last night. Silver contracts on the Comex are now above 50% of the total gold contracts. This is an anomaly as usually there are more than double the amount of gold contracts. We also touch on the selloff in the gold and silver mining shares when the metal prices have been stable.

Click here to visit Craig’s site for more metals focused commentary.

RNC Minerals closes C$12m bought deal financing

RNC Minerals has closed a C$12-million bought deal financing by issuing approximately 24.5 million common shares at a price of C$0.49 each.

The offering was underwritten by a syndicate co-led by Haywood Security and Cantor Fitzgerald Canada. The underwriters have also been granted a 15% over-allotment of 3.7 million shares at the same price per share.

RNC recently made a high grade discovery – the Father’s Day vein – at its 100% owned Beta Hunt gold mine in Western Australia. The company has completed a 40,000-metre drilling program and expects to use the results to update the resource estimate and mine plan in Q2 2019.

The Beta Hunt underground mine began producing both nickel and gold in 2015. RNC has decided to curtail the nickel output and concentrate on gold. As of December 2017, the mine has 2.4 million tonnes of indicated resources grading 3.2 g/t gold and containing 239,000 oz. The inferred portion was 2.0 million at 3.2 g/t gold for 208,000 oz. of contained gold.

(This article first appeared in the Canadian Mining Journal)

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Roxgold and Newcrest close deal on Séguéla project in Côte d’Ivoire

Roxgold (TSE: ROXG) announced Thursday that the deal to acquire from Newcrest a portfolio of 11 exploration permits in Côte d'Ivoire, including the Séguéla gold project, has completed.

The Canadian miner paid $20 million upfront, to be followed by a $10 million deferred payment due when Séguéla reaches production.

Séguéla is Roxgold’s second major project after the Yaramoko gold mine in Burkina Faso, also in West Africa. Séguéla is located approximately 240 kilometres north-west of Yamoussoukro, the political capital of Côte d’Ivoire, and approximately 480 kilometres north-west of Abidjan, the commercial capital of the country.

“The Séguéla gold project provides a second key asset with significant growth potential both in the near term through the near-surface Antenna deposit and attractive satellite opportunities as well as a highly prospective large land package,” John Dorward, Roxgold's President and CEO said in a statement.

The Antenna deposit hosts an inferred resource of 5.8 million tonnes at an average of 2.3 grams per tonne of gold, in addition to other satellite opportunities.

Drilling is set to begin April 24 on multiple exploration targets, the miner said.

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B2Gold Q1 production beats estimates

B2Gold’s Fekola mine in Mali, West Africa. Source: B2Gold Corp.

B2Gold Corp. [BTO-TSX; BTG-NYSE] is off to a good start in 2019 after posting better than expected production in the first quarter. First quarter gold production of 230,859 was 6% above budget and driven by strong results from the company’s Fekola mine in Mali, West Africa.

Consolidated gold revenue in the first quarter was $302 million on sales of 232,076 ounces at an average price of US$1,300 per ounce, compared to $344 million on sales of 259,837 ounces at an average price of US$1,325 an ounce in the equivalent 2018 quarter.

Based in Vancouver, B2Gold is a senior gold producer with five operating mines and numerous exploration and development projects in various countries, including Nicaragua, the Philippines, Namibia, Mali, Burkina Faso, Colombia and Finland.

Its roster of producing mines includes the Fekola mine in Mali, West Africa, the Masbate mine in the Philippines, and the Otjikoto mine in Namibia. The company also has two mines in Nicaragua – La Libertad and El Limon.

The company has been widely tipped as a takeover target in the wake of news that Goldcorp Inc. [G-TSX; GG-NYSE] and Newmont Mining Corp. [NEM-NYSE] have agreed to merge in an all-stock deal worth $10 billion that will make the two companies the world’s leading gold producer.

Meanwhile, B2Gold said the company’s Fekola, Masbate, Otjikoto and El Limon mines all exceeded their production targets. For example in the first quarter, Fekola produced 110,349 ounces of gold. Masbate produced 57,481 ounces.

On March 26, 2019, the company announced positive results from the expansion study preliminary economic assessment (PEA) for the Fekola Mine, including an estimated increases in average annual gold production to over 550,000 ounces per year during the five-year period between 2020-2024.

By comparison, Fekola is expected to produce between 420,000 and 430,000 ounces this year, making it the company’s biggest gold producer by a wide margin. Masbate ranks second with forecast production of 200,000 to 210,000 ounces in 2019.

The company is also proceeding with an expansion project to increase Fekola’s processing throughput by 1.5 million tonnes annually to 7.5 million tonnes from the current base rate of 6.0 million tonnes.

For the full-year 2019, B2Gold said it remains well positioned for continued strong operational and financial performance with consolidated gold production forecast to be in the range of 935,000 and 975,000 ounces. All-in sustaining costs are forecast at US$835 and US875/oz.

On Friday, B2Gold shares eased 0.55% or $0.02 to $3.61 on volume of over 2.0 million. The shares trade in a 52-week range of $2.77 and $4.40.

Also, in the second quarter of 2019, the company expects to complete an updated PEA for the 49%-owned Gramalote Project in Colombia. If the PEA is positive, the company and joint venture partner AngloGold Ashanti will consider whether to proceed to a final feasibility study.

Gramalote is a gold development project located approximately 230 kilometres northwest of Bogota.