Alacer releases updated PFS for Turkey project

Not-so-good news about higher costs and capex estimates in an updated prefeasibility study this week for Alacer Gold Corp.’s (TSX: ASR; ASX: AQG) Gediktepe project in Turkey were partly offset by good news of a 117% jump in the project’s indicated resource.

Gediktepe’s Ardich deposit is about six km northeast of Alacer’s 80%-owned Çöpler open-pit mine and is the company’s highest priority development project.

The updated mineral resource consists of predominantly oxide ore with some sulphide, totaling 13.24 million measured and indicated tonnes grading 1.50 grams gold per tonne for 639,000 ounces of contained gold and a further 2.58 million inferred tonnes averaging 1.16 grams gold for 96,000 ounces of contained gold.

The latest study estimates a post-tax net present value at a 5% discount rate of $252 million and internal rate of return of 27%

The company believes there is potential to expand the resource and will start step-out drilling next week to test the extent of the mineralization. Alacer also believes there are opportunities to process oxide ore from Ardich at its existing Çöpler oxide plant facilities and is undertaking an engineering study this year for a 20 million tonne per day expansion of Çöpler’s heap leach pad.

The resource estimate was released the same day as a prefeasibility study for the project that updates a previous PFS completed in 2016.

The PFS outlines a mine life of 11 years and total recovered metals, to both dore and concentrates, of 345,000 ounces of gold, 8 million ounces of silver, 254 million pounds of copper and 626 million pounds of zinc, for a total of 1.6 million gold-equivalent ounces.

The latest study estimates a post-tax net present value at a 5% discount rate of $252 million and internal rate of return of 27%, down from the 2016 study’s NPV of $475 million and IRR of 47%.

Pre-production capex of $164 million was up from the 2016 PFS estimate of $120 million, while life-of-mine cash costs were forecast at $817 per oz., up from the previous $613 per oz.

“The cost increase was mainly attributable to higher processing costs, as challenging metallurgy and ground conditions limited the viability of the previously proposed heap leaching flowsheet,” comments Cosmos Chiu of CIBC. “The oxide ore will now be processed through a CIP circuit.”

Chiu also estimated that Gediktepe’s total resources, inclusive of reserves, fell by 18%-25%.

News of the updated resource and PFS sent the company’s shares down 2% or C$0.07 to C$3.45 apiece on April 3.

CIBC’s Chiu has an outperformer rating on the stock and a 12-18 month target price of C$4.00 per share.

(This article first appeared in The Northern Miner)

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Alamos Gold sells royalty portfolio to Metalla for $8m

Alamos Gold (TSX: AGI; NYSE: AGI) will sell a portfolio of 18 royalties on assets not owned by Alamos to Metalla Royalty and Streaming (TSXV: MTA; MTAFF) for $8 million in Metalla shares.

The portfolio includes a 2% net smelter returns royalty (NSR) on Agnico Eagle Mine’s El Realito gold deposit, adjacent to its La India mine in Sonora, Mexico, plus 1.5% and 1% NSRs on Monarch Gold’s Wasamac gold project and Beaufor gold mine, both in Quebec. Most of the other royalties are on exploration stage projects.

Metalla will pay Alamos 8.23 million shares valued at $1.30 a-piece. Following the transaction, Alamos will own 6.26% of Metalla.

Concurrent with the royalty deal, Metalla secured a C$12 million convertible loan facility with Beedie Capital. Beedie will advance Metalla an initial C$7 million, with the remaining C$5 million available in minimum tranches of C$1.25 million.

In March 2019, Alamos received an operating permit from the Turkish Department of Energy and Natural Resources for the start of earthworks at the open pit area on its Kirazli gold project. The company expects to spend C$75 million in 2019 finishing Kirazli’s water reservoir and ramping up major construction activities. It expects to spend C$60 million continuing construction in 2020 and begin initial production by the end of that year.

Metalla acquired a 1% NSR on Atlantic Gold’s Fifteen Mile Stream gold project in Nova Scotia for C$4 million. Metalla paid the third party seller C$2.2 million in cash and issued it 2.6 million shares. The royalty covers all products recovered from the project.

(This article first appeared in The Northern Miner)

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Eldorado begins commercial production at its first Canadian mine

Eldorado Gold (TSX:ELD)(NYSE:EGO) has kicked off commercial production at its Lamaque mine located in Quebec, the company’s first operation in the home country, expected to produce between 100,000-110,000 ounces of gold this year.

Lamaque underground gold mine in Val d’Or, Quebec, is expected to produce up to 135,000 ounces of the precious metal a year in 2020 and 2021.

Lamaque, which the Vancouver-based company grabbed after acquiring Integra Gold in 2017, has an initial mine life of seven years and its output is set to increase to 125,000-135,000 ounces of gold in 2020 and 2021.

The underground mine produces ore from the Triangle-deposit, which is processed at the refurbished Sigma mill.

Chief Operating Officer, Paul Skayman, noted the company achieved the key milestone ahead of schedule and said that was “a testament to all of the hard work” that has gone into the project.

The deposit is located in the Val d’Or mining camp, at the eastern end of the prolific Southern Abitibi Greenstone Belt.

Eldorado said in February the new mine and the resumption of mining and heap leaching at Kışladağ gold mine in Turkey, will take its 2019 production to between 390,000 and 420,000 gold ounces.

The company also has mining, development and exploration operations in Greece, Romania, Serbia and Brazil.

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Researchers learn to produce borophene on a gold surface

Scientists from Rice University, Argonne National Laboratory and Northwestern University discovered that when heated in a furnace and place on a gold surface, boron atoms dissolve into a bath of gold and when the materials cool down, they resurface in the form borophene.

Borophene is the atom-flat form of boron.

Illustration by Luqing Wang | Rice University.

In a press release, the researchers explained that their findings constitute a step toward practical applications like wearable or transparent electronics, plasmonic sensors or energy storage for the two-dimensional material with excellent conductivity.

The team led by Boris Yakobson at Rice, Nathan Guisinger at Argonne and Mark Hersam at Northwestern first theorized and then proved that with sufficient heat in a high vacuum, boron atoms streamed into the furnace sink into the gold itself. Upon cooling, the boron atoms reappear and form islands of borophene on the surface.

According to the experts, this is different from most other 2D materials made by feeding gases into a furnace. In their media brief, they said that in standard chemical vapor deposition, the atoms settle onto a substrate and connect with each other. They typically don’t disappear into the substrate.

The metallic borophene islands formed in the reaction are about 1 nanometer square and show evidence of electron confinement which, in the scientists' view, could make them practical for quantum applications.

“Gold, with a lesser charge transfer and weaker bonding, may yield a layer that’s easier to lift off and put to use, although this has not yet been achieved,” Yakobson said.

It took an order of magnitude more boron to grow borophene on gold than it did for silver.

This is not the first time the researcher and his colleagues investigate the possibilities offered by borophene. In a previous experiment, they showed that borophene grown in a particular way on silver becomes wavy, which also gives it interesting possibilities for wearable electronics.

“So far, the substrates with demonstrated success for borophene synthesis closely follow theoretical predictions,” Yakobson said. “The challenge remains to grow it on an insulating substrate. That will permit many intriguing experimental tests, from basic transport to plasmons to superconductivity.”

Boron, in the form of its primary sources colemanite, rasorite, ulexite and tincal, is mostly found in large deposits in Central and Western Turkey.

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30 countries face higher resource nationalism risk — report

According to global risk consultancy Verisk Maplecroft's latest Resource Nationalism Index (RNI) report, a total of 30 countries have registered a significant increase in resource nationalism risk metrics over the past year, 21 of which are considered major producers of oil, gas and minerals. The RNI is aimed to measure the risk of expropriation, the imposition of more stringent fiscal regimes, and the pressure for companies to source goods and services from local providers. Countries are also rated and ranked based on these risk metrics.

Specifically, the RNI report names Russia and the Democratic Republic of Congo (DRC) as the two notable movers on the list, with both being downgraded to 'extreme risk' to indicate that the risk of governments taking greater control of natural resources is the highest. In DRC's case, the risk bump was mostly a byproduct of its new Mining Code, which allowed more government interventions and oppressive fiscal terms for existing operators. Eight countries now have the 'extreme risk' rating (starting from highest risk): Venezuela, DRC, Tanzania, Russia, North Korea, Zimbabwe, Swaziland and Papua New Guinea.

Government interference poses threat to operators

Although outright expropriation has become a less likely scenario than before, government measures such as tax pressures, changing contractual terms and strict regulations can still make countries difficult to operate in.

Africa has long been recognized as a high-risk jurisdiction. It has gotten worse over the past year as 10 nations experienced growth in risk factors, according the RNI report. Other countries such as Mexico, India, Malaysia, Turkey and Iraq also saw increased risks as governments took measures to erode the revenues of operators.

Improvement in Zimbabwe, Ecuador

On the upside, the RNI report shows that 24 nations have seen improvements in their index performance, including Zimbabwe (joint 5th), Vietnam (25th), Ecuador (46th) and Guinea (94th). Even though Zimbabwe is still far away from what is considered a stable mining destination, its score has improved thanks to a new government regime that has been actively encouraging foreign investment. The country boasts the world's second largest platinum and chromium reserves, according to Verisk Maplecroft, and could attract meaningful investment from abroad and even shed its 'extreme risk' tag.

Ecuador has made more significant progress. Since President Lenín Moreno came to power in 2017, Ecuador has jumped from ranking 3rd and ‘extreme risk’ in the Resource Nationalism Index two years ago to 46th and ‘medium risk’ in 2019.

Read the full report here. 

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Kyrgyz and Turkish miners join forces to develop gold projects in Central Asia

Kyrgyz gold producer Chaarat (AIM:CGH) and Turkish mining and mine construction contractor Çiftay İnsaat Tahhüt ve Ticaret signed today a binding term sheet to enter into a joint venture with the idea of collaborating on the Tulkubash and Kyzyltash projects in the Kyrgyz Republic.

In a press release, the companies explained that even though they have worked together since 2017 and that in 2018 Çiftay mobilised equipment to the Tulkubash site in the western Chatkal Valley, the Turkish firm will now be appointed as construction and long-term mining contractor for the gold project.

In addition to the prior, the deal stipulates that Çiftay will progressively invest $31.5 million for a 12.5% equity stake in Tulkubash and Kyzyltash, which have been valued in $252 million. Definitive agreements for the joint venture are expected to be concluded in Q2 2019.

Exploration at the Tulkubash project has defined 1,657,000 ounces of gold through approximately 78,000 metres of drilling.

According to Chaarat, Çiftay’s investment provides a significant amount of the required equity for the Tulkubash project. Total capital expenditure for the project is between $120 and $130 million, and after Çiftay financial input, the vast majority of the remaining capital expenditure is expected to be debt funded.

“Çiftay’s investment represents a significant milestone for the funding of Tulkubash and clearly demonstrates the company’s inherent value,” Martin Andersson, Executive Chairman of Chaarat, said in the media brief.

Andersson explained that construction is ongoing at Tulkubash, that the first gold production at the open pit, heap leach operation is expected for 2021 and that the recent resource update continues to suggest the emergence of a significant new gold district. He also said that Çiftay has earthworks equipment at the mine site and built a temporary construction camp this winter to be ready for an early spring start to major earthworks.

Corporate information states that exploration at the site up to January 2019 has defined 1,657,000 ounces of gold through approximately 78,000 metres of drilling. This is contained within 3.2 kilometres of strike in the southern portion of the 6 kilometres long mining licence.

The Kyzyltash project, which is also part of the JV with Çiftay, comprises a sulphide ore body and represents a long-term development. Chaarat reports that over 80,000 metres of drilling has been carried out to date, which has defined a large high-grade resource of 5,377koz: 46.1Mt at 3.75g/t.

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Eldorado to hike gold production to over 500,000 ounces in 2020

Shares in Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) climbed on Friday after it said is ready to grow its yearly output to more than 500,000 ounces next year, supported by the restart of its Kışladağ gold mine in Turkey, and the soon coming online of the Lamaque project in the home country.

The Vancouver-based miner cancelled last month plans to build a $500-million processing mill at Kışladağ, choosing to resume mining and heap leaching instead.

The resumption of mining and heap leaching at the Kışladağ gold mine in Turkey should provide the opportunity to consider initial debt retirement later this year.

The decision may not have been entirely voluntarily, since Eldorado has almost $600 million in debt due in 2020, is building its first mine in Canada — the Lamaque project in Val d’Or, Quebec — and it had only about $287 million in cash on its balance sheet at the end December.

When it comes to output, however, Eldorado had a good year, generating 349,147 ounces of gold in 2018, which include 35,350 ounces of pre-commercial production from Lamaque. The figure is significantly higher than the previous year’s output of 292,971 ounces and its original 2018 guidance of 290,000 to 330,000 ounces.

For 2019, the gold company expects to produce between 390,000 and 420,000 ounces, it said while delivering its financial year-end results.

While Eldorado generated $459 million in revenue from its operations in 2018, it also registered impairments adjustments of almost $448 million related to Olympias, in Greece, and its Turkish mine, resulting in a net loss of $362 million, or $2.28 a share.

The adjusted net loss came to $26.3 million, compared with adjusted net earnings of $15.2 million in the previous year.

Looking ahead, chief executive officer George Burns said the restart of Kışladağ and the kick off of commercial production at Lamaque, later this quarter, should allow Eldorado to generate significant free cash flow and provide it with the opportunity to consider debt retirement later this year.

The stock was up 5.53% at C$5.92 by 12:12 p.m. EST.

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Central bank gold buying surges to 50 year high

Against a backdrop of continued stock market volatility and geopolitical risk, gold demand surged in Q4 of 2018, according to a new report released today from the World Gold Council.

Annual gold demand increased 4% on highest central bank buying in 50 years. Gold demand in 2018 reached 4,345.1 tonnes, up from 4,159.9 tonnes in 2017. Central banks’ demand for gold soared to the highest level since the dissolution of Bretton Woods. 

Central banks’ demand for gold soared to 651 tonnes in 2018, 74% higher year over year —the highest level since the dissolution of Bretton Woods and the US eliminated the gold standard.

Net purchases jumped to their highest since 1971, as a greater pool of central banks turned to gold as a diversifier.

Russia, Turkey and Kazakhstan remained key buyers throughout the year, while Russian gold production rose 10% year-over-year.

Central bank buying, Q4 2018, World Gold Council.

World Gold Council analysts assert that central banks reacted to rising macroeconomic and geopolitical pressures by actively increasing their gold reserves.

Stock market weakness in the fourth quarter helped fuel inflows into gold-backed exchange traded funds, which resulted in 3.4B  of inflows. The report reveals annual inflows into gold-backed ETFs slowed to 68.9 tonnes, 67% lower than the 206.4 tonnes in 2017.

Sizable annual flows into European-listed funds (+96.8 tonnes) drove growth in the sector, the report reads. And while North American funds experienced heavy outflows for part of the year, strong global Q4 inflows propelled total assets under management to 2,440 tonnes by year-end, up 3% year -over-year from 2,371 tonnes. For the first time since 2012, the value of total gold-backed ETF holdings finished the year above $100B.

Read the full report here.

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Eldorado scraps mill at Turkish mine, to resume mining and heap leaching

Shares in Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) jumped 12.6% in pre-market trading in New York on Thursday on the news that it will resume mining and heap leaching at its Kışladağ gold mine in Turkey.

The Vancouver-based miner noted it would halt a previously announced $520 million-project to build a mill on site. The facility would have made of Kışladağ a nine-year, 270,000-ounce-per-annum mine.

Facility would have made of Kışladağ, which is expect to churn out this year between 145,000 and 165,000 ounces of gold, a 270,000-ounce-a-year mine. 

Ore extraction at the gold operation is expected to resume by the end of April, with production forecast to reach between 145,000 and 165,000 ounces this year. The figure represents nearly 40% of the company's total full-year guidance of 390,000-420,000 ounces

The decision to resume mining and heap leaching at Kışladağ, said the company, follows improved heap leach recoveries and a revised heap leaching plan, resulting in "favourable economics when compared to milling without the risks associated with the construction and financing of a $500 million project."

As operations ramp up in 2019, the miner foresees consolidated gold production climbing to 520,000-550,000 ounces in 2020 before dropping to 350,000-380,000 ounces the following year.

Last week, Eldorado announced it was getting closer to open its first mine in Canada, the Lamaque project in Val d’Or, Quebec, which it grabbed in 2017 through the acquisition of Integra Gold.

“Beyond completing remaining construction at Lamaque, Eldorado has no major capital projects under way and will remain focused on existing operations in order to realize the full potential from these assets,” president and chief executive officer George Burns said in the statement.

Lamaque, which gives Eldorado an operating asset in its home country, will be an underground gold mine with an annual average output of 117,000 ounces of the precious metal at all-in sustaining costs of $717 per ounce over seven years.

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Eldorado Gold on the countdown to opening first mine in Canada

Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) is only weeks away from opening its first mine in Canada, the Lamaque project in Val d’Or, Quebec, which it grabbed after acquiring Integra Gold in 2017.

Delivering full year and last quarter of 2018 results, the Vancouver-based company said pre-commercial production from the operation had already supported production results for the last three months of the year, which came at 75,877 ounces.

Total output for last year reached 349,147 ounces of gold, which exceeded the company’s target of 290,000 to 330,000 gold ounces and it also surpassed by 16% the total produced in 2017, which was 292,971 ounces.

Lamaque underground gold mine in Val d’Or, Quebec, is expected to produce 123,000 ounces of the precious metal annually over 10 years.

Eldorado president and CEO George Burns said the company’s team working at the company’s Olympias mine in Greece had made progress in addressing challenges relating to the blending of the ore feed to the mill and start-up of the newly installed paste plant.

“Ore feed blending impacted metallurgical performance and contributed to lower second half production and higher costs. With better control of the blend anticipated, we expect 2019 to be a better year for both mining and processing at Olympias,” Burns said.

The company didn’t refer to the status of its application to obtain a compensation of 750 million euros (about $851 million) from Greece for damages suffered due to delays in the issuance of permits for its Skouries project.

Differences between Eldorado and the Greek government over the miner’s plans to produce gold and other metals in the northern region of Halkidiki have dragged on for years, mainly over environmental regulations.

The company’s Lamaque will be an underground gold mine with an annual output of 123,000 ounces of the precious metal at all-in sustaining costs of $634 per ounce over 10 years. The operation, together with Eldorado’s Kışladağ gold mine in Turkey, are helping the company strengthened its footprint outside Greece.

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