Vancouver Resource Conference 2015 Notes
Been slammed with work so only had time to stop by for 3 hours Sunday. Attendance was down like last year and only really those working in Vancouver exploration industry attending (lots of grey hair). No retail interest whatsoever. Highlight was definitely Bo Polny’s presentation. See below. Let’s hope he’s right and 2011-2014 was a redux of the mid-1970’s $200 to $100 correction in gold and we are going much higher in 2015.
Notes on PM miners I had time to visit/watch presentation as per my usual:
Oceanagold booth visit OGC.TO
- Lowest AISC intermediate producer (along maybe with DPM.TO). Reason as always for this is strong base metals credits from copper sales from Phillipines Didipio mine.
-Hedged almost all of their New Zealand gold production at current $USD converted price of $1200-$1300 so no gold-price upside for 2/3 of company's gold production (NZ is about 200,000 oz and Didipio 100,000 oz)
-Didipio copper is all hedged, but not on a long term basis. There is a 3 month lag between when they deliver concentrate to port and get paid so they hedge when the deliver. 3 months out.
-I think OGC did well the last couple years because they were low AISC but if gold goes up in 2015 there will be much better investments due to OGC’s hedging. I am going off of past experience here to when they trailed market in upside gold price environment.
Roxgold Presentation ROG.V
- need final permit
- coup in Burkina Faso. Permit was approved by old government. Pre-approved by new government last week
- indicated 16g/t grade, 12g/t fully diluted to mill
- 8 yr mine life, hoping to extend 55 zone mine life
- 4.1m wide vein
- drilled to 900. But mine plan only to 400m, so looks more like 16 year mine life.
- power only 4km away
- 10-15M/year to lower decline to extend mine life for mine life extension.
- only two mining trucks in first 2 years = key reason for low capex. Need less equipment with wide, high grade vein
- AuMS is experiences u/g mine contractor they have contracted (see their website)
- 40M of cash currently
- Project Finance not currently approved. Key piece of missing information will be to see if financiers require hedging. Since Roxgold has such strong economics perhaps there is a possibility they will not need.
Tahoe (THO.TO) presentation
- 3rd largest primary silver mine in world now
- AISC $9-$10 last year
- $1.20 in cfps last 9 months
- Government just increased royalty from 5-10% so politics is biggest risk here.
- Just like B2Gold’s La Libertada gold mine is largest corporate taxpayer in Nicuragua, Tahoe’s Escobal is now the largest corporate taxpayer in Guatemala.
- effective rate of both taxes and royalties is 35% with 10% royalty increase
- long hole stoping with wide width veins = low aisc
- ship a lead and zinc (two) concentrate separately to market. Simple processing.
- CEO claims that local protests are caused by non-guatemalan NGOs, not locals and points out the mine has created a middle class in town
surrounding mine. Mine is very low footprint with low grade.
- Should do very well in 2015 if silver goes up. Political risk should be behind them at least for 2015.
Lake Shore Gold LSG.TO
- 50m in fcf last year
- 120m in ebitda last year (same as Endeavour FYI with Endeavour having much lower EV)
- main takeaway is that reserves are quite low.
-only 5 years of resources at timmins west (FYI resources (M&I) not reserves (P&P))
- 12 years of resources at bell creek
- senior secured debt will be paid off in a few months
- ceo says "We will be operating for 25 years"
- US $875 Aisc in 2014
- 95% of costs in $cad (underground so limited diesel costs priced in $USD) so should do very well in 2015 with $CAD heading down and gold in $USD heading up.
- 6 m oz of resources
- conv deb @ 1.40 - $135M.
- cash 60M now
- 2015 guidance: 170-180k
Bo Polny
- 70th month US stock markets must drop. 69 month cycle. December 2014 was 20th month. All global stock markets down for month December including US markets which dropped to loss for month in last 10 minutes. Convinced equity bear has starting and we are going down near 2008 lows with 16 year “bearish descending wedge”.
-Thesis: bullish 3.5 yr descending triangle for gold will be broken in 2015 and looks like this started last week SNB announcement and gold breaking downtrend in all global currencies.
- thinks +2000 gold, +60 silver in 2015 and this is being “conservative”
- most money is made at the end of a major cycle with a major market disruptions. Thinks gold will tear upwards.
- He pointed out that the Comex Gold/silver volume was off the charts in last two months of 2014 so powers to be are trying everything possible to keep PMs down.
- Interesting: Bill murphy of GATA was standing next to me throughout Bo’s entire presentation listening very intently. Maybe Bill thinks that “Bo Knows”
Pershing Gold PGLC.pk
-Near term heap leacher of former producing heap leach mine in 1970’s
-Have $10M of cash and claim they only need to raise $10-$15M to get back into production
-I am so fr$$%**in sick of companies only sending VPs of corporate development that have never started a mine so I have no insight on mining operaionts like this one and am staying away. Could be a money hole and only produce like 20,000 oz/year once heap leaching
-Listed on pink sheets but plan on doing share consolidation to list on Nasdaq. They use Canadian NI 43-101 standards though apparently.
-One rich guy owns 25% and management owns another 25% so there is strong interest in making this work.
