Woofers,
Here is my take on it:
Facebook: "Testing and calibration of the new circuit was a huge success. We determined the new circuit has a higher capacity than originally thought. The testing did take us longer than anticipated, as we were hoping to have finished within 14 working days and it took us closer to 17."
TTH: First, for non-miners like me, this announcement illustrates how little nonprofessionals understand what it takes to run a gold mine or a company like URHG, and therefore how unrealistic shareholders expectations might be. By the same token, this information is very helpful and shows the current management is aware of the need to communicate with (and educate) their shareholders to create confidence. I think it also shows the management has a plan to follow and is willing to do things right, even if that take some time and is sometimes frustrating. It seems pretty clear this is not a pump and dump stock making outrageous claims; if anything, they appear to prefer to under-promise then hope to over-deliver.
Second, these last 17 days have not been for producing gold. I thought you put in a trommel, turn it on and process gold. Instead you can see that they installed and then did a very thorough testing of the circuit, even if that meant adding some extra days to the process. I appreciate the specificity of telling us how many days it took and also admitting it took longer than they thought it would. They could have skipped that part, but I think it shows they are trying to be open and honest instead of glossing over it.
Facebook: "During our testing/calibration phase we were able to run each component of the circuit independently, as well as the entire circuit at only about 20% of capacity for very short time periods. So though we did capture GOLD we were unable to determine the rate of gold per ton we were capturing. However, we can say that everyone involved with the Dun Glen mine was quite impressed with what we did capture for running on such a limited basis and with so many start/stops involving the many moving parts that needed to be fixed, adjusted, aligned, or moved."
TTH: This sounds like tuning a fine musical instrument but on an industrial scale :^)
Again, that gives me confidence they are doing this right and helps me understand the steps they must get through before full production can take place. It looks like each part needs its own calibration. I see also that they have not yet run the unit at 100% capacity."
Facebook: "We have notified MSHA (Mine Safety & Health Administration) that we are moving from intermittent status into full production as of today, July 23rd. The capacity of running ore with this new circuit could average 100 tons per hour. Using the assay reports from the geological work on the mine, we are targeting 200 ounces of gold recovery per month. The three keys to any gold mine are good ore, enough water and a good circuit to capture the gold. Dun Glen has always had the first two, but lacked the third. Everyone here at URHG is feeling very confident that we now have a GREAT circuit and thus all the necessary ingredients to have a successful mine and in turn a very successful company. We will closely monitor our water supply as we move forward to ensure the ability to run the circuit at full capacity."
TTH: This section shows that each step the mine takes is monitored by MSHA, which will always add delays, and that it was unrealistic if we were to expect full production this last couple of weeks. Apparently "testing and calibration" phase could only be done in "intermediate status". It looks like they can now go into "full production" status, and their expectations are 100 tons/hour and 200 ounces/month. So that gives us some benchmark numbers for future estimates of progress, which is useful. I was less interested in the number of ounces they recovered and more interested in the integrity of the new circuit. It appears the equipment is now more reliable than it was in the period from last September until now. This was good news IMO.
Facebook: "Placer mining is best done successfully by consistent hourly production because the gold content of each ton of hour can vary dramatically. The numbers we release from production can be affected by finding a big pocket of ore one week or possibly missing the vein the next week. We plan to have weeks of no less than 40 hours of production time to help us determine what our average output will be, what our cost per ounce to produce will be and what the optimal labor, equipment and support team will look like."
TTH: With good water, good equipment, and good management, good production numbers will be a question of the assays proving themselves to be accurate. It is helpful to know the caveats here, too, which apply to placer mining; ups and downs are to be expected. This helps us manage our expectations and also know what kinds of questions to ask if numbers seem low.
Facebook: "Things look very positive for all URHG shareholders going forward and the confidence at the mine is extremely high. We have GOLD, we have WATER and now we have a beautiful circuit to mine the GOLD from the ore.
Thank you for your patience and continued support as we continue to make progress to our goal of making gold, which ultimately will be reflected in our stock price."
TTH: I prefer this type of announcement about steady, planned progress to what I have seen for some other stocks which imply explosive growth is right around the corner. Since they didn't put out a press release, I think they will still do that because they have been keeping their recent promises to keep us informed. And if they do, I think it would probably contain additional information beyond what is in the Facebook posting since the PR would be reaching a larger audience and I see the URHG Facebook as a more informal vehicle. I liked the video they posted on Facebook today - it is helpful to get a feel for what the mine equipment looks like and its size. That does look like one big trommel!
- TTH
