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I wish this stock would just crater so I could buy a whole bunch of it. I love SAND's business model.
For the record you forgot the million shares they printed in March 2014 and there may have been other shares for land deals in the past that I am missing since they certainly didn't PR the last one. They definitely have a fetish with selling shares at market bottoms. What is LODE's fully diluted share count? If anyone knows the current number let me know. I believe it is getting around 150 M. As I have pointed out before, market cap up, share-price flat/down. We will get to that billion eventually, the question being is it 200m x $5 or 150 x $6.66 (down from the $50-100 share potential this whole saga started with many years ago). I don't think LODE will ever have another RS unless gold stays very low for many years and they are forced to balloon the share-count to an absurd number. 130-200M shares is typical for a junior, let alone a junior producer like LODE. The only thing in my mind that will take LODE below a dollar is less than $15/oz silver, conversely $30 ag would probably put LODE around $3 or more (IMO), regardless of what they do.
It is not set in stone but I agree they will likely need one or two more capital raises to become profitable. If gold and silver go up they can probably do the last one with minimal pain and finally start to throw off some money from the heap.
What about stock options? Once Corrado gets up to the currently unprofitable 40k oz I think it unlocks another big block of shares for him as well. The guy has done quite well for himself (while the rest of us eat cat-food).
The thing that galls me about this the most is that Corrado says there is no dilution. He is even capable of saying this with a straight face.
I have been steadily reorganizing my portfolio away from LODE to higher potential investments over the past couple years, the number of shares I own being proportional to how much I trust management.
It was John Kaiser that is responsible (Not Pat Dicapo as I said earlier). He is very smart guy with a good track record who has a newsletter. So the price increase is explained by the recent promotion and the company's recent high grade discovery. There are more eyeballs on the story. This is what Mr Kaiser said recently:
TMR: Let’s switch to scandium. What’s the supply and demand picture going forward?
JK: Scandium is fairly abundant in the earth’s crust but it does not concentrate well in the manner of less abundant metals such as lead. When it’s alloyed at very low percentages, 0.5%, with aluminum, it makes the resulting alloy much stronger. It has an anti-corrosion characteristic, good conductivity and is much more heat resistant. If the $100 billion ($100B) aluminum industry had a reliable annual supply of hundreds of tonnes of scandium oxide, there would be no shortage of applications using aluminum scandium alloy, which end-users would rush to commercialize.
Unfortunately, the world only produces about 10 tonnes of scandium oxide annually from a hodgepodge of byproduct sources that are not scalable. Emerging byproduct sources include certain titanium dioxide processing operations in China. Another source is in situ leaching of uranium deposits in Russia and Kazahkstan, as well as nickel-cobalt operations in the Philippines. Tests are underway to see if scandium can be recovered through the remediation of red mud, the toxic waste created when bauxite is converted into alumina. The only primary scandium mine was the Zhovti Vody deposit in Ukraine, which was part of an iron mine in which the Soviets discovered 100 g/t scandium that they exploited to make aluminum scandium alloy for their MiG fighter jets. The supply situation of 10 ton per annum (10 tpa), even at a $2,000/kilogram ($2,000/kg) price, has an inconsequential value of $20–40M/year. But over the last six years scandium-enriched laterite deposits were discovered in Queensland and New South Wales, Australia at or near surface with grades of 200-500 g/t.
I have high hopes for EMC Metals Corp. (EMC:TSX). It is $3M away from owning the Nyngan deposit in New South Wales, which has a resource at $2,000/kg, $9B in situ value and a rock value of $800/ton on a 100% recovery basis. According to my speculative cash flow model of this system, a mine producing only 50 tonnes annually could be worth $200M. But there is a chicken-and-the-egg problem: If there is no supply, there is no demand, and nobody wants to put up capital for something that does not have an offtake agreement. The aluminum alloy industry isn’t willing to help EMC. It wants to see the scandium first.
But Bloom Energy, based in Silicon Valley, has developed a solid oxide fuel cell that relies on scandium to reduce the temperature of its Bloom Boxes. This would reduce the high maintenance cost that prevented solid oxide fuel cells from commercialization as a way to convert natural gas into electricity much more efficiently than ordinary combustion.
Bloom reached an installed capacity of 100 megawatts (100 MW) last year. That would only have consumed about 7 tons of scandium oxide, but if its annual sales doubling trend continues, annual demand could be 20–40 tons scandium oxide by 2017. This could result in a marriage of necessity between EMC Metals and Bloom. If Nyngan can be in production by 2016-2017, it solves Bloom Energy’s supply problem. I would also expect the aluminum industry to be interested.
Until very recently, EMC Metals has been an extremely risky pick because it had a market cap of only $5M but needed to raise $3M by June 24 to secure the Nyngan asset, on which it has done feasibility work since 2010. What changed during the past week was news from EMC Metals that it has made a new scandium oxide discovery not far from Nyngan in Australia with similar grades and a tonnage footprint sufficient to meet Bloom’s needs for the next decade. The Honeybugle discovery can be fast-tracked in place of Nyngan, though it is still important for EMC Metals to acquire Nyngan. But with a market cap of about $15M reflecting both the value of Honeybugle and the option it has on 100% of Nyngan, it should be much easier for EMC to raise the $3M acquisition cost and another $3-4M needed to deliver a feasibility study by the end of 2015.
TMR: Is Bloom talking with EMC Metals about that funding?
JK: Bloom Energy has been in discussions with EMC Metals since 2010. The talks derailed in 2012 when a title dispute arose over EMC’s acquisition of a stake in Nyngan, at which point, Bloom Energy did an offtake agreement with Metallica Minerals Ltd. (MLM:ASX) for Metallica’s lower-grade Lucknow deposit in the amount of 20–30 tons scandium oxide and an option for another 30 tons. But Metallica could not scale down to just produce 20–30 tons. It tried to find another offtake partner for the surplus, but could not.
Bloom has done deals with Chinese titanium oxide producers, but the byproduct supplies are incremental and cannot be scaled up. If Bloom Energy is going to succeed, it needs a primary supply that can guarantee it 30–50 tpa scandium oxide.
I like the Bloom story because it’s about making things more efficient and utilizing an energy source of which America has a growing supply, natural gas. Solid oxide fuel cells have a smaller carbon dioxide footprint than conventional combustion of natural gas. As Japan looks at ways to avoid nuclear energy, including the import of liquefied natural gas, it becomes an obvious and big market for Bloom’s technology.
http://etfdailynews.com/2014/05/13/what-will-shake-retail-investors-out-of-their-shell-shock/ for the rest of his ideas.
Interesting. I found the original scandium-aluminum alloy patent and it also says that the alloy has a very good conductivity to strength ratio. It was 57% tensile strength for a 7-8% decrease in conductivity. I bet it has a bunch of electrical and other undiscovered applications. Its uses in aerospace and the fact Russians use scandium for performance parts makes me wonder how much the US government controls. It doesn't seem like it can be that much, but they got to have some, right? It seems pretty strategic in many respects so perhaps they will be active in investing/securing more especially if some other sources are brought online. There is only a couple competitors to EMC and the market caps are tiny so maybe we will see a mini bubble with these one day like with lithium and rare plays before them.
http://scholar.google.ca/scholar_url?hl=en&q=http://patentimages.storage.googleapis.com/pdfs/US3619181.pdf&sa=X&scisig=AAGBfm3c2dxi1lflbGlgT4xiiQFZrRUDdg&oi=scholarr&ei=pA5tU-b6Gs7soAS3k4HgCA&ved=0CC0QgAMoADAA
EMC Metals Corp. Drills 30 Holes at Honeybugle, Intersects Average 270 PPM Scandium in 13 Holes
Including the highest grade hit, a 3-meter intercept graded 572 ppm scandium (hole EHAC 11)
http://www.businesswire.com/news/home/20140507006348/en/EMC-Metals-Corp.-Drills-30-Holes-Honeybugle#.U2zs0KI-fPg
EMC was also mentioned in an article or video interview I saw recently, although I cannot remember which. I have watched several hundred interviews in the past couple months and they all sort of blend together a little bit so I am unable to confirm the source. Needless to say it was someone smart, I want to say Pat Dicapo off the top of my head but that may not be correct.
I find the scandium story to be quite compelling and I have been gradually accumulating shares in ECM. The market is tiny, a hundred pounds world wide in 2011 according to one source I read. The market is tiny not because demand is small but because supply is so negligible. This is why it is exciting that ECM seems to be sitting on a significant deposit of this stuff, which I believe will function similar to other speculative rare earth plays. Holding nearly all of the supply of a useful commodity gives ECM the appearance of being something akin to a monopoly. This coupled with the fact scandium's properties make it very useful in modern applications and technology makes a good sales pitch. If a decent supply is made available it will be used. I mean who is going to develop a wide scale commercial application for something so limited in supply? But if it was more widely available it would be used in a number of high performance aluminum products. By creating supply you can simultaneously create demand, like making the first PC or iphone.
I love the royalty business model and I love silver... hard to go wrong with SLW at these prices in my opinion.
[When do you expect LODE will start showing profits?] (paraphrased)
Corrado De Gasperis:
"I think that from our view and I could be very pedantic, repeating some of the aspects of the mine plan. We did increase our cash position in April we were very happy about that of course, we -- I think I have been trying to explain that, we still have some strip ratios in May or June, we believe that stability of the operation in the cost reductions will allow us to be stable with cash and increase cash continuously, but to really breakout from an all definition perspective we need to get to that 40,000 ounce run rate which is really think is the third quarter at the soonest. So it’s nice to generating some cash, it’s nice to be improving from there, but the real breakout and there’s nothing stopping us or slowing us down from reducing cost further faster et cetera, I don’t want to give that impression that’s all we will be doing in May and June. But the mine plan gives us a big lift, when we get into that third quarter and we got through some of the more difficult transitionary parts, right. And if we’re running at 10,000 that goes it could have announce as a quarter we will be there. So that’s really what we’re marching towards and we’ll continue to improve that rate and we’ll continue to reduce the cost but I think we still have a couple of months of more challenged strip ratio in front of us, before we get to the really, really good stuff. But it’s around the corner."
From SA:
http://seekingalpha.com/article/2175123-comstock-minings-ceo-discusses-q1-2014-results-earnings-call-transcript?page=4&p=qanda&l=last
Some other misc news that I haven't seen posted:
On March 4, 2014, the Company issued 543,500 and 436,500 of Rule 144 restricted shares of common stock to Dan and Caroline Salzwimmer as payment towards the purchase of 78 acres of land (the "First Salzwimmer Purchase") and 30 acres of land and buildings (the "Second Salzwimmer Purchase"), respectively, both located in American Flat and directly adjacent to the Company's processing facilities and the V&T Land.
Commenting why shares were issued instead of using cash Corrado de Gasperis said, "we weren’t in a position at the time to make an all cash offer," and that the land was important, a "property [that] was the absolute strategic connector of our existing private acres to a very-very large private acreage position that we have to the south."
Comstock Mining Inc. also announced Monday it has received the IAIR Award for “Best Company for Leadership — Gold & Silver Mining — USA.”
The judges awarded Comstock “for its important role in the Gold and Silver Mining in the Comstock District of Nevada since 2003. Thanks to its operating model and its understanding of the geology of the area, Comstock Mining was able to bring its exploration project into production.”
“Our entire team strives to lead and promote breakthrough innovations in mining, reclamation and restoration, by promoting a culture of continuous learning, wealth creation and commitment to our communities,” said President and CEO of Comstock Mining Corrado De Gasperis.
http://elkodaily.com/business/iair-recognizes-comstock-mining-as-best-company-for-leadership-/article_d63a19ec-ccdc-11e3-a27f-0019bb2963f4.html
I would say the chance is quite high that they will raise more capital.
I did read the PR and this is what is said:
They have 2.8 M cash.
They lose money every quarter on every ounce so far.
They are planning a 7M drill program.
For the remainder of 2014 they plan to spend 3.5 million in the short term and pay off 6 million in debt, for a total of 9.5 million or -6.7 million in the treasury. This heavily implies lode will raise money as they have historically when their treasury gets low.
Yes, they will have some cash-flow from operations but since these operations cost more than they generate and have yet to earn their first dollar it is unrealistic to assume that in the next quarter or two they will suddenly become not only profitable but materially so. As you point out, the ratio of overburden to ore is high for lode and it will come down along with their costs as their grades and throughput rise. This is the slow trend to become profitable, but we have a ways to go. Say hypothetically they increase production 50% next quarter (~7500) and earn $200 x7500 = $1.5 million, they will still need to raise capital shortly.
Do not be fooled by pretty sounding numbers. Even at 40k/oz at $750 cost applicable to mining they may very well still lose money at current prices when considering all in sustaining cash costs. So if you are expecting cash to come from operations and that it will somehow prevent a capital raise, I would say this is unlikely and that cash-flow will be anemic at best for another quarter or two. (IMO)
They explained CATM in the PR:
Belgie, thanks for the encouragement.
Gene, please do not confuse DP with PT. One is the company the other is a shareholder in the company. Normally, if someone is angry at the management of a company they blame the management instead of shareholders without any power to affect change. If DP owned 51% and appointed PT it would be a different story. Your confidence in a stock should be based upon the strength of its fundamental investment thesis, gleaned from its history, PRs, filings, and other DD of which message boards should be the smallest part and under the most scrutiny.
Yes there is another deal.
Gene, the effort and confusion from deciphering cryptic posts is probably not worth it. I've read DP's stuff since 2009 I think and reading his posts is perfectly analogous to gold mining. Move a lot of dirt, overburden, and waste rock to find the nuggets of pure gold. Most people say "too much work."
Stick to the filings and PRs and put less emphasis on the message board stuff. Despite people saying otherwise there is a very real and powerful investment/speculation thesis for putting money into Mexus and you do not need DP to make it.
You question answered from the last PR:
Mexus Gold US also announced that it is in the process of entering into a contract with an engineering, mine development, and mining firm to construct facilities and provide expertise to place the Santa Elena/Julio property into full production. The Company is also in the final stages of relocating its equipment from the San Felix Project to the Santa Elena/Julio property and should be finalized very soon. Paul Thompson added, "We expect to announce the details of this agreement within a week or two. I'm excited about this firm who will consult and partner with us throughout the process to achieve full production with uninterrupted operations. Now is the time for the Company to establish a more professional mining team by adding the appropriate expertise to the Board of Directors, as well as, additional key personnel to meet the expanding needs of Mexus Gold at the Julio/Santa Elena project. Going forward, our shareholders can expect to see frequent press releases and updates on our march to full production at the 100% owned Santa Elena/Julio property."
So within a week or two (aka in the mining world as "within a month") we should have a deal and start producing some high grade, low cost gold.
What do you want me to share? It is my experience that companies with low all in numbers brag about it and tout them, and rightfully so. If you're exceptional you want to market the fact.
The slow staged ramp up like lode is doing only works if each stage generates more cash and the whole thing makes sense based on a capital and financing perspective. I mean whats the point of raising a huge amount of money and ramping through different levels of production if they lose money at all but the top levels? This is the whole point of all those studies, scoping reports and EAs - to build a profitable mine from the get go. Through economies of scale lode is probably pretty profitable at 100k oz a year but 20-40k is quite marginal. If it is obvious we need 50k oz to break even why didn't we start at that run rate and head towards what we actually need? It looks like overconfidence and over reliance on very high gold and silver prices. All the calculations should have been conservative and use hugely discounted metal prices.
It is frustrating because if lode earns no profits, not only will shareholders receive nothing in the form of dividends and an earnings multiple but one of the main value creation mechanisms (drilling like mad and making a discovery) is completely dead. Lastly we are relying on the permitting and expansion of the Lucerne open pit from the starter pit. This is a 5 year process that can cost many millions, and much more in bonding. I haven't heard anything about that either and their time is ticking away.
It is part of the game that miners play to appear profitable or better off than they are in reality. The only number that matters is all in (sustaining) cash costs, which lode does not report. (You can figure it out by reading the filings with the info in the link from my previous post). I estimate they are $1300-1500+ for lode. Cash cost per oz can be calculated in so many different ways and games are played to dress it up so that it is essentially a meaningless metric used to pump stock and is worthless for an apples to apples comparison. Despite this only a few (a gradually increasing number) including major mining companies report the real numbers and make it somewhat easy to figure it out.
I imagine "costs applicable to mining" was a number that looked better than their cash costs or their all-in sustaining number. The problem with every miner self determining how to report this stuff and having no common reporting is that this number might be disingenuous or very disingenuous. I have never heard of "costs applicable to mining" either and you would have to ask lode for the specifics but I feel based on the phrasing that you are correct and "mining" may very well exclude processing, admin, and royalties.
You were correct. That got us moving alright!
Our buyer got a good deal. Their stock is even thinner than ours, up 54% today on low volume.
I read it and think it is a pretty good start and more informative than usual, hopefully it is the first of many. The reaction today kind of says a lot, the buyer is a no-name so the PR drew around 0 new shareholders, and the couple hundred people who follow Mexus are tapped out and over-invested. I am surprised there isn't some "sell the news" style trading. We got a ~40% bump last week and that might be the main short term reaction to this news. Which is okay in the scheme of things, keep moving forward, inform everyone what is going on and mine a lot of gold. Although there is a small part of me that is disappointed (a deal with a major would have given us some very interesting trading, perhaps doubling the stock in a day and tripling in a week kind of thing) but there is no sense in dwelling on it, at the least we removed the legal hassles (Goldspring's catalyst for their ~10000% run), still hold the JV and will until the $4 million trickles in over the next year, and have a small piece of upside if they make it a success.
One PR won't make or break us. Judging by Paul's comments he understands, and more is coming down the pipe. Finish the game-plan and we will be worth a lot more. Last week might have been the beginnings of an uptrend/rally, but who knows.
Good catch at the bottom of the PR, an investor relations person to go along with more regular communication is a good sign.
Also on a side note I have noticed several people talking about the royalty from the San Felix, there is no royalty, we have received shares in FPV instead.
Yes. There are two components here, we have a solid mining company with no cash. You could have all the best claims and management in the world but if they need $3 million to build out their mining facilities and they have a LOC of a couple hundred K and their burn rate is high, Mexus may not be in good shape at all. Whereas if it is cash, and already paid, construction will be complete in a couple months; if our money is delayed 6-12 months (more than reasonable at second read of the terms) then construction will be delayed 6-12 months. Instead of making many millions (more than the deal) we will make $0 in the interim from our heap, which is the most important skew for Mexus.
I am not sure, it says we hold 50% until they pay and they have until March 24 2015 one year after the transaction date. On the other boards I thought D said that it was already cashed so, who knows. Presumably will be soon but someone should call Paul for confirmation, after we wait for the PR which is presumably more detailed. We also have other financing so instant cash probably isn't an issue. It is not immediately clear to me how Pursuit would pay us without a capital raise of their own, so there might be something in the background there.
I'll wait for Monday. Still good news even if we have to wait and see; since we hold part for security I think they would pay quickly. These guys are all connected and have links to some institutions and investors that raising $4M in a private placement shouldn't be difficult.
Some info on our new buyer:
Silver Pursuit Resources Ltd. is a mineral exploration company. During the fiscal year ended September 30, 2012, the Company owned the rights to explore and develop a prospective property known as La Quintera located in Sonora, Mexico. As of September 30, 2012, the Company owned two mineral leases for its Gordon Lake Property. The La Quintera project is located in the foothills of the Sierra Madre Occidental Mountain Range. The La Quintera claim group totals 4672.5 hectares in area and covers several silver mines and mine dumps. The La Tuna property is located 50 kilometers northeast of Obregon, Sonora, Mexico. It consists of a group of nine mineral concessions, covering more than 16,600 hectares (41,019.5 acres).
http://www.silverpursuit.ca/
They are a micro-cap even smaller than Mexus, listed on the CVE under SPF. Where they even got $5 M I have no idea. Cash is cash though! $5 million into the Ranch and this thing will be worth a billion in the next gold upswing.
The Ken saga is now resolved, with a large profit for Mexus.
($5M Deal) Entry into a Material Definitive Agreement
Item 1.01 Entry into a Material Definitive Agreement.
On March 24, 2014, Mexus Gold US and Mexus Gold Mining S.A. de C.V. entered in to an agreement with First Pursuit Silver de Mexico S. De R.L. De C.V. ("FPV") whereby Mexus Gold US and Mexus Gold Mining S.A. de C.V. sold 100% of its interest in Mexus Enterprises S.A. de C.V. Mexus Enterprises S.A. de C.V. is the company's operating entity in Mexico which owned and operated the San Felix Project ("Project").
The total purchase price is $5,000,000 to be paid as follows: FPV will assume $468,000 of debt; $200,000 in cash to be paid to a creditor of Mexus Gold Mining S.A. de C.V.; $332,000 in shares of common stock of Silver Pursuit Resources Limited valued at $0.20 per share; and $4,000,000 to be paid in cash no later than March 24, 2015. Mexus will continue to hold a 50% security interest in the Project until such time as the full purchase price is paid by FPV.
The agreement includes a full release of Mexus and its affiliates from all potential claims and liabilities related to the Project its former joint venture partners and allows Mexus to retain possession of all machinery located at the Project.
http://biz.yahoo.com/e/140328/mxsg8-k.html
I hope one day I can frame some of my five cent shares.
We have now closed above the 50,100, and 200 day moving averages.
Within a week or so I expect a joint announcement of what has been decided for the JV. I believe it will take a form similar to my thoughts here http://investorshub.advfn.com/boards/read_msg.aspx?message_id=95154617
Shortly following that we should be entering a development and production cycle that is conducive to more regular updates.
Some PRS I expect in the short term (next few months)
1. JV agreement.
2. Mexus announces commercial production commences on high grade surface and underground targets.
3. An update on the construction of the MC facility and associated pads and production buildings.
4. Mexus expands the BOD.
5. Update on drilling and ounces produced.
Gene see: http://ih.advfn.com/p.php?pid=nmona&article=59257764
Mexus Gold US (OTCQB:MXSG), 50% owner of Mexus Enterprises SA de CV, releases cost projections per ounce gold equivalent mined from the San Felix Mine.
Mexus Enterprises can now project costs per ounce gold equivalent. Based upon using an experienced and well equipped mining contractor at a rate of $2.09 USD per ton. These cost projections are based on information contained in an August 2013 report by geologist Ing. Javier Martinez which Mexus Enterprises published September 16, 2013. This report indicates the gold and silver content is considered to be 1.23 grams of gold with a 70% recovery of 0.86 grams of gold and 24.60 grams of silver with a 70% recovery of 17.32 grams of silver per ton of ore. Based upon a stable production of 3,000 tons of ore a day, Mexus Enterprises anticipates 108.60 ounces gold equivalent per day. At 3,000 tons of ore per day production, Mexus Enterprises can make the following cost projections:
Established daily direct costs to produce: $ 20,246.07
Contract miner at $2.09 per ton: $ 25,080.00
Contingency: $ 4,682.61
Total projected mining costs for 3,000 ton: $ 51,508.68
Gold equivalent ounces per day: $ 108.60
Projected cost per gold ounce equivalent: $ 474.30
Gross sales per day: $141,179.31
Projected net per day ($1,300 gold & $20.00 silver)
$ 89,670.63
The Mexus Enterprises existing 1,600 gpm gold recovery plant has the capacity to handle 6,000 tons per day production.
The 3,000 tons per day is considered to be a start up amount. Mexus Enterprises has a target production rate of 6,000 tons per day. At the 6,000 tons per day, Mexus Enterprises can project a gold equivalent recovery of 217.20 ounces per day with a gross sales amount of $282,358.62, a projected net per day of $202,577.33, and a projected cost per gold ounce equivalent of $367.17.
The above figures are based upon gold sales of $1,300 per ounce and silver sales of $20 per ounce.
Their own heap leach should be comparable. The underground mining is probably ~$30/ton to mine at least one ounce per ton. We should be in the lowest quartile costs for both underground and heap leach operations. The power of grade!
That's what I was thinking if GG's bid for OSK fails or gets away from them, Rubicon is the other really obvious match, for a much lower price tag. Now that they have raised enough capital to finish Phoenix it does not make sense now for them to sell; the odds of Rubicon being taken out have decreased significantly.
Slow and steady for a year tracking the POG as we finish building and then let's get mining all that beautiful high grade Red Lake gold!
In the short term I think we head up to at least the last financing price ($1.55 CAD).
The price will swing sideways until they either make some money, or silver goes up or down significantly.
If we don't count any of the dilution we are at ~$12 dollars a share right now. Our market cap has doubled many times, while our share-price, tempered by sentiment and the printing press stays the same.
It is definitely frustrating, since many of us here correctly predicted that not only would Comstock find an economic deposit but also place it into production themselves. We were right, picking correctly something that had a 1/10000 chance of being right - and still made no money off of it. We underestimated GoldSpring's debt and the repeated capital raises necessary to actually make a single dollar of profit. The lesson is well learned.
On the value side Comstock has made big strides, going from 0oz per share of a "played out" mine to 0.025 oz/share or $30 gps of a producing mine just on the cusp of making money. The only problem is that our share count has ballooned along with every milestone.
I still believe that LODE will ultimately trade for a much higher price over the next few years but this stock's potential has definitely been sapped for the common shareholder.
Residents Sue Comstock Mining Inc.
A group of residents is suing Lyon County commissioners and a mining company over a decision that it fears could pave the way for mining expansion close to Silver City, about 30 miles southeast of Reno.
The Comstock Residents Association, in its lawsuit filed Jan. 31 in district court, contends commissioners' Jan. 2 votes to approve master plan and zoning changes to allow Comstock Mining Inc. to pursue mining exploration were illegal.
The suit seeks an injunction to block the company's plans, claiming mining would adversely affect Silver City residents' rural quality of life by leading to noise, dust, traffic and diminished water quality, the Reno Gazette-Journal reported.
The complaint maintains Comstock Mining has sought to "purchase influence" in both Lyon and Storey counties as it pursued mining plans. It cites $17,500 in campaign contributions from the company and its affiliates to the 2012 campaign of Commissioner Bob Hastings, who voted in support of Comstock Mining's land-use change requests.
"What we have asked for from the beginning of this decision process was a level playing field when it comes to land-use decisions," Silver City resident Gayle Sherman said. "But the Jan. 2 hearing was far from a level playing field. CMI purchased its favorable decision, and we are requesting that the decision be overturned."
Comstock Mining President and CEO Corrado De Gasperis declined to comment on the complaint's allegations but defended the commission's decision.
"I believe the county commissioners were incredibly diligent in understanding the possible zoning, existing and pre-existing property rights and potential positive impacts on the community and the county," De Gasperis told the Gazette-Journal. "It represents a meaningful step forward for the county, the community and our company."
County Manager Jeff Page declined to comment on the lawsuit.
"But I will tell you we anticipated litigation either way the vote went," Page told The Associated Press. "We've turned the case over to the district attorney's office to follow the legal process. We'll support the court and do whatever we need to get it through the court process."
The commission's votes, which affect 87 acres on the south end of Silver City, allow the company to move forward with exploration to determine the area's mining potential. Comstock Mining would have to apply for a special-use permit in order to begin open-pit mining. The company already operates an open-pit mine just to the north in Gold Hill in Storey County.
The company has brought back gold and silver mining to the Comstock Lode, a massive, underground pocket of silver and gold around Virginia City that produced one of the world's greatest bonanzas and led to Nevada's statehood in 1864.
http://www.chem.info/news/2014/02/residents-sue-comstock-mining-inc#.UwQnIs7YBB0
I am still quite amazed at the level of anti mining hate in a famous mining town founded on mining. Even if its just another frivolous lawsuit that will be tossed out like all their others it still outlines the importance of a mine's position and gaining the support of local communities and native groups. Even a tiny vocal minority can still delay projects and waste a lot of time and money, which is their goal.
The assays were very impressive. Value up; share-price down, what you do with the opportunity is your choice.
I am feeling quite optimistic about the sector in general at this point, a large portion of my portfolio has rallied (Mexus excluded) in the past month or two. Gold is still above $1250 and in the short term I think technical traders could very well drive the price up another hundred dollars or more. A rising gold price coupled with the increased M&A activity that has exploded in 2014 we have the makings of a good year for juniors. Anecdotally financing availability also appears to be gradually returning to the junior market. Will this help our stock prices this year? Hopefully, but maybe we do have another year of sector stagnation in the future.
I'm sorry that may not make you feel better, but feelings have no place in investing or speculating except as a gut-check indicator. You're feeling angry and downtrodden, that's a buy (with fundamentals intact of course), and when you are convinced of your own genius and euphoric that is the strong sell point.
If the market always fully valued things there would be no opportunity to invest. We, as investors, must make the decision to invest when the difference between something's value and its price reaches extremes in our favour.
I won't mention the equity name here but as an example there was a very compelling junior exploration story that was quite theoretical and early stage in its exploration. If they could prove their theory to be true they could potentially sit on one of the largest gold deposits in the world.
I wrote a list of the best conceivable news for the stock. The top two were bellow and I placed a very low chance of either happening.
The number one is an assay so large and long it appears fake, subsequently verified and proven by 3rd parties. The second was the company becoming FULLY financed and backed by a major mining company capable of evaluating their complex theories competently, adding a huge amount of cash and credibility to the project.
Number two on my list, to my complete surprise, miraculously came true a month later. Realistically the best news possible. And drum-roll... down 50% in short order. The value of the company went up at least 2 or 3 times and yet its share-price cratered. This is the type of market we are in. If they would have announced the same deal in 2011 I'm sure they would have had a nice pop and positive market reaction. Like with Mexus, the market was punishing an increasingly valuable company. The good news kept flowing and eventually it got to the same absurd level I have seen many times with juniors, ie that cash is discounted, reserves worth zero, and any progress is punished instead of rewarded etc.
So I took a position. Now up 100% in the past two months on no news. Like with Rubicon's F2 discovery it may take many months, potentially a year or more to be recognized for the work we do today. There is nothing to be angry about, only things to take advantage of - or not.
Take care.
If you pull up some of the large neighbouring mines you would see average grades of around .5 gpt, .6, .62, .72 etc whereas the Mexus JV is ~1.5 gpt with samples up to nearly half an oz. It would almost be negligence on the part of these nearby companies to not at least inquire and learn a bit about the project, since it is fully constructed and hosts much higher grades than their own operations. The majors are always grade hungry and are out scouting projects, even ones that turn out to be outright scams. They are almost obliged to investigate the too-good-to-be-true stories and evaluate them with their own experts and snipe the best, most synergistic projects. There is almost always DD and NDAs being floated between parties. I would say most of the time there is no deal, and no one even knows there was DD going on in the first place, which could have lasted many months or years.
In the case of Southridge, as an example, a Kinross geologist/scout checked into their much touted project and exchanged a few emails, and this was enough for them to hugely pump the stock and release a fake JV agreement on Boxing Day when it could not be verified.
There is a big difference between a preliminary email exchange over an incredibly hyped, but dead project and the Mexus JV, its value, and the type of negotiations taking place there. The Mexus project is a no-brainer but even even the best deals still require time for due diligence, negotiations, and ample legalese.
He is referring to the heap leach, where the majority of the gold in Mexus' future lies. It is not like you just flip a switch and the facilities that do not yet exist produce gold. CMI's MC + pads and crushing circuit took about eight months to construct. I have seen similar build-outs take anywhere from a couple months to over a year to build, it depends on a lot of factors. Based on what I know of the Mexus operations I think they will land on the shorter side of that timetable. Realistically, even if everything goes smoothly, it would probably be a late Q1 or early q2 start up just as DP indicates.
The high grade underground mining, placer production, and perhaps even some higher grade surface veins from their open pit can be milled to make up remaining capacity when the UG begins at 20 tpd before ramping up to a greater portion of its 80-120 max, but it only really makes sense if they can isolate some perhaps unrealistically high grades. This, coupled with whatever happens with the JV, is plenty in the short term and will still be lots of gold even if the heap isn't operational until later in the year. Even if we are only doing ~50-75 oz/day over the next couple months it is still a lot more than zero. Watch the transformation in share price as we go from 0 to 300+ oz/day by the end of the year. If the metal prices recover we should have quite a good harvest and exit point around 2016-2017 in my mind.
2014 should be pretty golden though, happy new year!
Here is a guess at how a deal with our JV could be structured.
Ideally a suitor would want to come in and buy both the San Felix and the neighbouring Mexus-Aztek JV processing operations but this is worth much more than a few million dollars because those facilities, with a little elbow grease, should be able to produce around 100k ounces of low cost gold per year, worth $120 million at current prices. If the entire thing is sold, some investors will inevitably feel cheated that we did not hold on to a piece of a very valuable operation. In my mind it is doubtful that PT would sell everything and would more likely attempt to craft a deal in which all parties benefit.
First a deal is signed with one of our suitors, say AEM in this hypothetical. Our San Felix mine is sold to them and becomes their 100% owned property in exchange for a lump sum of $10 million. Normally an exploration property would not be valued in such a fashion but because of their grades, significantly higher than neighbouring mines, and its position a few hundred feet from the Mexus-Aztek facilities and its ability to produce sizable amount of gold immediately it more than justifies a deal in the ball park of $10 million.
This money would be put into the JV, Mexus and Aztek each receiving half to fund their own respective projects. This would repay both for the risks, work, and capital invested over the past year. The sale of the San Felix mine would also include a contract with the Mexus-Aztek JV to process the ore from the mine of which AEM (or whichever suitor) would assume the responsibilities of mining and exploring their new mine and also pay 100% of the costs of the operation of both the mining and the JV process facilities, in exchange for paying the JV a toll, like a royalty, on every ounce produced. Mexus-Aztek would continue to operate the MC facility for the new suitor, effectively establishing a 3 way collaboration.
This would ensure an ongoing profit stream and potential for another buy-out farther down the line, while still maintaining some leverage, an interesting property, and something akin to an operating toll mill. I have never heard of a toll heap leach, but it makes sense as long as there is only one ore source.
Now, does this make any sense for the suitor?
6000 tpd x 335 days of operations is ~2 million tons at 1.5 g/t this is 3,015,000g / 31.1 = 96,945 oz au, at 70% recovery this is ~70k oz, or $84 million at $1200 gold.
Using Mexus' own numbers (http://globenewswire.com/news-release/2013/09/18/574161/10048906/en/Mexus-Gold-US-San-Felix-Mine-Update.html?parent=574716) my math falls right within the industry average of a few years ago (typical of a low cost producer in a low cost country) of $15/t to process a ton of ore.
$8.36/t mining, hauling, crushing
$6.74/t direct production expenses
$15.01/t
x 2 million tons = 30 M + 3 M (10% contingency) + 3.5 M tolls to JV
=36.5 M for 84M = a $521/oz conservative estimate, which should in theory be able to be lowered even further. This is in line with Mexus' estimates and would net approximately 20-30 million in its first year for the owner.
In this scenario everyone wins.
The major receives a high grade mine with sizable turnkey gold production that would materially affect their bottom lines, and lower their average cash costs. 70-100K+ ounces is significant even on a million ounce producer. They also receive the lion's share of the future profits, looking like a payback of less than a year for its $10 million, and potentially hundreds of millions over life of mine without having to build any infrastructure, nor waiting decades to build a mine.
Both Aztek and Mexus receive a very difficult to come by cash injection, better than any financing they could hope to get, and also retain a piece of the pie, acting like a NSR. Mexus for its 3.5 million invested (or has it exploded all the way to 3.6 M ;) ) would receive 5m + 1.75M (1/2 of a $50 toll on 70k oz) at the end of its first year for a two year return of almost 100% including a future income stream, and whatever the surrounding claims and facilities end up being worth. This also kick-starts the Mexus 100% projects.
That plus whatever happens with our already producing JV... yikes Mexus may very well make way more than its current market cap next year, forward p/e of less than one. 2014 should be awesome, we very well could end up multiples of where we sit now. Congrats to Mr. Thompson and the Mexus team, and the shareholders that hung on. It has been a bit of a meandering path but there is indeed a lot of gold at its end. Regardless of what happens in short term trading (ie reactions to good news have been muted as of late) the value of the company has increased materially. Take care everyone.
LODE must make their first dollar of profit before anyone will care the tiniest bit. Even then a single dollar will not do anything, of course, you need millions. Consider this, you have more money on your dresser in your change jar than LODE has made its shareholders, even if there was just a single penny in there. Investors like to invest companies that are very profitable and are undervalued based on the cash it generates, LODE is currently the opposite of that.
I would also point out that it is indeed remarkable that LODE, against the odds, not only managed to make an economic discovery (1/10000) but also turn it into an operating mine themselves (~1/10) which is in theory a unique asset and worth a lot of money.... if it made any money. This obligation is on LODE to prove.
Mining projects are like R&D companies in many ways, as they answer questions about development, the stocks tend to appreciate, or depreciate depending on the answers to those questions. So you could reasonably ask, "Why has LODE, with so many positive answers not appreciated in the slightest?"
And the answer is that is has... and a lot, only common shareholders have not participated. Years ago LODE traded for about he same price as today but our market cap, even after the effects of the poor gold market, has risen significantly. We may trade at the same price as long ago but we are priced collectively about 5x more than we were before. So while we appear to be stuck in limbo the company has in fact advanced, and printed a lot of shares to finance itself over and over again.
LODE's breakeven with modest exploration appears to be around ~40,000 oz/year which we are just ramping up to. 80-100,000 oz a year should give economies of scale to lower their costs and make their first profit most likely Q1 or Q2 2014, and ultimately a couple tens of millions in profit in its first year. As they expand, earn profits, and begin aggressively exploring again their shares will appreciate as long as they keep a lid on the new offerings. Ideally most shareholders, (in hindsight), would now just be entering into LODE in the next year as it transforms itself from a speculation into an investment.
It is not so much in market conditions (which we have no power over) but in LODE itself that the power to change its situation lies. Higher gold prices and sentiment would of course help our situation but open pit heap leach projects should be profitable even at $1000/oz, and we need to perform irrespective of the market.
Agnico was at the top of my short list. They have recently changed their strategy regarding JVs, that is to do more of them, and with a Mexican focus, so it is not an outrageous possibility. They (Boyd et al) are also on record talking about how Mexico is their main target for growth. There are few properties in Mexico like our JV property that gives them exactly what they want, high margins and already in operation for a potentially significant ~10%+ increase in total company production. I would just remind everyone to take JV speculation with a grain of salt, as there are often NDAs involved and interested parties are not obligated to do a deal or anything for that matter.
Agnico weighs joint ventures as gold miners sell assets
One of Canada’s oldest gold producers, Agnico Eagle Mines, will consider entering joint ventures for the first time and buying mines already in operation.
Related Stories
Author: Liezel Hill (Bloomberg)
Posted: Thursday , 20 Jun 2013
(Bloomberg) -
Agnico Eagle Mines Ltd., one of Canada’s oldest gold producers, will consider entering joint ventures for the first time and buying mines already in operation.
Agnico may also expand into new countries as it loosens the acquisition criteria it’s stuck to for decades, Chief Executive Officer Sean Boyd said in an interview at Bloomberg’s Toronto office. What Boyd won’t change is his vow not to “bet the company” on any single deal, he said.
“We’re not changing the general strategy, we’re changing the tactics,” the CEO said. “We’re broadening our horizon.”
Agnico, based in Toronto, has the highest price-to-book ratio of seven Canadian gold producers bigger than $2 billion, according to data compiled by Bloomberg. The company trades at 1.50 times book value, compared with an average of 0.94 times for the group, indicating the market values the company’s net assets, including its LaRonde mine in Quebec, higher than any other miner in Canada. Agnico has a market capitalization of C$5.13 billion ($5 billion) and had 2012 sales of $1.92 billion.
The company continues to seek growth even after gold fell 19 percent this year and as companies including Barrick Gold Corp., the biggest producer, cut spending plans and pursue asset sales. Agnico Eagle, which also operates in Finland and Mexico, isn’t facing some of the same difficulties as other producers because it didn’t get caught up in a “race to be the biggest,” Boyd said.
Smart Deals
“In the race to grow, the industry has created businesses that are unmanageable, whether they are too big or too complex or the assets in them are just not that good,” he said. “The companies that have successfully navigated the last two or three years realize the importance of doing smart, measured deals.”
Agnico got its start when five silver mining companies merged in 1953 to become Cobalt Consolidated Mining Co., according to the company’s website. Cobalt, which changed its name to Agnico Mines Ltd., merged with Eagle Mines Ltd. in 1972 and the new company started trading on the Toronto Stock Exchange the same year.
Agnico Eagle fell 1.5 percent to close at C$29.70 in Toronto while gold futures dropped 1.2 percent to $1,350.50 an ounce at 4:57 p.m. on the Comex in New York. Agnico has declined 43 percent this year, compared with an average of 36 percent among the seven biggest Canadian producers.
Bull Market
Gold fell to a four-week low today after the Federal Reserve Chairman Ben S. Bernanke said the central bank may “moderate” the pace of U.S. bond purchases later this year, which may reduce inflation pressures.
While there may be some more short-term weakness, the longer-term gold bull market hasn’t ended and the fundamentals that pushed prices higher for 12 straight years are still in place, Boyd said.
“It’s going to exceed its all-time high at some point, which is over $1,900,” Boyd said. “I still think it can get to $1,800 in the next 12 months.” Gold reached a record $1,923.70 an ounce in New York in September 2011.
Agnico had $232 million of cash and an undrawn $1.2 billion line of credit as of March 31. The company had net debt of $516.6 million on March 31 and the ratio of its net debt to trailing 12-month earnings before taxes, depreciation and amortization was 0.7, compared with an average of 0.67 among the biggest Canadian producers, according to data compiled by Bloomberg.
Comfort Zone
Agnico’s strategy of pursuing measured growth makes sense, said David Christensen, CEO of ASA Gold and Precious Metals Ltd. in San Mateo, California, which manages about $300 million and invests in precious-metals companies including Agnico.
“They’ve never gone out and done a transaction which could cost them the company,” he said in a phone interview yesterday. “Knowing this company they will stay within their comfort zone and I wouldn’t expect them to do anything outlandish.”
While Agnico has consistently grown through acquisitions, the company limited the size of deals to within 15 percent of its market value, Boyd said. At yesterday’s close that would be about C$782 million. It may be prepared to go beyond that threshold for the right deal, as long as it doesn’t increase financial risk for the company, he said.
“It has to be measured, we’re not talking about massive deals relative to our market cap,” he said.
Minority Positions
Agnico spent $1.67 billion on 14 acquisitions in the past 10 years, according to data compiled by Bloomberg. The company’s biggest transaction was its $577.6 million purchase of Complex Minerals Corp. in 2010 to add a project in Nunavut.
The company plans to produce about 970,000 to 1 million ounces of gold this year, increasing to about 1.2 million ounces in 2015. The firm’s Goldex mine in Quebec and La India in Mexico will both start operations this year ahead of schedule, Agnico said in April.
Agnico has been active already this year, acquiring minority positions in smaller companies including Kootenay Silver Inc., Sulliden Gold Corp. and Probe Mines Ltd.
The company’s current operations are divided between its northern business, which has longer mine lives and greater operational complexity, and a southern business in Mexico, which offers higher returns, better growth prospects and shorter payback times on investments, and which it’s hoping to grow, Boyd said.
http://www.mineweb.com/mineweb/content/en/mineweb-mining-finance-investment-old?oid=194902&sn=Detail
Mexican mining tax.
"Mexico's senate approved by 73 votes to 50 the broad outline of a package of tax reforms, which included a debated 7.5% charge on resource companies, and as much as 8% for gold, silver and platinum."
http://www.mining.com/mexico-mining-tax-approved-but-hits-political-roadblock-86307/
"Argonaut Gold Inc. has been among the hardest hit, falling by double digits this week, but it’s not alone. Aurcana Corp., Endeavour International Corp., Great Panther Silver Corp. and Silvercrest Mines Inc. have also been off. Falling prices for precious metals aren’t helping either.
“The new mining tax regime in Mexico has come at an inopportune time as precious metals prices are near their two-year lows, industry costs remain high and equity valuations for the mining space are depressed,” said Christos Doulis, analyst at Stonecap Securities, in a note to clients.
The Mexican government’s tax reforms will come into effect Jan. 1, 2014, and include four significant changes: an increase in the corporate income tax rate to 30%; a 10% withholding tax on dividends paid to non-resident shareholders: a 7.5% mining royalty on EBITDA (tax deductible for income tax purposes); and a 0.5% environmental erosion fee (precious metals only) based on gross revenues (tax deductible for income tax purposes).
Mr. Doulis noted the approved proposal also disallows immediate deductions for exploration expenses in the period in which they occurred. Instead, miners will get an allowable 10% amortization of exploration expenses per year.
He said the changes will impact valuations for miners with operations in Mexico and limits any future upside in their shares...."
http://business.financialpost.com/2013/10/31/mexican-tax-reforms-tough-on-canadian-miners/
Nothing like an ill timed tax on a struggling industry...
Mexus Mining Updates (Video Included)
Mexus Enterprise heap leaching continues to produce gold. Our RC drilling program on the newly acquired San Felix is going as planned with 5 holes completed with near surface intercepts from 78' to 126' thick mineralized zones found, the drilling will continue. The San Felix mine is known to have been mined underground by the Spaniards some 350 years ago to a depth of 300'. Some of the old workings are open today. Up until recent times, mining anything under two ounces per ton was not considered economically feasible. Mexus will use contract miners that already have the necessary equipment needed to mine 6000 tons a day. Recent assay show 0.300 to 11.430 grams per ton gold and 18.16 grams per ton silver with an average of 2 grams per ton gold. Although our drilling shows great potential, Mexus is considering all options at this time.
Mexus Gold Mining SA de CV
In anticipation of receiving our mining permits, Mexus is moving forward with the necessary recovery equipment to process 400 gpm. We have purchased and constructed 90% of this equipment at this time, (See Julio Mine gallery on Mexus website for pictures: http://mexusgoldus.com/photos.php) , along with the engineering to install and operate an open pit heap leach operation at the Julio mine. Ready and waiting permits, the Julio underground is also ready to start along with restarting the placer operation. This is very exciting times for Mexus.
A video showing ongoing drilling and mining operations can be found here:
There are many unknowns but there is much more information available today than last year. Typically a junior miner is revalued as it answers questions about their projects. In the past year, very reminiscent of 2008, Mexus has answered several of the most important questions concerning their projects and is worth much more than at any point last year but has not been priced to match.
In 2008 it was by far the best buying opportunity I have ever had, miners were discovering and mining huge amounts of gold and practically no one cared until a couple months later when the money spigots were turned on full blast.
In regards to the communications, people should realize that compared to an average junior miner Mexus is probably slightly above average. Most miners you get a PR once or twice a quarter, the SEC filings, and occasionally a poor web page.
Here we recently had one week with 3 updates, and I think we have received around 6 or 7 updates in the past month and a half, which included costs estimates, geological reports, production recommencing and JV news. We all want to know everything but it cannot be so, nor is it even desirable nor feasible for so many of these cash strapped companies.
I do think that some of the criticisms of Mexus’ PR are entirely justified but that at this point it is mostly exaggerated. In 2008 (and perhaps 2013) it was not PR that was driving the stocks and it wasn't communications and PR that raised the entire sector 400% in the years following. Gold is worth more than words anyway.
I would like to offer some perspective to the disheartened shareholders here.
We all knowingly put our money in a volatile penny stock in the highest risk sector in the world and it should not be the least bit surprising that it is capable of large percentage swings both up and down. When you consider the sentiments towards metals and markets in general and how many times junior markets have had 90% corrections in recent history then there is nothing alarming about our current circumstances. Due to the calibre of the Mexus projects and their realistic potential for huge production we are in far better shape than most juniors. Remember that many things are cyclical or driven by events far from our control or view.
Consider one of my favourite Mark Twain quotes:
“I was seldom able to see an opportunity until it had ceased to be one.”
Hindsight makes the winners obvious, but if opportunities were easy to see they would cease to be.
You can look at the share price and become emotional or you can evaluate things calmly from the perspective of a disciplined speculator.
Last year, with higher metals prices and a generally more optimistic market, Mexus ran up over 300% (11.5-46.5) in a month and a half on essentially nothing. All that happened was that Mexus finished their mill and it looked like underground mining was commencing imminently and a relatively small number of shareholders chased the stock to a high $0.62. As the rally accelerated this is where numerous JV rumours, pictures, trips, the Plomo deal and ultimately Trinidad and the all speculation and back of napkining(™) that went along with it.
To get to .62 it took about 7-8 million dollars of total buying and selling over 14 weeks. I estimate it took approximately $250k per week of sustained buying pressure.
Fourteen weeks is not a long time, the number of shares and dollar value is modest, this stuff can and will change just that quickly.
At 62 cents Mexus was valued at 130 million dollars and was just not worth it without cash flow. If you go back and the read the messages during this time period everyone was ridiculously bullish and had blinders on. This is a telltale sell signal. At this point they had the mill, a hole in the ground, and a JV going concern with huge potential but that definitely needed a few bucks and some TLC. The JV employed about 125 workers and was quite bloated and inefficient and we had little information about grade and operations. Gold is a dream somewhere in the future. Most of us, myself included, ignored many of the permits necessary to run the Mexus 100% projects and I think that in general an average investor hugely underestimates the difficulties and amount of time permitting and construction actually take in this business.
Fast forward to today. Mexus trades at 7.5 cents and is worth about 18 million dollars fully dilluted. They still have no real earnings. While that remains the same though, the projects on the other hand have all advanced significantly. The mill sits as before and the placer, marginally expanded, is idle. There has been a lot of equipment added to the Julio site, a headframe and bucket system has been installed and the underground mine resembles an underground mine instead of a rattle snake cave. The environmental and permitting is ongoing but I would say it is more a matter of money than time at this point. The geo reports indicate (to me) that there is ludicrous exploration potential at the Julio and the surrounding areas. Something about multi-kilogram surface outcrops that makes a man wonder what is a little bit deeper.
The JV now with new, much more conducive partners, is a lot leaner and more efficient, the property better understood and explored and huge tracts of land have mysteriously been acquired, probably through Atzek. The geological report demonstrates that the exploration potential is also very exciting, showing 1.5-20x the grades of neighbouring profitable mines, processed with little or no crushing (rare) and we have cost estimates that as far as I remember put us in the top quartile of mining companies on Earth. I know Paul has been working and tinkering, replacing pumps and whatnot. I am confident in saying the JV is in much better working order than last year.
Gold is still a dream somewhere in the future but this time metal is flowing and is so close I can taste it. (It tastes like a four leaf-clover, or perhaps that’s the cyanide?)
Overall the value of the company has increased significantly while the price has decreased considerably. What’s that sound? Opportunity knocking.
On another related note I wanted to ramble a bit about gold and the political standoff in the US. There have been 17 US shutdowns since 1976. There were more and more shutdowns as the US economic situation progressively worsened in the 1970s and early 80s. I would expect a few more of these in the coming decades if history is any guide.
I was listening on the radio and a financial commentator I respect was talking about how it made no sense whatsoever that when the US government shutdown the stock markets were rallying. Data was coming in showing the negative ramifications of such brinkmanship diplomacy and as these effects ripple throughout the economy things are bound to get worse, hence negative for stocks. He was genuinely puzzled, as were his guests and callers.
This probably sounds crazy but he is correct from a common sense point of view and that is why he will be wrong a lot of the time. We do not live in a world of common sense and free markets where its participants rationally price things. Prices used to be largely determined by economic fundamentals, by supply and demand, and were set by the summation of the desires and wills of millions of people. Nowadays we look to a single man with a beard and hang on his every word. Our markets are dominated by their respective central banks and the gigantic fascist tumour that is the political and corporate landscape of North America.
So the government shuts down, tanking the economy, thus creating the next financial crisis and giving the impetuous for a massive amount of money printing and government stimulus. Of course the people that created the crisis will be put in charge to fix it, and encouraged to do whatever it takes to save the country. The longer this business persists the more likely another credit downgrade is and the more significant the effects of removing the third leg (gov’t spending) from a three legged stool, and the more justification they have for not only maintaining their profligate spending but increasing it as well. The stock markets, in the bizzaro world we live in, are anticipating a fat increase in the debt limit, and the maintaining of free money interest rates (to the banks, not the people) and that those freshly printed eighty five billion smackers per month keep being churned out for a long long time to come. Everything is easily blamed on republicans for the crisis, and Obama gets to “save” the world 2008 style.
Gold is heavily correlated with the debt ceiling moves of the past 15 years or so. They don’t want to have to deal with this debate again in six months or a year so they will likely pick an absurdly large number like 20 or 25 trillion dollars as the new limit. Such a limit allows for the irresponsible status quo to continue, and I believe that gold acts as an anti-debt instrument, it is the opposite of the debt, actual payment and not a promise to repay. This ensures a gold price over $2500 and that a lot of “crackpot gold bugs” will be proven correct.
All in my opinion,
Take care.
-TM
I missed perhaps one of the most obvious and important components of the deal, which is land. This may explain part of the recent negotiations and huge acreage of claims added to the company. I think these land additions as well as San Felix's position may mean it is ultimately amalgamated as part of the JV along with these new claims. There might not even be any money aside from cost splitting as part of the deal; these claims are worth more than a token amount of cash.
I am curious to see what the ultimate terms of the deal are and what we end up with. These claims are very good in my estimation and probably contain economic gold of size. How much remains to be seen, but the more of the land in this area we control, the better in my opinion.
"Mexus Gold US (OTCQB:MXSG), 50% owner of Mexus Enterprises SA de CV..."
Have any of the terms of this deal aside from the initial PR surfaced? The former arrangement with Ken was 60-40, this is 50-50.
Some elements of the deal likely include political and legal work, technical/geological work (some already produced), logistical support, and perhaps a financing, cash, or stock component.
To avoid confusion there are now multiple organizations with similar names within the Mexus Gold US company.
Mexus Gold US owns 99% of Mexus Gold Mining S.A. DE C.V. which owns the Julio and Rancho claims and 100% of the newly acquired San Felix Mine. Recently Mexus Gold Mining S.A. DE C.V. has created a new subsidiary, Mexus Enterprises which owns the process facility and some surrounding land formerly called the Trinidad JV. We now own half of Mexus Enterprises, with Aztek holding the other half with a still somewhat ambiguous arrangement.
I am just recently back from my B.C trip. I got to tour a number of exploration and mining operations in the Cariboo area, explore the country a bit, and set us up for an open pit mining operation on our own claims next year.
I got to see almost every part of Imperial Metal's Mount Polley Mine, which is a 160,000 tpd (20-30 of ore) open pit and underground copper-gold mine that produced almost 4 million lbs of copper and 55k oz of gold last year. It is quite the operation and even though I read about mining every day and have for many years it was eye opening for me how ignorant I was (am) about so many of the processes. For example they have heap leach pads, which we are all familiar with, except their stacked ore was bright green processed purely with sulphur and no cyanide. In gold mining we tend to want oxide ores for the cyanide, in this process they want sulphide ores for higher recovery. They had a giant electromagnetic circuit that resembled a waffle iron, they use it to accumulate magnetite (black iron sands commonly found with gold) which they then resell to coal mines that (apparently) spin it in centrifuges and use it to upgrade their coal quality. They had about an acre of flotation circuits. Their mills were almost all exclusively rod mills (ball mill= steel balls, rod mill = giant steel rods that when worn down enough self eject themselves safely from the mill and are replaced).
Imperial metals operates about 5 mining projects and is worth about a billion dollars, trading at 30x earnings. The main reason I bring this up is because I think that Mexus can within just a few years potentially exceed Imperial's current market cap. On one hand you have a diversified and profitable miner with 1000+ employees and a very high capital expenditures / relatively low margin deposits. They net around 30 million across all their operations. On the other hand Mexus will be shoestring mining compared to these guys. Instead of moving 160k tons of mostly waste rock for 1/8 ore Mexus will move perhaps 10k a day across Rancho and Mexus-Atzek and 90%+ will be ore. Not only is there less waste rock there is huge economies of scale mining ore from the surface rather than running trucks up and down into the pits. Factor in our $2 haul costs and the lack of elaborate and costly processing methods and facilities and our recent cost estimates, it appears, as we suspected, that Mexus will be a very low cost producer. Even locked at 100 oz a day with higher costs should allow us to net about the same 20-30 million Imperial makes. Within a few years we are probably at 3-600+ low cost oz per day where about every 300 ounces per day is about $100 million of profit (at current prices) and worth about one billion in market capitalization at 10x earnings (1/3 of Imperial, -33% below industry average of approximately 15).
Some highlights from the geo report:
The first stage of Drilling program at San Félix will indicate the continuity of mineralization,with a 100 000 Oz Au Eq target, expecting the thickness behavior of 10 meters, in a zone of
650 meters (along the vein) and 200 wide.
As a level of Mining District, The San Félix Mining District is considered with amenable potential to contain 1 M Oz of Au Eq.(Or more!)
-They are in negotiations and have been acquiring land around the former Trinidad Mine, which is prudent.
The mining activities at San Félix mine, are done in the claims San Félix and La Chinchi and the consolidation of the district is represented with the contracts with Mr. Marco Antonio Martínez
Mora, adding the Marco and Phoenix claims with 3592.62, 4693.32 and 1498.13 has. The claims San Carlos and Phoenix 4 are under control with contracts with Mr Leopoldo Felix Badilla. (This is approximately 25,000 acres of land additions.)
The three main competitors outlined in the report:
• Sundance Minerals with the subsidiary Minera Teocuitla S.A. de C.V.
• Mexichem Fluor S.A. de C.V.
• Riverside Resources Mexico S.A. de C.V.
I think we are in pretty good shape all things considered. Mining is always a bumpy road and we are almost off the bear trail and onto the pavement.
Alright take care everyone. I'm glad to be back with internet... I was having withdrawal symptoms.