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Nemaska Lithium Produces up to 6.65% Li2O Concentrate from DMS Modular Mill at
Whabouchi
QUEBEC CITY, QUEBEC -- (Marketwired) -- 03/14/17 -- Editors Note:
There are two photos associated with this press release
Nemaska Lithium Inc. ("Nemaska Lithium" or the "Corporation") (TSX:
NMX)(OTCQX: NMKEF) announced today the results of its initial
production of spodumene concentrate from the Whabouchi Mine, using a
mine representative bulk sample. The plant is running continuously at
half its capacity, 12 hours per day since March 7, 2017. Operation is
steadily ramping up and should reach a throughput of around 150 tpd.
Recent results from concentrate composite samples, produced on a
6-hour basis, yielded the following results:
March 7 (AM) - 2.89% Li = 6.22% Li2O
March 8 (AM) - 3.05% Li = 6.56% Li2O
March 8 (PM) - 3.09% Li = 6.65% Li2O
"Generally speaking, the hard rock lithium industry requires a 6%
concentrate or higher to efficiently produce battery grade lithium
salts," said Guy Bourassa, President and CEO of Nemaska Lithium. "We
have seen other hard rock producers struggle to achieve this quality
concentrate, making it more technically challenging and costly to
produce battery grade lithium salts. With this concentrate production
we have met another important milestone as we continue to de-risk our
project."
It is expected that Nemaska Lithium will process sufficient raw ore
minerals in the DMS plant to provide 650 tons of spodumene
concentrate with a view to producing lithium hydroxide samples in the
Phase 1 Plant in Shawinigan, for qualification by potential
customers.
"The operations team at Whabouchi is working diligently to ramp up
the DMS mill to full run rate over the next few weeks per our
schedule," said Francois Godin, Vice President Operations. "We have
been working closely with DMS experts from around the world to ensure
the plant start-up is smooth and high quality concentrate is
produced. We've learned a tremendous amount that will be directly
applicable to the start-up of the commercial concentrator. I look
forward to updating you further as we log more hours on the DMS
mill."
The technical parts of this press release were prepared by Caroline
Boudrias-Chapleau, Ing., M.Sc., Process Engineer - Mineral Processing
of the Corporation, qualified person under Regulation
https://www.bloomberg.com/press-releases/2017-03-14/nemaska-lithium-produces-up-to-6-65-li2o-concentrate-from-dms-modular-mill-at-whabouchi-j09edktf
I have invested in Frontier and Nemaska both . Frontier could use Nemaskas plant in the future.
Nice news. Targeting the battery market would be a game changer .
Yes . Look at the chart
Huge volume day !!!
Awesome . So now we have Canada,Unites States and Australian patents . Did i miss any ?
New interview with Guy Bourassa . 2017 will be a interesting year for Nemaska and lithium .
Nothing but good news !!
VANCOUVER, Nov. 3, 2016 /PRNewswire/ - Red Eagle Mining Corporation (TSX: R, OTCQX: RDEMF, BVL: R) is pleased to announce that it has received final approval to graduate to the Toronto Stock Exchange ("TSX"). On Friday November 4, 2016, Red Eagle Mining common shares ("Shares") will begin trading on the TSX under the new symbol "R". To ensure continuity for shareholders, Red Eagle Mining Shares will be delisted from the Toronto Stock Exchange Venture at the close of business on Thursday November 3, 2016
Finally breaking above the .90
BC: One of the companies that we find particularly interesting is Red Eagle Mining Corp. (RD:TSX.V; RDEMF:OTCQX), which is just finishing its mine build-out and should start its pre-commercial production probably in Q4/16. I mentioned that we're typically looking for companies that have a catalyst to their business that will drive revenue, cash flow and earnings. Red Eagle really fits that profile in that it's a company that was financed by management. It hasn't relied on brokers and The Street to finance it. As a result, there's no analyst coverage on the stock.
The company did the initial drilling on its project, and the numbers came in quite good. It continued to do infill drilling, which showed that the numbers in its feasibility and economic assessment are actually better than the numbers that it originally looked at. It's going into production here fairly soon. Typically, these companies, when they first make their discoveries, have a huge run-up in their share prices and then a lag in between when they find the discovery and when they move forward with getting a mine built. Moving up into the production phase, we typically see the stock price start to come up again. Then the analysts start to look at it on a cash-flow basis of where they're going to be at.
When we look at Red Eagle compared to a peer group and where we think its production and cash flow will be, the valuation is about half of what we think the peer group is .
https://www.streetwisereports.com/pub/na/four-under-the-radar-investment-picks-in-canada
Red Eagle Mining Intersects 11.5 Metres at 7.25 Grams Gold Per Tonne and 0.8 Metres at 169 Grams Gold Per Tonne
VANCOUVER , Aug. 16, 2016 /CNW/ - Red Eagle Mining Corporation (TSX-V: RD, OTCQX: RDEMF, SSE-V: RDCL) is pleased to announce results from ongoing ore production stope delineation drilling at the San Ramon Gold Mine, Santa Rosa Gold Project, Antioquia, Colombia . The results from the initial 5 holes (SRD-0001 to SRD-0005) were previously announced. An additional 18 holes have been completed (SRD-0006 to SRD-0023) with highlights including intersections:
SRD-0010 - 11.48m at 7.25 g/t Au from 100.50m down hole (incl. 1.89m at 19.05 g/t Au)
SRD-0017 - 5.10m at 12.27 g/t Au from 93.90m down hole (incl. 1.46m at 29.94 g/t Au)
SRD-0018 - 1.35m at 50.11 g/t Au from 71.85m down hole
SRD-0020 - 10.60m at 4.22 g/t Au from 36.70m down hole (incl. 3.40m at 6.36 g/t Au)
SRD-0021 - 0.80m at 168.91 g/t Au from 92.60m down hole
Results from the delineation drilling continue to exceed expectations with intercepts significantly longer that the average mining width of 3m and grades significantly higher than the reserve grade of 5.2 g/t Au. For complete drilling results, please see Table 1 – Drill Hole Intersections, Table 2 – Drill Hole Specifications, Figure 1 and Figure 2 – Drill Hole Plans, Figure 3 – Long Section and Figure 4 and Figure 5 – Cross Sections. True widths are estimated to be 70-90% of the intersections and vertical depths are estimated to be 70-90% of the drilled depths reported below. Drill assays were composited by length-weighted averaging into intersections using a 2 g/t Au cut-off grade. Due to the mining method and mining selectivity contemplated for the deposit, internal dilution was included in some intersections where considered appropriate for mining continuity. For photographs of the drill core see Red Eagle Mining's photostream on flickr.
Quality Assurance and Quality Control
All technical information for Red Eagle Mining's Santa Rosa Project in Antioquia, Colombia is obtained and reported under formal quality assurance and quality control (QA/QC) procedures and guidelines. Red Eagle Mining's procedures are designed to meet or exceed C.I.M. "Best Practices Guidelines" and National Instrument 43-101 standards of disclosure. QA/QC protocols for drill core sampling and assaying include the insertion and monitoring of appropriate reference materials (certified standards, blanks and duplicates) to validate the accuracy and precision of the assay results.
All drilling samples were collected with a diamond core drilling rig using approximately one metre sample intervals following industry standard practice. Activation Laboratories Ltd. prepared and assayed the samples at their laboratory in Medellin , Colombia. Fire Assay for Au (using a 50 gram sample) with an AAS finish was carried out routinely on all samples submitted. For all samples which returned initial Au fire assays of greater than 5 g/t, a second Fire Assay for Au was performed (also using a 50 gram sample) with a gravimetric finish.
The technical information contained in this news release has been reviewed and approved by Red Eagle Mining's Vice President Exploration, Jeff Toohey P.Eng ., who is a "Qualified Person" as defined under National Instrument
http://finance.yahoo.com/news/red-eagle-mining-intersects-11-091500156.html
Burned thru all their cash again. I guess got to out and borrow more money again .
Thanks for posting this. I know they got the Vetas gold project from CB gold . I guess Red Eagle owns 72% of CB gold now . Vetas project may hold over 1 million oz gold. Moreover the Vetas project contains exploration targets that haven't been drill tested yet.
Found this in another message board interview with a CEO
Ian Slater: Thanks, James.
James West: Ian, you’ve got a mine that’s getting ready to go into production. Why don’t you tell us what the status is, and when we’re actually going to see the first start-up of it?
Ian Slater: We’re almost there. We’re looking at the remaining things to do on the plant are just electrical and piping, so we’re shooting for our first gold pour nearing the end of September, early October, and ramping up to commercial production by the end of the year.
James West: Wow, that’s great. So there’s been no hiccups along the way?
Ian Slater: Well, it’s mining, there’s always some minor hiccups, but luckily, we have got the right team down there.
James West: Minor hiccups – is that a pun? (laughter) So you plan to start producing commercially by the beginning of 2017. What’s that going to look like?
Ian Slater: 70,000 ounces for 2017.
James West: Wow, that’s great. And all-in sustaining costs?
Ian Slater: Are about $600.
James West: So you’ve basically been able to do exactly what you said you were going to do.
Ian Slater: Yeah, exactly.
James West: That’s not really very mining-esque.
Ian Slater: No, it’s not.
James West: So what is it – I mean, what’s changed in Colombia since you got started? Has the situation, I mean, not that there was anything really wrong with it, but has the environment improved for companies like you who are putting a mine into production as a foreign entity operating in Colombia?
Ian Slater: As you know, we never had any issues there, so for us, we had, we took one year to get our environmental license. So we’ve always had a great relationship with the Secretary of Mines in Medellin, and CORE Antioquia, the environmental body. We did everything at the department level. Federally, we’ve always had a great relationship, too; they haven’t had to help us. So for us, nothing changed. I think it’s more of a perception problem, just because we’re the only ones building a proper scale gold mine under the new legislation.
Unfortunately, Ventana was an amazing example, but it’s private now, so people don’t hear about it. But they’re also working hard up in California. So if you know the background is, Batista bought it, and then you had it as collateral, so Mubadala from UAE own it now, and they’re working. So if I was a public company, that would be in the headlines. And people forget, too, that AngloGold was able to permit Gramalote, next to us, and they permitted it for an open pit, actually. So really the only one that was said no to was Greystar, but they wanted to build an open pit in the watershed, so it wouldn’t have been permitted in Canada, either.
James West: So but there’s been some other companies have had some problems there as well. Didn’t Continental run into some issues?
Ian Slater: Yeah. I mean, really, it’s Continental is what everybody thinks is a synonym with Colombia, right, because they’ve had issues, but their big issue is thousands of armed, illegal miners.
James West: Armed?
Ian Slater: Yeah.
James West: Oh, that complicates things, doesn’t it?
Ian Slater: Yeah. Just last month, the president sent the army in there and have cleaned out a lot of them.
James West: OK, but you guys don’t have any problems like that whatsoever?
Ian Slater: No, we don’t have any artisanal miners. It peaked in our project in about 1940.
James West: So the community that surrounds or that is closest to your mine, are all looking forward to being employees
Ian Slater: Yeah. We’ve had 100 stakeholder meetings in our region. So we have a 20 km area of influence that we chose, and there’s six villages in that, and then the town of Santa Rosa de Osos, which is about 45,000 people. We’ve got the support of everybody.
James West: Amazing.
Ian Slater: And that’s the key, is that Core Antioquia, the environmental agency, they care just as much about the social side as they do the environmental permitting side, so you really have to have the local communities onside. It’s just more challenging if you have a weakness there.
James West: Yeah, you bet. So everything’s on schedule. Are there any challenges with getting that equipment to your site?
Ian Slater: Which equipment?
James West: All of the components of the mill being – like you see in the photos.
Ian Slater: We had no problems for most of it, just we had, the only issue we had in the whole year we’ve been building is, in July for a couple of weeks there was a transport workers’ strike, so we had our pumps for the piping were stuck at port. But we’ve got them up at site now. These things happen.
James West: Sure. So how many full time employees will your entire operation employ?
Ian Slater: A couple hundred, and mostly from the town of Santa Rosa. We actually bus the shifts in from Santa Rosa, so we have very few people living at site.
James West: Sure. Another aspect of Red Eagle that I think is certainly under-appreciated is the Vetas deposit that you acquired through merger with CB Gold, or a bit of a takeover, I guess. What is the progress there, what are you doing in terms of exploration, or is that just sort of on hold until you get into production on the San Ramon?
Ian Slater: We’ve only had it for half a year, and that half a year we’ve been busy, actually, re-doing the geological model, re-sampling many of the assays and just putting together our own model of what we think this is, and it’s clearly a high-grade underground mine. Once we’ve finished with that, with doing our own geological model, we’re putting together a work program for what work needs to get done to get the resource where we want it to be. So that work program will be done in 2017, at this point.
James West: Oh, OK. So you’ve got a mine going into production in early 2017, with another one sort of under development?
Ian Slater: Yeah, well, there’s one in the middle there, too. So first is getting the San Ramon mine up at 1,000 tonnes per day; then the second phase is ramping that up to 2,000 tonnes per day, and then the third phase is building a mine up at Vetas.
James West: Wow. So that’s great, and are there other projects in your sights in Colombia?
Ian Slater: Yeah. We’re actually working on a couple acquisitions of, again, high grade underground mines in CB Gold.
James West: Wow, fantastic. OK, so then, what’s the investment agreement with the government of Colombia? How do they realize revenue from what you’re doing?
Ian Slater: Corporate tax, payroll taxes, and royalties. So they have a 3.2 per cent royalty on gold.
James West: OK, and what kind of corporate tax?
Ian Slater: Well, historically it’s in the low 30s, but they have a temporary increase to closer to 40 per cent. But in the tax world, when they say – so in the current legislation, it’s back down to the low 30s before we pay tax because we’ve got lots of loss carry-forwards, and on top of the loss carry-forwards, how do you get VAT back on all of that CapEx is deducting it against corporate tax payments.
So according to the current plan, we’d be back in the low 30s before we’d be paying tax, but taxes never seem to be temporary. So we’ll see.
James West: So what’s the general economic environment and status of Colombia as a country since the new president took over from the last one?
Ian Slater: Yeah, I think really from an economic perspective, there’s not so much difference between Uribe and Santos. They’re both right-wing, pro-business, pro-U.S. presidents, and pro-mining, though Uribe was more pro-mining. So I don’t think that’s the difference. What’s a bigger difference is the collapse of oil and coal prices, the biggest exports out of Colombia.
James West: Right. So has that had a negative impact on the general economy?
Ian Slater: Oh sure, yeah. I mean, the currency especially has gone from two years ago, when we did our feasibility study, it was 1900 to 1 and now all the cash that we converted this year for CapEx has been done at over 3000 to 1. We haven’t seen big inflation in the country, though, so it’s great for people like us who are building in Colombia. It helped, I think, when the government policy towards mining; they need mining revenues more than ever.
James West: Right. OK, Ian, well that’s a great update. Let’s leave it there for now. Thanks so much for your time today.
Ian Slater: Yeah, thanks,
Not only they will be producing gold in a few month but also drilling and if they can really increase the their reserves over a million ounces = big pay day coming .
Nice SA write up
Red Eagle Mining
Red Eagle Mining is a Colombian junior miner currently developing its 100%-owned Santa Rose Gold Project. To say the company has fast-tracked its junior-producer life cycle would be a massive understatement. The company is currently on track to see only a five year gap between its first discovery hole on the property to its first gold pour, a very rare occurrence for any gold company. Red Eagle is expecting initial production Q4 of this year, with construction currently over 70% complete. This is the first South American gold company I have covered and is a very rare occurrence for me. I normally stick to North American gold juniors, but believe Red Eagle is a special situation where it's worth leaving my usual top mining jurisdiction comfort zone.
Red Eagle's high-grade Santa Rosa deposit is situated in between Continental Gold's (OTCQX:CGOOF) Buritica deposit and B2Gold's (NYSEMKT:BTG) shared Gramalote deposit. The deposit currently hosts proven and probable reserves of 405,000 ounces at 5.20 grams per tonne gold. In addition, the deposit holds a resource of over 610,000 ounces at an average grade of 3.3 grams per tonne gold. The feasibility study completed on the project in 2014 showed the potential for an eight-year mine life with an annual production rate of 70,000 ounces a year. The all-in sustaining cash costs for the mine were anticipated at $758/oz with an average head grade of over 6.5 grams per tonne gold. The feasibility study provides a payback period on the initial capex of a measly 1.5 years using a gold price of $1,300/oz. Since the feasibility study, all-in sustaining cash costs have been estimated to be below $700/oz, well below the average of $782/oz for gold juniors acquired this year in acquisitions.
In addition to having more robust economics than most of the acquired juniors thus far in 2016, Red Eagle is significantly undervalued compared to its peers. While Red Eagle is the smallest scale producer of the five companies shown above, this does not justify such a massive discount. The company's current enterprise value based on 233 million shares outstanding is $190 million. As shown by the table below, the company trades at less than a 3x multiple for 2017 price to cash flow, less than half of its closest peer. Of its peer group that it does compare, Red Eagle is arguably is in as unfavourable of a jurisdiction as Australia or Burkina Faso, neither of which is much more geopolitically stable than Colombia.
Red Eagle will be a 70,000 ounce high-grade producer as of late 2016 and should pump out significant cash flow to aid in exploration activities to test multiple other targets across its Colombian land package. The current resource is located within the first 200 meters from the surface, and the shear zone remains open down dip and to the east. With a relatively unexplored property and several other magnetic anomalies left to drill, it is very possible for Red Eagle to prove up another 1 million ounces on its land package over the next two years. Red Eagle's operational excellence moving from explorer to producer in less than a five-year span cannot be ignored, and there continues to be huge potential for the company going forward.
Red Eagle & Atlantic Gold Compared to 2016 Acquisitions
I have compiled the below table to aid in comparing current gold juniors to those acquired thus far in 2016. Instead of looking at all acquisitions over the past five years, I believe it makes much more sense to look at recent acquisitions as they are much more indicative of what future M&A deals should look like. Given that gold is trading at the lower end of its five-year range, I find it more relevant to look at gold companies being acquired at current levels, than those acquired with gold near record highs. Below is a table showing all of the acquisitions of the past six months in addition to the two gold companies profiled in this article:
Looking at the table, we can see that Atlantic Gold Corporation is being valued at roughly $61/oz based on its 2.2 million ounces of gold across its four deposits. This figure is almost half the average valuation of Canadian acquisitions this year. While Atlantic Gold's average grade of 1.5 grams per tonne gold is less than half of the average grade of other Canadian takeovers in 2016, the company is closer to production than any of the other companies taken over in 2016, with the exception of Lake Shore Gold (NYSEMKT:LSG). I believe the company's discount is not justified at all at current prices and expect to see the company receive a re-rating with a market capitalization of closer to $300 million once it begins production. This would represent nearly a double in share price over the next year with production slated for late 2017.
Looking at Red Eagle Mining at first glance, it may seem that the company is overvalued compared to its peers. The average international valuation per ounce is $68.63 at time of takeover, and Red Eagle is currently valued at $155.73 per ounce of gold. I believe Red Eagle's higher priced valuation per ounce is more than justified when compared to Amara Mining (OTCPK:CLUGF) and Goldrock Mines (OTC:MFMNF). For starters, Red Eagle's grades are 300% higher than the majority of its international comparisons. In addition to this, Red Eagle's all-in sustaining cash costs are almost 20% lower than its international comparisons to past acquisitions. This shows that Red Eagle is a higher-grade and higher-margin gold producer and should not be placed in the same category as Goldrock Mines, Amara Mining and True Gold Mining (OTCQX:RVREF). I expect Red Eagle to also receive a re-rating upon the beginning of its commercial production to a $300 million market capitalization, a 30% jump in current share price by the end of this year.
Risks Associated With My Thesis
Both Atlantic Gold Corporation and Red Eagle Mining are micro cap gold juniors with market capitalizations sitting around the $200 million level. There are always risks in investing in smaller junior gold companies as future financing potential and declines in the gold price can be very detrimental to the company's wellbeing. Fortunately, for these two companies unlike most other micro-caps juniors, they are both well financed with over $35 million in their treasury. These substantial cash positions allow them some wiggle room while moving into the construction phase of their life cycle in case there should be any hiccups during the process.
In terms of risk with the price of gold, both companies have industry-leading all-in sustaining cash costs. Even with a dip to the $1,000/oz level, both companies would still be seeing $300/oz margins on their gold sales as their all-in sustaining cash costs come in at the sub-$700 level. Atlantic Gold has gone a step further and hedged over 1/3 of its eight-year mine life (215,000 ounces) at an average gold price of $1,500/oz. This means that despite where the price of gold goes over the next three years, Atlantic Gold will have 215,000 ounces of gold sales secured at the $1,500/oz level. Red Eagle Mining has not done any hedging and thus is exposed to the gold price on both advances and declines. Having said that, its all-in sustaining cash cost is at a very reasonable level and it is currently working with nearly 50% margins. Should these margins erode in the future, the company still has lots of leeway in terms of staying profitable as a producer. Red Eagle Mining would be in serious trouble and likely have to shut down operations if the gold price moves to the $600/oz level, but the same can be said for 99% of gold producers in the world, and I don't see the price of gold even touching the $1,100/oz level in the next two years.
The one worry for me about Red Eagle Mining is its deposit size. While it does have a very high-grade resource of over 1.2 million ounces, it would be nice to have some confirmation of gold mineralization at its soon-to-be-drill-tested targets. There is always the possibility that these targets will not show any favorable gold bearing mineralization and the company will be unable to prove up a larger resource. Having said this, the company is still moving forward to produce for eight years at a run rate of over 70,000 ounces a year. This will provide substantial free cash flow to the tune of well over $50 million after tax over the mine life. The main risk involved with Red Eagle Mining is its ability to prove up a larger resource so it can extend beyond the current eight-year mine life. While I am confident that it will be able to find at least one magnetic anomaly (of the three on its property) that shows favorable mineralization, if the drill targets all come up empty, this could affect the share price moving forward. Red Eagle Mining will still continue as a junior gold producer, but this would significantly cap its future as a gold producer after the year 2024.
Technical Outlook and Summary
Looking at the technical side of things, both companies are sporting very impressive charts. Red Eagle Mining has currently broken out to new 52-week highs and is consolidating above its recent resistance level. We can expect to see the stock base at this level before continuing to trend higher, and it can be noted that it is doing this while most other gold companies have fallen 10% from their highs.
Atlantic Gold has spent most of the year going sideways, but has recently broken out to the upside over the past two weeks at $0.73 CAD. I purchased the stock at this point and currently have a stop on my position below $0.55 CAD on a closing basis. We can expect to see Atlantic Gold find support at the $0.70 cent level where it broke out of after three months finding resistance at this level. If the $0.70 level does not hold, the uptrend line made from connecting the lows thus far this year comes in at the $0.69 level and should also act as strong support going forward.
Looking at the below GDXJ chart, Atlantic Gold and Red Eagle are charted beside it with line charts. Atlantic Gold is represented by a pink line and Red Eagle by an electric blue line. As you can see, while GDXJ has pulled back the past two weeks, these two companies have done the opposite and made new highs. This is extremely bullish and shows their resilience in a time when the price of gold has come under some pressure.
I believe both of the companies highlighted in these articles to be takeover targets due to the depressed valuations they are currently trading at. While many people will criticize me for buying these stocks while they are up over 100% this year, I have used this same strategy to buy several stocks already this year, and my current portfolio is up 24% year to date using this same strategy. I employ a Turtle Trading strategy in my portfolio, which enters new long positions on new 55-day highs, and exits them when their uptrends are invalidated. I have included a snapshot of my current accounts below to show my money is where my mouth is as I am currently holding significant gains in several miners and not taking profits. I believe profit targets are profit limiting and only sell my positions when the trend is broken.
While Red Eagle Mining and Atlantic Gold may not have the most glamorous massive deposits that some juniors that I have highlighted this year share, they are significantly undervalued compared to their peers. I believe the current entries provide a depressed valuation into companies which are moving into production and can expect a re-rating over the next 12 months. I do not believe either company's deposits are impressive enough for gold majors to want to take them over solely for their assets. Having said that, at the valuations they are currently trading at, these companies are a steal to any suitors. I would not be surprised to see them taken over on a purely valuation basis if they do not see a re-rating in the near future.
Disclosure: I am/we are long SPVEF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: I have included the Canadian charts for these stocks in the article as I believe they are much better for trading given the increased volume and cleaner charts which give a better idea of support and resistance levels. If you liked this article and found it useful, please feel free to follow me by clicking on my name next to my avatar at the top of this article. I also invite you to check my performance at TipRanks.com where my average return this year is 60% on new long positions.
Gran Colombia Gold Might Be A Golden Stock After All. Jul.12.16
SA article , not sure if it has been posted yet .
In the beginning of the year, I was writing about solid precious metals companies that are well run, have strong financial statements, and will turn into cash cows once the resumption of the bull market begins. Now that this bull market has turned, a lot of those companies' valuations started to get expensive. Now, I am not saying these companies aren't a good buy at the moment, but they are no longer the best buy in my opinion for the speculative side of my portfolio.
My last article was about Santacruz (OTCPK:SZSMF). This one is about a gold miner in Colombia. It is called Gran Colombia (OTCPK:TPRFF). The main reason I bought back into this company is because of its valuation. When it comes to its EV/EBITDA ratio, it's trading at only two times its EBITDA, which is really cheap. It's trading way below its book value, which is calculated to be at $1.44 per share. It's even trading at .67 times its revenue.
The main reason the stock is so cheap is because the market still believes in the false premise that the labor market is strong and that the US economy is still in recovery.
But it's not just its valuation that is attractive. This company has good assets also. Its first asset is its Segovia mine, which contains a measure and indicated (M&I) resource estimate of 428,000 ounces of gold, containing grades of 25.3 grams per tonne (G/T) for 77,000 ounces of those reserves, and the rest of the reserves are reported to be at 16.8 G/T, with an expected life up to the year 2022. This mine's all-in sustaining costs are reported to be at $850-950 per ounce of gold. Its next mine is the Marmato mine. This mine has a resource estimate of 11.601 million ounces of gold in its resource estimate.
The estimated cost of total production from these mines is expected to be at $850-950 per ounce on an all-in sustaining cost basis. Its last mine is its Zancudo mine. This mine is located in the middle of the company's Cauca gold belt with recovered grades of 14.6 G/T. Gran Colombia has halted exploration on this property while completing its Segovia project.
In terms of the company's financials, it posted a net income of $10.826 million last quarter. That's a drastic improvement on a year-over-year (YOY) basis, which was reported to be at -$3.75 million this time last year. And if you include its other comprehensive income numbers, it actually generated a higher net income of $18.185 million last quarter. Its cash flow is very healthy. I calculated the company to generate a positive free cash flow of $3.939 million last quarter, and I expect this type of cash flow to continue as we are in a new bull market for gold, which means we will see higher prices in the months and years ahead.
In terms of its balance sheet, that still needs to be cleaned up. Its working capital position is still negative at a rate of $27.353 million. This means the company will have to either borrow more long-term debt to fund its short-term obligations, which I think is unlikely, or may issue more shares now that we are in a bull market, but that is also probably very unlikely, or it's very possible that future cash flows might be able to make up for this negative position if gold hits $1,400-1,500 per ounce this year, but no matter, Gran Colombia will have to solve this. Or it can sell its Zancudo mine since it has stopped exploring it; in fact, selling that mine to help pay off its debt and liabilities might not be a bad option.
In terms of total assets to total liabilities, that is also leveraged. Its total assets to total liabilities ratio turned out to be 1.9. I would like to see two assets for every one liability, but that is not this company's reality. But some encouraging attributes for this company is its debt/EBITDA ratio, which I calculated to be at 6.9, and its EBIT to interest expense ratio, which I calculated to be at 3.
In terms of its debt, it has $79.632 million of long-term debt on its balance sheet, with $1.861 million of term loans being due in 2017, $23.142 million of debentures due in 2018, and it has $55.231 worth of debentures due in 2020. These debentures can be converted into common shares that could devastate shareholder value as the number of shares being traded can increase greatly. This combined with its working capital position does have to be corrected.
In conclusion, I think this is obviously a speculation, and not a core holding. The company is generating a good amount of free cash flow, generating a really strong net income, but it has to solve its working capital position, must pay off its long-term debt, and not allow those debentures to turn into shares. The company has good assets, and there is a strong possibility that it could get bought out. But, no matter what, this company is trading at a valuation which is really cheap at a time period when most gold stocks are looking to be overbought. This is obviously a speculation and not a core holding.
But the main reason this stock is so cheap is because that gold is now in a new bull market, and the general Wall Street consensus has still not caught on to the idea that the Fed will never raise rates, because it can't raise rates in any significant manner without crashing the market. Because of this, gold will go higher, and Gran Colombia's working capital will improve due to the improvement in cash flow, which will go towards paying off its liabilities. As stated above, Gran Colombia generated $3.93 million in free cash flow, because as gold prices improve, its cash flows will also improve. This will pay off liabilities, and not only that, but also it will be able to renegotiate delayed payments, because the bankers and suppliers don't want to write off huge losses, especially now that their producing mineral is in a bull market.
The main reason this stock is cheap is because of its EV/EBITDA valuation, and the fact that gold is in a new bull market now, it should be able to pay off its liabilities through a combination of extension of payments and increased profitability from operations that could pay down liabilities, and the company might get bought out by a senior producer which needs to replace its production significantly. Now, if I am wrong about the gold bull market, and gold prices do tank, there is a downside risk, the risk of bankruptcy, but considering the fact that this stock is $0.10 per share, I am willing to take that risk, especially since I believe sub-$1,200 gold is a thing of the past.
Disclosure: I am/we are long TPRFF.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
http://seekingalpha.com/article/3987945-gran-colombia-gold-might-golden-stock
Was talked about in Money Talks.
Starts @ 20 min mark .
Toroparu contains 10 million ounces near surface mineralization in Gyuana . Is the fourth largest gold deposit in South America held by a junior . Massive potential here .
Backers include Silver Weathon .
Should have a nice run coming to completion and production of the Sam Ramon mine .
Development and Construction of the San Ramon Gold Mine and Mill
The overall project is approximately 70% complete (based on physical completion), with earthworks, concrete, platework, steelwork and mechanical equipment installation on schedule for 100% practical completion in July 2016. Piping, electrical and instrumentation installation would continue to completion during Q3 2016.
Red Eagle Mining Corporation (TSX-V: RD, OTCQX: RDEMF, SSE-V: RDCL) is pleased to announce that detailed ore production stope delineation drilling has commenced at the San Ramon Gold Mine, Santa Rosa Gold Project, Antioquia, Colombia and will continue for the life of the mine. Highlights from the first four holes (SRD-0001 to SRD-0005) include intercepts: -- SRD-0003 - 4.00m at 10.68 g/t Au from 60.70m down hole (incl. 1.10m at 27.38 g/t Au) -- SRD-0004 - 7.80m at 12.79 g/t Au from 71.40m down hole (incl. 2.80m at 30.44 g/t Au) -- SRD-0005 - 8.15m at 5.71 g/t Au from 96.20m down hole (incl. 1.60m at 15.65 g/t Au) "The initial results from the in-fill drill programme have exceeded our expectations with intercepts significantly longer than our average mining width of 3.00m and grades significantly higher than our reserve grade of 5.20 g/t Au", comments Bob Bell, Chief Operating Officer. Hole SRD-0002 was abandoned. For complete drill results, please see Table 1 - Drill Hole Intercepts, Table 2 - Drill Hole Specifications, Figure 1 - Long Section and Figure 2 - Cross Section. True widths are estimated to be 70-90% of the intercepts and vertical depths are estimated to be 70-90% of the drilled depths reported below. Drill assays were composited by length-weighted averaging into intersections using a 2.00 g/t Au cut-off grade. Due to the mining method and mining selectivity contemplated for the deposit, internal dilution was included in some intersections where considered appropriate for mining continuity. For photographs of the drill core see Red Eagle Mining's Flickr. Quality Assurance and Quality Control All drill samples were collected with a diamond core drill rig using approximately one metre sample intervals following standard industry practice. Activation Laboratories Ltd. prepared and assayed the samples at their laboratory in Medellin, Colombia. Fire assay for Au (using a 50 gram sample) with an AAS finish was carried out routinely on all samples submitted. For all samples which returned initial Au fire assays of greater than 5 g/t Au, a second fire assay for Au was performed (also using a 50 gram sample) with a gravimetric finish. QA/QC included the monitoring of standards and a coarse blank inserted into the sample stream. The technical information contained in this news release has been reviewed and approved by Red Eagle Mining's Vice President of Exploration, Jeff Toohey P.Eng., who is a "Qualified Person" as defined under NI 43-101. About Red Eagle Mining Red Eagle Mining is a well-financed gold exploration and development corporation with an experienced mine development team. Management is focused on building shareholder value through discovering and developing gold projects with low costs and low technical risks in Colombia, a jurisdiction with prolific historic production but until recently limited modern exploration. Red Eagle Mining owns 71% of the Vetas Gold Project and 100% of the Santa Rosa Gold Project, where construction is underway at the fully permitted and fully financed San Ramon Gold Mine with production expected to commence in the second half of 2016. Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in the policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release. This news release includes forward-looking statements that are subject to risks and uncertainties. All statements within, other than statements of historical fact, are to be considered forward looking. Although Red Eagle Mining believes the expectations expressed in such forward-looking statements are based on reasonable assumptions, such statements are not guarantees of future performance and actual results or developments may differ materially from those in forward-looking statements. Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration successes, continued availability of capital and financing, and general economic, market or business conditions. There can be no assurances that such statements will prove accurate and, therefore, readers are advised to rely on their own evaluation of such uncertainties. We do not assume any obligation to update any forward-looking statements. This news release does not constitute an offer to sell or a solicitation of an offer to sell any securities in the United States. The securities have not been and will not be registered under the United States Securities Act of 1933, as amended (the "U.S. Securities Act") or any state securities laws and may not be offered or sold within the United States or to U.S. Persons unless registered under the U.S. Securities Act and applicable state securities laws or an exemption from such registration is available. SOURCE Red Eagle Mining Corporation
Gold demand just had its strongest-ever first quarter
Frank Holmes - U.S. Global Investors
CEO and Chief Investment Officer
U.S. Global Investors
It makes a great deal of sense to own gold. Billionaire hedge fund manager, Paul Singer
This year’s first quarter is one for the history books. Not only did gold appreciate at its fastest pace in 30 years, but demand for the yellow metal was the strongest it’s ever been on record.
Let me repeat that: the strongest it has ever been.
Demand surged 21 percent from the same period a year ago, according to the latest World Gold Council (WGC) report. Most of this demand was driven by investment, with net inflows into gold ETFs reaching 363.7 tonnes, a seven-year high.
click to enlarge
Meanwhile, demand for bars and coins shot up 55 percent year-over-year, from 11.8 tonnes to 18.3 tonnes. Appetite for American Eagle coins jumped 68 percent.
http://www.mining.com/web/gold-demand-just-had-its-strongest-ever-first-quarter/
Not my opinion. Copy and paste from Seeking Alpha.
He's calculations for a full year are based on $1200 a ounce ( $1109 after streaming deals) . Gold has been trading $1250-$1280 for a while now.
Twangiza output will improve by H2 .
As well as cash cost improvement by H2 . We need POG over $1300 and refi of the bond payment due in 2017 . Other than that there is a reason we trading at .30 and not book value $2 and that's debt.
Ouch . From SA
My last article on Banro Corp. (NYSEMKT:BAA) has triggered a number of critical comments. My opponents have accused me of having being biased against the company. Well, I have not changed my mind - I still think that Banro is not worth investing in. However, to defend my thesis, in this article, I will use Banro's management's arguments. I hope that this way of reasoning should settle the dispute over my attitude towards the company once and for all.
Introduction
Banro is a mid-tier gold producer, operating two mines in the Democratic Republic of Congo. The first mine, Twangiza, should deliver around 120 thousand ounces of gold in 2016. The second mine, Namoya, commenced its commercial operations in January this year. Banro expects that Namoya should produce 100-110 thousand ounces of gold in 2016.
During the construction phase of Namoya, the company had encountered a number of technical problems. These problems were magnified by low gold prices. As a result, the company entered a few unorthodox business deals to finance Namoya's construction. I agree with my opponents that at that hard time Banro did not have too many alternatives to find cash to finish Namoya's construction. However, I think that the decisions taken by the management will have a negative impact on the company's performance in the years to come (for example, due to gold forward agreements, Banro is set to sell its gold at lower prices than those offered by the market). The results delivered in 1Q 2016 confirm this thesis.
1Q 2016 Results
The table below provides a few basic operating and financial measures delivered in 1Q 2016:
In thousands of US$
source: Simple Digressions
Comment
The most striking issue is the gold price realized. In 1Q 2016, gold prices went up from $1,062 to $1,233 per ounce. Many miners were selling their gold for around $1,200 per ounce, on average (for example, another African gold miner, SEMAFO (OTCPK:SEMFF), was selling its gold at $1,187 per ounce, on average). Banro, due to a few gold forward selling agreements (discussed in my first article on Banro), was selling its gold for just $1,109 per ounce.
As a result, despite much higher production than before, in 1Q 2016, Banro reported revenue of $46.5 million, only 13.5% higher than in 1Q 2015.
Further, despite higher production and higher revenue, the company showed only marginal earnings from mining operations (I am touching this issue below). These poor earnings had a negative impact on the company's bottom line.
Another thing - Banro is a heavily indebted company. Let me list all of its debt issues ($388,285 thousand, in total) as of the end of 1Q 2016:
• Bank loans - $9,281 thousand
• Debt offering - $169,508 thousand (it is a mixed financial instrument, comprising both debt and common shares issues)
• Term loan - $20,981 thousand
• Preference shares - $74,896 thousand
• Deferred revenue - $113,619 thousand
In my opinion, this heavy debt is putting severe constraints on the company's future performance. For example, in March 2017, Banro will have to pay off the expiring debt offering of around $170 million. It looks like the company, to cover this liability, should have to find new financing sources very quickly.
Next thing - despite commencing commercial operations at Namoya, in 1Q 2016, Banro was not able to report positive cash flow from operations. Apart from the decreased revenue (due to gold forward selling agreements), the company reported the increased production costs at both operations. Let me discuss this problem now.
Twangiza
Twangiza is a flagship property. It started its commercial operations in 2013. In just two years, it increased its gold production from 82,591 ounces in 2013 to 135,532 ounces in 2015. What is more, in the same period, Twangiza's cash costs of production went down from $836 to $553 per ounce of gold.
Unfortunately, in 1Q 2016, Twangiza delivered much worse results. It produced less gold than in 1Q 2015 (26,638 ounces in 1Q 2016 versus 35,943 ounces in 1Q 2015). In addition, this gold was produced at a higher cost. Reason? Lower throughput, lower grades and lower recovery rates. The company explains (page 9):
"The decrease in ore tons mined in Q1 was consistent with the annual mine plan, which allows for higher waste movement in the main pit and the new central pit throughout the first half of 2016. Recoveries at Twangiza during the first quarter of 2016 were impacted by the processing of lower head grades than in recent quarters. The focus of waste removal in the first half of 2016 was planned to provide better access to higher grade ore in the second half of 2016 in step with the expansion of the fine crushing circuit. This is expected to increase the plant throughput and create a finer grind (i.e. producing a smaller average particle size) which is more amenable for improved leach dissolution. The additional crushing equipment has been procured and is expected to be commissioned in the beginning of the third quarter of 2016"
It looks like the situation is going to improve in the second half of 2016. We will see.
Namoya
Although this mine started commercial operations in January, I understand that it takes some time to achieve full efficiency at any new mine. It means that the operating results delivered by Namoya in 1Q 2016 are, by no means, representative in the long term. Anyway, in 1Q 2016, Namoya was ramping up its production, delivering 17,554 ounces of gold (15,901 ounces in 4Q 2015 and 9,254 ounces in 1Q 2015).
Despite higher production, Namoya reported loss from mining operations of $3.5 million. As I have written above, it is an initial stage of Namoya's operations, therefore, the mine does not perform in the way it should perform in the future. For example, the company's management is currently focused on stacking the ore to build the significant inventory for future production.
Now, let me go to the main point.
2016 Forecast
In my forecast, I will use the management's assumptions delivered in the 1Q 2016 Earnings Call Transcript and 2016 Outlook:
• Over the year, the company will be selling its gold at 1Q 2016 prices ($1,109 per ounce) - keep in mind that a price of $1,109 per ounce of gold, obtained by Banro, means a market price of gold of around $1,200 per ounce.
• Projected gold production: 230 thousand ounces, of which 120 thousand is attributable to Twangiza and 110 thousand to Namoya (I am assuming the highest production estimate).
• The gold sold is equal to the gold produced.
• Banro will produce 40% of its annual production in the first half of 2016; the rest, 60%, will be produced in the second half of 2016 (management's assumption).
• In 1H 2016, cash cost of production will stand at $800 per ounce of gold; in 2H 2015, it will go down to $700 per ounce (management's assumption).
• Depreciation and depletion are calculated on a per ounce of gold basis ($291 per ounce, as reported in 1Q 2016).
Using these assumptions, I have prepared my forecast for 2016:
source: Simple Digressions
As the table shows, despite higher production and higher market prices of gold, in 2016, Banro should earn only $17.8 million in earnings from mine operations. I remind my readers that in 2015, with only one operating mine and lower gold market prices, the company reported earnings from mining operations of $56.0 million.
The company's fans will surely argue that the margin (revenue less production costs) reported in 2016 should be higher than that delivered in 2015 ($84.7 million versus $81.8 million). Yes, it should be but understand that to get a big picture, I have to take into account the economic cost of putting Namoya in operation (depreciation and depletion). Putting it differently, although in 2016 Banro operates two mines, cash flow from operations should be comparable to that delivered in 2015 by only one mine. Quite a shocking observation…
Summarizing - although now Banro has two operating mines, no recovery in the company's financial standing is expected. Quite contrary - this year, this African miner is going to show much worse results than in 2015. What is more, the company is heavily indebted and some large liabilities will become due within one year. Therefore, in my opinion, Banro, despite its low market valuation (the company's shares are currently trading at a relatively low multiple enterprise value/EBITDA of 8.2), is too risky to put your hard earned dollars into.
Note: I strongly encourage my readers to visit my blog. It is a continuation of my Seeking Alpha activity where you will find the articles posted on a daily basis.
Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Nice volume so far .
This was back in 2011 pre Twangiza . Would not be surprised if the Chinese would try again for a JV or even takeover .
http://www.financialpost.com/m/wp/blog.html?b=business.financialpost.com/news/mining/banro-teams-up-with-china-to-develop-congo-gold-mine
The Chinese are buying up gold and gold miner as fast as they can.
http://www.mining.com/chinas-icbc-buys-giant-london-gold-vault-from-barclays/
http://www.mining.com/eldorado-gold-to-sell-remaining-assets-in-china-to-yintai-resources-for-600-million/
They did come thru with Baiyilin deal and getting Namoya commercial even if year late . Slow progress over there at DRC .
I was just thinking about the same thing. Pretty sad . Anyway still most undervalued miner out there
Banro Corporation (NYSEMKT:BAA)
Q1 2016 Earnings Conference Call
May 12, 2016 11:00 AM ET
Executives
John Clarke – President and Chief Executive Officer
Kevin Jennings – Chief Financial Officer
Analysts
Phil Larson – Millstreet Capital
Presentation
Operator
Good morning, ladies and gentlemen, and welcome to Banro Corporation First Quarter 2016 Financial Results Conference Call. After the presentation, we will conduct a question-and-answer session. Instructions will be provided at that time. Please note that this call is being recorded Thursday, May 12, 2016 at 11 A.M. Eastern Time.
I would now like to turn the meeting over to John Clarke, Banro’s President and CEO. Please go ahead, Mr. Clarke.
John Clarke
Thank you and thanks to everyone for joining us. Before we get started, we’d like to emphasize that some of the information discussed in this call, particularly our targets for 2016 and beyond, and our forward-looking plan, is based on information as of today, May 12. As well, our commentary contains forward-looking information that involves risk and uncertainty.
Actual results could differ materially from a conclusion, forecast or projection in the forward-looking information. And certain material factors or assumptions were applied in drawing such a conclusion or making such a forecast or projection. Additional information about the material factors that could cause actual results to differ materially from such a conclusion, forecast or projection and the material factors or assumptions that were applied in drawing such a conclusion or making such a forecast or projection is contained in Banro’s regulatory filings, including Banro’s Q1 2016 MD&A.
During today I will provide a broad overview of Q1 2016 together with an operations update for both Twangiza and for Namoya. Kevin Jennings, Banro’s CFO, will provide an update on Banro’s financial position. At the Twangiza mine, our operations during Q1 2016 focused on continuing to deliver results in line with our current design capacity. Production for the first quarter of approximately 27,000 ounces represented a decline from recent quarters as it was driven by lower available head grade consistent with the mining plan.
We are moving increased amounts of waste in order to expose additional high grade ore terms for future periods. The cash cost per ounce at Twangiza was $639 per ounce, only a small increase from Q4 2015, which is a result of the decrease in the gold production being partially offset by lower gross operating costs.
We commented in our last call that during 2016, we will install some additional fine crushing capacity to take Twangiza’s interim capacity through 1.85 million tons per year from its current 1.7 million tons per year design. This expansion program is in progress and is expected to contribute to Twangiza’s plant performance beginning in the third quarter.
At the Namoya mine, following the declaration of the commercial production, effective the January 1, 2016, the operation continued to ramp up to steady state operating levels. Namoya’s focus during the first quarter was and continues to be on mining productivity. While heavy rains limited the progressive improvement of mining productivity, the dry season there is expected to now provide the opportunity to increase tons moved and build sufficient ore stockpiles in order to improve utilization levels and stacking rates in the processing circuit. Namoya produced approximately 17,000 ounces at a cash cost of $959 per ounce, contributing to the consolidated cash cost of $767 per ounce, again consistent with our 2016 guidelines.
Now, I would like to handover to Banro’s CFO, Kevin Jennings, for an overview of our Q1 2016 financial results.
Kevin Jennings
Thank you, John, and good morning to all. Since, most of you have read the financial results in the press release and filings I will go over them briefly and provide you some commentary on our Q1 results and some of our expectations for Q2 2016.
In Q1, Banro report 44,000 ounces of gold and revenues of $46.5 million were generated from the sale of 42,000 ounces at an average price of $1,109 per ounce. This compares to 36,000 ounces produced in Q1 of 2015 for revenues of $41 million from the sale of 34,000 ounces at an average price of $1,208 per ounce. This is an increase of 24% in gold sold over the same quarter of 2015 with an increase in revenues of 14% over Q1 2015, primarily due to the gold price being $99 lower than Q1 of 2015.
The following describes the key revenue drivers for Twangiza from Q4 2015 to this quarter. As guided at the year-end call, the quarterly mill throughput in Q1 was 415,000 tons of ore milled, flat with the previous quarter. The head grade decreased from 2.82 grams per ton to 2.61 grams per ton with the corresponding decreases in the recoveries from 81% to 77% as the operational loss some availability in the mining operations from the heavy rains and the requirement to move more waste to free up available ore faces.
When compared to Q1 2015, Twangiza’s ounce production of 27,000 ounces was down from 36,000 ounces in the prior year’s quarter. This reduction was a reflection of higher ore grade processed in Q1 2015 as compared to this quarter. In this quarter and the next, we will see more focus on moving waste to expose the similar high grade material on the north side of the pit, which we will mine in the second half of the year.
In Q1, cash costs were $639 per ounce and 6% higher than the fourth quarter of $601 per ounce, primarily due to the 6,000 fewer ounces sold than in Q4 of last year. At Namoya material mined was up 12% from the previous quarter and a 182% from the previous year’s quarter with the introduction of the new mining fleet. The mine productivity at Namoya was impacted versus our expectations by the difficult road conditions at Namoya due to the rains. The sheeting of roads with good competent rock will be an important remediation project for us in the dry season before the rains begin next October.
Namoya’s gold production was 17,000 ounces for the quarter, 10% higher than the previous quarter, reaching 7,100 ounces produced in March and by the end of Q2, we expect to reach the 9,000 ounces per month target. On a consolidated basis, the cash cost per once were $767, and on target with our 2016 production guidance of around $800 per ounce in H1 and then dropping to below $700 per ounce in H2. Due to the production weighted at approximately 40% in H1 and 60% in H2. The combined mine site all-in sustaining costs were $855 per ounce and the consolidated all-in sustaining cost per ounce of $949, taking into consideration corporate and CSR costs were in line with our guidance.
The company generated $10 million in EBITDA for the quarter, which was $10 million less than Q1 2015. This was due to lower production from Twangiza, which was a high margin mine and we had higher proportion of production, which came from Namoya where EBITDA is lower since it has not hit its steady state run rate and continues to carry additional project overheads, which we are addressing over the remainder of the year and higher transaction cost from the financing that closed during the quarter.
In Q1 of 2016, we experienced a net loss of $23 million versus the prior quarter net income of $7 million. This was due to the lower EBITDA of $10 million, a $10 million non-cash mark-to-market loss on mainly financial derivatives and higher interest costs. With the improved gold price outlook emerging for 2016, we do not expect any further write downs in the near future.
In February, we closed the comprehensive $98.75 million financing, which has allowed us to build up $25 million of cash and restricted cash for debt servicing on the balance sheet, pay down older accounts payable and place deposits for our 2016 capital program and refinance some of the more expensive financing on our balance sheet.
For 2016, the company expects the annual gold production from both Twangiza and Namoya to a total of 210,000 ounces to 230,000 ounces with a production weighted at approximately 40% in H1 and 60% in H2. At this production level, the company expects consolidated cash cost in the range of $700 per ounce to $800 per ounce, with the cash cost in the higher range in H1 and falling below the range in H2, consistent with the production volumes. The mine site all-in sustaining costs are expected to be in the range of $800 to $900 per ounce and the consolidated all-in sustaining cost in the range of $875 to $950 per ounce.
Q2 will be our busiest quarter of our 2016 capital program, focused on the procurement and installation of the larger primary crushing circuit at Twangiza. The construction of the existing TMF list at Twangiza during the dry season and the completion of major earth works for the heap leach pad expansion at Namoya and the delivery of some auxiliary equipment to support mine production.
That concludes my summary of the financial highlights, now I’d like to pass it back to John for his operation review.
John Clarke
Thank you, Kevin. I will go through the operations highlights. Now that will include repeated some of the production numbers, but it is consistent with our operational planning. In Q1 2016, the combined Twangiza and Namoya operations produced 44,192 ounces of gold consistent with our production guidance as the company’s production is heavily weighted as Kevin pointed out to the second half of the year.
Consolidated cash costs were $767 per ounce sold and the average realized gold price was $1,109 per ounce for a gold margin of $342 per ounce. Mine site all-in sustaining costs were $855 per ounce sold and consolidated all-in sustaining costs were $949 per ounce sold. The Twangiza mineral reserves as of December 31, 2015 increased 11% year-on-year after depletion. The Namoya mineral reserves as of December 31, 2015, increased 7% year-on-year after depletion. So overall, Banro’s mineral resources have increased 9% after depletion for the period in 2015 – for the previous year.
Operational Twangiza, the Twangiza Q1 2016 cash cost per ounce was $639 per ounce, represents an 6% increase from Q4 2015 and Twangiza’s Q1 2016 all-in sustaining costs of $755 per ounce represents 1% increase from Q4 2015. Twangiza’s production in Q1 2016 decreased from the recent quarters in line with the mine plan as a result of lower head grade. Production levels are expected to increase in the second half of the year, following the expansion of the fine crushing capacity.
After achieving of a $10 million loss time incident free hours during the first quarter of 2016, Twangiza experienced one loss time injury relating to employees and three loss time injuries relating to contractors for a loss time injury frequency rate of 0.58.
During the first quarter of 2016, the plant at the Twangiza Mine processed 414,930 tons of ore, compared with 415,509 tons during the fourth quarter of 2015. The indicated head grade of ore processed during the first quarter of 2016 was 2.61 grams per ton of gold compared to 2.82 grams per ton of gold during the fourth quarter of 2015.
Process recovery rate for Q1 was 77.2%, compared with 81% during the fourth quarter of 2015 and the Q1 2016 gold production was 26,638 ounces compared with 30,440 ounces during the fourth quarter of 2015. Capital spending at Twangiza was focused on the continued construction of the TMF and capital is expected to increase in future quarters of 2016 as we carryout the fine granting and begin to progress with the new TMF as pointed out by Kevin in his presentation.
Namoya, we declared commercial production effective January 1, 2016. I’m pleased to announce that during the first quarter of 2016, Namoya was loss time injury free. During Q1 2016, the Namoya mine produced 17,554 ounces of gold from a total of 414,120 tons of ore stacked and sprayed on the heap leach pads. This is an indicated head grade of 1.94 grams per ton gold. The average head grade stacked was lower than expectations as a result of supplementing ore from mining operations with ore from low grade ore stockpiles.
Ore delivery from mining operations in the first quarter was adversely impacted by heavy rains restricting the ability for the CAT 777s to operate on certain haul roads. At the regional roads, the company expects to take advantage of the dry periods of the year to continually improve both quality and mitigate the impact of unusually wet periods in the future. Capital spending at Namoya during Q1 2016 mainly focused on extension of heap leach pad and similar to Twangiza capital activities are expected to increase in the future quarters of 2016.
We have been able to progressively protect our operations from the impact of heavy rains in recent rainy seasons, but this last quarter we have to contend with the heavy El Nino events for the first time in our operations. We will continue with operational improvements to deal with these even heavier rain events. On the exploration front, during the first quarter of 2016, exploration activities were limited to the continuation of the near mine exploration drilling at Namoya, including the evaluation of the results obtained from the work performed in the latter half of 2015.
If exploration work led to the high grade results, which were published in Banro’s February 24, 2016 press release and the discovery of new mineralization of the Namoya hanging wall area and Filon C in the North Eastern and Eastern regions of the Namoya Summit.
For the remainder of 2016, the focus of the exploration team will be on near mine resource development including additional delineation for the Namoya resource and follow-up activities in relation to the newly discovered Namoya mineralization zone, the Namoya Summit hanging wall and the Filon C mineralized zones. In addition to near surface targets, the exploration team will be exploring opportunities related to the underground resource targets at both Twangiza and Namoya beginning with desktop reviews of existing deep drilling data from the historical drill programs already carried out by the company.
In closing comments, I’d like to point out that we will continue to focus on increasing gold production at both of our operations and on containing costs, while we increase the company’s mineral resources to potentially enhance the life of its mines thereby increasing long-term shareholder value. The Twangiza and Namoya management teams will continue to identify and explore potential opportunities to further enhance the current mine operations through production capabilities and cost containment, while maintaining a safe working environment. This will be supported by the continuous evaluation of the company’s current resource space and the potential opportunities that provide the potential for significant growth.
Thank you very much for joining us today. I’ll now turn the call back to the operator and open up the question time. Thank you very much.
Question-and-Answer Session
Operator
[Operator Instructions] Your first question comes from the line of Phil Larson with Millstreet Capital. Your line is open.
Phil Larson
Hi, guys. How are you doing?
John Clarke
Fine. Hi, Phil. How are you doing?
Phil Larson
Good. So could you just give us a little more detail on the $9 million of other non-cash charges within the quarter?
Kevin Jennings
Yes the – other debt really relates to mark-to-market losses of financial derivatives. And…
Phil Larson
Okay.
Kevin Jennings
Basically, some of the historical financing were tied to the delivery of gold at lower prices than today and related to share price. So these include the gold forward sales agreements we had, the preferred shares and the warrants. Now, these instruments were re-valued during the quarter based on the gold forward curve and that was basically higher than the year-end. So as a part of the current financing, we focused on retiring some of these instruments because some of them – some of are most expensive financing and that’s such as the Twangiza gold forward sale agreement. So those numbers should be lower in the future.
Phil Larson
Okay, great. That makes sense. And then the other question I had is just how you guys are thinking about your cap structure now that you’ve got the new financing in place and then your notes are coming due inside of a year?
Kevin Jennings
Yes, so we just completed that financing in February and that has actually strengthened our balance sheet. Our networking capital, as you’ve seen, has gone from year-end from negative $80 million to negative $5 million. We basically replaced some of the more expensive financial liabilities with cheaper streaming debt or cheaper stream financing. And now, we’re focused internally basically on the marketing and the refinance project going forward and we were cognizant of the timing.
Phil Larson
Okay. When you think you might have some news on what you want to do in terms of the refinancing?
Kevin Jennings
We’ll have some news obviously within the next two quarters.
Phil Larson
Okay, thanks guys.
Kevin Jennings
Thanks.
Operator
[Operator Instructions] As we have no further participants queued out for questions, I will turn the call back over to John Clarke.
John Clarke
Thank you very much. Thanks to all for taking part in this call. We’ll be available here in Toronto if there are any other follow-on requirements from our shareholders and from interested parties. And we will continue to develop our operations, look at our opportunities, and keep on refining our balance sheet. Thank you very much.
Operator
This concludes today’s conference call. You may now disconnect.
Good news is Namoya is streaming free the $150 will come off Twanziga gold selling price for the next 1.14 mil ounces after that will be reduced by 50% and the reserves increased to 1.84 mil ounces .
Good or bad ? The Chinese are going to have a say now on the board of directors.
- Under the private placement transaction, Banro issued 50 million common
shares and 2.5 million warrants to RFWB, for total gross proceeds to the
Company of $8,750. These warrants have the same terms as the Warrants
issued under the term loan transaction as set forth above. RFWB holds
approximately 16.6% of the outstanding common shares of Banro following
completion of this private placement. For so long as RFWB holds at least
10% of the outstanding common shares of Banro, RFWB has the right to
nominate one person for election to the Banro board of directors at the
annual shareholders meeting.
-- The Twangiza Transaction provided for the payment by the purchaser of a
deposit in the amount of $67,500 and the delivery to the purchaser over
time of a certain percentage (the "Entitlement Percentage") of the life-
of-mine gold production (effective January 1, 2016) from the Twangiza
mine, or any other projects located within 20 kilometres from the
current Twangiza gold mine, based on the gold price at the time of
delivery. The Entitlement Percentage is 11% based on a gold price
between $1,150 and $1,500 per ounce, 12.5% based on a gold price of less
than $1,150 per ounce, and 9.5% based on a gold price greater than
$1,500 per ounce. When total gold production from the Twangiza mine has
reached 1.14 million ounces from the commencement of the stream, the
Entitlement Percentages above will be reduced by 50%. The ongoing
payments by the purchaser to Twangiza upon delivery of the gold are $150
per ounce. At any time after the third anniversary of the closing of the
Twangiza Transaction, Twangiza may, at its discretion, terminate the
stream by paying to the purchaser in cash a buyback price equal to an
amount which would result in the purchaser achieving an implied internal
rate of return of 17.5% on the cash flows arising from the stream during
the period from the closing of the Twangiza Transaction to the date that
is 12 months following the date of payment of the buyback price.
So $150 will come right off the selling price of gold for the streaming deal for Twangiza for the life of the mine . Well that's going to hurt for a while
The average gold price per ounce sold during the first quarter of 2016 was $1,109 compared to an average price of $1,208 per ounce obtained during the first quarter of 2015 due to lower market prices and stream revenues recognized.
The interesting thing is that even some gold miners are betting on correction on POG .
IAMGOLD has just reported its quarterly results, and revealed that it sold 135,148 ounces of gold bullion at an average price of $1260 per ounce. Importantly, IAMGOLD did not have an immediate need for cash, as it finished the fourth quarter with plenty of cash.
Brian LundinA battle royale is brewing between gold bulls and commercial traders who are short gold, says Brien Lundin, publisher of Gold Newsletter. That tug of war, which should play out in the coming weeks, could result in either a severe correction or a spectacular rise in the price of gold and silver. No matter which way it goes, in this interview with The Gold Report, Lundin recommends that investors continue to look at companies with world-class resources that are still being priced at a fraction of what their values should be. Lundin should know; some of his recommendations are up more than 400% from December and January.
The Gold Report: Gold and silver prices have risen fairly dramatically since the first of the year. What's your outlook for the metals?
Brien Lundin: We are on a razor's edge right now. The new gold rally has been somewhat confirmed by silver also beginning its own rally and by the mining stocks leading the charge ahead. On the other side, however, we have a massive, historically large net short position that's been built up by the large commercial traders. Typically, when the large commercials have built up such large net short positions, it is followed closely by a severe correction in gold. Right now, we have a battle royale between the bulls in gold and the large commercials that are short the market. There is a chance that the bulls could continue to buy and force the large commercials to begin covering their shorts. This hasn't happened often during this long turnaround in gold since the turn of the century, but it has happened on occasion. When it does, we see spectacular rises in the price of gold and silver and in the values of mining stocks.
The next few weeks will tell the tale because the commercials will either be forced to capitulate or they will force their whims upon the market, and we'll have a fairly severe correction. Even so, that correction would represent a buying opportunity over the longer term because the commercials will reload at the bottom of the market, will cover their shorts and then the cycle will begin anew.
http://www.mining.com/web/some-of-brien-lundins-precious-metals-picks-are-up-more-than-400-what-is-next/
I'm still a buyer here at these levels . Looking to hold a few years and see how the Santa Rosa mine pans out .
Article from 2015 about Red Eagle .
First, an overview of Red Eagle's 100%-owned Santa Rosa project. This project contains 405,000 ounces of gold reserves at 5.2 g/t, and a feasibility study outlines a 1,000 tonne per day operation, with expected annual production of 50,000 gold ounces over an eight year mine life.
Initial capital costs are just $74 million, and the mine is estimated to produce gold at cash costs of just $596 per ounce (with all-in sustaining costs estimated at $763 per ounce). This means at $1,200 gold, margins would be $437 per ounce, and with 50,000 ounces of gold produced annually, annual EBITDA would be $21.8 million.
First, an overview of Red Eagle's 100%-owned Santa Rosa project. This project contains 405,000 ounces of gold reserves at 5.2 g/t, and a feasibility study outlines a 1,000 tonne per day operation, with expected annual production of 50,000 gold ounces over an eight year mine life.
http://seekingalpha.com/article/3602776-red-eagle-mining-huge-upside-potential-carries-much-risk