Sabre Gold Mines Corp (SGLDF)

[goldenpolarbear]

« ...Opportunity for Gold Right in America's Backyard

« ...Kerr Mines Inc. (KER:TSX; KERMF:OTC; 7AZ1:FRA) has been actively exploring bringing the past-producing Copperstone Gold Mine in western Arizona back to life.

Copperstone, located in mining-friendly Arizona, has a lot going for it. The fully permitted mine is built and there is infrastructure on site. It already has a 300,000 ounce resource, and the land package offers lots of exploration potential.

The company released results from its prefeasibility study on April 10.

Copperstone was mined by Cyprus Minerals as a heap-leach surface mine from 1989 to 1993, when it was decommissioned. Between 2010 and 2014, a previous junior mining company developed a small underground operation that was put on care and maintenance due to engineering and financial issues, as well as a downward trending gold price. Some 500,000 ounces of gold have been produced at the mine.

Kerr acquired Copperstone in 2014.

The previous owners of the mine had made large investments in infrastructure and drilling. The existing underground access, mill, surface impoundments and related infrastructure are well built and are in sound working condition, according to the company. The infrastructure investments were made relatively recently and cost the previous operator between CA$50 million and CA$60 million; today they would cost over CA$100 million to replicate, Kerr CEO Claudio Ciavarella told Streetwise Reports.

According to the prefeasibility study, the 300,000-ounce resource begins beneath an open pit 500-feet deep, and the company's biggest news suggests interesting numbers for future development. Based on the company's recent news release, it expects to jump into production quickly.

A Clear Path to Production

The study shows strong highlights for both the quality and quantity of the gold found in Copperstone. The company announces a base case of $1,250 per ounce of gold, which is about $75 below today's price. With average annual sales of 38,347 ounces gold, the company expects payback of initial capital ($22.7 million) within 2.3 years of a 2019 production start. That low capex of $22.7 million also includes a mine equipment capital lease. With a study life operating margin (EBITDA) of $89 million and an internal rate of return of 40%, the company is confident in starting production next year.

With the infrastructure in place and strong numbers, the company says it has a 95% average of recovering gold using crushing, grinding, and whole ore leach.

CEO Claudio Ciavarella estimated that the company could be looking at 100,000 ounces of gold per 100 vertical feet of its Copperstone project. While the open pit was initially 500 feet deep, the company has added an additional 300 feet. Ciavarella says Kerr Mines could go another 400 to 500 feet deep.

"If this mineralization continues at the same rate, this would mean that we could grow the resources to around the 1,200-1,400-foot level and add another 300,000 to 400,000 ounces in resources," explained Ciavarella.

Kerr Mines' president, Martin Kostuik, shares the excitement: "The results of this PFS display the strong near-term production opportunity for the Copperstone Mine and robust returns for our investors. This is just the beginning."

The company threw out big-picture numbers for the long term. According to the study, the study life operating margin (EBITDA) is $89 million, with an internal rate of return of 40%.

https://www.streetwisereports.com/article/2018/05/01/opportunity-for-gold-right-in-americas-backyard.html

« ..."The impressive exploration upside displayed by the 2017 Phase I program, the historical production of over 500,000 gold ounces and the potential to generate solid positive cash flows by identifying the first four years of gold production, all point toward the opportunity of many more years, beyond the Study timeframe, of profitable production," said Kostuik.

Furthermore, the company is pleased that there are 100,000 ounces of measured and indicated mineral resources that were not included in the confirmed mineral resources. According to the company, part of this additional 100,000 ounces of gold is immediately accessible for drilling and potential inclusion during the phase 2, 2018 drill program.

A Copperstone Gold Mine tour video is available here.

Fundamental Research Corp. released an investment analysis for Kerr Mines on April 18. Analyst Siddharth Rajeev noted that "at an average grade of 7.36 gpt (across the resource categories), the Copperstone project is of significantly higher grade than most of the deposits in the western U.S."

Rajeev also expressed the belief that "the PFS was very conservative as it only accounted for 63% of the measured and indicated resource. Also, we believe the current resource and NPV estimates do not account for any upside potential from the ongoing exploration. A newly discovered Footwall zone has potential to be of the same dimensions as the main Copperstone zone."

"Approximately 100 Koz of measured and indicated resources were not included in the reserve estimate, which we believe would have added another 2 to 3 years to the mine life, and potentially $50 million in additional operating profit," Rajeev added.

Fundamental Research has a Buy rating on Kerr and assigns a fair value estimate of C$0.49 per share. The stock currently sits at CA$0.24.

Currently, there are 255 million shares outstanding, with 32% held by management and directors. Eric Sprott has an approximately 7% stake in the company.

Technical analyst Clive Maund on April 10 reiterated Kerr Mines as a strong buy: "It looks like Kerr will break to the upside soon from the current tight range, and it is therefore rated a strong buy here."

http://www.kitco.com/commentaries/2018-05-01/Gold-At-A-Critical-Support-Level.html