Investors Remain Aloof Despite News from Gold & Silver Producers
Encouraging drill results and profitable production aren’t always enough to impress investors, as Claude Resources and SilverCrest Mines saw on November 27. Claude’s Saskatchewan gold assays and SilverCrest’s Mexican silver-gold-copper results each brought a slight but perceptible stock pullback.
Claude’s November 27 results came from its Santoy Gap deposit on the Seabee Gold Project, which includes two operating mines, Seabee and Santoy 8, in the La Ronge mining district of northeastern Saskatchewan. The assays show:
- 8.16 grams per tonne gold over 5.93 metres
- 5.07 g/t over 6 metres
- 3.51 g/t over 4.53 metres
- 5.03 g/t over 1.58 metres
- 4.68 g/t over 1.41 metres
True widths are estimated between 75% and 95%. A 3 g/t lower cutoff was applied, but no top cut. The deepest interval stopped at 649 metres’ depth.
These three holes extend the Santoy Gap mineralized system down dip and along strike toward Santoy 8, suggesting possible continuity, the company stated.
Results from this year’s 71-hole, 35,100-metre program will be used to update Santoy Gap’s December 2011 resource estimate, which sits at 2.32 million tonnes averaging 6.63 g/t for 495,000 ounces gold. The resource update, as well as an updated life-of-mine plan, comes due by year-end. Claude is now building an 850-metre-long exploration drift for further drilling.
The 14,400-hectare Seabee Gold Project’s five deposits come to:
- proven and probable reserves totalling 2.1 million tonnes with an average 5.37 g/t for 355,600 gold ounces
- indicated resources totalling 410,900 tonnes with an average 5.35 g/t for 70,700 ounces
- inferred resources totalling 4.19 million tonnes with an average 6.48 g/t for 873,400 ounces.
In Ontario’s Red Lake mining camp, Claude’s 4,000-hectare Madsen gold project includes four past-producing mines, along with some modern infrastructure intact. The high-grade estimate for Madsen’s four zones shows:
- indicated resources totalling 3.24 million tonnes averaging 8.93 g/t gold for 928,000 ounces gold
- inferred resources totalling 788,000 tonnes averaging 11.74 g/t for 297,000 ounces.
A 16-hole, 19,100-metre program using one surface and two underground rigs wrapped up in September. The company plans further drilling, along with a PEA study, next year.
Infrastructure includes a permitted tailings facility, 500 tpd mill and a 1,250-metre shaft.
Claude’s other northeastern Saskatchewan project, the 40,373-hectare Amisk Lake property, comes with resources that show:
- an indicated category of 30 million tonnes averaging 0.85 g/t gold and 6.17 g/t silver for 827,000 ounces gold and 5.98 million ounces silver
- an inferred category of 28.65 million tonnes averaging 0.64 g/t gold and 4.01 g/t silver for 589,000 ounces gold and 3.7 million ounces silver.
Amisk is slated for a resource update and PEA to be released next year.
Seabee’s November 27 drill results followed closely on Claude’s Q3 report, which announced a net profit of $3 million or $0.02 a share and 15,073 ounces of gold production with cash costs of $920 an ounce. The company projects increasing production and decreasing costs reaching an estimated 90,000 ounces annually at about $800 an ounce by 2017.
So how did the market react? Claude closed November 26 at $0.61, opened November 27 at $0.63, then closed at $0.59. That left the company near its 52-week low of $0.55, compared to a 52-week high of $2.04. November 27 closed on a market cap of $102.51 million.
SilverCrest also slipped slightly on November 27 drill results. Highlights from its La Joya property in Durango state, Mexico, include:
- 28.3 g/t silver, 0.09 g/t gold and 0.11% copper over 288.7 metres (including 65.6 g/t silver, 0.17 g/t gold and 0.28% copper over 25 metres) (including 75.1 g/t silver, 0.08 g/t gold and 0.27% copper over 41.8 metres) (including 48.5 g/t silver, 0.06 g/t gold and 0.18% copper over 21.9 metres)
- 135.5 g/t silver, 0.11 g/t gold and 1.14% copper over 45 metres
(including 189 g/t silver, 0.07 g/t gold and 1.52% copper over 23.2 metres)
- 53.1 g/t silver, 0.06 g/t gold and 0.63% copper over 48.8 metres
- 66.4 g/t silver, 0.31 g/t gold and 0.12% copper over 22 metres
- 28.2 g/t silver, 0.06 g/t gold and 0.19% copper over 43 metres.
True widths weren’t provided. Drilling started near surface, with the deepest interval ending at 437 metres’ depth.
Drilling and surface sampling have extended the project’s main mineralized trend to approximately 2.5 kilometres, with an average width of approximately 700 metres, the company stated. Of 15 holes reported November 27, five tested the trend’s southern extension while the other 10 delineated the project’s Contact zone and Santo Nino target. Additional drilling to explore new targets is expected this month. A 2013 PEA will consider the potential for a “starter pit,” the company stated.
La Joya’s January 2012 resource estimate shows an inferred category of:
- 57.94 million tonnes averaging 28 g/t silver, 0.18 g/t gold and 0.21% copper for 51.35 million ounces silver, 333,400 ounces gold and 270.3 million pounds copper, using a cutoff of 15 g/t silver-equivalent
- 35.5 million tonnes averaging 39 g/t silver, 0.22 g/t gold and 0.3% copper for 44.3 million ounces silver, 246,000 ounces gold and 237.5 million pounds copper, using a cutoff of 30 g/t silver-equivalent.
On November 14 SilverCrest reported Q3 comprehensive earnings of $2.2 million or $0.03 a share. Quarterly production from the company’s flagship Santa Elena project in Sonora state came to 7,184 ounces gold and 151,368 ounces silver, an 18% decrease and 42% increase respectively. Average cash costs came to $7.60 per silver-equivalent ounce, below the budgeted $8.20, the company stated.
But SilverCrest’s November 27 news failed to impress. Its stock closed November 26 and opened November 27 at $2.71, and reached a high of $2.74 before dipping to a close of $2.65. The 52-week low and high are $1.55 and $3.17. At November 27 close, SilverCrest’s market cap was $280.55 million.
