Eldorado to hike gold production to over 500,000 ounces in 2020

Shares in Canada’s Eldorado Gold (TSX:ELD)(NYSE:EGO) climbed on Friday after it said is ready to grow its yearly output to more than 500,000 ounces next year, supported by the restart of its Kışladağ gold mine in Turkey, and the soon coming online of the Lamaque project in the home country.

The Vancouver-based miner cancelled last month plans to build a $500-million processing mill at Kışladağ, choosing to resume mining and heap leaching instead.

The resumption of mining and heap leaching at the Kışladağ gold mine in Turkey should provide the opportunity to consider initial debt retirement later this year.

The decision may not have been entirely voluntarily, since Eldorado has almost $600 million in debt due in 2020, is building its first mine in Canada — the Lamaque project in Val d’Or, Quebec — and it had only about $287 million in cash on its balance sheet at the end December.

When it comes to output, however, Eldorado had a good year, generating 349,147 ounces of gold in 2018, which include 35,350 ounces of pre-commercial production from Lamaque. The figure is significantly higher than the previous year’s output of 292,971 ounces and its original 2018 guidance of 290,000 to 330,000 ounces.

For 2019, the gold company expects to produce between 390,000 and 420,000 ounces, it said while delivering its financial year-end results.

While Eldorado generated $459 million in revenue from its operations in 2018, it also registered impairments adjustments of almost $448 million related to Olympias, in Greece, and its Turkish mine, resulting in a net loss of $362 million, or $2.28 a share.

The adjusted net loss came to $26.3 million, compared with adjusted net earnings of $15.2 million in the previous year.

Looking ahead, chief executive officer George Burns said the restart of Kışladağ and the kick off of commercial production at Lamaque, later this quarter, should allow Eldorado to generate significant free cash flow and provide it with the opportunity to consider debt retirement later this year.

The stock was up 5.53% at C$5.92 by 12:12 p.m. EST.

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Pan American Silver completes $1B-buyout of Tahoe Resources

Canada’s Pan American Silver (TSX:PAA) (NASDAQ:PAAS) announced today that it has completed the $1.07-billion buyout of Tahoe Resources (TSX:THO) (NYSE: TAHO) by acquiring all of the issued and outstanding shares of the precious metal miner.

Pan American expects to produce between 26.5 million ounces and 27.5 million ounces of silver this year, with gold output in the range of 162,500 ounces to 172,500 ounces.

Based on the deal signed by both companies, some Tahoe shareholders received 0.2403 of a Pan American share for each Tahoe share, subject to pro-ration based on a maximum cash consideration of $275 million and a maximum number of Pan American shares issued of 56.0 million. Tahoe shareholders who did not want to join Pan American received $3.40 in cash for each share instead.

Overall, holders of 23,661,084 Tahoe shares decided to get the cash, while holders of 290,226,406 Tahoe shares made, or were deemed to have made, the share election by the deadline of 4:30 pm EST on January 3, 2019.

By finalising this transaction, Pan American, already the world’s second-largest primary silver miner, is doubling its silver reserves as Tahoe owns the controversial Escobal mine in Guatemala, which is the third largest silver mine in the planet, as well as gold mines in Peru and Canada.

“The completion of the Arrangement establishes the world’s premier silver mining company with an industry-leading portfolio of assets, a robust growth profile and attractive operating margins. We are also now the largest publicly traded silver mining company by free float, offering silver mining investors enhanced scale and liquidity,” Michael Steinmann, President and Chief Executive Officer of Pan American Silver, said in a media statement.

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Mine tailings could be used to produce cement replacement material

Canada’s ZEN Graphene Solutions (TSXV: ZEN) issued a press release this week saying that management is optimistic about the company’s project to transform mine tailings into cement replacement material.

The experiment is being carried out at the University of British Columbia’s Okanagan campus and it makes use of the tailings from the Albany graphite project, located in northeastern Ontario.

“Early results show promise and if successful would reduce tailings disposal costs and create a potential byproduct revenue stream,” ZEN’s media statement reads.

“Partially replacing cement with tailings materials could have a significant financial and environmental impact on the concrete industry” – Ahmad Rteil

The initial test carried out by researcher Ahmad Rteil involved replacing 10% and 20% of a cement mixture with ZEN’s tailings material and after 28 days, the results showed the 10% replacement had a compressive strength rating of 46.1 MPa, less than a 2% difference from the control at 47 MPa. The 20% replacement had a compressive strength rating of 37.9 MPa, about 20% difference with the control sample.

Both the academic and the miner say these results are significant as most of the concrete used by the construction industry has a compressive strength requirement ranging between 20 MPa and 40 MPa.

But ZEN is not only planning to make use of the residual elements. Its experts are now evaluating the possibility of conducting research to see what happens when graphite is added to the tailings.

The hypothesis is that it is possible to create an enhanced cement material and concrete that could be stronger, and have faster curing time and increased durability. The new compound’s production process is also expected to be environmentally friendlier than existing processes.

“Cement production from limestone is a significant source of CO2 emissions accounting for approximatively 8% of global emissions. Every ton of cement that we can replace with our tailings material would potentially save up to approximately one ton of CO2 emissions,” Francis Dubé, Co-CEO of ZEN, said in the media brief.

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Barrick Gold says 'reviewed' Newmont merger – no decision yet

Canada’s Barrick Gold (TSX:ABX)(NYSE:GOLD), the world’s second-largest gold producer, may eclipse its recent and perhaps overly-analyzed Randgold Resources takeover by buying rival gold major Newmont (NYSE:NEM) in a $19 billion all-share deal.

Commenting on media speculation, the Canadian miner confirmed it had reviewed the opportunity to merge with the US miner in an all-share nil premium transaction. “No decision has been taken at this time,” Barrick said.

Both Bloomberg and The Globe and Mail had said Barrick was considering an hostile-bid as Newmont is about to officially become the world’s No. 1 gold producer once it closes its announced merger with Goldcorp (TSX:G) (NYSE:GG).

A deal could leave Goldcorp stranded — or back in play — amid a wave of consolidation in the gold sector.

MINING.com understands that another option Barrick is considering involves attracting a partner, such as Australia’s Newcrest Mining (ASX:NCM), to jointly attempt a merger with Newmont.

A deal between the two world’s largest bullion miners would create a mega-gold corporation, with assets in almost every continent, including Australia, Africa, the US and Latin America. However, it could leave Goldcorp stranded — or back in play — amid a wave of consolidation in the sector.

If the merger between Newmont and Goldcorp doesn’t go ahead, Barrick would be liable for a $650 million break-fee, The Globe and Mail reported.

This is not the first time rumours of Barrick toying with an offer for Newmont grabs headlines. As close as November last year, the Toronto-based gold giant was said to have resumed talks with Newmont to at least merge their operations in Nevada.

“They have been trying to negotiate for years but Newmont couldn’t agree with Barrick, now that you have a new management team, it’s certain they revived those talks,” anonymous sources said at the time.

Another option Barrick may consider involves attracting a partner, such as Australia’s Newcrest Mining, to jointly attempt a merger with Newmont.

Speaking at the Denver Gold Forum in September, however, Newmont chief Gary Goldberg said the company had examined a deal in the past and had not “seen anything”. He did acknowledge some opportunities highlighted by RBC Capital Markets then.

According to the bank’s analysts, the US gold miner could achieve $300 million in operating and cost savings from combining its mines in Nevada with those of the Canadian company.

Goldberg also said at the time he was interested in buying Barrick’s half shares of their jointly-owned Kalgoorlie mine in Australia.

Newmont and Barrick own Turquoise Ridge, in Nevada, in a 25%-75% partnership. Early last year, the Canadian gold giant said the operation was one of its core ones due to its exceptional growth potential. It also noted it would invest between $300 and $325 million to build a third shaft there, which combined with additional processing capacity, is expected to enable the mine to roughly double annual production to more than 500,000 ounces per year.

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First AI mining company goes public

Goldspot Discoveries team celebrate at #Disruptmining

Given the massive amounts of data generated by mineral exploration, using artificial intelligence and machine learning to make discoveries seems like a natural fit for the industry.

Goldspot Discoveries, which listed today on the TSX Venture Exchange under the symbol SPOT, takes a big step forward in use of artificial intelligence in the exploration industry. The Montreal-based company is barely three years old, but has secured the backing of some of the biggest names in mining

The Montreal-based company is barely three years old, but has secured the backing of some of the biggest names in mining, including US Global Investors’ Frank Holmes; Eric Sprott, Rob McEwen, mining financiers Triple Flag and Hochschild, and also counts Integra Resources and Yamana Gold as early customers.

Denis Laviolette, founder and president of Goldspot, tells MINING.com that crunching geological data to find new deposits or expand discoveries is just one component of its approach.

Goldspot, which, despite its name is mineral-agnostic, pools what it learns from the geoscience data with capital market information, macro-economic inputs, company specific data and insights into management teams to identify investment targets.

Laviolette says there is enough information in the public domain, especially in places like Canada, for its AI-driven process. The mountains of data interpreted, combined with the expertise of Goldspot’s 23-person team, including six Ph.D’s, can then identify the juniors best poised to make discoveries.

The company has $10m in the bank and part of its strategy is to invest in juniors, use its technology to develop exploration targets and acquire royalties. Goldspot has also inked a partnership with Triple Flag to co-invest in these targets.

Goldspot’s incorporation of management data into its decision-making engine is an interesting one. Laviolette says a central consideration when assessing leadership at potential investments is management’s access to capital – a measure of industry respect. But it cuts both ways – some companies may be overvalued because of management’s ability to market themselves and attract capital, beyond what the quality or value of the company’s assets are.

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Devon Energy pulling out of Canada

The Jackfish SAGD project produces about 105,000 bbl/d and may soon be for sale. (Image: Devon Energy)

Devon Energy has announced plans to transform itself into a U.S. oil growth company. The final step will be to sell its Canadian oilsands and Barnett shale assets, a move that may put more than $30 billion in the treasury.

Devon’s oil sands operations are located on the eastern edge of the Athabasca Basin. It put the Jackfish steam assisted gravity drainage project into production in 2007. Since then it has expanded its output by building Jackfish 2 and Jackfish 3. With three phases, Jackfish produces about 105,000 barrels per day.

Devon also holds a 50% interest – and would have been the operator –  in the proposed Pike SAGD project with BP Canada Energy Group.

Devon expects to complete its pullout from Canada by the end of this year. Either a spinoff or sale of its Canadian assets should allow the company to focus on high return U.S. oil assets in Wyoming, Texas, New Mexico, and Oklahoma.

Approximately $780 million in cost savings by 2021 at its U.S. projects is anticipated. Four areas will receive scrutiny: general and administrative ($300 million), design and construction ($300 million), interest ($130 million), and per-unit recurring lease operating expenses ($50 million).

The company is also planning a $5 billion share buyback that will reduce the number of outstanding common shares by almost 30%.

This story first appeared in the Canadian Mining Journal.

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Maritime to make decision on Hammerdown this year

Maritime Resources Corp. of Toronto says 2019 will be a critical year for the company. It plans to advance its Hammerdown gold project in the hope of making a production decision by year-end.

The past-producing Hammerdown gold mine, Orion gold deposit, and Lochinvar base and precious metals deposit make up Maritime’s Green Bay property near Springdale. Activities this year will include project engineering, additional exploration, and studies in support of environment and permitting activities.

Last year, the company sent a Hammerdown metallurgical sample to the Steinert laboratory in Kentucky where the sample was tested for its amenability to ore sorting technology. An independent consultant was hired to conduct a technical review of the now idled Nugget Pond processing plant. It may be possible to add a dedicated grinding circuit and isolate the base mental circuit that is currently being used by Rambler Metals.

Activities this year will include project engineering, additional exploration, and studies in support of environment and permitting activities.

The Hammerdown deposit contains measured and indicated resources of 925,670 tonnes grading 10.6 g/t gold for 315,535 oz. of gold and inferred resources of 1.6 million tonnes grading 7.53 g/t for 377,000 oz.

This story first appeared in the Canadian Mining Journal.

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British Columbia's mining revenue expected to drop by 25% by 2022

As expected, curbs placed on B.C.’s housing market have resulted in lower new housing starts and a loss of about $325 million from property transfer taxes.

Last year’s budget installed tax curbs to slow down B.C.’s runaway housing market, including increases to the property transfer and school taxes on homes valued over $3 million, and a new real estate speculation tax.

But the government isn’t counting on that falling revenue to be made up from B.C.’s natural resource sector. The government expects revenue from mining to drop by 25.5% over the next three years, due mainly to weakening metallurgical coal prices and increased mine production costs.

Revenue from forestry was up in 2018, thanks to record high lumber prices. But those prices have since fallen and going forward the government is expecting declining revenue from forestry, as well as other natural resource sectors.

Forestry revenue is expected to fall 16.8% in 2019-20, due largely to lower lumber prices. Timber harvest levels are expected to drop by 2 million cubic metres by 2021-22. The government expects revenue from forestry to drop from $1.4 billion in 2018-19 to $1.2 billion in 2019-20 and to $1 billion by 2021.

While natural gas royalties are expected to increase 68% for the 2019-2020 fiscal year, over the next few years they are expected to decline, largely due to increased use of infrastructure credits and royalty programs.

Revenue from bonus bids and rents on drilling licences and leases for natural gas are also expected to decline over three years, from $276 million in 2018-19 to $145 million in 2021-22.

Revenue from mineral taxes and fees are also expected to decline. The government expects revenue from mining to drop by 25.5% over the next three years, due mainly to weakening metallurgical coal prices and increased mine production costs.

Revenue from energy and mining is expected to drop from $1.1 billion in 2018-19 to $861 million by 2020-21.

Finance Minister Carole James warned that a global economic slowdown could have an impact on B.C.’s economy.

“I think that’s really one of the biggest challenges that all of us could face,” James said. “We know that China’s growth numbers are going down. We’ve seen the challenges with trade with the U.S. Those kinds of outside factors could have an impact…on our economy.”

(This article first appeared in Business In Vancouver.) 

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Canadian miners had a tough 2018, but optimism remains — EY

Canadian miners had a tough 2018, but optimism remain — EY

Canadian miners continued going down the slippery slope in the last three months of 2018 due mostly to weak commodity prices, triggered by a slowdown in the Chinese economy near the end of the year, the latest report by consultancy Ernst & Young (EY) reveals.

As a result, EY’s Canadian Mining Eye index — which tracks the performance of 100 Toronto Stock Exchange and TSX Venture Exchange mid-tier and junior mining companies — dropped 2% in the last quarter of 2018. It had declined 12% in the previous three-month period.

“Although some commodities saw considerable volatility in 2018, we remain optimistic for the year ahead,” says Jeff Swinoga, EY Canada Mining & Metals Leader. “Strategic transactions, refocusing on quality deposits and, of course, digital transformation are top of mind as the mining and metals industry continues to work toward reinventing itself this year.”

Taken from EY Canadian Mining Eye Index Q4, 2018.

Industrial and precious commodities fell by about 12% by mid-December. In stark contrast, cobalt prices declined by 24% in the same period as compared with outstanding growth of 127% in 2017.

Copper and zinc prices both decreased by 5% in Q4 2018. Prices for gold went the opposite way, gaining 8% in the last three months of the year due to the weakness in global stock markets, uncertainty over future economic growth and a possible likelihood of fewer than three US Federal Reserve interest rate hikes in 2019.

Taken from EY Canadian Mining Eye Index Q4, 2018.

Most of the challenges faced by Canadian miners last year, the report says, were partially related to China’s slowdown. And while companies can anticipate more positive pricing in the near term, slower growth is expected to continue in China over the coming year, it warns.

Commodity price volatility isn’t the only consideration for mining and metals companies in the year ahead, as another EY report confirms.

“The shifting stakeholder landscape is creating mounting concerns from Canadian mining and metals companies over their license to operate,” says Swinoga. “Firms must commit to being sustainable and responsible if they want to strengthen positive stakeholder relationships and attract new investment for future growth.”

Looking ahead, the experts predict better metal prices driven by growing demand for nickel from the stainless steel sector and the electric vehicle battery market. They also see the copper and zinc market gaining momentum on supply constraints and tight market conditions.

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Spanish Mountain’s project in BC passes archaeological test

Spanish Mountain Gold (TSXV: SPA) is one step closer to developing its namesake project in British Columbia following the acceptance by local First Nations of the results of an independent archaeological impact assessment.

In a press release, Spanish Mountain said that the survey found the investigated area to have sustained previous disturbance through extensive forestry-related and placer mining activities. Thus, no remains or artifacts are expected to be found there.

The Archaeological Impact Assessment included a desktop review, and vehicle and pedestrian surveys.

This means that the mining operation proposed by the Vancouver-based company in its 2017 Preliminary Economic Assessment can move forward as planned.

The archaeological assessment follows a field program that took place in the summer of 2018 and that was led by archaeologists, field technicians and heritage specialists representing all three First Nations communities whose traditional territories encompass the project area, namely the Williams Lake Indian Band, Xatśūll First Nation and Lhtako Dené Nation.

“We have now achieved a significant milestone in the overall permitting process and have thereby further de-risked our project. We are satisfied that the proposed project footprint does not appear to impact areas that may be of archaeological significance to our First Nations communities,” said Larry Yau, CEO of Spanish Mountain Gold.

The firm’s sole project is located in southern-central British Columbia,  70 kilometres northeast of Williams Lake. It is a two-zone project in which the pit-delineated high-grade core or First Zone of the multi-million-ounce resource is expected to sustain a stand-alone operation exceeding 24 years.

Additionally, Spanish Mountain reports that resource ounces for the Second Zone, which are not included in its 2017 PEA, present future development opportunities for the project.

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Kirkland Lake expects a million ounces in 2019

Canada’s Kirkland Lake Gold (TSX. NYSE: KL) announced today that management increased its consolidated three-year production guidance and improved its unit-cost guidance for 2019.

In a press release, the miner explained that there is potential for a million ounces in 2019 as guidance was increased to 920,000 – 1,000,000 ounces from the previously announced 740,000 – 800,000 ounces.

For next year, Kirkland Lake said guidance would be 930,000 – 1,010,000 ounces and for 2021 995,000 – 1,055,000 ounces.

In detail, the Toronto-based firm rose the three-year guidance for its Fosterville mine in Victoria, Australia to 550,000 – 610,000 ounces for 2019 and 2020, from the previous 390,000 – 430,000 ounces, but kept the 2021 production guidance at 570,000 – 610,000 ounces.

The company also expects output from its Holloway mine in Ontario, Canada, to grow because operations are to be resumed soon. Thus, guidance for this mine was set at 20,000 ounces in 2019 increasing to 50,000 ounces by 2021.

Fosterville’s improvement is related to changes to the mine plan to provide access to high-grade Swan Zone stopes earlier than previously expected.

The Kirkland Lake also improved its 2019 consolidated unit-cost guidance with operating cash costs per ounce guidance revised to $300 – $320 from $360 – $380 previously, with AISC per ounce sold improved to $520 – $560 compared to previous guidance of $630 – $680; Fosterville’s 2019 operating costs per ounce sold guidance improved to $170 – $190 from $200 – $220 previously.

The company also announced Mineral Reserve and Mineral Resource estimates for December 31, 2018, which include growth in Mineral Reserve ounces and average grades at both Fosterville and Macassa, as well as on a consolidated basis. Consolidated mineral reserves increased by 1.1 million ounces or 24% to 5,750,000 ounces @ 15.8 grams per tonne (“g/t”).

“Since November 2016, Fosterville has been transformed into one of the world’s highest-grade, most profitable gold mines, which has greatly benefited Kirkland Lake Gold and its shareholders. The completion of Fosterville’s December 31, 2018, Mineral Reserve and Mineral Resource estimates, with the related revisions to its life of mine plan and production profile, have taken that transformation to an even higher level, with the potential for much more to come,” said Tony Makuch, President and Chief Executive Officer of Kirkland Lake Gold, in the media statement.

Makuch emphasized that it is the 34% increase in the Fosterville Mineral Reserve grade what it driving the million-ounce revised production guidance. He also praised the effectiveness of the infill drilling programs both at Fosterville and Macassa, the latter in Canada.

“At Fosterville, there is considerable potential for further Mineral Reserve growth at a number of areas, including the Swan Zone, other parts of the Lower Phoenix system, Harrier and a number of other targets, like Robbin’s Hill, where early exploration results demonstrate the potential for attractive economic orebodies. Turning to Macassa, we converted close to half a million ounces of Mineral Resources to Mineral Reserves in 2018 and have a number of high-potential areas in and around the South Mine Complex that we …read more