Best resource investing bets for a Trump or Harris win
Commodity investors can’t ignore the spectacle unfolding in the States.
The Northern Miner presents its top-10 list of U.S.-based mid-tier and junior precious metals companies.
Coeur Mining (NYSE: CDM) is a diversified precious metals producer and owns the silver-gold complex of mines in Chihuahua, Mexico; the Rochester open-pit silver-gold mine in Nevada; the Kensington underground gold-silver mine in South Dakota; and the Silvertip silver-lead-zinc underground mine in British Columbia, Canada. In addition it owns the La Preciosa silver and gold project in Durango, Mexico, and the Sterling gold project in Nevada.
Last year the Chicago-headquartered company produced a total of 12.9 million ounces of silver, 367,728 ounces of gold, 6.8 million pounds of zinc and 3.9 million pounds of lead, or 35.6 million silver equivalent ounces. In May 2019, the company provided production guidance for the year and says it expects to produce 334,000-372,000 ounces of gold, 12.2-14.7 million ounces of silver, 5.3 million pounds of zinc and 5.2 million pounds of lead.
Hecla Mining (NYSE: HL) was founded in 1891 in the Coeur d’Alene mining district of Idaho’s Silver Valley, one of the largest silver producing districts in the world. Today the low-cost silver producer has mines in the U.S., Canada and Mexico. It owns the Greens Creek mine in Alaska—one of the largest and lowest cost primary silver mines in the world; the Lucky Friday underground silver, lead, and zinc mine in Idaho; the San Sebastian underground gold and silver mine in Mexico; the Casa Berardi underground gold mine in Quebec, and the Fire Creek and Hollister mines in Nevada. It also owns several exploration properties in eight world-class silver and gold mining districts in North America.
Last year the company produced a total of 10.4 million ounces of silver and 262,103 ounces of gold, a new record. At the end of 2018, Hecla reported proven and probable reserves of 191 million ounces of silver and 2.9 million ounces of gold—the highest in the company’s history. It also has proven and probable zinc reserves of 932,000 tonnes and 774,000 tonnes of lead reserves
The company had cash and equivalents and short-term investments of about $10 million as of June 30.
Argonaut Gold (TSX: AR) is a Canadian gold company whose assets are the El Castillo mine and San Agustin open-pit mines, which together make up the El Castillo Complex in Durango, Mexico; and the La Colorada open-pit gold and silver mine in Sonora, Mexico. It also owns the advanced exploration stage San Antonio project in Baja California Sur, Mexico; the Cerro Del Gallo open-pit gold, silver and copper project in Guanajuato, Mexico; and the Magino open-pit gold project in Ontario, Canada, which received federal government approval of its environmental assessment in January 2019. It also has several exploration stage projects in North America.
Last year the company produced 165,117 gold-equivalent ounces at cash costs of $792 per gold oz. sold and all-in sustaining costs of $912 per gold oz. sold. This year management expects to produce 200,000-215,000 gold-equivalent ounces at cash costs of between $775 and $875 per oz. sold, and all-in sustaining costs of between $875 and $975 per oz. sold.
The company plans to invest $50 million to $60 million in capital expenditures this year. The largest one-time budgeted capital item is about $15 million for the expansion of the crushing and leaching facilities at the San Agustin mine to increase capacity from 20,000 tonnes per day to 30,000 tonnes per day.
Gold Resource Corp. (NYSE: GORO) is a gold and silver producer, developer and explorer with operations in Mexico and the U.S. The company poured first gold at its Isabella Pearl mine in Nevada in the second quarter of this year—just ten months after breaking ground on the project in the Walker Lane belt.
The company owns several assets in Oaxaca, Mexico, including the Arista underground mine, the Aguila mill, and the Mirador underground mine. Initial production at Arista began in March 2011, and mineralized material from the mine is trucked about 2 km to the Aguila mill, where it is processed into three different concentrates: copper-gold; lead-silver; and zinc. The Mirador mine, also in Oaxaca state, is part of the company’s Alta Gracia project.
Gold Resource produced a total of 9,559 ounces of gold and 467,484 ounces of silver in the second quarter of the year, which along with base metal revenue generated $29.4 million in net revenue and $1.8 million, or $0.03 per share in net income during the three months ended June 30.
Gold Reserve (TSXV: GRZ; US-OTC: GDRZF) owns 45% of the Siembra Minera gold-copper-silver project in the Km 88 gold mining district of Venezuela’s Bolivar state. (The Venezuelan government owns a 55% interest.) Gold Reserve has spent more than $10 million on the project since August 2016, and the next phase of development work is expected to include detailed design work for the small cyanidation plant and related facilities, and metallurgical tests. Depending on financing, the company also expects to start a feasibility study on a large flotation plant.
In 1992, the company began developing the Brisas gold and copper project, also in Venezuela’s Km 88 mining district, and invested close to $300 million in the project. But in April 2008, the government revoked previous authorization to proceed with construction and in 2009 the company sent the case to international arbitration. In June 2017 it signed a settlement agreement with Venezuela, under which the government agreed to pay the company a total of $1.03 billion. As of March 2019, the company had received about $276 million from the settlement, leaving about $756 million outstanding.
Vista Gold (TSX: VGZ; NYSE: VGZ) owns the Mt Todd gold project in Australia’s Northern Territory, about 250 km southeast of Darwin. The project is the largest undeveloped gold project in the country. Vista has invested over $100 million to advance Mt. Todd since acquiring the project in 2006.
An updated preliminary feasibility study on the brownfield project released in January 2018 envisioned a large conventional open-pit operation with a mine life of 13 years. The mine is expected to produce 382,211 ounces of gold each year over its mine life, with an average of 479,450 ounces of gold a year during the first five years of operation. Initial capex was pegged at $839 million and the mine should deliver an after-tax net present value at a 5% discount rate of $679 million and after-tax internal rate of return of 20.5% at a gold price of $1,300 per oz. Life of mine average cash costs were estimated at $645 per oz., with average cash costs of $571 per ounce during the first five years of operations.
Mt. Todd has proven and probable reserves of 221 million tonnes grading 0.82 gram gold per tonne at a cut-off grade of 0.40 gram gold, for 5.85 million ounces of contained gold.
Americas-focused Fiore Gold (TSXV: F; US-OTC: FIOGF) has assets in Nevada and Chile. Its North American assets include the producing Pan mine near Eureka, Nevada, and the nearby Gold Rock exploration project. Fiore also controls the Golden Eagle exploration project in Washington State, just 10 km from Kinross’ Kettle River mill.
In Chile, Fiore controls a land package adjacent to Yamana’s flagship El Peñon mine in the Atacama region. Fiore’s Pampas El Peñon properties lie immediately west, south and north of the northernmost portion of Yamana’s El Peñon deposit, and its Cerro Tostado project is south of the Mina Fortuna satellite deposit and the main El Peñon mine and mill complex.
The company’s initial goal is to become a 150,000-oz.-per year gold producer. In 2018, the company produced 34,297 ounces of gold at cash costs of $820 per oz. and all-in sustaining costs of $1,063 per oz.
Sandspring Resources (TSXV: SSP; US-OTC: SSPXF) is developing its Toroparu gold project in western Guyana, 50 km from Guyana Goldfields’ Aurora gold mine. A preliminary economic assessment in June 2019 estimated Toroparu would produce 4.5 million oz. gold — 3.64 million oz. of which would be in the form of gold doré bars — over a 24-year mine life. In addition, the project would produce 4.46 million oz. payable silver and 124.7 million lb. payable copper over the mine life. During the first 10 years, the mine would produce 1.48 million oz. gold doré. In the second, 14-year phase, it would produce 2.15 million oz. gold doré and another 876,000 oz. gold in concentrate. The study estimated all-in sustaining costs would run to $812 per oz. over the mine life. Pre-production capex was pegged at $378 million. Sandspring says it plans to complete a final feasibility before the end of the year.
In November 2013, Wheaton Precious Metals signed a gold-purchase agreement, and in 2015, added a silver by-product stream to the agreement. Frank Giustra’s Fiore Group came in 2015, and now owns 9.3% of the company’s stock, and last year, Gran Colombia Gold became a shareholder with 16.7% equity, which increased to 19.96% after Sandspring’s $4-million private placement in June.
Santa Fe Gold (US-OTC: SFEG) started mining operations at its Jim Crow gold and silver mine in the historic Steeple Rock mining district of southwestern New Mexico, at the end of April 2019. Initial production at the mine is planned to be stockpiled at surface in preparation for shipment to smelters in Arizona.
The company hopes initial production from the Jim Crow mine will generate funds to finance development of its other mines in the district—the adjacent Imperial mine and the Bilalli mine, about 6.4 km to the north of Jim Crow. It aims to have all three mines in production over the next 12 to 18 months.
In addition to its three past-producing mines in Steeple Rock, Santa Fe Gold has acquired five other historic silver mines: The Alhambra, Black Hawk, Silver King, Good Hope and Bullard’s Peak mines. These are covered by thirteen patented claims and 82 un-patented claims in the Black Hawk district in Grant County, about 24 km southwest of Silver City, in New Mexico. Santa Fe is currently reviewing development options for the assets
Paramount Gold Nevada (NYSE-AM: PZG) owns the Grassy Mountain gold project in eastern Oregon, about 113 km west of Boise, Idaho, and the Sleeper gold project in northern Nevada, about 40 km northwest of the town of Winnemucca.
The company completed a prefeasibility study on Grassy Mountain last year that outlined annual production of 47,000 oz. gold and 50,000 oz. silver over a mine life of 7.25 years at cash operating costs of $528 per oz. gold. The study estimated initial capex of $110 million for a 750-tonne per day mine and milling operation, and a payback period of 2.5 years. The study put the after-tax net present value at a 5% discount rate at $87.7 million and an after-tax internal rate of return of 28%. The company launched a feasibility study
in June 2019 and says it plans to start construction as soon as it it receives all of the required permits, which it forecasts will be in 2020.
The Sleeper mine was operated by AMAX Gold from 1986 until 1996 and produced 1.7 million ounces of gold and 2.3 million ounces of silver. A preliminary economic assessment of Sleeper completed in 2015 proposed a 30,000 tonne per day heap leach-only operation with a low strip ratio and a payback period of initial capex of $175 million of 3.5 years. The PEA envisioned annual production of 102,000 oz. gold and 105,000 oz. silver at cash operating costs of $529 per gold-equivalent oz. produced.
In April 2019, Paramount closed a 2% net smelter return royalty agreement for $2 million with Franco-Nevada Corporation. The proceeds will be used towards the advancement of permitting efforts and the feasibility study on Grassy Mountain.
