The era of high-grade silver mines may be coming to an end. Remarkably, the top primary silver miners’ average yield fell to the lowest ever in 2019. Which begs the question, will high-grade silver mines become extinct in the not-so-distant future? Well, if we look at the data, it seems to be already happening.
Since I started researching the primary silver mining industry, the yields at many high-grade silver mines have fallen drastically. For example, Fresnillo PLC’s Flagship mine, the Fresnillo Mine, had seen its average yield decline from 15 oz/t (ounce per tonne) in 2005 to only 5.3 oz/t last year. That is one hell of a reduction in just 14 years… nearly 10 oz/t of silver yield evaporated.
Take a look at how much more silver the Fresnillo Mine was producing in 2005 compared to 2019… processing LESS ORE!!
As we can see, workers at the Fresnillo Mine processed more ore in 2019 to produce 20 million fewer ounces of silver. No wonder the cost to produce silver has risen from $4-5 per ounce back in 2005 to over $15+ an ounce presently.
Now, if we combine the top seven primary silver miners in my group, the average yield fell to a record low of 6.0 oz/t in 2019:
The top primary silver mining companies’ average yield fell from 13 oz/t in 2005 to 6.0 oz/t last year. That’s a 54% decline in average yield from the top primary silver mining industry. This means these silver mining companies have to extract, transport, and process more than twice the amount of ore than they did in 2005 to produce the same amount of metal.
The companies that impacted the group’s average yield the most were from Peru. Peru’s Hochschild average yield declined from 7.5 oz/t in 2018 to 5.9 oz/t last year, while Buenaventura’s average yield fell from 10.6 oz/t to 7.5 oz/t during the same period. Mexico’s Fresnillo PLC’s average yield from its primary silver mines (Fresnillo, Saucito & San Julian) fell from 5.7 oz/t in 2018 to 5.0 oz/t in 2019.
Also, Russia’s Polymetal International, Dukat Operations, saw its average yield fall to 7.7 oz/t last year down from 8.5 oz/t in 2018. The only primary silver miner that saw an increase in yield was Hecla. Mainly due to Hecla’s Greens Creek Mine, the company’s average silver yield increased from 10 to 11.5 oz/t during the same period.
The world is running out of its HIGH-GRADE, easy to get to silver deposits. While there are still some high-grade silver deposits still remaining in the world, the primary mining industry continues to BURN through its better quality reserves. At some point, production from these top seven silver mines will no longer be able to offset the declines from falling ore grades.
Investors have no idea what a deal they are getting in acquiring silver for such a great deal when we compare it to most of the over-valued financial paper assets and real estate. The few silver miners in the world may just surprise the market when investors begin to move into them in a BIG WAY.
Source: Maurice Jackson for Streetwise Reports 06/09/2020
Millrock Resources CEO Gregory Beischer speaks with Maurice Jackson of Proven and Probable about his company’s drill program in the shadow of the Pogo gold mine.
Maurice Jackson: Welcome to Proven and Probable. Joining us for a conversation is Gregory Beischer of Millrock Resources Inc. (MRO:TSX.V; MLRKF:OTCQB).
Gregory for someone new to Millrock Resources, please introduce the opportunity the company presents to the market and in particular, the 64North project, which has market participants anxiously awaiting news results.
Gregory Beischer: Millrock is a team of early-stage exploration geologists. We want to make a discovery of a giant ore deposit and sell it to a major mining company, that’s our goal, but we take a different approach than a lot of early-stage explorers. It’s a risky business. So we will invest our capital to generate projects, come up with a new idea, acquire the mineral rights, but before any really big dollars are spent for exploratory drilling, we’ll bring in a partner. And that way we can operate five or six projects at any one time, increasing our odds of making the discovery that will drive our share price way up, but also it’s a sustainable company, one that has a core group that’s with us year after year doing excellent scientific work. And we know that’s one of the key ingredients to successful mineral exploration and discoveries.
Maurice Jackson: Sticking with the 64North project, can you provide us with an update on drilling?
Gregory Beischer: These are exciting times for Millrock right now. We’ve developed a huge district-scale project looking for another gold deposit in the vicinity of the Pogo gold mine. Pogo was discovered in 1994–1995. It’s been producing excellent gold grades and ounces over the past decade. Millrock is confident that we may find another mine just like it. And I believe the area around Pogo has the potential to host multiple mines in the future. I think the Goodpaster Mining District in which our 64North project is located will have in the end multiple mines that will produce tens of millions of ounces of gold, comparable to something like Red Lake in Ontario, or Val-d’Or in Quebec, or Kalgoorlie in Western Australia. Millrock has the dominant land position by far in the district. We had a unique opportunity a year ago where after eight bad years in the mining cycle, the ground had all come open.
And so we were able to stake the whole district. And there was an aggressive move on our part, but one that’s paid off. We have an Australian junior company funding the work. We’re executing that work in collaboration with their technical team. I am glad to convey that our geological crews are mobilizing to the field today. And the drill is meant to have arrived on site today. And by the end of the week, we should be drilling again at the Aurora target on the 64North project, just to the immediate west of the Pogo gold mine, so exciting times. I know you and other shareholders have been following this particular project quite closely. And it’s a relief now to be exploring again, after being slightly derailed by this pandemic.
Maurice Jackson: Besides drilling, what other work is being conducted to delineate the 64North project to increase the chances for success?
Gregory Beischer: Millrock is conducting work on multiple fronts. It’s an enormous attractive claim, we’ve done a lot of studies, desktop studies looking at our extensive database for the district generating new drill targets. We have this obvious, compelling target at Aurora west of Pogo, but there are lots of other places that are coming forward too. We’re going to have a steady pipeline of drill-ready targets on this project for years to come. And so we’ve developed plans, exploration plans for each one of those prospects that will be executed later in the year, but also more particularly on the West Pogo, we’re about to do two geophysical surveys, airborne geophysical surveys that will help our image below the surface of the Earth, map out the structures. And as you know, the deposits at the Pogo mine are relatively flat-lying.
They dip gently, and so at about 25 or 30 degrees. As those dip off to the Northwest, they’re going to come on to Millrock’s ground. And these geophysical surveys will help confirm the existence of the structures, and to determine the depth to which we’ll have to drill, to intersect them. And we would plan to do the geophysics, in early June, but we would plan then to drill those targets in the down-dip direction from the Goodpaster Deposit Pogo Mine later in the summer. The Aurora is being drilled now, geophysics happening now, but we should be drilling through the year on this project.
Maurice Jackson: Truly exciting times for Millrock Resources. Sir, what is the next unanswered question on the 64North project? When can we expect a response, and what will determine success?
Gregory Beischer: The very first hole we drilled at 64North in March had a lot of great geological signs in it. We could see a lot of hydrothermal fluids had moved through the rocks, mineralizing them with quartz veins and veinlets and sulfide minerals that are very typically associated with gold. Everything looked great, but surprisingly the gold values were pretty weak. But we know we’re in the right area, and we’re probably peripheral to a deposit by a short distance. And we know we’ve got the structures. We know we’ve got the right mineralization. We just need the gold. Millrock will be moving our drill northward. And I’m very hopeful that we’ll intersect the same structures, but this time with lots of gold in them, and that’ll be the next big test and measure of success for Millrock and its team.
So we’re hoping to make in this drill program that we’re currently executing a new gold deposit discovery. And if we do, I don’t think Millrock’s share price will be 22 cents much longer. It’s been great to see some exploration companies having exploration success, and shareholders being rewarded at the same time as there are some good drill holes lately, and one particularly in Alaska that resulted in a tenfold share price increase. So we’re hoping to repeat that kind of success.
Maurice Jackson: Well, in many regards you have, in nine months the stock prices almost tripled. What are the current stock price and the capital structure for Millrock Resources?
Gregory Beischer: Now, the last time I looked, an hour or so ago, we were at 22 cents. That’s three times higher than it was a year ago when you and I and others participated in a private placement financing when Millrock raised some money. So that feels good to have had that success, but I think we’re just barely getting going. Maurice, I think about 2009, Millrock share price has got all the way down to a similar level of 5 cents when the market crashed badly in 2008, but 12 months later Millrock was at $1.05. And that was simply because we had a very supportive market. Things came roaring back, and Teck invested in Millrock; Altius Minerals and Kinross all invested in Millrock. We were doing really good work and in that rising tide, in that good market, our share price increased significantly. Today we’re a much, much stronger company. And if we were to make a real bona fide gold deposit discovery at this time, it would be a remarkable thing for our share price.
Maurice Jackson: Well, speaking of a strong company, what is the capital structure?
Gregory Beischer: Millrock has 109 million shares outstanding right now. The market cap is roughly $20 million. We also have warrants that are outstanding and now in the money. And so we anticipate that we may get some warrants exercised and that would bring some more money into our treasury. We want to deploy some cash as soon as we can to buy up more gold projects. We see that the market is here. We’re getting inquiries from other junior explorers looking for projects. And so we want to make some quick moves to generate more gold projects in Alaska, as soon as we possibly can.
Maurice Jackson: Sir, what keeps you up at night that we don’t know about?
Gregory Beischer: Well, I’m like everyone concerned about this pandemic. We put in rigorous safety precautions for our teams, so they can get back to work safely. As you can imagine though, traveling together in vehicles and that sort of thing poses some risks. We think we’ve got it well handled, but it’s a worry. We would hate for this drilling program to get derailed again. And so we’re trying our very best to have those safety protocols to minimize the chance that that’s going to happen.
Maurice Jackson: Last question, what did I forget to ask?
Gregory Beischer: Well, often, Maurice, we talk about the gold price, and I’ve already done that to some degree, seems like it’s moving up and so much of capital availability and interest in the mining and mineral exploration sector seems to depend on the gold price, but everything’s moving the right way now. And I’m sure you’re seeing it, but the generalist investing public now is starting to pour into precious metals. And it’s great to see because it’s putting some wind under the wings of mining companies and explorers.
Maurice Jackson: Yes, sir. A lot of synergies and a lot of catalysts coming into the space. Mr. Beischer, where can audience members receive more information on Millrock Resources?
Gregory Beischer: The website address is www.MillrockResources.com. There you’ll find the contact information for Melanie Henderson who’s in charge of investor relations for Millrock. And if any of the current shareholders or future shareholders would like to speak directly to me, I’d be glad to take the time to speak with them.
Maurice Jackson: Mr. Beischer, thank you for joining us today on Proven and Probable. Wishing you and the entire Millrock team the absolute best, sir.
Millrock Resources is a sponsor and we are proud shareholders.
And as a reminder, I’m a licensed representative for Miles Franklin Precious Metals Investments, where we provide a number of options to expand your precious metals portfolio from physical delivery, off-shore depositories, and precious metal IRAs. Call me directly at 855-505-1900 or you may email, maurice@milesfranklin.com.
And finally, please subscribe to provenandprobable.com, where we provide mining insights and bullion sales.
Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.
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Disclosure:
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Millrock Resources. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Millrock Resources is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
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( Companies Mentioned: MRO:TSX.V; MLRKF:OTCQB,
)
Source: Adrian Day for Streetwise Reports 06/09/2020
Money manager Adrian Day reviews the prospects of two of his favorite resource companies and comments briefly on the pullback in gold prices.
Following the strong rally in gold and gold stocks since the March low, we expect a pullback over coming weeks. It is already underway. We do not expect it to be particularly long or deep, and will present opportunities to buy. For now, however, patience is the best course.
Altius Minerals Corp. (ALS:TSX.V, 10.44) reported royalty revenue down on a year ago, with thermal coal and iron ore down while potash was up. Overall, COVID-related shutdowns also contributed to lower revenues. For the quarter, revenue was $16.3 million, down from $21.9 million. The company has withdrawn its full-year guidance because of the shutdowns, with analysts looking for around $65 million in revenue this year (down from $78 million for 2019).
One major negative this quarter was the bankruptcy of Alderon Iron Ore Corp. (IRON:TSX), in which Altius held equity and debt. It owned the Kami iron ore deposit, which has been seized by its major creditor. Altius took a write-off of $0.08 per share, and wrote down its debt to CA$1 million. The royalty on the project remains, however.
The company has a deep pipeline of projects, some in development and others very early stage. But it said it was not seeing many opportunities in the current environment. Balance sheets at base metals companies were not as stretched as they had been, while in the current environment, companies wanting or needing to do a royalty would prefer to do it on any gold by-product rather than on the base metals.
New projects coming on stream
Altius will experience sharply falling revenues from the 777 Mine in 2022, ahead of mine closure; this was previously one of its largest earners. It has four projects in the development phase that are scheduled to replace this revenue.
Most important is the Gunnison copper project, in which Altius has both equity and a royalty; it was expected to produce its first copper this quarter but commissioning is currently suspended. Starting small, the operator, Excelsior Mining Corp. (MIN:TSX; EXMGF:OTCQB), plans to expand production from the initial 25 Mlb/year up to 125 Mlb/year over the next seven years.
Other near-term growth will come from the underground expansion of the Voisey’s Bay project, in which Altius has an effective 0.3% royalty. This expansion will extend the mine life to 2034. Mining at Voisey’s Bay is also suspended. Both these projects will resume shortly, it is expected.
Major new division in renewables, generating revenue
In addition, Altius has recently made large investments in renewable projects, totaling about CA$100 million, including:
· Last year, a $30 million investment, to be paid over three years, in Texas-based wind and solar energy concern Tri Global Energy LLC; to date, three royalties have come from this investment.
· In March, a CA$47 million investment in Apex Clean Energy for future royalties on North American wind and solar projects in development.
Altius’ renewal energy unit already has a management team in place. The plan is to raise additional equity from a major investor by the end of the year and then spin it out as a separate public company, perhaps as early as Q1/2021. Multiples on stand-alone renewal companies are about twice what Altius is receiving in the market, so that should boost Altius’ stock price, as well as provide ongoing revenues. The expectation is that Altius will be receiving full royalty revenue on these investments by the end of 2023.
Strong balance sheet with several potential revenue sources
Currently, Altius has $32 million in cash and net debt of CA$122 million. It also owns a very liquid $50 million in Labrador Iron Ore Royalty Corp. (LIF.UN:TSX) shares, as well as a portfolio of junior resource companies, currently valued at CA$34 million, with the write-off of Alderon offset by generally improving prices. This consists for the most part companies with which Altius has joint ventures, or has royalties on a property owned by the companies. It has done a very good job of managing its junior equity portfolio, generating almost CA$1 million from sales at the end of 2019, for example.
There are future sources of revenue outside of the royalties. Major holder and famed Canadian investor Prem Watsa is expected to exercise his warrants in the company by the end of 2022, helping to pay off its debt by mid-2023. There is a partially undrawn line of credit for major new investments. And there is a potential payoff from ongoing litigation against Alberta in a “takings” lawsuit over its coal royalties, but it is not expecting a resolution until the end of 2022. General and administrative (G&A) expenses are low, at CA$6 million a year, of which about $1.5 million is for the renewable energy business, which will go away for Altius when the renewables unit is spun out.
Core holding in resource sector
Altius remains one of our favorite resource companies and a core holding: disciplined and innovative management, a good balance sheet, and diversified assets and deep pipeline. The stock is now back at its February highs, and given our concern about a pullback in the resource sector, we would hold and wait for better prices to buy. If you do not own it already, however, it is good value and can be bought as a long-term holding.
Midland Moves Ahead on Many Fronts
Midland Exploration Inc. (MD:TSX.V, 0.85) continues to move ahead on its existing projects, as well as generating new projects. Last month, it generated over 170 claims in the northern Abitibi region, along the Casa Berardi zone, adding to other claims acquired in recent months along the Detour trend, near to new discoveries by other companies, including the Area 51 discovery of Wallbridge Mining Co. Ltd. (WM:TSX), and in James Bay. Most of this ground has had minimal, if any, exploration, and Midland will likely undertake initial work before readying properties for joint venture partners.
Exploring its projects and seeking partners
The provincial government in Quebec last month announced companies could resume exploration, and Midland is planning extensive work at several of its properties. These include a new drill campaign now underway by Agnico Eagle Mines Ltd. (AEM:TSX; AEM:NYSE) on the Cadillac joint venture; and on two 100% projects, its large Mythril project, and Vortex, which saw some very exciting results initially. Midland regained the property from partner Soquem Inc., whose mandate does not include gold, in exchange for regional alliance in the north.
After large spending programs at Mythril, Midland is returning to its prospect-generator roots, seeking more partners for many of its properties. But it will also continue its own exploration on 100%-owned properties. Last week, it commenced exploration at two properties close to Wallbridge’s recent discoveries (Area 51 and Reaper) on the Detour Belt. With recent property acquisitions, Midland has several properties along the belt, strategically located. We would expect some drilling this summer.
The company has a strong balance sheet, with over CA$13 million in cash. Again, because of our concern about a gold pullback, we are holding Midland, but would buy on any pullback, perhaps to the mid-70s.
Top Buys
As mentioned above, we think we are likely to see a pullback in gold and resources in coming weeks, so would hold off most buying. Best buys this week would be Lara Exploration Ltd. (LRA:TSX.V, 0.69) and Kingsmen Creatives Ltd. (KMEN:SI, 0.22). We fully expect that in the next week or two, we shall start to see more good buys.
Upcoming Conferences
Two of my favorite conferences are coming up next month, one virtual and one live. The Sprott Resource Symposium is going virtual this year, July 22–25, with many of the top names in the resource investing world, and several companies having “virtual exhibits.” For details or to register, click here.
Meanwhile, FreedomFest will be live in Las Vegas, July 13–16, the first major in-person conference since early March. For details and to register, click here.
Originally posted on June 7, 2020.
Adrian Day, London-born and a graduate of the London School of Economics, heads the money management firm Adrian Day Asset Management, where he manages discretionary accounts in both global and resource areas. Day is also sub-adviser to the EuroPacific Gold Fund (EPGFX). His latest book is “Investing in Resources: How to Profit from the Outsized Potential and Avoid the Risks.”
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Disclosure:
1) Adrian Day: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: Midland Exploration, Altius Minerals, Lara Exploration. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: None. Funds controlled by Adrian Day Asset Management hold shares of the following companies mentioned in this article: All. I determined which companies would be included in this article based on my research and understanding of the sector.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Midland Exploration, Lara Exploration and Altius Minerals, companies mentioned in this article.
Adrian Day’s Global Analyst disclosures: Staff may have positions in securities discussed herein. Adrian Day is also President of Global Strategic Management (GSM), a registered investment advisor, and a separate company from this service. In his capacity as GSM president, Adrian Day may be buying or selling for clients securities recommended herein concurrently, before or after recommendations herein, and may be acting for clients in a manner contrary to recommendations herein. This is not a solicitation for GSM. Views herein are the editor’s opinion and not fact. All information is believed to be correct, but its accuracy cannot be guaranteed. The owner and editor are not responsible for errors and omissions. © 2020.
( Companies Mentioned: ALS:TSX.V,
KMEN:SI,
LRA:TSX.V,
MD:TSX.V,
)
How do we make sense of the apparent detachment of stock values from economic reality? John Rubino interviewed by Jay Taylor on Turning Hard Times Into Good Times John Rubino, […]
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