Jim's Mining Letter - May 6, 2024

Galiano Gold (GAU.TO GAU OUIT.L B7U.F) announced first quarter operating and financial results. Gold revenue of $65.5 million was generated from 31,840 gold ounces sold at an average realized price of $2,056/oz during the quarter. Net income was $14.5 million and adjusted EBITDA $21.7 million. The company generated positive cash flow from operations of $26.1 million and free cash flow of $5.8 million, notwithstanding investing $12.4 million in waste stripping costs at the Abore deposit. Gold production was 30,386 oz during the quarter and is expected to increase in the first half after completion of the waste stripping. 2024 production guidance remains at 140,000 to 160,000 oz. Following successful 2023 and early 2024 infill drilling programs, an increase to the Abore resource estimate was completed effective 31 March 2024, with the measured and indicated mineral resource increasing by 181,000 oz or 38%. Planned 2024 exploration programs include drilling at Midras South to advance the deposit towards a potential maiden mineral reserve estimate, infill drilling at Adubiaso, early-stage drill testing at Target 3 and extension drilling at Gyagyatreso. A property wide reconnaissance program has also been designed to identify new target areas of interest.

Capstone Copper (CS.TO CSC.AX CSCCF OUW0.F) announced financial results for the three months and quarter ended 31 March 2024. Consolidated copper production was 42,121t at C1 cash costs of $2.88/lb, consisting of 15,672t at Pinto Valley, 10,967t at Mantos Blancos, 9,476t at Mantoverde, and 6,006t at Cozamin. Net loss attributable to shareholders was $4.8 million for Q1’24 compared to net loss attributable to shareholders of $20.0 million for Q1’23. Q1’24 adjusted net loss attributable to shareholders of $4.5 million is lower than Q1’23 adjusted net income attributable to shareholders of $17.5 million due to the lower realized copper price. Adjusted EBITDA was $80.1 million for Q1’24 compared to $66.0 million for Q1’23, the increase driven by higher copper sold (41.0kt in Q1’24 versus 37.5kt in Q1’23), partially offset by a lower realized copper price of $3.86/lb compared to $4.12/lb. Operating cash flow before changes in working capital was $62.1 million in Q1’24 compared to $41.7 million in Q1’23. 2024 guidance remains unchanged.

Patriot Battery Metals (PMET.TO PMETF PMT.AX R9GA.F) announced that it has entered into a definitive agreement to increase the land position at its Corvette property through the acquisition from Azimut Exploration (AZM.V AZMTF)  of a 100% interest in a proximal claim block, JBN-57, which is comprised of 39 claims (1,995.0 ha) located on trend with the Corvette property, which is situated in the Eeyou Istchee James Bay region of Quebec. The CV5 Spodumene Pegmatite, with a maiden mineral resource estimate of 109.2 Mt at 1.42% Li2O inferred, is situated approximately 13.5 km south of the regional and all‑weather Trans-Taiga road and powerline infrastructure. Consideration comprises an aggregate cash payment of $500,000 to be paid to Azimut upon closing, an aggregate of 150,000 common shares in the capital of the company to be issued to Azimut upon closing and the grant to Azimut of a 2% net smelter returns royalty interest in the future minerals produced from the block.

Nouveau Monde Graphite (NOU.V NMG NM9A.F) announced that it has closed its private placements previously announced on February 15, 2024 and May 1, 2024, representing a gross aggregate amount of US$37.5 million from Mitsui & Co. and Pallinghurst Bond. Nouveau Monde Graphite is developing mining and advanced manufacturing operations to supply carbon-neutral active anode material to power EV and renewable energy storage systems. The company is developing a fully integrated ore-to-battery-material source of graphite-based active anode material in Québec, Canada.

Contango ORE (CTGO F85.F) and HighGold Mining (HIGH.V HGMIF) announced that they have entered into a definitive arrangement agreement pursuant to which Contango will acquire all of the issued and outstanding shares of HighGold by way of a court approved plan of arrangement. Each HighGold share will be exchanged for 0.019 shares of Contango common stock based on the respective volume weighted average price of Contango for the five-day period ended May 1, 2024. The exchange ratio implies total consideration of C$0.55 (approximately US$0.40) per HighGold share and total HighGold equity value of approximately US$37 million (C$51 million). The consideration represents a premium of 59% based on Contango’s and HighGold’s 20-day VWAP. Upon completion of the transaction, existing Contango shareholders will own approximately 85% and HighGold shareholders will own approximately 15% of the combined company.

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