Jim's Mining Letter - September 8, 2024

Companies issuing interesting news last week

Alamos Gold (AGI AGI.TSX 0UGS.L 1AL.F) announced a development plan for Puerto Del Aire outlining what it states is an attractive, high return project with an after tax IRR of 46% and significant exploration upside. The project is located within the Mulatos District in Sonora, Mexico and is a higher grade underground deposit adjacent to the Mulatos open pit. Given the attractive economics and proximity to the existing Mulatos infrastructure, the company anticipates starting development in 2025 with first production expected mid 2027. The project is expected to nearly triple the mine life of the Mulatos District, extending production into 2035. Opportunities currently being tested could extend the mine life further and enhance already robust economics through the significant exploration upside potential at both Puerto Del Aire and Cerro Pelon. Project highlights include average annual gold production of 127,000 ounces over the first four years and 104,000 ounces over the current mine life, total cash costs of $921 per payable ounce and mine site all in sustaining costs of $1,003 per payable ounce.

Osisko Development (ODV ODV.V 3OZ0.F) announced a non-brokered private placement of units at a price of $1.80, with each unit consisting of one common share of the company and one common share purchase warrant entitling the holder to purchase one additional common share at a price of $3.00 for a period of 60 months. Closing of the offering is expected to occur on or about September 23, 2024 and the securities will be subject to a hold period of four months and one day from the closing date in accordance with applicable Canadian securities laws. The company intends to use the net proceeds of the offering towards the advancement of its Cariboo Gold project and Tintic project, and for general corporate purposes.

Thesis Gold (TAU.V THSGF A3EP87.F) announced positive results from the updated independent preliminary economic assessment for its 100% owned Lawyers-Ranch project in the Toodoggone mining district of northern British Columbia. The updated assessment outlines a plan for developing the combined Lawyers-Ranch project using both open-pit and underground mining methods, with mineralized material processed at a single facility achieving an estimated average gold recovery of 93%. The project offers strong economics with a pre tax internal rate of return of 46% and a pre tax net present value at a 5% discount rate of C$1.99 billion using $1,930 per ounce of gold and $24 per ounce of silver. Initial capital expenditure is estimated at C$598.4 million with an after tax payback of 2 years.

Emerald Resources (EMR.ASX EOGSF) announced that it has signed a binding term sheet with Golden Horse Minerals (GHML.V) to sell the company’s tenements located in Southern Cross, Western Australia, which comprise the Southern Cross Gold project. As part of the transaction, Golden Horse will seek a dual listing on ASX. Emerald will receive consideration of 32 million Golden Horse shares at a deemed issue price of A$0.25 per share subject to the satisfaction of a number of conditions precedent including Golden Horse receiving conditional approval from the ASX for admission to the official list, all necessary third-party approvals and regulatory consents being obtained in relation to the transfer of assets to Golden Horse, approval by the TSXV of the transaction, issuance of the consideration shares and receipt of shareholder approval. Emerald will also receive deferred consideration contingent on achievement of the following milestones: A$1 million of Golden Horse shares at a 30-day volume-weighted average price at the time of releasing a JORC resource of 250,000 ounces of gold in respect of the Southern Cross Gold project, A$1 million of Golden Horse shares at a 30-day VWAP at the time of releasing a JORC resource of 500,000 ounces of gold in respect of the project and A$1 million of Golden Horse shares at a 30-day VWAP at the time of announcing a decision to mine. While Golden Horse undertakes the ASX listing process, Emerald will provide a secured short-term loan facility to Golden Horse of up to A$2 million, subject to the satisfaction of various conditions precedent. Upon completion of the transaction Emerald will hold a cornerstone investment in Golden Horse.

Wia Gold (WIA.ASX) announced results from the first phase reconnaissance RC drilling program completed at its Bouaflé Gold project in Côte d’Ivoire. 44 reverse circulation drill holes totalling 5,642 metres which were designed to test multiple targets delivered significant results including one intercept with 4 metres at 87.43 grammes per tonne of gold from 79 metres. Per Executive Chairman, Josef El-Raghy, Bouaflé could prove to be a high-quality project of scale after the identification of a significant mineralised zone which is only 30 kilometres from Perseus’s multimillion ounce Yaoure project and the company now will launch a second phase of this program, aiming to further define its full potential. As a priority, the second phase 2,000 metre RC drilling program is scheduled to begin in October, when access conditions are expected to improve in the area. The objective of the program is to fully explore the potential of this mineralised zone and its surrounding areas.

Great Southern Copper (GSCU.L E9E.F) announced that the scale of the target for the company's maiden drilling programme at the Mostaza mine has increased due to the recognition of significant zones of additional Cu-Ag mineralisation in historical drill-hole assays and surface rock chip samples. Preparations for the start of drilling continue with archaeological and environmental surveys now completed and the selection of the drilling company via tender. On-going exploration at Cerro Negro also has identified additional copper mineralisation hosted in multiple structures parallel to the Mostaza trend further expanding global copper potential. Per Sam Garrett, Chief Executive Officer, exploration at Cerro Negro is rapidly advancing with three key objectives: drill beneath the historic Mostaza open pit to develop a high-grade copper-silver-gold resource, expand the Mostaza deposit along strike targeting extensions to the mineralised structures, and explore at depth targeting large-scale porphyry copper type deposits.

Arras Minerals (ARK.V ARRKF 9RJ.F) announced an update on its exploration activities underway across the project portfolio in North East Kazakhstan. The 3,547 line kilometre Heli-TEM survey over the entire 1,397 square kilometre Bozshakol project mineral tenement package has now been completed, the KGK drill program is underway at the Aktasty and Maisor licenses (the Bozshakol project) targeting high priority areas to test bedrock under 10-40 metres of unconsolidated cover, the ground IP survey at the Elemes project is 80% completed with high priority targets identified, the core drill program is now underway at the Berezski East and Berezski Central targets and the KGK drill program at the Tay project is completed.

Bellevue Gold (BGL.ASX BELGF) announced a maiden net profit after tax of $75 million for the year to 30 June 2024. The result follows a year which saw the company commission its Bellevue gold mine, with commercial production declared in May 2024. Bellevue generated free cash flow of $41 million in the June 2024 quarter from production of 42,705 ounces, highlighting the cash flow potential of the project as production continues to grow. In July, Bellevue announced its five-year growth plan under which production is forecast to increase to 250,000 ounces a year by FY 2028, materially growing the earnings and production profile and reducing the project all in sustaining cost profile to A$1,500-1,600/ounce in FY 2029. Guidance for FY 2025 is 165,000-180,000 ounces at an all in sustaining cost of A$1,750- A$1,850/ounce, with the production expected to be back-ended to the second half of FY 2025 as further development headings and underground advance rates ramp up to a forecast run rate of 1.35 million tonnes per annum by the end of FY 2025. Exploration expenditure of $30 million has been budgeted for each of FY 2025 and FY 2026 to drill-test the exploration target of 1.5-2.5 million ounces at 8-10 grammes per tonne of gold to the south of the deposit. This is aimed at increasing the resource base and extending mine life. Cash flows generated from the project combined with the revised capital structure are forecast to self-fund investment in the accelerated underground development, in-mine exploration and infrastructure upgrades outlined in the five-year growth plan.

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