Mining Solutions Firm Receives Patent for Gold Extraction Process

Source: Streetwise Reports   11/14/2018

This company’s system, which is portable and nontoxic, affords mining companies cost and time efficiencies.

Mineworx Technologies Ltd. (MWX:TSX.V; MWXRF:OTCQB) announced it received a patent for its Mineworx HM X-tract modular process for mining gold. U.S. Patent Number 10/124,345 was granted by the United States Patent and Trademark Office.

The company develops and sells nontoxic, precious metals extraction solutions for the mining and e-waste industries.

“The new technology allows us to deploy rapidly, process efficiently and decommission quickly in an environmentally sound manner with little capital expenditure and significantly reduced permitting process,” noted the company in a news release.

The portable HM X-tract system can recover metals from alluvial and crushed hard rock deposits as well as tailings. With the technology, however, the scope of what can be mined extends beyond those, to include, for instance, deposits previously not mineable due to concerns about harming the environment; deposits in areas where permitting and lack of water forbid mining; and smaller deposits where significant capex is not justified. HM X-tract also can clean up soil contaminated by other solid metals, according to the company.

HM X-tract is a lower cost, environment-friendly mining option, according to the release. When it is used in tandem with a “unique operational system,” tailings ponds are not needed, and the process requires 80% less water than is typical.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Mineworx. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The 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 LLC 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 one week 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 Mineworx, a company mentioned in this article.

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from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/14/mining-solutions-firm-receives-patent-for-gold-extraction-process.html

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Advancing Graphite Projects in Madagascar

Source: Maurice Jackson for Streetwise Reports   11/12/2018

Dan Weir, executive chairman of DNI Metals, speaks with Maurice Jackson of Proven and Probable about the personnel changes the company has made and its plans to obtain the environmental permits for the company’s graphite projects in Madagascar.

Maurice Jackson: Joining us for a conversation is Dan Weir, the executive chairman of DNI Metals Inc. (DNI:CSE; DMNKF:OTC), which is establishing itself to become one of the world’s leading graphite producers.

Dan, glad to have you back on the show. Before we delve into today’s interview, for first time listeners, who is DNI Metals and what is the thesis you’re attempting to prove?

Dan Weir: DNI is a public company, listed in Toronto and the U.S. on the OTCQB. We are developing graphite projects in Madagascar, and we’re very excited to be involved in the graphite industry because, as you know, and I think a lot of your listeners will know that the demand picture for the future of graphite looks very good. If you just take a Tesla and look at the batteries that go into a Tesla, in every Tesla car there’s going to be somewhere between 100 and 200 kilograms of graphite. Multiply that by how many thousands and millions of electric cars that we’re going to have, let alone the batteries in your cellphones and the batteries in our computers. The demand in the world is going to be huge. So we’re very excited about the future and the future for graphite.

Maurice Jackson: Dan, you referenced DNI’s projects are located in Madagascar. I understand that elections are coming up soon. I have a multilayered question, should the current administration remain in place, what type of impact will that have on DNI and what if a new administration takes place, what type of impact could this have on DNI?

Dan Weir: Well, I’m going to take you through how the elections work here in Madagascar. There’s a presidential election that happens every four to five years. I think it’s mandated that it has to happen every five years. In order to become president, you have to have 50% of the votes. Now, the first round of the elections took place on November 7, so just a couple days ago. There were 36 people running for the president, including four of the people running were ex-presidents of the country. So the incumbent is one of the four.

We had the election on the 7th. And it takes approximately 20 days to do all the counting of the votes. Therefore, we won’t know the outcome for approximately three weeks. Legally, all voting has be recorded and published within the next 21 days. So by November 28, legally they have to announce all the different figures or the numbers or percentages that all the different candidates received.

Then what happens is if no candidate gets over 50%, they have a next round of elections. The two top candidates from the first round will compete in a second round. So the second round will happen on December 19 should this situation come to fruition. Again, then you’re going to have probably another 20 days before you get the results. So you’re really looking into mid-January by the time they announce who the president is and who wins the election.

Now, in the government they have a president, then they have a prime minister, then they have different ministers for different areas, minister of mines, minister of the environment, etc. The president doesn’t actually pick the prime minister, but what he does is he goes to parliament and gives them about four or five different names of who he would like to be the prime minister. So he doesn’t technically put the prime minister in place, but he’s the one that provides the names to parliament and then parliament picks who that prime minister is. But the president does pick who all the different ministers are.

So until mid-January, the current prime minister and all the current ministers stay in place and it’s business as usual until mid-January. Does that answer all your questions that you had on that topic, Maurice?

Maurice Jackson: It certainly does. Let’s switch gears here. Since our last interview, there have been a number of personnel changes at DNI Metals. As a shareholder, how concerned should I be, and equally important, why were these changes made?

Dan Weir: So I want to be careful what I say here. You can refer to our press releases that we’ve put out over the last couple weeks. We have decided to make changes here. I think I’m going to make it as polite as I can, Maurice. We have decided to make changes here in Madagascar. The team that we had in place we felt was not doing their jobs properly. So we terminated their contracts. Every single one of them was a contractor to the company. We terminated their contracts and we have brought new people in. I have decided to spend more time in Madagascar and take over as the country manager here in Madagascar to make sure that things are moving forward in the right direction.

As we stated in our previous press releases that we had been promised from our previous team the environmental permits would be done in January of 2018. We’re now in November of 2018. This was not fair to our shareholders, and therefore, we needed to make changes. I am here now taking control of that process and taking control of all the personnel here in Madagascar. I will be spending a lot of time in Madagascar to make sure that everything goes through and goes through smoothly here in Madagascar.

So new team will be myself, we will have a bookkeeper/accountant here in Madagascar as well, and I decided to bring in a lawyer on a contract basis, basically she will work part-time for us here in the company. I brought in a government relations person, again a contractor that will work part-time. And I brought in a community relations person, a CSR expert. He is also a chemical engineer. He will look after all of the local people and probably in the new year, I’ll probably bring him on more as a full-time person. As we get our environmental permits and we’re building our pilot plant initially and then the full on commercial plant, we’ll need somebody like him when you’re dealing with all the locals and all the relationships within the locals; and, again, him being a process engineer, chemical engineer, he’s a great person that can talk to all the locals and help us put processes in place to deal with the locals and deal with all our workers.

Maurice Jackson: You’ve also had some changes on the board. Can you speak to that?

Dan Weir: Yes. On our boards, we had five people. Myself, John Carter, who is an engineer. He’s built multiple processes plants. I think somewhere around 300 different mining processes plants around the world, including four graphite processing plants. We have Keith Minty. He’s a mine engineer. He’s operated graphite mines in Ontario and in Sri Lanka. He has worked all around the world, including Madagascar at one point and time. So these are great guys to have on the board. The other two people that we had on the board were two accountants, Paul Hart and Brian Howlett. They have decided to step down.

As we are moving closer and closer to getting the pilot plant built and commercial production, we will bring in people that have more expertise in graphite sales as well as have technical expertise in building graphite mines. The other people that we might consider for the board as we move forward would maybe be some of the big shareholders who have had a lot of expertise in developing companies and building companies. So we’ll look at that. That will be in the new year. Right now the main focus is making sure that we get all of our environmental licenses and that we’re moving forward.

Maurice Jackson: Before we get to the environmental licenses, talk to us about some good news that you have for U.S. investors.

Dan Weir: We decided to upgrade our listing in the United States on the OTC. We’re going to move it up to a QB listing in the United States. What that does is I’ve had complaints from different people in the U.S. and from around the world where a lot of the discount brokers found it difficult to trade on the CSE, one of the stock exchanges in Canada. So we are getting an upgraded listing in the United States, and we had been fully approved for that listing; that should happen over the next couple months. We will also get what we call DTC settlements set up where it, again, makes it easier for discount brokers in settling the trades in the back office. DTC basically is an electronic transfer system. Again, just makes it much easier for trading and settling of your trades.

Maurice Jackson: All right. The multi-million dollar question everyone wants to know about. What is the next unanswered question for DNI Metals? When should we expect results, and what determines success?

Dan Weir: So results, if you’re referring to getting the environmental licenses and moving the project forward, again, that’s been our biggest delay over the last year is getting these environmental licenses. I’ve been promising and promising and promising that they’re coming, they’re coming. It’ll happen soon. Most of that was from our team here in Madagascar that kept promising me that it was going to happen tomorrow, tomorrow, tomorrow. A number of documents and stuff that they gave us to show that it was going to happen tomorrow and tomorrow and tomorrow ended up not being really truthful documents or proper documents. I’m rectifying all that. I’ve taken charge here.

We have found out, and you can refer to one of our press releases that some of our documents had not even been filed, even though we had been told that they had been filed. For the Vohitsara property, some of the documents been filed, they had not been filed properly. When you’re working here and you’re filing environmental permits, this is the document. It’s about 500 pages long that you file for an environmental license in Madagascar. This had not been filed for the Marofody property. You file that and you also file a document that looks like this, which is called the Cahier des Charges. The Cahier des Charges is about 88 pages. It’s stamped by the director general of the mines ministry. This document had not been filed either for Marofody. So we’ve gotten the copies. We will be filing those with the ONE. Again, the ONE is the ministry of the environment and be moving this project forward.

So, as we said in the press release that I put out in the last couple days here, once you have filed the documents with the ONE, it’s a 60-day process that they must evaluate and grant you the environmental license within those 60 days. They also have a requirement where they need to go to the property twice. We will take them to both Vohitsara and Marofody properties at the same time. As part of that, I’ve requested and I have a meeting next week with the ONE again to try to speed this up. I will be requesting if we can we do those visits within the 60 day-process. I think that my initial meeting with them, they indicated that that was possible, and hopefully I can confirm that up next week.

So when is the exact timing? I can only give you what the laws state in Madagascar, which I have put in the most recent press release. People, again, have been concerned about the elections. If we can work within this 60 day window here, we will have this all completed while the current ministers are still in place. So we should be able to get all the documents completed and get our environmental licenses within those days. Again, that’s kind of a worst case scenario. The ONE knows that there were some people that have not really done their jobs properly here in Madagascar, and that they will work with us to speed up this process as fast as they can, which is fantastic.

Maurice Jackson: It truly is exciting to hear that. Last question for you, what did I forget to ask?

Dan Weir: I’m not sure. I know the two biggest questions for people out there have been: How do the elections effect DNI, and what the heck is going on with the permits? So hopefully we have addressed those today, and with some of the press releases that I have put out recently, I will try to get the market as much as I can update information as we move forward, and I look forward to finally getting the permits and actually getting this thing, the pilot plant, built and get into production. I’ve been trying to do this for a long time, but I’m finally excited that now I am taking control, I will remain in control of this process, and we know exactly what has to be done to complete this process, and I’m pushing forward to make sure that that happens.

Maurice Jackson: Mr. Weir, for someone listening and that wants to get more information on DNI Metals, please share the contact details.

Dan Weir: Best thing to do right now because I’m going to be in Madagascar quite a bit. It gets very expensive to call me on the phone. I’d prefer if you can email me at DanWeir@DNIMetals.com. I will respond to that. It’s about an eight hour time difference between Madagascar and New York or Toronto. So please bear with me, if you don’t hear from me for a couple days, I will get back to you.

Maurice Jackson: And please share the website address.

Dan Weir: The website is http://www.DNIMetals.com.

Maurice Jackson: And as a reminder, DNI Metals trades on the CSE, symbol DNI, and on the OTC QB, symbol DMNKF. DNI Metals is a sponsor of Proven and Probable, and we are proud shareholders for the virtues conveyed in today’s interview.

And last but not least, please visit our website http://www.provenandprobable.com where we interview the most respected names in the natural resource space. You may reach us at contact@provenandprobable.com.

Dan Weir of DNI Metals, thank you for joining us today on Proven and Probable.

Dan Weir: Thank you, Maurice, and bye to everybody from Madagascar.

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) Dan Weir: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: DNI Metals. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: DNI Metals.
2) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: DNI Metals. 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: DNI Metals is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
3) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: DNI Metals. Click here for important disclosures about sponsor fees.
4) 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.
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from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/12/advancing-the-graphite-project-in-madagascar.html

Using the ‘Big Think’ to Find Zinc in Ireland

Source: Maurice Jackson for Streetwise Reports   11/12/2018

Bart Jaworski, CEO of Group Eleven Resources, talks with Maurice Jackson of Proven and Probable about his company’s exploration efforts in Ireland.

Maurice Jackson: Joining us today is Bart Jaworski, the CEO and director of Group Eleven Resources Corp. (ZNG:TSX.V; GRLVF:OTCQB), which is known for advanced stage zinc exploration in Ireland.

Mr. Jaworski, for someone new to the story, who is Group Eleven Resources and what is the thesis you are attempting to prove?

Trend Map

Bart Jaworski: Well, our overall thesis is that by Group Eleven Resources having the largest land position in the richest country for zinc in the world, that being Ireland, we have a very substantiated vision, and that vision is to discover the next big zinc deposit in the country.

We already have the second and third largest undeveloped zinc occurrence in the country, that being the Stonepark current resource and the Ballinalack historical estimate, and those are second only to Glencore’s very substantial Pallas Green deposit, which is one of the largest undeveloped zinc deposits in the world.

People-wise, of course, you need people with the right mind-set and experience to drive towards this goal of discovery. And we certainly have that part covered with MAG Silver as a strategic backer and people like Peter Megaw and Dan MacInnis involved, as well as,] very experienced Irish geologists like John Barry, David Furlong and Dr. Mark Holdstock, who have spent most of their careers exploring for zinc in this country.

Maurice Jackson: Before we discuss the unique value proposition of Group Eleven Resources, I would like to begin our discussion today at the 10,000-foot level regarding zinc, it’s a metal that is not on a lot of radars. What can you tell us about the zinc supply and demand fundamentals?


Source: TradingEconomics.com (US$/tonne)


Source: Scotiabank (The Daily Mining Scoop)

Bart Jaworski: Zinc demand is roughly 14 Mt/year, so that’s about US$40 billion/year turnover (at current prices). Zinc is the fourth most consumed metal, after iron, aluminum and copper. The price of zinc was on fire in 2016 and 2017—roughly doubling from 70c/lb to $1.60/lb; then in 2018, the price took a bit of a breather, falling to about $1.00/lb in September and now starting to rise again towards the $1.20/lb level.

Zinc is primarily used for galvanizing steel, which means making steel rust proof and that then feeds the construction and automotive sectors. Zinc is also an essential nutrient for embryonic growth and normal metabolic processes inside the human body.

So that’s a bit about the demand side. On the supply side this is where things get interesting. A number of mines around the world have been shutting down because they’ve run out of ore or because they are no longer economic to run because, for example, they’ve been starved of capitalized for too long, etc. Lisheen, Galmoy and Century are a few examples of large mines that have been depleted over the last few years.

This has led to a shortage in mine supply, which in turn has led to diminishing global inventories—which are now down to levels we haven’t seen since 2007/2008 and remember, back then, prices reached as high as $2.08/lb. So the question becomes why are prices relatively muted now, despite these multi-year inventory lows? Well, I think the key issues are the trade war rhetoric, Chinese slow down fears and of course, the threat of a supply response.

Now obviously, no one has a crystal ball, but I suspect trade war talks will conclude constructively or at least I hope so. The Chinese economy, I suspect, still has a number of very large buffers at its disposal and one has to wonder if the trade talks with the U.S. do indeed falter the Chinese government could notionally just double-down on internal infrastructure growth again bolstering its Belt and Road initiative even further, for example.

On the supply response, as a former mining analyst, I definitely learned over the years that slippage on getting new mines up and running happens more often than not. So you always want to take a haircut to guidance on start-ups. Then there is the question of Chinese supply, which accounts for about half of world’s mine supply. Historically it has been the case that whenever zinc price went up, Chinese supply would go up as well, leading to a moderation of zinc prices.

This hasn’t been the case so far this cycle. The reason is that China has imposed a number of strict environmental regulations on industry, including mining, over the last year or two. The effect has been that a lot of small “mom and pop” zinc mines in China have been shut down and that has suppressed the supply response from China in a big way.

So, that’s the crux of the market.

There is one other key bright spot that I believe is starting to show great promise and that is the evolution of zinc batteries. I think this could be a potential game-changer for the industry. The background here is that zinc was always an ideal metal for batteries since Edison’s time 100 years ago; however, the problem has always been “rechargeability,” you couldn’t recharge a zinc battery without needles growing inside the cell and quickly bursting the battery.

A few years ago a scientific breakthrough by the U.S. Naval Research Laboratory changed all that and this was written up in the prestigious Science magazine in April 2017; by the way, I recommend people take a look. With the advent of 3D lattice technology, electric charges can now be dissipated homogeneously enough to prevent needle growth and whamo! Zinc now has the potential to compete and offset the likes of Li-ion batteries. That’s pretty exciting.

Now there are small zinc batteries for cars and small equipment, etc., which I don’t think will have much impact on zinc demand. Then there are the large zinc batteries aimed for grid power storage and here is where we could definitely move the needle significantly on annual zinc demand.

A great example of these large zinc batteries is NantEnergy, which is run by a California-based billionaire named Patrick Soon Shiong. He’s developed a Zinc-Air battery, which run on photons, zinc and air; and he’s demonstrated he can successfully run dozens of cell phone towers and villages completely off the grid in Africa and other regions. There is a great video on Bloomberg interviewing Mr. Soon Shiong on this technology, plus the New York Times has recently written it up as well.


Source: NantEnergy

Maurice Jackson: Group Eleven Resources projects are strategically located in Ireland, provide us with some historical context on the relationship between zinc and Ireland.

Bart Jaworski: Ireland is estimated to be No 1 in terms of zinc found per square km, so it’s a very prospective country. It also hosts some of the world’s largest zinc deposits (e.g., Boliden’s Navan mine and Glencore’s Pallas Green deposit). It’s infrastructure-rich and has year-round tidewater for shipping. The product is clean and you’re close to consumer. Irish zinc concentrates tend to be very good quality. European smelters are around the corner in Norway, Sweden, Belgium, etc.

Politically Ireland is a safe, first world jurisdiction with security of tenure and rule of law. And lastly, the Fraser Institute, which is the only think tank that ranks the world’s mining jurisdictions, ranks Ireland No 1 in terms of Policy Perception Index for five years running. So Ireland has all the ingredients you’d want.

One key aspect to add is that over the last 70 years of mining history in Ireland, a general rule of thumb of what it takes to break-even economically in Ireland is what is known as “10 and 10” or 10 Mt at 10% Zinc+Pb combined. That reflects the infrastructure and tidewater (so in more remote part of the world were you need to truck in your diesel and truck out your concentrates; you may need 50–100 Mt to break-even. In Ireland you typically need much less, which is very comforting to know).

Source: Boliden (location of zinc smelters in green)

Maurice Jackson: Bart, now that we know the virtues of exploring for zinc in Ireland, how much of a land position does Group Eleven Resources have in Ireland?

Bart Jaworski: We have the largest land position of any explorer or miner in Ireland. All together we hold approximately 3,200 sq km, or 320,000 hectares or nearly 800,000 acres. This gives us the dominant position over two geological basins, which gives us the ability to think big and think outside the box, and this greatly aides our exploration approach.


Source: Group Eleven (G11 licenses in orange)

Maurice Jackson: You mention approach, is there anything different that you are doing that others are not?

Bart Jaworski: Well, yes, absolutely! Our “Big Think” approach is what really makes us different. Essentially, we are tearing up the old geology textbooks and putting them back together again using a very open minded and thorough approach to exploration by systematically conducting detailed data compilation. Mining data in Ireland goes back all the way to the 1200s and beyond and we are coupling that with cutting edge exploration techniques such as seismic surveys, airborne geophysics, ionic leach soil sampling, etc.

Now, not just anybody can have the “Big Think.” You can’t have the “Big Think” without the ground position, right? Because if you come up with a great idea, it’s likely on someone else’s ground and you can’t do anything about it. You also can’t do the “Big Think” without the right people—big picture thinkers—and that’s again where the likes of Peter Megaw and Dan MacInnis, both from MAG Silver, come in, as well as deep Irish bench-strength with the likes of Dr. Mark Holdstock, John Barry and David Furlong.

Maurice Jackson: A virtue of having the largest ground position in Ireland is that Group Eleven has two flagship projects. Let’s delve into them shall we. Mr. Jaworski, introduce us to your first flagship project, the Stonepark and the unique value propositions it presents.


Note: Red and Black outlines are G11. Blue outline is Glencore

Note: This map is a zoom-in on the Pallas Green/Stonepark area; shows the Carrickittle and Limerick South prospects, which may be a quasi-mirror image to the small red blobs to the north of Pallas Green

Bart Jaworski: Well, at Stonepark we are very excited because we are right next door to Glencore’s Pallas Green deposit, and we think we might have at least some of the key mineralizing faults from that deposit trending onto our ground. Our ground, by the way, covers nearly the entire prospective geology in this area, outside of Glencore’s ground. We have by far the largest land position in this region much bigger than Glencore’s area and we cover about 1200 sq km or 300,000 acres.

We also already have a maiden resource 43-101 compliant in the Inferred Category on our ground totaling 5mt @ 11% Zinc+Pb (Stonepark deposit). That is located only about 1km away (very close) from Glencore’s Pallas Green deposit, which hosts about 44mt @ 8% Zinc+Pb.

Our deposit is about 200–400m deep. whereas Glencore’s Pallas Green is 300–1300m deep, with its new discovery called Caherline about 10mt @ 10% Zinc+Pb at the deepest part of that range (i.e., towards 1300m). We know Glencore has been actively drilling at Pallas Green since early 2017. So from the above you can see that our Stonepark deposit is much shallower and about 30–40% higher grade.

That’s a good starting point.

But the key is this! This is an emerging camp. The discoveries here at Pallas and Stonepark are relatively new and yet this is already the most metal-endowed region within all of Ireland, outside of Boliden’s Navan deposit. And yet the main mineralization structures (or faults) have not yet been found. It’s a complete mystery.

Usually in Ireland, the zinc occurs butted up against a fault. But in this camp the main structure appears to be further away, suggesting that what has been discovered to date is actually the periphery of the system. Thus, the heart may be lurking somewhere underneath, in what we call the Limerick volcanics.

So the question becomes how do we find the center of the system? And this is where our preliminary drilling and the Tellus survey come in. We announced last week the start of a preliminary 1500–2000m drill program, which will be primarily aimed at answering the big geological questions on the architecture of this camp. If we hit some mineralization too, that’s great, but the primary aim is geological.

We’re going to couple this data with a large ongoing airborne survey that is currently being flown by the Irish Geological Survey. It’s called Tellus and it comprises flying 2,500 sq km or 620,000 acres or so, covering our ground, Glencore’s ground and our nearby Silvermines ground and using three state-of-the-art detection methods all together, which are radiometrics, magnetics and electro-magnetics.

This information will be publicly available early next year and will hopefully tell us where the major faults are and how they line up with the known mineralization in this camp. Now we already have our suspicions on where this key fault corridor might be—one clue is that the main Pallas Green body seems to trend in a NW orientation; this is from an academic paper that was published in 2015.

If you continue that trend towards the south you line up perfectly with our Carrickittle and our Limerick South prospects. At Carrickittle, for example, there are about a half dozen historical holes that intersected about 5m @ 12% Zinc+Pb and they have been largely forgotten about since the late 1960s.

However, now that we know about Pallas Green and Stonepark, these 1960s prospects are starting to look at lot like the small satellites you see just outside the Pallas Green deposit to the north, which poses an interesting question: Do we have a “quasi-mirror image” down to the south?

So this is one of key ideas we are working on and that is what we’ll be working on as part of the “Big Drill of 2019.”

Maurice Jackson: Let’s move north now and discuss your second flagship project, Ballinalack. What has the company excited there?

Note: above shows regional cross-section across Ireland, demonstrating that the zinc (red) occurs in two prospective horizons (blue and yellow) at Ballinalack. We have BOTH of these horizons (This is unique, given if you move north, you lose the blue layer; if you move south, you lose the yellow layer.)

Bart Jaworski: At our second flagship project, Ballinalack, we also have an exciting idea that we will be testing as part of the Big Drill of 2019. It is located about 50km away from Boliden’s giant Navan zinc mine, which has approximately 100 Mt @ 10% Zinc+Pb; it’s mostly mined out now, but still operating. It’s the biggest mine in Europe and considered one of the top five zinc deposits in the world.

Ballinalack is unique as it’s still close enough to Navan to have well-developed Navan Beds on the property in addition to the other prospective horizon called the Waulsortian limestone. In fact, Ballinalack is the only known zinc occurrence in Ireland that has significant mineralization in both horizons.

Interestingly, in the 1970s, when Ballinalack was discovered, the old-timers only drilled down to about 300m to define the historical estimate, which by the way totals 7.7 Mt @ 7.3% Zinc+Pb, which is not too far off from our 10 and 10 rule of thumb.

So drilling beyond 300m was considered “very deep” at that time. Now, of course, mining reaches much deeper, for example, at Boliden and Pallas Green, drilling is going down well beyond 1000m or 3300 feet. Our big idea at Ballinalack is that the Navan Beds directly underneath the historical estimate have not yet been tested for Navan-style mineralization.

Case in point, of the 30 holes historically drilled deep enough to actually intersect the Navan Beds in the vicinity of the old estimate, a surprisingly high number, about half of the holes, hit significant mineralization. And directly underneath the historical estimate the area is virtually undrilled.

So our preliminary drilling of two holes earlier this year was also primarily aimed at geology, and we successfully identified (1) that cross-faults exist and they seem to have a lot more to do with mineralization than ever recognized before, and (2) that the Ballinalack fault is much steeper than previously thought, which shows definitively how previous drilling was missing the target.

By the way, Group Eleven Resources intersected 10m @ 10% Zinc+Pb in an area of known mineralization, which is also comforting, plus a zone of mineralization in the Navan Beds.


Note: The orange zone (4a-4e) is our hanging-wall Navan Bed target (which has been virtually undrilled) and targets 1, 2 and 3 are our footwall Navan Bed targets where historical drilling has yielded significant mineralization worthy of follow up (all the red dots are the historical holes, which were drilled deep enough to intersect Navan Beds, and half of them hit. ‘n/a’ means not assayed for silver.

Maurice Jackson: What are your plans going forward at Ballinalack?

Bart Jaworski: We will be relogging and in some cases re-assaying some of the historical core with the aim of sharpening our understanding of the architecture of this area even further, and we will then do more drilling in 2019 as part of the Big Drill.

Maurice Jackson:

Are these brownfields explorations that the company is undertaking?

Bart Jaworski: If “brownfield” means an area that was previously mined, then the answer is no. However, I think in this case, you are referring to the notion that in these areas we have seen significant heavy lifting already done on the exploration side by previous operators, than definitely yes.

Maurice Jackson:

For someone new to the term brownfields, please share how that improves the probability of discovery.

Bart Jaworski: Well, with the heavy lifting already done for us, this puts us in great position to allow us to get up the learning curve much quicker than if we had to drill all those initial holes ourselves. So we’re walking on the shoulder of a giant amount of historical work, and if you infuse that with cutting edge technology and truly open minded thinking—that’s where the magic happens.

Maurice Jackson: For current and prospective shareholders, the story doesn’t end with zinc. You have recently discovered some silver at the Ballinalack. How was “Big Think” responsible for the discovery and share the results with us.


Note: Drill core from G11 recent drill hole (G11-1344-02) at Ballinalack

Bart Jaworski: Correct, at Ballinalack only some of the historical intervals were ever assayed for silver and those that were often had good silver numbers in them, say between 20–100 g/t, and our highest was about 380 g/t. So we know there is silver in the system, but that was never calculated historically.

I see that as a potential sweetener to the story, which has yet not been borne out. Also at Stonepark and the broader Limerick basin, we have the idea that because you have a lot of volcanics intruding limestones, you might expect to see some overlooked deposit types, which can host a much higher precious metal component, for example, CRD deposit types that you see in Mexico.

That is I believe what captured the imagination of Peter Megaw. I think all that I’ve mentioned above speaks to the open-minded approach that we have and hence the “Big Think.”

Maurice Jackson: What is management’s philosophy, are you looking to build mines or are you focused on exploration?

Bart Jaworski: Similar to most juniors, our exit strategy is to make a large discovery and then sell it to the highest bidder. We are not interested in becoming miners.

Maurice Jackson: Switching gears, I’ve learned from some of the most serially successful in industry—from Rick Rule, Doug Casey, Jayant Bhandari, Mickey Fulp and Bob Moriarty—that the people running the business are equally if not more important that the latent material in the ground. Mr. Jaworski, please introduce us to your board of directors and management team and the unique skill sets they bring to the Group Eleven Resources.

Bart Jaworski: We have four on the board currently.

Dan MacInnis is our chairman. (a) He is the retired CEO of MAG Silver (and currently sits on the MAG board) (b) Dan has over 40 years of experience and has been involved with seven discoveries during his career including Duck Pond and Juanicipio (c) Interestingly, Dan worked in Ireland for five years back in the late 1970s/early 1980s with Noranda, so he definitely knows the lay of the land in Ireland.

Alessandro Bitelli is our chair of the Audit Committee. He is currently the CFO of Lundin Gold, and interestingly was the CFO of RedBack when it was taken over for $10 billion by Kinross back in 2010.

Brendan Cahill is a lawyer and all round very sharp guy. He’s the CEO of Excellon Resources, which is mining the Platosa silver deposit in Mexico.

On the management side:

We have John Barry and David Furlong, who I’ve mentioned earlier in our discussion. Both are Irish geologists. ex-Rathdowney Resources (which is another European zinc development company). John was the founder and CEO of Rathdowney. So both John and David have deep experience with Irish-style zinc deposits and with operating in Ireland.

Dr. Mark Holdstock is a very well-known geologist in Ireland. He recently joined us (in early 2018). He led the team that discovered the 20-Mt SWEX extension of the Navan orebody.

So John, David, Mark and myself, we’re a home team. All of us live in the country we’re operating in and that’s different from many juniors and a big plus because we have our ear close to the rail.

And now onto the advisers:

Peter Megaw is the brainchild behind MAG Silver’s success in Mexico with the Juanicipio discovery. Peter is the chief exploration officer at MAG. and he’s a big help on our “Big Think” initiative.

We also have John Prochnau and Frank Hallam as advisers. John Prochnau is on Doug Casey’s Exploration Hall of Fame actually for his Esquel and Alligator Ridge discoveries. John also worked on our Ballinalack project back in the 1970s.

Frank Hallam has a lot of experience in M&A with the majors and has been involved with over a $1 billion in financings over his career. Last but far from least are Shaun Heinrichs, our CFO, and Spiros Cacos, our VP Investor Relations.

Maurice Jackson: Tell us about Bart Jaworski; what makes him qualified for the task at hand?

Bart Jaworski: I’m an exploration geologist and ex-mining equity analyst. I have about 24 years of experience since 1994, my first year in the field. I was an analyst for about 12 years. Initially, I began with Raymond James in Vancouver for about nine years and then for over three years with Davy in Ireland. I’ve been on a lot of site visits and met with a lot of CEOs and VP Ex’s over that time frame. I also covered many exploration and mining companies over the years.

The reason I ended up in Ireland is because my wife, who is Irish, wanted to move back home after being in Canada with me for nine years. And that’s how I ended up at Davy in Dublin covering the UK listed golds, plus Rio Tinto and the iron ore sector. As an exploration geo I discovered the original soil anomaly at Coffee Creek, which later became a multi-million ounce gold deposit (which was taken out for $0.5 billion when Goldcorp took over Kaminak). Going back a little further, I also helped discover industrial minerals in the Iskut area.

Maurice Jackson: Tell us about your capital structure.

Bart Jaworski: We have just under 60 million shares outstanding. So at our current share price (14c) our market cap is only CA$8.4 million or about US$6 million. About 20 million warrants and options outstanding: more than half of those are set to expire this December. Cash: our last Quarterly Financials have $3.2 million in the till. We have no debt.

Maurice Jackson: Let’s discuss some numbers: What is your burn rate?

Bart Jaworski: Burn is about $100k–$130k/month, so call it roughly $1.5 million per annum. So our runway is still fairly comfortable, at least another 12 to 15 months doing what we need to do, depending on how hard we step on the gas pedal.

Maurice Jackson: Do you have institutional Investors at this point?

Bart Jaworski: Yes, we’ve been lucky enough to garner the support of about a dozen institutions, mostly during the IPO, but some pre-IPO and some post-IPO. Most well-known institutions include Sprott, US Global, Galileo and Logiq.

Maurice Jackson: What is the float?

Bart Jaworski: About half our 60 million shares are owned by high-net worth investors, which is about 30 million shares. The rest is owned by MAG, Teck, the funds and insiders.

Maurice Jackson: Are there change of control fees? If yes, please convey the terms.

Bart Jaworski: There are no change-of-control fees for M&A transactions but there are fees associated with management being fired by the board without cause, which is fairly standard.

Maurice Jackson: When is the last time you purchased shares and at what price?

Bart Jaworski: I actually bought shares last just after our last press release last week at a price of 13c and 12.5c. I believe at least one other insider bought shares on the heels of last weeks’ press release as well.

Maurice Jackson: Any redundant assets such as patented mining claims and or reversionary interests, meaning are Group Eleven Projects 100% owned by Group Eleven Resources?

Bart Jaworski: We don’t have any patented mining claims in Ireland. We own all our licenses 100% except at Ballinalack where we have 60% interest with the remainder owned by a large Chinese zinc producer called Nonfemet. At Stonepark, where we own roughly 77% and the remainder owned by a small Irish exploreco. Important to note, these joint venture interests are participating, i.e., they have to pay their share of exploration costs or they get diluted down.

Maurice Jackson: All right, sir, you’ve survived the storm. Mr. Jaworski, multilayered question, what is the unanswered question for Group Eleven Resources, when should we expect results, and what will determine success?


Source: G11, October 2018 (L to R: David Furlong, John Barry, Bob Moriarty and Bart Jaworski)

Bart Jaworski: Results, we are currently doing a “preliminary drilling” campaign (1500–2000m) and we should have results from that over the coming weeks and months. The results of the Tellus survey will also be forthcoming early next year and that will tell us a lot. We will then couple the two datasets, i.e., the drill data and the airborne data and that should lead to very high-priority drill targets, which will be part of our Big Drill in 2019. A few months ago we put out a maiden resource at Stonepark measured 5mt @ 11% Zinc+Pb combined. We are working on updating the Ballinalack historical estimate, but we are not sure yet if we can upgrade to a current estimate without re-drilling, but we are looking into it so that something else to be aware of.

MAURICE JACKSON: What keeps you up at night that we don’t know about?

BART JAWORSKI: Well, I’m an optimist, as long as people keep remembering the lessons of Adam Smith and the Wealth of Nations. I think we’ll be ok and the world economy will keep on growing and with it, so will the prosperity of humanity. Other than that I try not to sweat the small stuff.

Regarding Group Eleven, obviously exploration is a risky and cyclical business, so one needs to be aware and cognizant of that. However, with high-risk comes high-rewards, and that’s really what I’m focusing on as a shareholder myself.

Maurice Jackson: Finally, what did I forget to ask?

Bart Jaworski: I guess one important element of the Irish exploration landscape is the support from the government, specifically iCRAG, which stands for the Irish Centre for Research in Applied Geosciences. This is a government-industry-academia partnership that is well-funded and has a number of very smart people working on a number of fronts. One of the main remits of iCRAG is to help companies like Group Eleven find the next zinc mine in Ireland.

So, interestingly, the individual who recently stepped into the role of CEO and Director at iCRAG is a gentleman by the name of Dr. Murray Hitzman. Dr. Hitzman was once at the White House shaping Science and Technology policy, as well as, the head of the Colorado School of Mines and more recently at the U.S. Geological Survey. He is one of the leading experts on Irish-style zinc deposits and has written many academic papers on the subject. When Murray was announced as the Head of iCRAG, I personally thought this was a major signal by the Irish government and a catalyst, really, for future discoveries in Ireland.

Maurice Jackson: For someone listening that wants to get more information on Group Eleven Resources the website is here. And as a reminder, Group Eleven Resources trades on the TSX-V: ZINCG and on the OTCQB: GRLVF.For direct inquiries please contact Spiros Cacos at 604 630 8839 Ext. 503 and he may also be reached at s.cacos@groupelevenresources.com.

And last but not least please visit our website provenandprobable.com, where we interview the most respected names in the natural resources space. You may reach at contact@provenandprobable.com.

Bart Jaworski of Group Eleven Resources, thank you for joining us today on Proven and Probable.

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: None. 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. Proven and Probable disclosures are listed below.
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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: ZNG:TSX.V; GRLVF:OTCQB,
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from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/12/using-the-big-think-to-find-zinc-in-ireland.html

Gold Major’s Australian Mine ‘Heading to Tier 1 Status’

Source: Streetwise Reports   11/10/2018

A BMO Capital Markets report assessed this project following a site visit.

In a Nov. 7, 2018, research note, analyst Andrew Kaip reported that the overall impressions from BMO Capital Markets’ site visit to Newmont Mining Corp.’s (NEM:NYSE) Tanami project in Australia’s Northern Territory are that it is “a great success that keeps getting better,” it is “quickly heading to tier 1 status” and it offers a “treasure trove of exploration opportunities.”

Kaip supported those statements with evidence.

As for Tanami already being fruitful, he noted that over time there, gold production and processing rose while costs dropped, he highlighted. Between 2012 and 2018, production increased to 440–515 thousand ounces (450–515 Koz) from 183 Koz. Processing rates went up as well, by 80% to 2.6 million tons per annum, resulting from mine and mill optimizations along with fresh discoveries.

Simultaneously, the all-in sustaining cost decreased to $705–775 per ounce, per 2018 guidance, from more than $2,000 per ounce. “Tanami is able to keep costs in the second quartile given the morphology of ore zones that are amenable to low cost, long hole stoping,” Kaip explained.

The growth of reserves has been “impressive,” noted Kaip, doubling to 4.4 million ounces at 5.7 grams per ton (5.7 g/t) gold (Au). Further, Tanami hosts another 700 Koz of Measured and Indicated resources at 5 g/t Au and 800 Koz of Inferred resources at 5.4 g/t Au.

Regarding the Northern Territory mine continuing to improve and on the cusp of becoming tier 1, Newmont began shaft development and mill upgrading work for its next phase, an expansion, with the ultimate primary goal of bolstering reserves. When finished, Kaip relayed, “phase 2 is expected to lift annual production to the 600 Koz range with costs declining a further 10%, an outlook that clearly positions Tanami as a tier 1 mine.”

Finally, in terms of the exploration upside at Tanami, the main ore shoots are open at depth. Resources at Liberator, a new ore shoot at the project, seemingly with grades better than those of the reserves, have yet to be delineated. A third area with potential is Orac, which “could support further mine expansion,” Kaip pointed out.

BMO Capital maintains its Outperform rating and $42 per share price target on Newmont. The stock is trading at around $32.02 per share.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The 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 LLC 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 one week after the publication of the interview or article.

Disclosures from BMO Capital Markets, Newmont Mining, Nov. 7, 2018

IMPORTANT DISCLOSURES

Analyst’s Certification
I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.

Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.

Analysts employed by BMO Nesbitt Burns Inc. and/or BMO Capital Markets Limited are not registered as research analysts with FINRA. These analysts may not be associated persons of BMO Capital Markets Corp. and therefore may not be subject to the FINRA Rule 2241 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account.

Company Specific Disclosures
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Newmont Mining.
Disclosure 6C: Newmont Mining is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.

Disclosure 9B: BMO Capital Markets makes a market in Newmont Mining in United States.
Disclosure 16: A research analyst has extensively viewed the material operations of Newmont Mining.
Disclosure 17: Goldcorp has paid or reimbursed some or all of the research analyst’s travel expenses.

For Important Disclosures on the stocks discussed in this report, please click here.

( Companies Mentioned: NEM:NYSE,
)

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/10/gold-majors-australian-mine-heading-to-tier-1-status.html

US Stocks: Whither from Here?

Source: Michael Ballanger for Streetwise Reports   11/09/2018

Sector expert Michael Ballanger muses on the forces at play on the markets and precious metals, and also mentions uranium.

Back in the 1960s, from time to time, many of my elementary school classmates would have great difficulty paying attention to the teacher. It would usually take the form of doodling with a pencil, drawing prepubescent renditions of monsters or hot rods or animals. The polite term for such distraction was the “inability to stay on task.” The remedy for failing to show the appropriate focus on the teacher was either a) a scolding, b) ridicule (sometimes the worst if a particularly cute girl was present), or c) a sharp crack on the knuckles with a yardstick, because in the 1960s, classrooms commanded order where corporal punishment was not only accepted, it was promoted.

Baby boomers, who love to reminisce about the “gold ol’ days,” think fondly of elementary school and can readily recall which teacher was a nightmare with the strap or the yardstick or the back of his (or her) hand. I assure you that not one Boomer ever suffered any sort of long-lasting trauma, either physical or psychological, over being punished for acting out in class. For that reason, bad behavior was rare in classes where Edwardian punishment was common and there was no such thing as “attention deficit hyperactivity disorder,” because the antidote wasn’t Ritalin or Adderal of Focalin. It was a non-chemical preventative called pain and/or embarrassment. And there were no “safe places” or support groups for the guilty party.

So when I look at the last week of trading, I am forced to simply shake my head in disbelief and acknowledge the existence of some rare form of memory-sapping disease that has been spread like the Ebola virus around the trading desks of every firm on the Street. It was only ten days ago that the 2-and-20 world was coming to an end, but a bunch of Xbox junkies representing the first generation in history who prefer a telephone to a widescreen, theater-sound room for personal entertainment, is now incapable of remembering exactly why they were soiling their undergarments during the final days of October. They are leveraging to the absolute max to make this rally a “life-changing event,” and you know what? They just might, albeit for the wrong reasons, get an oh-so deleterious outcome.

I was part of the “security staff” in 1975 when Led Zeppelin played the old Saint Louis arena, and I vividly recall the moments when the lights went down and a massive deluge of kids rushed the stage. We had set up a barrier line, but Zeppelin was so incredibly popular with stoners that we had to stand at the barrier actually “catching” these 90-pound hippies, so intent upon being inches from Robert Plant’s blue jeans, and literally throw them back into the crowd. It’s a defining moment in a young athlete’s life when your high school rock-and-roll heroes are now at the mercy of a crowd of whacked-out teenagers and you are suddenly on the side of “darkness” as opposed to the “Forces of Good.”

Well, after the brief (but terrifying) skirmish ended with the first chords of Jimmy Page’s bone-rattling rendition of “Heartbreaker,” life returned to normal and the music plus the mass medication put the crowd back into “mellow mode,” and back I went to the front of the stage, arms crossed and scowling fiercely so as to keep the zoned-out hipsters at bay. Today’s market participants remind me of that crowd back in ’75, with Fed speeches and interventions taking the place of recreational medication and smuggled-in booze.

Here is another comparison. In the 70s and 80s, it took months to turn sentiment; today it takes a couple of well-planned Fed member orations and a few tweets from DJT to turn the prevailing sentiment from bearish to bullish, such that there is a new meaning to the word “prevailing.” How about “fleeting sentiment” or “temporary sentiment” or “subject to drug-induced paranoia sentiment?”

The current market environment is analogous to the final flailings of a beheaded chicken—furious, directionless movements until it collapses from its own lack of neural leadership. The kids manning the trading desks think that “all is well” because the S&P reclaimed the 200-daily moving average (dma), while I contend that this very hungry bear knows he is going to be feasting on a great many unsuspecting millennial carcasses in the next few months. What better way to ensure a feeding pool than by encircling a larger population of prey through the installation of false confidence during these desperation-fueled rallies?

On Oct. 30, I constructed a missive entitled October’s Rout Was Meaningless, posted a chart of the S&P500 dating back to 2009 and submitted that the October correction was finished at the precise point where the October decline hit the ten-year trendline drawn off the March 2009 low. Sure enough, we are now up 200 S&P points and about 2,100 Dow points from the lows, as underperforming managed money implements its desperate “carpe diem” and buys up all of the momentum names in an effort to save years (and bonuses) from disaster.

I have elected to raise cash into the rally and then try to determine whether there are enough animal spirits and irrational overexuberance to drive the indices back to the summer highs, which I think is entirely possible but by no means probable. As we all learn from our mentors, legendary traders have always confessed that the most money they made was never anticipatingthe top but rather exploitingthe top, once it was in. While I think that the double tops shown below are now cementedand in place, we are still a long way off the 2018 high of 2,940 for the S&P 500. The great challenge for me will be trying to short this garbage as close to the 50-dma as possible without the chance of a whipsaw on a spike to 2,945 in early January, as the final sputter of the tank-empty engine resigns itself to a long winter’s nap.

Another thing that is annoying, verging upon maddening, is the inability of the precious metals (PMs) to break their bondage to the U.S. dollar. We had four brief spikes in gold on Oct. 2, 11, 15 and the 23, and the last one on Nov. 1 but there is never any follow-through and as such, the PMs remain range-bound, with $1,210-1,220 as support and $1,235-1,240 as resistance. Once again, Fed policy and member jawboning are contributing to the malaise in the metals, because the algobots have glommed on to the notion that interest rates are going to continue higher for the balance of the year. Since the rest of the world is dead set against the mere mention of the term “quantitative tightening” (sounds like a cosmetic surgery of sorts, no?), fixed income investors are swarming in droves into the U.S. 10-year treasury at the recent 3.24% yield because it is sharply more generous than comparable Eurozone or Asian bonds of similar duration andthey get the bump in the currency.

The problem with chasing the 10-year is that once the stock market reasserts its new primary trend to the downside, the negative asymmetrical “wealth effect” of declining asset prices is going to start showing up in the economic numbers, resulting in a sudden and sharp policy reversal—i.e., rates stop going up. When that happens, the yield advantage will be yanked out from under their feet and the ensuing currency crash will wipe out the “edge” afforded by higher yields.

As always, timing these policy reversals isn’t just difficult; it is impossible. But if I am right in my strategy, all risk assets including stocks, base metals and gold/silver will have a violent upside reaction once the Fed blinks. DJT will leave Chairman Powell be for the moment because his beloved legacy benchmark (the stock market) is enjoying a wonderful relief rally and he feels rather cocky, so the widely anticipated December rate increase is probable assuming this stock rally lengthens out to a year-end rally. That sets the target period for a possible policy shift as Q1/2019, so my forecast of a $1,400 gold price by New Year’s Day is probably going to need to be revised.

However, if the rally fails and, in fact, heads into another major down leg here in November, the odds of the policy reversal spike up and the risky assets may get an early jolt. The point is that once again, Fed policy and member blathering are the drivers and a much as it makes me want to hurl my quote screen into lovely Lake Scugog, I am forced to simply deal with it.

Trade accordingly and keep an eye on the uranium plays—at $29.20/lb., they might catch a bid very shortly and when the U308 stocks catch fire, the returns are scary. The trigger will be $30-plus uranium and that could happen next week.

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Statements and opinions expressed are the opinions of Michael Ballanger and not of Streetwise Reports or its officers. Michael Ballanger is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. Michael Ballanger was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
2) 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.
3) From time to time, Streetwise Reports LLC 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 one week after the publication of the interview or article.

Images and charts provided by the author.

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/09/us-stocks-whither-from-here.html

Golden Arrow Resources: Rock Solid Leveraged Play on Silver

Source: The Critical Investor for Streetwise Reports   11/07/2018

The Critical Investor explains why he believes this company is one of the safest leveraged plays on the silver price.

10
San Miguel open pit; Pirquitas Mine

1. Introduction

Although silver does not get much love lately, there are silver plays around that could move significantly as soon as the price of the metal recovers in more positive precious metals sentiment. One of these plays is Golden Arrow Resources Corp. (GRG:TSX.V; G6A:FSE; GARWF:OTCQB). Despite the name, this junior doesn’t own one NI-43-101 compliant ounce of gold in the ground yet. Its flagship project is called Chinchillas, located in the Jujuy province in Argentina, and is a large, open pit silver/lead/zinc project. At the moment it is on the brink of production, as part of the Puna Operation, a joint venture (JV) with much larger gold/silver producer SSR Mining (SSRM.TO, market cap of C$1.6B, formerly known as Silver Standard).

The Chinchillas deposit has been turned into an open pit mine recently, and production is ramping up towards nameplate capacity. The ore is being delivered to the nearby Pirquitas processing plant, as the Pirquitas silver mine, previously owned by SSR Mining itself, was depleted this year.

SSR Mining has financed this whole operation, and Golden Arrow can sit back front row after paying back its 25% share of capex, and watch the show unfolding while being paid. As Golden Arrow gets 25% of after-tax net cash flow generated by Pirquitas, this is not much at this stage and silver price, but as soon as full production is reached by the end of this year and especially as the silver price starts rising again, the share price will probably see a strong re-rating. To get an indication of the upside potential, and other ins and outs of Golden Arrow, let us take a closer look.

All presented tables are my own material, unless stated otherwise.

All pictures are company material, unless stated otherwise.

All currencies are in US Dollars, unless stated otherwise.

2. Company

Golden Arrow Resources is an exploration and development company operating in Argentina, and member of the mining investment firm called Grosso Group, founded by Joe Grosso, who already pioneered successfully in mining for over two decades in Argentina. The Grosso Group made four major discoveries during that period: Gualcamayo, Navidad, Chinchillas and Amarillo Grande. The flagship project of Golden Arrow is the 25/75% Puna JV with operator SSR Mining, based on the Chinchillas deposit and the Pirquitas Mine, 45 kilometers away, which until very recently was one of the largest primary silver mines in the world, in the Jujuy province.

7

Both companies have a long history in this area, which probably has been beneficial for operations. Besides the Puna project, Golden Arrow also owns several gold/silver/copper exploration projects in Argentina and recently acquired the advanced Atlantida and Indiana copper-gold projects in Chile. These advanced exploration projects are united in a subsidiary called New Golden Explorations, and the plan is to acquire more projects, and spin this out from Golden Arrow in the early part of next year.

5
Chinchillas deposit; Argentina

Golden Arrow Resources has C$5 million in cash at the moment according to management/financial statements, and no long-term (LT) debt. The company recently (July 6, 2018 per MD&A) arranged a US$10 million credit facility with JV partner SSR Mining, confined to Puna capex obligations, with an interest rate of US Base rate plus 10% and a final maturity date of December 31, 2020. This short period explains the relatively high interest rate, but raising it through equity would have caused a lot of dilution anyway, so this way it can proceed with funding its part of capex. The loan is secured by the 25% ownership of Golden Arrow in Puna Operations.

Management, Board, insiders, friends and family control about 50% of shares, which is good to see, and JV partner SSR Mining holds about 5% of outstanding shares. There are 4.5 million warrants, with an average exercise price of C$0.70, and 9 million options with an average exercise price of C$0.53.

As of November 7, 2018, Golden Arrow Resources has a share price of C$0.25 and a market cap of C$25.4 million, with 101.97 million shares outstanding, and fully diluted 115.48 million. All options and warrants are out of the money at the moment. The average volume is a pretty liquid 294,195 shares.

Stock chart
Share price GRG.V, 3 year period (Source: tmxmoney.com)

Overall sentiment on the Venture isn’t positive at the moment, but Golden Arrow has been hit particularly hard lately, most likely in my opinion because of the last financing round it initiated.

The company tried to raise C$2.625 million @ C$0.35 including a full 2-year warrant @ C$0.55 for general working capital, but failed unfortunately due to “current adverse mining market conditions,” according to the news release of October 22, 2018. Golden Arrow had in fact raised most of the money, but did not want to lower the financing price as requested by several parties, so it decided to not pursue this further at this moment. Fortunately, it has the financial resources in place to fulfill the capex funding obligations for Puna Operations, and other, not further disclosed, near-term objectives.

As you see often, when a company wants to raise money, the word gets out among interested parties, and especially when these parties can get a full warrant they tend to sell lots of shares in advance, in order to walk the share price down to lower levels as much as possible, so most likely the upcoming placement gets priced not only at a discount but also at a discount to these lower levels, plus they get a free and most likely low priced warrant. It looked like this is exactly what happened, in addition to a sell recommendation of a U.S. based newsletter when there was a peak volume. The company was looking at re-pricing the financing, but decided not to proceed with it after all, which I actually consider to be not a very bad thing as almost 10% dilution at, for example, C$0.25 (which is a 2.5 year low) isn’t very good for existing shareholders. A negative is that Golden Arrow can’t use proceeds to acquire/fund exploration projects and needs to wait for another opportunity.

On the other hand I view this failed financing as a blessing in disguise, as the share price probably got walked down to lower levels than otherwise achievable in the market, as fundamentals didn’t change in the last two months. As an indication of relative low valuation of Golden Arrow there is a nice table provided by Fundamental Research (report available through Golden Arrow), showing that the company is positioned at the bottom for EV/oz ratios for producers:

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Of course an EV/oz ratio doesn’t say much for producers as it doesn’t take into account all sorts of things like profitability of ounces, jurisdiction, permitting, etc., and large resources usually are valued lower per ounce anyway, but in my view this table represents a nice overview and gives a first, very global indication of silver producer valuations.

3. Puna operation

As mentioned, the Puna operation consists of a JV between Golden Arrow and SSR Mining, formerly called Silver Standard. The JV assets are the Chinchillas deposit of Golden Arrow, and the depleted Pirquitas Mine of Silver Standard. There is a bit of history behind the Pirquitas Mine, as it didn’t get depleted completely according to plan. This was the result of a massive and not intended scaling back of reserves, reducing them by 52% in 2011 compared to the 2008 resource estimate.

Just one year before that, CEO Robert Quartermain, after 15 years with Silver Standard (old name of SSR Mining), left the company in 2010 and started heading a certain spin-out called Pretium Resources, which has had its fair shares of controversies as well (and might be in for more, as this resource model isn’t free of discussion either). But that is another story. Right now SSR Mining has earned itself a strong reputation as a great operator in the mining industry, and that is what counts here in my view.

The 25/75% JV between Golden Arrow and SSR Mining (the operator and majority owner of Chinchillas and Pirquitas) revolves predominantly around the following terms:

  • Golden Arrow received an upfront US$15 million payment from SSR Mining representing 25% of Pirquitas mine earnings (less certain expenditures) in 2017. Golden Arrow has to pay its part of capex, which is about US20 million in total, and has to pay 25% of any future capex requirements.
  • Golden Arrow benefits from net earnings (25%) generated by the still producing Pirquitas Mine, but for this year this will be marginal, as only 1 Moz Ag per quarter from remaining stockpiles is being processed at the moment, at cash costs being above the current silver price.
  • Golden Arrow had paid about US$3–4 million of capex until Q3 2018, US$14 million up to now, and has to pay the majority of its US$20 million capex share (about US$19 million) before year end of 2018. This is probably where the recent US$10 million loan comes in. Golden Arrow is probably looking to repay most of the eventually drawn amount by future revenues coming from the Puna Operation.

As Golden Arrow sees itself as a minefinder next to a developer (of Chinchillas), it burned through quite a bit of cash in 2017, after the US$15 million was received. At that point the company had about C$24 million in its treasury (July 2017). At the end of 2017, this was brought down to C$16.2 million, most of it spent on exploration, but also significant spending on marketing and management compensation (considerable performance bonuses because of the JV deal).

Fortunately, marketing and compensations have normalized quite a bit, and the company is focusing on exploration again. At the moment, Golden Arrow has enough cash to fulfill its obligations towards the construction and ramping up of Chinchillas, to do some exploration, and do some acquisitions, while SSR Mining is doing the hard work. When Chinchillas is fully operational, I expect cash costs to go down considerably, with Golden Arrow to reap the benefits of this strategy.

Golden Arrow already drilled an N-I43-101 resource estimate on Chinchillas of 203 Moz (M&I and Inferred) silver equivalent at a decent average grade of 140 g/t AgEq, which is large and decent grade for open pit, and completed a Prefeasibility Study (PFS) in March 2017, with solid economics of an after-tax NPV5 of US$178 million and IRR of 29% at a silver price of $19.50/oz Ag. This is the 2016 resource estimate:

13

And this is how the orebody looks, pit constrained:

14

In my view it seems realistic to assume that the higher grade Measured and Indicated part is fairly continuous and not spread out irregularly, hereby limiting future potential to convert Inferred resources into the same kind of higher grade M&I resource (and eventually into Reserves). I don’t see this as a problem as there is enough M&I resource already to increase the life of mine and production, as I will discuss later on.

As the price of silver has been trading at US$14.60/oz Ag lately, the resulting NPV5 would be close to zero and the project wouldn’t stand a chance of getting capex funding, but the good news is of course that SSR Mining already provided the necessary capital (about US$81 million) to build the mine at Chinchillas, which is already producing and ramping up right now.

According to the PFS, the average operating margins based on cash costs are US$7.40/oz Ag net of by-products, with average all in sustaining costs (AISC) at US$9.75/oz net of by-products, which are very low numbers. The by-products lead and zinc are priced at US$0.95/lb lead and US$1.00/lb zinc in the PFS, whereas the current spot prices are US$0.85/lb lead and US$1.17/lb zinc. As lead revenues are about triple the zinc revenues, current metal prices result in slightly lower by-product revenues than planned, increasing AISC to an estimated US$10.50, which is still robust.

The average cash costs are higher in the beginning, as is presented by SSR Mining in their presentation (in US$):

18

The PFS shows that this is no coincidence, as the total mining costs per tonne of ore are much higher in the beginning as well:

20

According to the mining schedule, they don’t have the possibility to front load the mine with much higher grade in the beginning, as year 1 sees about 20% lower silver grade than average and lead even more for the first two years, at the same time having a higher strip ratio in the first three years:

19

9
Pirquitas Mine; SSR Mining

The Pirquitas Mine is producing marginal amounts of silver from the last remaining low grade stockpiles at the moment, achieving 0.95 Moz silver @ 110 g/t Ag in Q2 2018, at high cash cost of US$14.73/oz Ag, causing the mine to operate barely break even. This is all expected to change during the fourth quarter of this year, and ore is already being trucked from Chinchillas to the mine since July, with the processing of this ore expected to commence this month. The first test mining results are coming in according to plan, with the strip ratio (7-8:1) also close to PFS figures:

“Pre-stripping activities at the Chinchillas site continued to advance during the quarter. Approximately 2.1 million tonnes of waste and 0.3 million tonnes of ore were mined, with ore grades reconciling well to the geological model. Approximately 73,000 tonnes of ore from the Chinchillas pit were delivered to the Pirquitas site, of which approximately 39,000 tonnes were processed in two separate test runs as part of the project execution. The tests successfully validated metallurgical performance of the ore and produced saleable lead-silver and zinc concentrates.”

SSR Mining has a forecast of 3–4.4 Moz Ag for 2018, so this means it doesn’t expect to add much from Chinchillas for this year. The PFS outlines an average annual production during an eight year life of mine (LOM) at a 4,000 tpd throughput of 6.1 Moz Ag, 35 million lb Pb and 12.3 million lb Zn, which is 8.4 Moz AgEq. This is based on 81 Moz AgEq reserves. As the total resource stands at 203 Moz AgEq, and nameplate capacity of the Pirquitas plant is 5,000 tpd, there are options to increase the life of mine and revenues/cash flow, more on this in the next paragraph.

The company itself also mentions exploration upside for both Chinchillas and Pirquitas, and the possibility of a limited high-grade underground operation at Pirquitas, which ore can be blended at the mill according to management. A 2015 drill program completed at the Chocaya, Oploca and Cortaderas veins returned interesting highlights of 3.16m @ 1,436 g/t silver, 1.93m @ 1,890 g/t silver, and 0.83m @ 2,670 g/t silver, and an evaluation study of this potential will be completed by SSR Mining before the end of 2018. SSR Mining sports a 18.6 Moz @ 292 g/t Ag and 4.46% Zn M&I underground resource, which could probably be economic with the plant and infrastructure already in place, and this potential could be enhanced further by the high-grade vein mineralization.

4. Expansion scenario

In order to review full future economic potentialof Chinchillas for the Puna operation, some assumptions have to be made. First of all there is the aforementioned throughput increase to the nameplate 5,000 tpd, which doesn’t cost anything, and could bring annual production to 10.0–10.5 Moz AgEq.

The second assumption is converting more resources into reserves. As we have seen, the Inferred part of resources is much lower grade, probably not containing higher-grade ore and therefore likely less profitable. Therefore, I would like to include another 40 Moz AgEq from 62 Moz AgEq M&I resources into the current reserves, bringing these to 121 Moz AgEq. Taking into account the underground Pirquitas resource being developed and kicking in after, let’s say, one year, this could add another 10 Moz AgEq. This high grade could balance the potentially lower grade coming from Chinchillas or even increase it, increasing annual production and profitability, but I’ll take a somewhat conservative approach here.

When using 120 Moz AgEq of total production at 10.0 Moz AgEq per annum, the new life of mine would be 12 years.

Another item we have to take into consideration is the proposal of Argentina to impose temporary new taxes on exports, to the tune of 12%, on top of the current corporate tax of 30% (which has just been lowered from the long-lasting 35% this year). This is quite a swing from revoking the 5% mining export tax two years earlier. This isn’t a done deal yet as Yamana has expressed great difficulties with it, and would have serious impact on foreign mining investments again. It also has a serious impact on NPV.

As none of the warrants and options are even close to being in the money, I use the outstanding number of shares of 102 million.

I am using a 5% discount despite the Puna Operation being located in the Jujuy Province in Argentina. The Pirquitas Mine has been operating for eight years without interference from the government or strikes, and the Chinchillas open pit mine is constructed and commencing production without issues so far. For currency exchange rates I use today’s USD:CAD of 1:1.31.

This results, as a reference, for the current eight year life of mine plan, assuming no export taxes or expansions, in the following sensitivity for NPV5:

21

Clearly at current metal prices the NPV5 is close to zero. However, this doesn’t mean that the assets of Golden Arrow are worth nothing either. The Pirquitas plant, etc., in itself has a breakup value in this condition of at least 25–30% of replacement value, I estimate this at US$30–40 million for a 5,000 tpd operation, and Golden Arrow owns 25% of this which means US$7.5–10 million, which is C$9.75-13 million. The company has about C$5 million in cash, and it has several exploration projects, two of them with historic resource estimates. I estimate all of these projects at C$5 million combined.

Chinchillas, although with zero NPV, should be worth at least C$5 million as all leveraged plays are worth something (sometimes quite a lot, see Seabridge). Total asset value would come in this way at an estimated C$25–28 million, which would come very close to the current market cap. As long as Golden Arrow can repay its credit facility from Puna cash flows, and keep the lights on, I would estimate a structural bottom of C$0.15–0.20 per share no matter what happens with metal prices, which is a nice cushion in my view for the somewhat defensive mining investor.

The calculated NPV5 numbers are used to generate NAV per share, based on cumulative discounted cash flows. The capex of US$81 million is subtracted from NPV5 as the mine has been built and there is hardly any debt (up to US$10 million per the credit facility). The result is adjusted for ownership, currency exchange rate and divided by 102 million outstanding shares. The resulting table looks like this:

22

One could think that based on NPV the stock is slightly undervalued at the moment, but this is not exact science, of course. The leverage on a rising silver price becomes quite obvious, and is in my view the main strength of Golden Arrow as an investment. However, if we take into account the 12-year scenario, bigger capacity and new taxes, there is more upside to be expected:

23

A lot of upside is taken away by the increased taxes, so if this desperate move by Macri can be changed or discarded it would add half the 8y NPV5. The NAV per share looks like this:

24

Without the extra export tax you could add roughly 20–25% to these numbers, which explains why, for example, Yamana is not too pleased about this new tax.

I actually like Golden Arrow as a leveraged play, as the profitability at current metal prices is zero, so the multiplier of cash flows relative to a rising metal prices is largest in this situation. Golden Arrow isn’t part of a cash bleeding loss making operation, which would be a negative, even in a rising metal price environment, as investors turn to those companies last. The relative increase of stocks that are already making profits is often less than these neutral leveraged plays, as these stocks often are priced at a premium as most investors turn to those first in difficult times.

After having analyzed the potential of Chinchillas for the company, let’s have a brief look at the exploration projects.

5. New Gold Explorations

New Gold Explorations is a newly created, fully owned Canadian subsidiary, and contains all exploration projects, encompassing about 200,000 hectares of prospective ground in Argentina and Chile. The plan behind it is to do a spin-out at some point when the time is right, to avoid further dilution of Golden Arrow shares and create a standalone explorer. Not too long ago this was planned for this quarter, but it has been postponed until the early part of next year, as Golden Arrow decided to wait in order to avoid too much dilution when raising the necessary cash now. Golden Arrow is busy acquiring interesting projects for New Gold, for now most are early stage but management is also looking at more advanced projects, and is seeking JV partners for those.

17

The latest addition is the Indiana gold-copper project in Chile. Interesting part here is that this project has a historical resource estimate of 600 Koz AuEq (3 Mt @ 2.8g/t Au and 1.6% Cu). It is a near surface deposit of vein type mineralization, with ramps for underground access for exploration. The agreement involves a US$15 million staged payment over four years, with minimal obligations the first year.

Nearby is the also recently acquired Atlantida project, also in Chile, and also with a historical resource estimate, this time 427 Mt @ 0.43% CuEq. The deposit type is porphyry style at depth combined with a higher-grade skarn near surface. Terms include a US$6 million staged payment spread out over four years with minimal first year payments. Management believes that both deposits have significant upside potential, also because sampling returned good values, on average 0.51 g/t gold and 0.49% copper. In my view, an average grade of 1.1–1.2% CuEq is needed for a big UG porphyry deposit in order to be economic, but a higher-grade starter pit could lower this grade considerably.

A project that has been a while longer in the portfolio of Golden Arrow is the Antofalla project, which management believes to have strong similarities with Chinchillas for geology. It has been with the company for quite some time now, and has seen quite a bit of drilling, but it didn’t provide the same exploration success as Chinchillas yet.

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Antofalla project; Catamarca Province, Argentina

Golden Arrow owns more exploration projects in Argentina, often located on structures that contain existing, large resources (Los Helados, Filo del Sol, Gualcamayo, Famatina, Cerro Casale, etc), but these projects are all early-stage grassroots, which have seen limited drilling only besides rock sampling, trenching, ground magnetics, and time domain IP.

16
Mogote project; San Juan Province, Argentina

As all exploration projects need a lot of work and payments, it is too early to assign much value to them. Management and geologists are convinced of large upside potential in at least two or three of the projects, and is eager to explore these.

6. Conclusion

In my mind Golden Arrow represents one of the safest leveraged plays on the silver price, as one of the best operators around, SSR Mining, is handling the Puna Operation as part of their JV. Cash flows are around the corner, management has normalized spending, and the share price has hit rock bottom after a sell recommendation by an influential newsletter and a failed attempt by management to raise cash. Call it a blessing in disguise or not, but the upside on higher metal prices is considerable from now on, but the company has also other ways to add value while waiting for silver to start rising. I am an interested shareholder.

Access road Pirquitas Mine
Access road Pirquitas Mine

I hope you will find this article interesting and useful, and will have further interest in my upcoming articles on mining. To never miss a thing, please subscribe to my free newsletter on my website http://www.criticalinvestor.eu, and follow me on Seekingalpha.com, in order to get an email notice of my new articles soon after they are published.

The Critical Investor is a newsletter and comprehensive junior mining platform, providing analysis, blog and newsfeed and all sorts of information about junior mining. The editor is an avid and critical junior mining stock investor from The Netherlands, with an MSc background in construction/project management. Number cruncher at project economics, looking for high quality companies, mostly growth/turnaround/catalyst-driven to avoid too much dependence/influence of long-term commodity pricing/market sentiments, and often looking for long-term deep value. Getting burned in the past himself at junior mining investments by following overly positive sources that more often than not avoided to mention (hidden) risks or critical flaws, The Critical Investor learned his lesson well, and goes a few steps further ever since, providing a fresh, more in-depth, and critical vision on things, hence the name.

Disclaimer:

The author is not a registered investment advisor, currently has a long position in this stock, and Golden Arrow Resources is a sponsoring company. All facts are to be checked by the reader. For more information go to http://www.goldenarrowresources.com and read the company’s profile and official documents on http://www.sedar.com, also for important risk disclosures. This article is provided for information purposes only, and is not intended to be investment advice of any kind, and all readers are encouraged to do their own due diligence, and talk to their own licensed investment advisors prior to making any investment decisions.

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( Companies Mentioned: GRG:TSX.V; GARWF:OTCQB; G6A:FSE,
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from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/07/golden-arrow-resources-rock-solid-leveraged-play-on-silver.html

Avino: Silver Production in Mexico, Gold Exploration in B.C.

Source: James Kwantes for Streetwise Reports   11/08/2018

James Kwantes profiles a long-time, stable silver producer with growing deposits in Mexico and a “call option” on high-grade gold in Canada.

Long before Hollywood directors made it a favored setting for westerns. . .before Pancho Villa rose from the poverty of a hacienda there to become an important Revolutionary general. . .the Mexican state of Durango was a major center for global silver production.

Understanding silver’s role in Mexico—formerly part of “New Spain”—requires stepping back about 500 years. The precious metal has been mined in Durango since the time of the Spanish conquest, more or less continuously. Silver enriched the Spanish king and bolstered the treasury, helping fund wars against European rivals. It also funded a magnificent cathedral that still stands in the state capital, also named Durango. And coins minted from Mexican silver soon became a global currency.

One of the sources of that mineral wealth was Avino, the “mountain of silver” on the eastern flank of the Sierra Madre mountains outside of the city of Durango. It’s an ore body now being mined by Vancouver-based Avino Silver & Gold Mines Ltd. (ASM:TSX.V; ASM:NYSE.MKT). Avino produces silver, as well as gold and copper, from two underground mines: the main Avino deposit and San Gonzalo, a small higher-grade deposit about two kilometers away.

The metal remains a major export for Mexico, and Avino’s silver still makes its way around the world. But these days, it’s purchased by a division of Samsung. Samsung C&T purchases all of Avino’s production at spot prices and ships it to smelters in Asia.

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Avino founder Lou Wolfin

Avino was founded by current CEO David Wolfin’s father Lou Wolfin (above), who in 1968 bought a 49% stake in the mothballed Mexican mine—which had closed in 1912 due to the Mexican Revolution. The joint venture put the mine back into production, and Avino later purchased the remaining stake from the Mexican family that owned it. Avino’s 50-year history is one of the features that sets the company apart in a junior mining sector where longevity is typically measured in years, not decades.

CEO David Wolfin’s roots at Avino run deep, too—as a teenager, he worked in the underground mine. Lou Wolfin, who died on March 3, 2017, at age 85, was an entrepreneur and inventor who showed a willingness to invest where others feared to tread. And although the company founder’s path to silver mining in Durango started on Howe Street, it began with a detour through Beverly Hills.

That’s where the elder Wolfin met Mexican entrepreneur Fernando Ysita at a party in the late 1960s. The chance Hollywood encounter led to forays into Mexico and, eventually, a major investment. Avino purchased a 49-per-cent stake (the maximum allowed) in 1968 when Mexico re-opened to foreign investment. The company later bought the rest of the mine from the Ysita family.

Lou Wolfin was a contemporary of Murray Pezim and a bit of a legend in Vancouver business circles. A former stockbroker, Wolfin bought a seat on the Vancouver Stock Exchange in 1960 and later opened a Vancouver brokerage house. His entrepreneurial instincts extended far beyond mining—he owned the patent on holograms and developed a keyless door-lock entry system decades before those became common.

But it’s in mining that the elder Wolfin’s legacy is felt most acutely. He wasn’t there to see it, but Avino celebrated its 50-year milestone at the Vancouver Resource and Investment Conference in January. Among those at the party were employees who had been there from the beginning, as well as a contingent from Samsung headquarters in Seoul, South Korea.

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The Avino mine on the “mountain of silver.”

I toured the Avino mines—which also produce gold and copper concentrates—on a site visit to Durango late last year. After flying into the state capital of Durango via Mexico City, we shuttled to the Hotel Gobernador, a hacienda that was formerly a state prison (complete with bullet holes on one of the outer walls). Our group, mostly German investors and analysts, was hosted by Avino CEO David Wolfin, COO Carlos Rodrigues and investor relations manager Jennifer North.

The mine is about an hour-and-a-half drive through towns and a countryside that looks familiar thanks to westerns such as “How The West Was Won” and “Butch Cassidy and the Sundance Kid.” The city of Durango has its own walk of fame featuring Hollywood stars on the sidewalk and several bronze statues including John Wayne—The Duke totes a rifle missing its barrel. (John Candy died of a heart attack in the city in 1994 during a break from filming “Wagons East.”)

At the mine, silver, gold and copper concentrates are processed using a flotation circuit from ore mined at Avino and San Gonzalo. For the last three years, production has held steady at or above the 2.7 million ounces silver-equivalent produced in 2017 (2.68 million AgEq oz in 2016, 3 million AgEq oz in 2015).

But a project under construction when I visited and now largely complete should hike that total significantly: the fourth mill circuit. That circuit—with a ball mill purchased from a Quebec mine—is now complete and set to process ore in the first quarter of 2019. The circuit is projected to boost capacity by about 70%, to 2,500 tonnes per day. Once the fourth circuit is commissioned, it will process ore from the San Luis (expansion) area of the Avino mine.

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The fourth circuit at Avino’s mill, under construction when I visited, is now complete.

Avino announced Q3 2018 production on Oct. 15 and the company’s silver-equivalent production dropped by 7% year-over-year, to 704,429 ounces AgEq. Avino produced 342,151 ounces of silver (down 7% YOY), 2,204 ounces of gold (down 18% YOY) and 992,271 pounds of copper (down 10% YOY). The lower production and declining grades are partly because San Gonzalo is reaching the end of its mine life as Avino transitions to San Luis ore.

About 90% of Avino’s workers live in villages a short drive away from the mine. The local workers have been a constant for the last five centuries—the jobs pay well and are highly coveted. It’s quite a contrast to the fly-in, fly-out contract mining methods at many modern mines. That helps on the community relations front, in addition to Avino’s decades-long presence there.

The Sinaloa cartel operates in Durango but our group travelled without guards or security, and neither is there a visible security presence at the mine. There are signs of a cartel presence if you pay attention, however, in and around Durango. The police station outside the city is built high on a hill and resembles a fortress. A prison we passed also looked seriously secure.

At the mine site, our group of analysts, investors and newsletter writers donned waterproof protective and safety gear and descended into both mines, the temperature rising with each lower level. It was vaguely reminiscent of the silver price, which has fallen more or less consistently and is now stuck under US$15 after running to almost $50 an ounce in April 2011.

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That’s made it tough for silver producers to make money, and Avino is no exception. The company is also in expansion mode; there are exploration drilling projects at both the Avino mine and at the company’s Bralorne project in British Columbia. Avino is also investigating the economics of processing oxide tailings at Avino. It all costs money, and Avino recently raised US$4.6 million through the sale of 65-cent (US) units.

Each unit consisted of one 65-cent share and a full five-year warrant exercisable at 80 cents. But the financing was announced with the stock at 79 cents US, and the below-market pricing prompted a selloff in the stock. In conjunction with Q3 production numbers, released October 15, Avino announced cost-reduction initiatives (capital, operating and administrative) at its operations in Mexico and British Columbia.

There are other examples in Avino’s neighbourhood of how silver’s struggles have hit other producers. Nearby is Coeur Mining’s mothballed Preciosa silver deposit, purchased for $382 million from Orko Silver in 2013. That deal was done with silver at about US$30 an ounce.

Growing production from the fourth circuit gives Avino good leverage to rising silver prices. When and if that occurs is anybody’s guess, but the silver price has a track record of bouncing hard when it reverses. One measure suggestive of a silver bull market is the gold-silver ratio, which is above 80 and near a historical record. Silver has made outsized returns each time it has reached these levels.

Avino also has leverage to gold at Bralorne, its under-the-radar Canadian project. Bralorne is nestled amid rugged mountains in British Columbia’s South Chilcotin range. It was the epicenter of a major gold mining camp that produced 4.2 million ounces of gold between 1928 and 1971. The three adjacent mines—Bralorne, Pioneer and King—produced extremely high-grade ore. Average head grades were above 0.5 ounces per tonne, or 14 g/t gold—multiples of global mined grades that are now below 1 g/t Au.

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Avino’s Bralorne project site: July 2018.

Bralorne, where Avino is in the middle of a fully funded 28,000-meter drill program, has the potential to become the flagship and a company maker, if things work out. The project already hosts a state-of-the-art water treatment system and dozens of kilometers of underground workings as well as brand-new mining equipment. The latter equipment—including two scoop trams and a jumbo drill—was purchased as part of a prior plan to start small and ramp up production. The company now plans to focus on expanding the historical resource before starting up a larger mine.

As with Avino, Lou Wolfin played a key role in securing the property, including the historical mine workings. Wolfin bought the Bralorne-Pioneer Mines from Homestake and brought it into Avino in 1990. He got Bralorne running at 100 tonnes per day (in a separate company) but the mine shut down due to low silver prices. Bralorne was brought back into Avino in 2014.

Avino funded the drill program through a $6-million flow-through financing priced at $2.00 (Cdn) per share. The drill program is the most extensive in the project’s history, and includes both exploration and resource drilling. The company is using two drill rigs; assay results should start landing in the first quarter of 2019.

The existing Bralorne resource, announced on Oct. 21, 2016, is 91,528 ounces Measured and Indicated at average grades of 0.33 oz/t gold (9.36 g/t) and 83,900 ounces Inferred at 0.22 oz/t gold (6.2 g/t).

Independent geoscientist Garth Kirkham of Kirkham Geosystems completed the NI 43-101 resource model and also played a major role in designing the current drill program. Kirkham is an award-winning geoscientist known for his resource estimation and 3D modelling work. He has worked extensively with John Robins’ Discovery Group companies, including Kaminak Gold (acquired by Goldcorp) and Bluestone Resources (BSR-V). The drilling follows structural modelling and geological mapping as well as airborne and ground geophysics.

Avino’s investment proposition is that of a stable silver producer with growing, lower-grade deposits and a call option on high-grade gold at Bralorne, where drill assays could provide catalysts for the share price.

Avino Silver and Gold Mines (ASM-T)
Price: CA$0.85
Shares outstanding: 63.3 million (75.5 million fully diluted)
Market cap: CA$53.8 million

James Kwantes is the editor of Resource Opportunities, a subscriber supported junior mining investment publication. Kwantes has two decades of journalism experience and was the mining reporter at Vancouver Sun, the city’s paper of record.

Disclosure: James Kwantes has been compensated by Avino Silver & Gold Mines to produce this article and Avino paid for costs of the site visit to Mexico. Avino Silver & Gold Mines is not a Resource Opportunities portfolio company. This article is for informational purposes and does not constitute investment advice. All investors need to do their own due diligence.

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( Companies Mentioned: ASM:TSX.V; ASM:NYSE.MKT; GV6:FSE,
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from The Gold Report – Streetwise Exclusive Articles Full Text https://www.streetwisereports.com/article/2018/11/08/avino-silver-production-in-mexico-gold-exploration-in-b-c.html