Gold has traded between $1,333 and $1,343 so far today…as of 10:00 am Pacific, bullion is up $3 an ounce at $1,340…Silver is off 19 cents at $19.49…Copper is down a penny at $2.18…Crude Oil has surged $1.54 a barrel to $46.02 while the U.S. Dollar Index has fallen one-tenth of a point to 95.28…
Citi Research, which made some astute calls earlier this year, now predicts that Gold will ease slightly in the 4th quarter to an average of $1,320 an ounce as the Federal Reserve hikes interest rates for the first time in a year (we see higher Gold prices and no rate hike)…meanwhile, in a special section of the bank’s quarterly commodity forecast released overnight, Citi said Indian demand for Gold and certain other commodities – such as Crude Oil and power – is likely to be helped by rising incomes during the next 5 years…
There is much that can influence the markets this week including speeches from both Fed Chair Janet Yellen and ECB President Mario Draghi…
When Donald Meets Hillary
The importance of tonight’s first debate between Donald Trump and Hillary Clinton cannot be underestimated…half of America’s likely voters will rely on the presidential debates to help them make their choice between between the two in the November 8 election, according to a Reuters/Ipsos poll released this morning…for Trump, tonight is a huge opportunity as he has 90 minutes against Clinton unfiltered by the mainstream media that has helped give Americans high expectations of Clinton for this first debate…8 in 10 voters say they plan to watch tonight’s “event” which could attract a total audience of 100 million American viewers (Super Bowl territory and comparable to television benchmarks like the finales of “MASH” and “Cheers”)…44% expect Clinton to win vs. 34% who expect Trump to come out ahead…Trump, therefore, has an excellent chance to surprise to the upside and win the critical “expectations” game…given his business experience, he also knows how to “close the deal”…
Trump, who has been consistently underestimated since he launched his bid for the Republican nomination, has significantly narrowed the gap with Clinton in recent weeks, according to an average of all the polls, with Clinton beginning to hemorrhage in some key battleground states such as Ohio and Pennsylvania…any perception after tonight that Trump has a strong chance of winning is likely to have an impact on the markets including Gold (up) and the U.S. dollar (down)…
The Rise Of The Renminbi
On October 1, the International Monetary Fund will add China’s renminbi to its elite basket of reserve currencies in the Special Drawing Rights (SDR)…this is “a momentous event” for the international finance community, according to some economists, as it allows the yuan to join the euro, yen, pound and dollar in the A-list basket – an international stamp of approval for the renminbi and a major new step in its growing global credibility…
Oil Update
Oil has firmed up today as the world’s largest producers gathered in Algeria for 3 days of meetings to discuss ways to support the market, with nervous trade driving volatility to its highest since exporters met in April…skepticism about any deal being reached prompted money managers to cut their bullish bets to a 1-month low last week when it appeared Saudi Arabia and Iran were making little progress in achieving a preliminary agreement to freeze production…however, reports over the weekend suggested that the Algerian energy minister said the Saudis had offered an output cut…
Goldman – Coking Coal Rally To Continue
Goldman Sachs has responded to the dramatic coking coal rally by saying higher prices for this year’s best performing commodity may be here to stay…spot hard coking coal has more than doubled this year to trade above $205 a metric ton as a new Chinese government policy reduced the number of annual working days at its mines…Goldman, in a note dated Thursday, raised its 2017 price forecast by 64% to $135 a ton and its 2018 estimate by 47 percent to $125…that compares to the current third-quarter contract price of $92.50…BHP Billiton is the world’s biggest shipper of coking coal, which is combined with iron ore to make steel…China’s output has fallen more than 10% so far this year as President Xi Jinping’s government ordered miners to lower output to the equivalent of 276 days of production, down from 330 days…China’s imports of coking coal jumped 45% in August to the highest in 13 months…Corsa Coal (CSO, TSX-V) has been one of the hot Venture coking coal stocks this month, more than doubling in price…
In Today’s Morning Musings…
1. Two plays under a dime that are headed higher in Q4…
2. Cannabix Technologies (BLO, CSE) hits a new 2016 high…
3. Otis Gold (OOO, TSX-V) shows more resource expansion potential at Kilgore…
4. Silver update – important short-term indicator turns bullish…
5. Daniel’s Den – 5 key trading tips…
Plus more…click here to read the rest of today’s Morning Musings and all BMR exclusive content, through a risk-free Pro, Gold or Basic package, or login with your username and password…
Way to go Daniel! Some real gems and insights in your mini biograpy on stock trading. Really enjoyed it!
Comment by JoeMichel — September 26, 2016 @ 10:15 am
Ditto Daniel.. thank you.. good insight… I bought Microsoft in early 1990’s at 90 bucks… 250 shares.. sold at 112 and thought I was a god:)
If I would have held – Microsoft is a blue chip tech – I would be holding 4000 shares right now.
I use(d) the same mindset with CXO… my bad .. so as I learn it is important to understand WHAT your investment is.. that dictates the attention it should get.
thinking out loud again!:)
Comment by Jeremy — September 26, 2016 @ 10:53 am
There is a documentary on super channel at 7pm tonight, the title is Koneline and its about the beauty of The Golden Triangle area and it is not a protest about mining.
Comment by Iceclimber — September 26, 2016 @ 2:05 pm
Thanks, Iceclimber, should be good….will have to record in order to watch the debate.
Comment by Jon - BMR — September 26, 2016 @ 3:19 pm
Mr. Bill Fisher reports
GOLDQUEST ANNOUNCES A ROBUST PRE-FEASIBILITY STUDY & MAIDEN MINERAL RESERVES FOR ITS ROMERO PROJECT
Goldquest Mining Corp. has released the results of an independent prefeasibility study, including maiden mineral reserves, for its 100-per-cent-owned Romero gold-copper project in the Dominican Republic. With a Net Present Value (“NPV”) of US$203 million, the PFS demonstrates the economic robustness of a proposed underground mine at Romero. All figures are in U.S. dollars unless otherwise stated, with a DOP/USD exchange rate of 46:1 and metal price assumptions of $1,300/oz gold (Au), $20/oz silver (Ag) and $2.50/lb copper (Cu).
PFS Highlights Include:
-Maiden Probable Mineral Reserves of 7.03 million tonnes containing: -840,000 ounces of gold -980,000 ounces of silver -136 million pounds of copper -A 2,800 tonnes per day operation totalling life of mine gold equivalent production of approximately 1.117 Moz Au Eq -Annual gold equivalent production averaging 109,000 ounces per year -Post tax Net Present Value @ (5%) of $203 million (pre tax $317 million) -All-in Sustaining Cost of $595/oz Au Eq -Post tax Internal Rate of Return of 28% (pre-tax 38.6%) -Initial Capex of $158.6 (Life of Mine $250.9 including sustaining and closure)
“We are very pleased that our Romero PFS validates the previous Preliminary Economic Assessment studies and we look forward to aggressively advancing the project through permitting and final feasibility,” stated Bill Fisher, Executive Chairman of Goldquest. “Along with the robust PFS results, we are proud to have established the first Mineral Reserve in our district. We believe that the Romero mine as designed is only the starting point for the Company and that the remaining resources at Romero, Romero South and the exploration potential close by provides an excellent opportunity for growth beyond the mine plan in this PFS.”
The PFS was prepared under the direction of JDS Energy & Mining Inc. (“JDS”), an industry-leading, international engineering firm, with extensive experience in both the construction and operation of mining projects. The study was supported by a team of internationally recognized firms, all of whom are independent of the Company, including:
-Micon International Limited (Micon) (geology, mineral resources) -Golder Associates Limited (geotechnical, tailings and water management) -Allnorth Consultants Limited (process design) -MineFill Services Incorporated (backfill plant design)
The PFS envisages a 2,800 tonnes per day (“tpd”) project, encompassing a ramp-accessed underground mining operation employing a standard crush, grind, flotation process plant to produce a saleable copper concentrate product with significant gold and silver credits. Process tailings will be used as paste backfill in the underground mine with excess material stored on site as dry stack material. Water requirements for the mine will be met by collecting and storing runoff water from the site.
Mineral Resource Estimate
The basis for the PFS is the updated mineral resource estimate prepared by Micon. Details of the resource estimate will be set out in the Company’s upcoming National Instrument 43-101 (“NI 43-101”) technical report for the PFS. For the purposes of reporting the mineral resources, Micon selected a net smelter returns (“NSR”) cut-off of $60 (operating cost/commodity price weighted recovery) as an estimate of what might be a reasonable marginal cost of extraction at Romero and Romero South.
Table 1: Mineral Resource Estimate for Romero Project
—————————————————————————
Cu
Category Zone Tonnes Au (%) Zn Ag AuEq Au Ounces AuEq
(g/t) (%) (g/t) (g/t) Ounces
—————————————————————————
Indicated Romero 18,390,000 2.57 0.65 0.31 4.2 3.43 1,520,000 2,028,000
—————————————————————————
Romero
South 1,840,000 3.69 0.25 0.18 1.6 4.01 218,000 237,000
—————————————————————————
Total Indicated
Mineral 20,230,000 2.67 0.61 0.30 4.0 3.48 1,738,000 2,265,000
Resources
—————————————————————————
—————————————————————————
Inferred Romero 2,120,000 1.80 0.39 0.36 3.2 2.32 123,000 158,000
—————————————————————————
Romero
South 900,000 2.57 0.20 0.21 2.1 2.84 74,000 82,000
—————————————————————————
Total Inferred
Mineral 3,020,000 2.03 0.33 0.32 2.9 2.47 197,000 240,000
Resources
—————————————————————————
-Effective data for the Mineral Resource is September 27, 2016. -Mineral Resources which are not mineral reserves do not have demonstrated economic viability. The estimate of Mineral Resources may be materially affected by environmental, permitting, legal, title, taxation, sociopolitical, marketing or other relevant issues. -The quantity and grade of reported Inferred Resources in the estimation are uncertain in nature and there has been insufficient exploration to define these Inferred Resources as an Indicated or Measured Mineral Resource and it is uncertain if further exploration will result in upgrading them to an Indicated or Measured Mineral Resource category. -Gold Equivalent Metal prices used were $1,400/oz Au, $20.00/oz Ag and $2.50/lb Cu and recoveries of 78.1% for gold, 94.6% for copper and 58.6% for silver. -Columns may not calculate precisely due to rounding errors.
Mineral Reserves
The Probable Mineral Reserves are the economically minable portions of the Indicated Mineral Resource as demonstrated by this PFS.
Table 2: Mineral Reserve Estimate for Romero Project
—————————————————————————-
Mine Tonnes Au Ag Cu Au Eq (1)
Reserves
—————————————————————————-
(Cut off $70 (g/t) (oz) (g/t) (oz) (%) (M lb) (g/t) (oz)
NSR) (2)
—————————————————————————-
Total
Probable 7,031,000 3.72 840,000 4.33 980,000 0.88 136 4.9 1,117,000
—————————————————————————-
– Gold equivalent metal prices $1,300/oz Au, $20.00/oz Ag and $2.50/lb Cu -Cut-off NSR metal prices: Cu $2.50/lb Au $1,250/oz Ag $17.00/oz; Recovery: Cu-96.8 Au-71.7 Ag-54.4, Payable: Cu-96.5 Au-90.0 Ag-95.0, TCRC: $257.83/dmt, Cu concentrate 20%
Mining
The mine plan for the Romero deposit contemplates a ramp accessible underground mine employing mechanized longhole and cut & fill stoping methods with both paste and waste rock for backfill. At full production, run of mine material will be transported to the surface at an average rate of 2,800 tpd where it will be hauled to the process plant, located approximately 3 km south of the mine. The PFS does not propose exploiting the Romero South deposit at this time. Romero South may be evaluated as a stand- alone deposit in the Feasibility Study stage.
The PFS mine plan includes 7.03 Mt grading 3.72 g/t Au, 0.88% Cu and 4.33 g/t Ag after accounting for dilution and mining recovery, with contained metal totaling 840k oz Au, 135.9 M lbs Cu (61.7 kt) and 980k oz Ag. The waste rock mined totals 900 kt, with all waste rock returned underground as backfill by Year 5.
The mine design includes a 5.0 m x 4.5 m ramp access with production coming from a combination of 75% longhole mining, 16% cut & fill mining and 9% from development. The mine scheduling targets the highest NSR sections of the deposit early in the mine life. The mine production schedule is provided below.
Table 3: Romero Mine Production Schedule
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Economic
Model Total Y1 Y2 Y3 Y4 Y5 Y6 Y7 Y8
Export
—————————————————————————-
Ore
Tonnes kt 7,031 817.8 1008.0 1008.0 1008.0 1008.0 1008.0 1008.0 164.7
—————————————————————————-
Au g/t 3.72 4.54 4.85 4.06 3.96 3.66 3.23 2.18 1.80
—————————————————————————-
Ag g/t 4.33 4.97 3.83 3.52 5.33 5.31 3.85 3.90 2.82
—————————————————————————-
Cu % 0.88% 0.86% 0.83% 0.96% 0.96% 0.89% 0.80% 0.86% 0.78%
—————————————————————————-
Processing
The processing flow sheet selected for the PFS consists of crushing, grinding, gravity and flotation to produce a 13% copper concentrate with gold and silver credits and no significant deleterious elements. A marketing study commissioned by the Company has demonstrated the saleability of this concentrate.
Approximately 40% of tailings will be used as paste backfill with the balance disposed of in a tailings storage area through dry stacking. Total recoveries into the final concentrates, based on existing metallurgical test work, are expected to be approximately 78.1% for gold and 94.6% for copper, and 58.6% for silver.
Infrastructure
Off-site infrastructure for Romero is planned to include a 23.5 km main access road connecting the site to the local, paved road network. In addition, a 24.5 km — 69 kV Transmission Line will connect the site to the national power grid.
Concentrate storage and handling would occur at the port of Puerto Viejo, which will host a storage shed for 15,000 tonnes of concentrate and a ship-loading conveyor system.
On site infrastructure includes;
– 2.8 km haul road between the portal and the process plant site; -Step-down transmission substation for incoming high voltage power from the national grid; -Fit-for-purpose ancillary facilities, including administration and offices, maintenance and warehousing, mine dry, assay laboratory; -Temporary Waste Rock Storage Area for 225,000 m 3 of waste; and -Water storage pond, sedimentation ponds, dry stack and waste rock storage run-off collection ponds, and emergency pond for excess water.
Capital Costs
The pre-production capital cost for the project is estimated to be $158.6 million including indirect costs and contingency. Life of Mine (“LOM”) sustaining capital is estimated at $92.3 million. Total LOM capital required for the project is approximately $240.9 million.
Life of mine sustaining capital costs are estimated at $81.7 million (excluding contingency) including the closure costs of $15.5 million. Sustaining capital consists of capitalized development after the initial production start-up and major equipment rebuilds.
Table 4: Capital Cost Summary
—————————————————————————-
Capital Costs Pre-Production Sustaining/ Total ($M)
($M) Closure ($M)
—————————————————————————-
Underground Mining 15.7 57.4 73.1
Site Development and Roadworks 13.5 4.0 17.5
Process Facilities 32.4 5.2 37.6
On-Site Infrastructure 8.8 4.1 13.0
Off-Site Infrastructure 21.5 0.0 21.5
Indirect Costs 11.8 0.0 11.8
EPCM 23.2 0.0 23.2
Owner’s Costs 10.2 0.0 10.2
Closure 0.0 15.5 15.5
Salvage 0.0 -4.5 -4.5
—————————————————————————-
Subtotal Capital Costs 137.3 81.7 219.0
—————————————————————————-
Contingency 15% 21.3 10.6 32.0
—————————————————————————-
Total Capital Costs 158.6 92.3 250.9
—————————————————————————-
Operating Costs
The operating costs used in the PFS were estimated from first principles using in-country unit rates for labour, consumables and power where possible. The LOM All-In Sustaining costs are estimated to be $595 per ounce of gold (payable net of by-product credits from copper and silver).
LOM site operating costs total $45.97/t processed, as summarized below.
These cost estimates assume an electricity rate of 0.12/kWh and a diesel cost of $0.66/L.
Table 5: Operating Cost Summary — per ounce and per tonne basis:
—————————————————————————-
Operating Cost $/t Processed LOM $M
—————————————————————————-
Mining 27.67 194.5
Processing 11.58 81.4
Re-Handle 1.28 9.0
General & Administrative 5.44 38.3
—————————————————————————-
Total OPEX 45.97 323.2
—————————————————————————-
Financial Analysis
The summary below, showing a range of commodity prices, holds the above-noted electricity rate and diesel cost constant. The NPV figures are calculated to the beginning of 2018 when, assuming the receipt of necessary permits and approvals within expected timelines, construction would begin. For purposes of the calculations, any 2016 and 2017 development expenditures are treated as undiscounted costs.
Pre-Tax
-Net Present Value (NPV) discounted at 5% is $317.2 M; -Internal Rate of Return is (IRR) is 38.6%.
Post-Tax
-Net Present Value (NPV) discounted at 5% is $202.7 M; -Internal Rate of Return is (IRR) is 28.1%; and -Payback of 2.5 years.
Taxes modelled include a corporate tax rate of 27%, with Export Withholding Tax credited against gross corporate tax to generate net corporate tax. The Export Withholding Tax is applied at 5% on the Net Smelter Revenue, while a local community tax is applied 5% on taxable income. The net impact is an effective tax rate of approximately 32%.
Table 6: Gold-Copper Price Sensitivity Table
—————————————————————————-
Gold US$ per ounce $1200 $1300 $1400
Copper US$ per pound $2.00 $2.50 $3.00
Silver US$ per ounce $15.00 $20.00 $25.00
—————————————————————————-
NPV @ 5% $136.4 M $202.7 M $266.1 M
— After-tax USD
—————————————————————————-
IRR 21.9% 28.2% 33.7%
— After-tax
—————————————————————————-
Community and Environment
The PFS incorporates several important design features that minimize the impact to the surrounding environment:
-The use of cyanide is not included in the design. A flotation concentrate product will be shipped from the Puerto Viejo port to international smelters; -100% of the waste rock from the underground mine will be returned back underground as backfill to eliminate the potential for acid rock drainage; -The project is designed to capture run-off water to supply the mine, thus avoiding any water taking from the San Juan river; -Tailings from the process plant will be filtered, dried and placed in a dry stack storage facility. No tailings ponds or dam structures will be required; -Power will be supplied by a line connection to the domestic power grid; -Ventilation fans will be located underground to reduce noise; and -No relocation of the Hondo Valle village, or any settlements.
Opportunities
There are a number of initiatives recommended which may further enhance the project economics, including:
-Conversion of Inferred resources at Romero and Romero South to Measured and Indicated Mineral Resources which may be converted to Mineral Reserves -Examining resource growth potential at brownfields targets near Romero -Site investigation program for geotechnical, hydrology, hydrogeology and baseline environmental; -Additional drilling for metallurgical sampling and execution of further metallurgical testing on Romero South and pyrite concentrate product; -Discussions with smelters on terms and product specifications; and -Technical investigation of the Pueblo Viejo port and required upgrades.
About Goldquest
Goldquest is a Canadian based mineral exploration company with projects in the Dominican Republic. Goldquest is traded on the TSX-V under the symbol GQC and in Frankfurt/Berlin with symbol M1W.
Qualified Person
The scientific and technical information in this news release has been reviewed and approved by Jeremy Niemi, Vice President of Exploration of Goldquest and a Qualified Person under NI43-101. A Technical Report (the “Technical Report”) to be prepared in accordance with Form 43-101F1 will be filed on SEDAR within 45 days of this news release. For further information with respect to the key assumptions, parameters and risks associated with the results of the PFS, the mineral resource estimate and other technical information with respect to the Romero project, please refer to the Technical Report to be made available at http://www.sedar.com. The following qualified persons, as that term is defined in NI 43-101, have prepared or supervised the preparation of their relevant portions of the technical information in this news release and the related Technical Report to be filed:
The technical information contained in this news release is based upon information prepared by Mr. Makarenko, P. Eng. and Ms. Kelly McLeod, P. Eng. of JDS Energy & Mining Inc. with the exception of the Mineral Resources which were prepared by Mr. B. Terrence Hennessey, P.Geo., of Micon International Limited. Each of these individuals is a Qualified Persons and independent of Goldquest as defined by NI 43-101.
We seek Safe Harbor.
Comment by Jon -BMR — September 27, 2016 @ 4:42 am
Good write up Daniel, thanks.
Comment by Mmurphy — September 27, 2016 @ 10:08 am