yeh Ive just reduced my stake in the company, I do see them doing another share offer in the near term until they start making profit off of the placer mining, which isnt anticipated for the next qtr or so Im happy to cut my losses and wait for the share price to bottom out before I jump back onboard!
I guess im hedging my bets on NTL coming out with an amazing report next month
Drops to 4 cents on the TSX....they obviously didn't like the report either!
Based on that we should be at 5 cents here. Probably a smart move Bucko getting out when you did, probably only downside from here for awhile.
yeh well im going back to the UK for all of August to visit friends and family so i will probably look to reinvest after i get back...just in time for the next quarterly report
There was every indication that Q1 would see a sensible placer profit, it's frustrating that the company didn't manage to capitalise on a fairly good gold price, with all the gear well established, the weather being mild. They'll be snowed in by now.
Here's the only photo shareholders have of GRU#3, I think, from the placer page on the website. I'm not sure what to make of it, is it on a pontoon or not? In the background are the Dunstan Ranges, source of the secondary alluvial gold they're picking up. GRU#3 is working the Hecklers area, close to Glassford Road.
What worries me a bit is the fact conditions were pretty good in Q1. A good gold price, good weather....
And yet we hear this from the CEO...'The Company faced a highly challenging quarter...'
As you say ElZ, winter is here, snow, lower gold price....if Q1 was challenging one would imagine Q2 will be a nightmare.
Nice pic of the GRU, now they just have to get it to make some money.
What worries me a bit is the fact conditions were pretty good in Q1. A good gold price, good weather....
And yet we hear this from the CEO...'The Company faced a highly challenging quarter...'
As you say ElZ, winter is here, snow, lower gold price....if Q1 was challenging one would imagine Q2 will be a nightmare.
Nice pic of the GRU, now they just have to get it to make some money.
Flugenbear, I guess they'll pile a lot of wash up in front of a GRU during the day, enough to keep processing all night. The cross-pit conveyor, which we have no official data on at all, has been in use at Morans, on the other side of the road. I presume it is, as the description says, mobile. There is quite good detail about how the mining is carried out, in the placer report from February (Technical Reports page of GEL website). This includes grade data for Hecklers being higher than their exploration drilling suggested, but still just below 0.4g/m3 on average, up until February. This was a higher grade than at Morans. Hecklers was to have taken 66 weeks to mine out, Morans nearly two years, at the rate they used for most of the first half of 2013. Sounds like they ended up 20% behind schedule.
The lower South Island has had its first good dusting of snow a couple of days ago, and I don't know much about how long snow is on the ground each year in Alexandra. Maybe some of the locals can advise us.
At least gold is holding up at about US$1400 an ounce. When GEL did the figures for the NI 43-101 placer report in February, they used a figure of US$1600 an ounce, and a favourable exchange rate. Their cutoff was about 0.2g/m3 of gold. When I looked at a spreadsheet of my own, with a very rough idea of the hourly costs and grades they'd given, and costs like the capital payoff to Bob Kilgour, I reckoned that the grades needed to be about 0.4g/m3 to make a decent profit. So the subsequent gold price dropping $200 wasn't going to look good on paper or at the bank, unless they found good grades.
Where am I going with this? The same spreadsheet allows a simple test of the idea of moving to one GRU, concentrating the same staff on a 24/7 operation, and spreading the fixed costs over more hours. Fixed costs could be hireage, landowner royalties, Slimes and Other. Fuel and R&M, Labour, won't be. Even allowing for $80k capital repayments a month, one of the GRUs handling 60 m3 an hour, for about 83% of the entire week, should make a profit of about US$2mill a year - if the grade is consistent at 0.4g/m3.
I have included the govt royalty of 5% of net profit on the operation. Because GEL can't run without the GRUs and other equipment, and a mortgage over them is held by Bob Kilgour, I included the capital repayments in the running costs, even though technically they might not be in the cashflow treatment GEL uses. But shareholders are interested in seeing what the effect on the GEL bank account is, in terms of free cashflow.
When I tested the numbers, running a GRU at 45m3/hr makes a meagre profit at US$1400 an ounce. No profit safety there. So either GRU#1 is going to be used, or GRU#3 has to be pushed a bit harder than its normal capacity, or the grades will be better than 0.4g/m3.
But certainly, there is a very positive change when going from 300 hours of operation/month, to 728. That's where the magic comes in.
Stockhouse (forum on the TSX) has a post from the full first quarter report: the geologists are interested in an area between the Hecklers placer area and the historic Drybread sluicing area. I did some research on this from the February Placer report.
Q1: At Drybread, where mining operations are currently underway, exploratory mapping and drilling is underway to target the zone between the current operations, and historical mining activity adjacent to the Dunstan Range. In March 2013, GEGL completed an exploratory drilling program consisted of 46 RC holes totalling 472m. Assay results were completed on 18th April. The program returned mostly zeros and low grade results, apart from two holes, DRY-ARC-019 and DRY-ARC-041, which returned promising goldgrades over 4m and 6m respectively. These good grades correspond to a distinctive quartz-rich gravel, as observed in the chip trays. This gravel is more likely to be related to the early quaternary deposits of the historically mined Drybread diggings, as opposed to the more recent schistose gravels currently being mined at the Hecklers site. A review of the data was completed, which determined that multiple drill holes surrounding the anomalous results did not penetrate this quartz-rich gravel. A second phase of drilling (85 holes) is currently underway to establish the depth, extent and gold content of the layer. It will take an estimated three weeks (from 10/5/13) to complete the drilling.
Below is a flyover view of Drybread, and I'd guess that the area is towards the top of the yellow permit space. I read up a bit on the source of all the alluvial gold, it's the result of glaciers acting on exposed quartz reefs over thousands of years, the quartz being hosted in schist rock generally. Down at Heckler's, the gold is redeposited from the original layer by water action I guess, and it is close to a lot of clay (weathered greywacke). Further up, it might be a bit cleaner, and a higher grade. In fact, the grades at Groundwater, Morans and Hecklers, increase as the areas get further elevated. Groundwater is the lowest grade, Hecklers the highest so far.
By now, the extra drilling should be complete, and they'll be doing the assays in the lab at Alexandra.
It's very hard to put a figure on what sort of a grade sluicing operations would have bothered with, over a hundred years ago. Back then, water cannons driven by a big head of water provided artificial erosion, the wash being put through riffles. It must have been inefficient, and in the last 30-40 years the portable trommels have been developed(GRUs) which are a lot easier to use.
NZResources put out this press release today:
Main Divide gains Blackadder gold permit
5 June 2013
Private company Main Divide Gold Ltd has gained a permit for the Blackadder alluvial gold prospect on the South Island’s West Coast from New Zealand Petroleum & Minerals (NZP&M).
The company said the prospect is believed to be one of the richest undeveloped alluvial gold fields in New Zealand.
It was discovered in 1981 by local brothers Afton and William Blackadder. Their initial testing of 29 cubic metres of gravel returned 8 ounces of gold – a yield of over 8.6 grams/m3
Main Divide’s principal, Chris Humphreys, said this can be compared to existing alluvial mining operations which typically achieves grades of between 0.1 and 0.3 grams/m3.
Humphreys said based on the Blackadder Brother’s prospecting in the early 1980s, the permit has the potential to contain a significant alluvial gold resource at “unusually high grades.”
Humphreys noted that the Key Government’s support for the mineral industry is likely to assist with the exploration and potential development of Blackadder. He said the prospect has not been mined due to access constraints.
“Now that the permit has been awarded, Main Divide will seek to establish the extent of the alluvial gold resource within the prospect.
“We have received a number of expressions of interest from West Coast–based parties seeking to partner with Main Divide.”
He said these proposals will be evaluated in the coming months.
The Blackadder prospect is in the western Maruia Valley, about 20 kilometres north-west of Lewis Pass.
Main Divide describes itself as an alluvial gold explorer with a focus on the West Coast and holds interests in three prospecting permits and two exploration permits with a total acreage position of about 70,000 hectares spread across the Buller and northern Grey districts.
That is an eye-watering grade, and needless to say it looks very good running into the Drybread spreadsheet. But this permit is on the West Coast, actually it's in beech forest on West Bank Road beside SH65, near Springs Junction, inland below Murchison. This could explain why it hasn't been developed yet. It's an exploration permit (EP 54526, under Four Rivers Gold Ltd). http://www.maindividegold.co.nz/blackadder.pdf
The new permit also follows a north-east direction, the path of an old river which ran beside a glacier. This river deposited gold nuggets down in between granite boulders, a few meters underground, in rich patches. It's thought the permit could contain up to 100,000oz of gold.
Drybread on the other hand, is open country, already worked and easier to get a permit for mining. GEL has found pockets of 5g/m3 on some of their drills further down the hill.
[QUOTE=elZorro;410335]At least gold is holding up at about US$1400 an ounce. When GEL did the figures for the NI 43-101 placer report in February, they used a figure of US$1600 an ounce, and a favourable exchange rate.
elZ, do you know what exchange rate GEL have based their figures on?
Do they have any USD hedging in place? If not, now could be a good time with the USD falling to 0.79. Of course it could still go down further but the smart money is probably on a rise above .80 again, and probably higher...
As you say gold is hovering around that $1400 mark, that really needs to hold, a fall much below that and the high exchange rate could see an end to the placer projects for now.
I have tried to figure out what the direction the gold price might take and read a lot of stuff, but I have to admit I am more confused than when I started! There seems to be valid arguments both ways, but the general consensus was we should be somewhere near the bottom now...I hope so.
But at the end of the day anything could happen....
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Originally Posted by Flugenbear
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