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CANADIAN junior gold miner and explorer, Sacre Coeur Minerals, has told prospective investors that the company is offering a very low risk route to expansion through net cash generated by operating activities, less net cash used in investing activities. This process, usually referred to as organically generated cash flow, was outlined by the President and Chief Executive Officer, Greg Sparks during a meeting with investors in London on Monday, the Website Mineweb reported.
Sacre Coeur has been exploring for gold in Guyana since 2005.
Reporting on the briefing, Mineweb said that Sparks had disclosed that the company has narrowed its exploration focus to two large blocks of properties, namely the Lower Puruni Block, which includes the Million Mountain properties, and the Northwest District Block are both prime targets for hard-rock gold resources, and contain large volumes of alluvial (river bed) and elluvial (decomposed rocks) material.
According to the Mineweb report, at the moment, Sacre Coeur’s main focus is on the Million Mountain concessions where it is already producing gold from elluvial and alluvial mining operations generating significant cash flow in an extremely simple, and low cost, process.
The cash flow from the existing operations goes part way to cover the majority of costs associated with developing the saprolite ‘hard rock’ sections, meaning that when this is brought into production – planned for 2014 – the capital payback would be in months, rather than in years, and the Internal Rate of Return (IRR) an extremely impressive 115% on its current calculations!
Mineweb quoted Sparks as disclosing that current production is quite small, but overall, very cash accretive, at around 300 oz/month, but with total costs at only $510/oz.
The company is achieving a healthy margin of over $1,000/oz plus at current gold prices.
It is currently looking to double the output from its elluvial and alluvial operations at a capital cost of only around $435,000 – which can easily be financed out of cash flow – while setting out its larger open pit ‘hard rock’ operation at Million Mountain Zone 1 where it has defined an NI 43-101 resource of a gold content of around 500,000 ounces.
Admittedly this is low grade – but very easily mineable and simple to process material. Drilling is continuing to extend this.
An internal preliminary economic analysis, Sparks said, shows the plan to be a robust proposition, and more detailed mining and metallurgical studies are under way with the plan to bring it to a construction-ready stage and go-ahead decision by mid 2013, and on stream by mid 2014, at a gold output rate of around 35,000 to 50,000 ounces a year.
According to the Mineweb report, in addition to its own cash flow generation, Sacre Coeur is entering into an innovative $5M gold bond financing, convertible into gold at a discount to the 20 day average spot price for gold which Sparks describes as a technically very simple and low-cost financing option which is proving very popular. Total capital cost of the ‘hard rock’ mine is put at $29.5M.
The saprolite development would only have a life of around five years and produce gold at around $405/ounce operating cost, but the alluvial and elluvial operations, even at the planned doubling of the current mining rate, will last considerably longer, at around 13 years, with the prospect of opening up new areas and extending the life here as well.
Once the saprolite cap is mined, Sacre Coeur could look at mining the true hard rock material below it, but given this would involve crushing and grinding of the ore, as well as processing, the added costs – particularly for power which is diesel generated – would make it become a very different economic proposition and might not be worthwhile, depending on the prevailing gold price at the time.
But, Mineweb reported there is huge additional exploration potential for finding new low cost projects, not only in the Million l Mountain area, but also in its Northwest Block.
Sparks additionally disclosed that Sacre Coeur owns and operates three of its own drill rigs which keeps its drilling costs down and the company currently has two of its rigs undertaking lucrative contract drilling work for other explorers. It is also not ruling out accretive acquisitions and farm-ins in Guyana, which could be achieved at low cost in the current economic environment.
According to Sparks’ figures, Mineweb reported, Sacre Coeur’s current burn rate is around $200,000 a month as against a cash flow of close to $600,000/month (including contract drilling revenues), and with the proposed doubling of its alluvial and elluvial operations, this should rise to nearer $1M a month, assuming current costs and recoveries can be fully duplicated and the contract drilling continues at its current level.
Sacre Coeur has been exploring for gold in Guyana since 2005.
Reporting on the briefing, Mineweb said that Sparks had disclosed that the company has narrowed its exploration focus to two large blocks of properties, namely the Lower Puruni Block, which includes the Million Mountain properties, and the Northwest District Block are both prime targets for hard-rock gold resources, and contain large volumes of alluvial (river bed) and elluvial (decomposed rocks) material.
According to the Mineweb report, at the moment, Sacre Coeur’s main focus is on the Million Mountain concessions where it is already producing gold from elluvial and alluvial mining operations generating significant cash flow in an extremely simple, and low cost, process.
The cash flow from the existing operations goes part way to cover the majority of costs associated with developing the saprolite ‘hard rock’ sections, meaning that when this is brought into production – planned for 2014 – the capital payback would be in months, rather than in years, and the Internal Rate of Return (IRR) an extremely impressive 115% on its current calculations!
Mineweb quoted Sparks as disclosing that current production is quite small, but overall, very cash accretive, at around 300 oz/month, but with total costs at only $510/oz.
The company is achieving a healthy margin of over $1,000/oz plus at current gold prices.
It is currently looking to double the output from its elluvial and alluvial operations at a capital cost of only around $435,000 – which can easily be financed out of cash flow – while setting out its larger open pit ‘hard rock’ operation at Million Mountain Zone 1 where it has defined an NI 43-101 resource of a gold content of around 500,000 ounces.
Admittedly this is low grade – but very easily mineable and simple to process material. Drilling is continuing to extend this.
An internal preliminary economic analysis, Sparks said, shows the plan to be a robust proposition, and more detailed mining and metallurgical studies are under way with the plan to bring it to a construction-ready stage and go-ahead decision by mid 2013, and on stream by mid 2014, at a gold output rate of around 35,000 to 50,000 ounces a year.
According to the Mineweb report, in addition to its own cash flow generation, Sacre Coeur is entering into an innovative $5M gold bond financing, convertible into gold at a discount to the 20 day average spot price for gold which Sparks describes as a technically very simple and low-cost financing option which is proving very popular. Total capital cost of the ‘hard rock’ mine is put at $29.5M.
The saprolite development would only have a life of around five years and produce gold at around $405/ounce operating cost, but the alluvial and elluvial operations, even at the planned doubling of the current mining rate, will last considerably longer, at around 13 years, with the prospect of opening up new areas and extending the life here as well.
Once the saprolite cap is mined, Sacre Coeur could look at mining the true hard rock material below it, but given this would involve crushing and grinding of the ore, as well as processing, the added costs – particularly for power which is diesel generated – would make it become a very different economic proposition and might not be worthwhile, depending on the prevailing gold price at the time.
But, Mineweb reported there is huge additional exploration potential for finding new low cost projects, not only in the Million l Mountain area, but also in its Northwest Block.
Sparks additionally disclosed that Sacre Coeur owns and operates three of its own drill rigs which keeps its drilling costs down and the company currently has two of its rigs undertaking lucrative contract drilling work for other explorers. It is also not ruling out accretive acquisitions and farm-ins in Guyana, which could be achieved at low cost in the current economic environment.
According to Sparks’ figures, Mineweb reported, Sacre Coeur’s current burn rate is around $200,000 a month as against a cash flow of close to $600,000/month (including contract drilling revenues), and with the proposed doubling of its alluvial and elluvial operations, this should rise to nearer $1M a month, assuming current costs and recoveries can be fully duplicated and the contract drilling continues at its current level.
