If one was to wear a PR campaign hat then first gold pour in April or May is better for short term positive market vibes AND FOR SHAREHOLDER CONFIDENCE IN THIS MANAGEMENT TEAM. Beating expectations is something this company NEVER did in the past. Long time shareholders suffered deeply and continually. Long time Century shareholders deserve the world for all that they have suffered through (even pre-financial crisis) during a period of the highest gold prices in the history of the planet.
However, when one puts on the operating efficiency hat then the view of a June 1st gold pour may be preferable.
With 200 tpd mining achieved at the end of March (assuming peak at 200 tpd for March, and not an avg of 200 tpd for the month), then we may be looking at about 3,000 to 3,500 tonnes of ore stockpiled in March.
If the company delivers on the target of 200 - 300 tpd ore mined in April then we may be looking at a further 6,000 to 8,000 tonnes of ore stockpiled in April.
This would bring us to a total of somewhere between 9,000 to 11,500 tonnes of ore stockpiled at the end of April.
Now, the company`s target for ore mining is 500 - 800 average for May. Let`s assume they deliver on that.
Let`s also assume they start the crushing process at mid May, with the intentions of first gold pour on June 1st (to hit the clock target on the company`s website).
It would likely mean a further 8,000 - 9,000 tonnes of ore gets stockpiled in the first half of May.
If all goes well, this would now bring the stockpiled ore total up to somewhere between 17,000 to 21,000 tonnes of ore.
If they are still mining 500 - 800 tpd in the second half of May, I can easily see them mixing in ore from the 17,000 to 21,000 tonne stockpile, to enable them to run 1,200 tpd through the mill once processing start up begins.
I think running 1,200 tpd through the mill starting in mid May is much more efficient than running maybe 400 - 600 tpd (daily mined + from stockpile) through the mill starting mid April.
Under this scenario, I can see them using the stockpile ore to enable them to process 1,200 tpd (through the mill) for both the second half of May and June, and maybe part of July.
As such (from the presentation):
``average daily tonnage is expected to average 1200-1400 tpd for 2010 as new zones are brought into production in the latter part half of 2010``
This statement may be refering to tpd average from the milling operation for 2010.
Who knows - only time will tell I suppose.
4 comments:
It seems to me that the entire Lamaque ramp up plan is geared towards achieving the Deutsche Bank performance objectives.
The Deutsche Bank agreement (filed Jan. 14th on SEDAR) includes a lot of confusing lawyer talk, as usual. However, I think we can focus in on a few of the key wordings.
They mentioned specifically ``processed ore`` and ``production rate``. They don`t mention mined ore in the key performance objectives.
As a result, I think milled process rates will be the key to everything.
Firstly, to have the first US$5M come available to us (from the US$15M performance escrow account) we need to install the crushing equipment (to the satisfatory of DB), and, we need to process 1,200 tpd for 14 consecutive days. The stockpiled ore should ensure we hit all 14 days in a row (if we happen to have 1 bad mining day in between, the 14 day count doesn`t have to start all over again).
If Century is following the plan I described in the main post (processing 1,200 tpd through the mill by mid May), we might be able to satisfy this processing requirement and gain access to the first US$5M from escrow maybe in early June.
Secondly, to gain access to the remaining US$9M from escrow Century need to hit a Lamaque ``production rate`` of 70,000 ounces for 4 consecutive months. With a 95% recovery rate and 4.76 g/t, I figured that Century will need to average 1,340 tpd through the mill for the 4 months in order to achieve this performance objective.
Thirdly, with regards to the start up comittment guarantee, the target appears to be the exact same as the one for gaining access to the US$9M from escow. Century need to hit a Lamaque ``production rate`` of 70,000 ounces for 4 consecutive months. I don`t see any near-term date that this has to be achieved by. I only saw something about all achievements have to be made by 59th month (or something like that). That`s a long time away. San Juan has been pledged as the start up guarantee. It will be released once the 70,000 ounce for 4 consecutive month performance rate has been achieved.
As a further note, the DB agreement restricts Century from making any acquisitions until the 70,000 ounce for 4 consecutive month productuion run rate has been achieved. I like this restriction a lot. It forces Peggy and 100% of Century time to be focused on delivering at Lamaque. I LIKE THIS RESTRICTION A LOT.
Century can still make a small acquisition at anytime, but only up to $5M (cash + non-cash). There is not much you can get for $5M though.
Anyway, in a nutshell, this is my interpretation of the situation.
According to Peter Ball, 200tpd was an average for April, not the peak. So we should have something close to 6000 tons of accumulated ore on surface already.
Thanks for sharing that info Glorieux. I was hoping it was an average, but I wanted to take the conservative approach just in case.
The 6,000 stockpiled tonnes make our start even more positive. Let`s hope we exceed the 200-300 tpd target for April. Also, it would be nice if preparation is coming along well in accessing the additional ore areas that will help us to crank up to 500-800 tpd in May. Perhaps the Bedard Dyke ounces in the pit wall (near surface) will have a contribution at that point - we know they are currently preparing the Bedard Dyke portal.
I have one more note.
As we know, they have set their clock on the website to a June 1st first gold pour.
However, they have also left this note in the latest presentation:
``Oz Au/Mth: 2-3k``
It looks like they have positioned themselves with 2 options:
1) If advancing stockpile mining goes well, and they stockpile sufficient number of tonnes in advance, they may choose to start milling in early May (once mining tonnage is cranked up to 500-800 tpd). This would allow them to process 1,200 tpd (new tonnes + stockpiled tonnes) through the milling circuit. This would also allow them to start pouring gold in mid May.
95%, 4.76 g/t, 1,200 tpd milled = about 174 gold ounces
14 days (to access the $5M from escrow) * 174 ounces per day = 2,436 ounces
This would be consistent with the ``Oz Au/Mth: 2-3k`` May target on the Corporate Presentation.
2) If ore stockpiling is not moving as rapidly as they like then they can give themselves 2 more weeks (to stockpile further, without impacting the website clock target of June 1st gold pour), and start up the milling circuit at mid May. This option still allows them to get to first gold pour at June 1st.
I am ok with whichever option they end of choosing, however, I would like for them to roll the first 14 days of gold pour (at the 1,200 tpd mill rate) into the bigger 4 month objective, if possible.
The 14 days will get them the $5M from escrow, but they need 4 consecutive months with a production run rate of 70,000 ounces. That`s about 1,340 tpd. Not all 4 months need to be 1,340 tpd, but the sum of the 4 consecutive months need to average 1,340 tpd (again, assuming 95% recovery and 4.76 g/t grade). As a result, they need the first of the consecutive months can be only 1,200 tpd milled, but the other months will need to be above 1,340 tpd to compensation.
Also, I think the production ounces have to come from calendar months. I take it that means, clean months, such as from June 1st to June 30th.
If Century feels that they can`t crank it up to 1,340 tpd consecutively in July and August time timeframe then they might as well go ahead and pour gold for the 14 days in May (to get the $5M from escrow), if the chain will be broken in July anyway.
However, if they feel that they can average 1,340 tpd from June to September then they shouldn`t pour any gold prior to June 1st (other than any small tests they need to run on the milling circuit) - they should toss all of the valuable stockpiled tonnes into that 4 month period. If successful, it would allow them to access the remaining $10M from escrow in October.
MUCH MORE IMPORTANT, I am thinking of the BIGGER PICTURE here. The 4 month success (Jun to Sep) would eliminate the start up pledge of San Juan. The 4 month success would eliminate this GIANT bottleneck (in October). The markets are always uncomfortable when key assets are pledged, as the risk of start up issues occuring are always a possibility (even though it might be slim in our case, especially with our great Bedard Dyke drill results, which will likely provide near-term significant ore feeds). Eliminating this start up commitment pledge (of very profitable San Juan) will go a long way towards removing giant clamps on our share price, IMO.
Post a Comment