Eric O's Favorite Gold Miners

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Eric Original
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St Andrew Goldfields

Mine accident at the flagship Holt Mine.  Buying opp?

http://finance.yahoo.com/news/St-Andrew-Goldfields-Ltd-Holt-cnw-1331725559.html?x=0

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Eric Original
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Eric Original wrote: Mine

Eric Original wrote:

Mine accident at the flagship Holt Mine.  Buying opp?

http://finance.yahoo.com/news/St-Andrew-Goldfields-Ltd-Holt-cnw-1331725559.html?x=0

Nope.  Opened a couple cents higher.  

cursesfoiled128455229619687500.jpg

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Raising the bar

Forgot to mention last week I raised my minimum market cap to $30M.  No immediate impact on the thread, though Temex had better watch their backs.  I'll go to $35M at the end of the month, and steadily higher after that.  As I've said many times, for penny wisdom, I follow BOG's thread.  On this thread, I'll stick to the bigger fish.

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Saskman
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Mine Tours

Eric

If you had a list of things to look for and questions to ask during on a one-on-one mine tour of Sask companies - what would you look for and ask.

Best wishes as always

Eric Original
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Saskman wrote: Eric If you

Saskman wrote:

Eric

If you had a list of things to look for and questions to ask during on a one-on-one mine tour of Sask companies - what would you look for and ask.

Best wishes as always

I'm thinking you'll be visiting underground miners, and therefore I'd be asking about reserve replacement.  To explain why, let's take a step back and talk about the difference between underground mines and open pit mines.

Because of the economics and logistics involved, open pit mines generally drill up the whole works before they turn a shovel. They know from the start that there are Xmillion ounces, and what the mine life is expected to be.  With underground mining it's more common to prove up reserves as you go.  Mine a years worth, prove up another years worth, that sort of thing.  This is why databases that show you valuations in $ per ounce in the ground always make the OP mines/deposits look really cheap.  Lots of cheap ounces.  And the UG mines/deposits always look expensive. But it's really apples and oranges.

An open pit mine might typically start off with a projected mine life of 10 years or so.  And quite often, that will pretty much be it.

An underground mine, given a simplistic calculation of reserves divided by production might appear as if it only has 3 or 4 years of life left.  But that is misleading.  A good underground mine might report a remaining mine life of 3 or 4 years, for decades, provided the gold price and mining costs cooperate.  The gold is often there, it's just that it's expensive to prove up, so they drill as they go.

Getting back to your question, I'd hone in on the prospects for discovering and proving up new reserves to replace the current production.  "Reserve Replacement".   The current numbers as far as reserves, grade, production, are public record.  Their first answer will usually be something like "We've replaced our reserves for 10 straight years!"  or "We replaced 120% of production last year!"  I can look that stuff up.  I want to know what's coming up next.  Any hot new zones?   If the boss let you place one blind hole, where would it be and why?   How many meters are you going to drill this year?  Is that more, or less, than the past couple of years?  Why?  Are production grades expected to rise or fall for the next few quarters?  Why?  What are your chances to not only replace production, but to actually grow reserves?  Gimme some sizzle!

Secondary to that, I'd be asking about milling capacity.  Are you using your mill to the fullest?  Any plans to expand milling capacity?   That might tip their hand as to future production increases.

Have a great trip, Saskman!

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Saskman
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Thanks

Sounds good, Eric. I have been seeking advice from my best sources. I am going into all the properties with the maximum amount of pre-reading possible including gov't archives. Hopefully my studies and the advice from others will be beneficial.

One week and I'm gone for a week. I've had to sign disclosure waivers as I have been told I will be seeing many things that are not public information. Also sign a waiver stating I am not affiliated with another miner. 

I am being treated to site tours w/ senior mgmt and BOD. Just happens boss of one company grew up around here and one of the top top dogs of the other company is my best friend's uncle and the companies are within a couple hours of each other.

I have been told to expect long days.

Thanks again

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Sounds very cool indeed,

Sounds very cool indeed, Saskman.  Wish I was going with you.  Road Trip!

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Gold Mining Video

Here's a video of a very unique mining operation ;-)

This has been playing here for a week or so, thought the non-Californians would get a kick out of it!

A little tooo serious on the main thread today to post it there.

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Saskman

Check your messages before you hit the road.  

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Eric Original
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Pretium

Revised PEA on Brucejack is out, and it looks pretty darn attractive to me.  For Capex of $436M, you get 24 years of 287,000 oz production, that actually averages 325,000 over the first 12 years.  I like it.  

http://finance.yahoo.com/news/Pretium-Resources-Inc-Updated-iw-3560709721.html?x=0

Let's compare these numbers to a couple other projects that are out there:

Rainy River:  $681M for 13 years at 339,000 oz

Romarco:  $292M for 13 years at 125,000 oz

Keegan:  $500M for 10 years at 260,000 oz

Now, obviously, there's a lot more to it than that.  There are a multitude of variables to consider, not the least of which is the current market cap of the company.  I like to keep it simple though, so I usually say to myself "If I were a multi billionaire, what would it cost me to buy the whole company and build the mine?"

In Pretium's case, the market cap is $1.44B, plus the capex of $436M, less the current cash on hand of $115M, gets me to an "all in" cost of about $1.76B for the aforementioned production.  Compare that to other comparable projects, and some similar sized current producers. You should expect a discount for a project vs a current producer, that narrows as production approaches and starts up,  so factor that in.  Crunch the numbers, weigh the risks, and place your bets.

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Trading Halt on Mega Precious Metals

?!?!

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Pretium down on the news

Pretium is selling off a bit on the news.  My gut tells me that, even though the project itself is attractive, they might be thinking that the market cap that it is commanding might have gotten a little bit ahead of itself.

I don't have these numbers fully crunched, but it looks like maybe that is the verdict of the marketplace this morning.

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Golden Band

Drilling news is out.  The most interesting thing is hole KO-11-012 which is hinting at an open pittable zone at what was originally thought to be strictly an underground mine.

http://finance.yahoo.com/news/Golden-Band-Resources-Komis-cnw-4072481973.html?x=0

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Mega Precious Metals

This is big news.  Big jump in resources.  What's really new is the nearly 800,000 ounces of open pit material, at average grades near 2 grams.  Very nice.  Mgmt is not shy about telling us that these numbers will grow in the future.  Stock just came off it's trading halt and I can't wait to see what happens.  

I just added to my position yesterday. cool  "Better to be lucky than good"

http://finance.yahoo.com/news/Mega-Confirms-Large-Scale-bw-3159366940.html?x=0

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Mega

OK, so after things settle down, Mega is only up a penny?  Yeah, whatever....

I guess too much of that news was already anticipated, but still, this is a solid story.  Not going away...

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lakeshore news

Are you still holding...price is saying the new resource is a good thing...what do you

think...I don't have enough knowledge to know...any thoughts appreciated..

thanks EO

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Lakeshore

They do have good things going on, but management really pissed me off recently by selling that royalty to Franco.  I'm done with them now.

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Hey Eric O...

Crazy trading going on with the pennies!...Extreme ups & downs...either greed/fear...or the "Algo Boyz" working over time!...How about your miners...same thing?!?...

Bag Of Gold

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Eric Original
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Not too bad over here, BOG

The bigger boys don't get the crazy charts like your pennies do.  That's why I leave them (mostly) to you!  A couple of yours caught my eye.  Oremex Silver, pretty wild, especially right at the close. And what's up with Stroud?  Zero volume?  On a big day like today?  Wha?

My favorite chart on one of mine today was Torex Gold.  Steady up all day, no drama.  Me likey. yes

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BagOfGold
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Eric O...

Eric Original wrote:

The bigger boys don't get the crazy charts like your pennies do.  That's why I leave them (mostly) to you!  A couple of yours caught my eye.  Oremex Silver, pretty wild, especially right at the close. And what's up with Stroud?  Zero volume?  On a big day like today?  Wha?

My favorite chart on one of mine today was Torex Gold.  Steady up all day, no drama.  Me likey. yes

Yes!..."The Algo Boyz" have indeed changed the algos...& adjustments will need to be made...as I have been trading successfully from my observations of these algos...& will post this...when I have it figured out again!...

Also a reminder about Stroud...This one continues to disappoint...& I do hope that many of you have or will sell your Stroud shares by the end of the close tomorrow...it will be coming off "the list"...as we have a CEO who chooses to do damage to his own stock!...No news has been reported on the remaining drill results...since November 2011...let alone any news...& without news...you have nothing!...It's unfortunate...such great value...& such a rotten CEO!...

Thanks for everything you do Eric O!!!...

Bag Of Gold

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