LONDON, April 10, 2019 /CNW/ -- Forget about peak oil. The real crisis hitting the commodity markets is peak gold. The Financial Post reports that "all major deposits have been discovered." Goldman Sachs forecasts there may be only 20 years of supply left. The world's gold majors may soon be in a real estate bidding war. Mentioned in today's commentary includes: Seabridge Gold Inc. (NYSE:SA) (TSX:SEA), Teck Resources (NYSE:TECK) (TSX:TECK), Teck Resources (NYSE:TECK) (TSX:TECK), Great Panther Mining (NYSE:GPR) (TSX:GPR). Endeavor Silver (NYSE:EXK) (TSX:EDR).
For companies like Euro Sun (ESM, CPNFF), this could represent a major windfall. Their Rovina Valley project in Romania is the #1 copper/gold resource in Europe - with reserves totaling 7.5 million ounces of gold and 1.5 billion pounds of copper.
Rovina's previous owner - Carpathian Gold - spent $51 million sinking 138,000 meters of drill holes to prove up the potential $13.3 billion resource. It's a similar and, perhaps even better image, than that of the Timok project in neighboring Serbia, and the company that owns Timok was just snapped up for $1.4 billion. And, unlike Nevsun, Euro Sun has its mining permits - the first issued in Romania since 2003. It could be in production within as little as 24 months.
Here are five reasons to pay close attention:
- The World Is Facing Peak Gold
- Europe's #1 Copper/Gold Find
- Robust, Mine Ready Economics
- Their $1.4 Billion Serbian Neighbor
- Romania's First Mining Permit Since 2003
Reason #1 - The World Is Facing Peak Gold Reserves
Simply put, the world is running out of viable gold reserves. In comments to the financial post, Ian Telfer, chairman of Goldcorp, said: "If I could give one sentence about the gold mining business… it's that in my life, gold produced from mines has gone up pretty steadily for 40 years."
According to the USGS, indicated and identified reserves are down from 57,000 tons in 2017 to just 54,000 today. That's a precipitous drop in two years. Meanwhile, demand is skyrocketing on the back of the highest central bank buying in 50 years. It's now at 4,345.1 tons, up 4% from just a year earlier. Goldman Sachs is already forecasting $1,425 per ounce.
For Euro Sun (ESM, CPNFF), which has millions of ounces of 43-101 proven gold reserves, this represents a huge opportunity.
Reason #2 - Europe's #1 Copper/Gold Find
Amidst this active gold market, Euro Sun (ESM, CPNFF) might be perfectly positioned with their Rovina Valley project in Romania. Cantor Fitzgerald reports that "Rovina Valley, when up and running, will be Europe's largest gold and copper mine in terms of resources."
According to their 43-101, the Rovina Valley property has reserves totaling 7.5 million ounces of gold and 1.5 billion pounds of copper. At today's prices, that's approximately $13.3 billion in resources.
Their key project is located in the famed Golden Quadrilateral, where mining has taken place since the Roman period, over 2,000 years ago. The region has produced greater than 55 million ounces of gold, worth roughly $71 billion at today's prices.
The Golden Quadrilateral Mining district has established power, transportation (road and rail)
and all needed infrastructure for commercial-scale mining. Prior to being acquired by Euro Sun, Carpathian Gold spent approximately $51 million exploring, drill defining, and completing a PEA (2010) on Rovina Valley.
The current 43-101 compliant resource (2012) was based on 138,000m of drilling completed by Carpathian over a period stretching from 2005 to 2014. Euro Sun acquired and now sits on an immense, proven resource.
Reason #3 - Mine Ready Economics
Euro Sun's Rovina Valley Project (ESM,CPNFF) has robust economics and upside. This a property that already has a Preliminary Economic Assessment, with 138,000 meters of exploratory drilling and a huge resource. At present, the current 43-101 compliant resource across all categories stands at 432.6 million tons of ore grading 0.54 grams per ton of gold and 0.16% copper.
According to analysts at Cantor Fitzgerald, "If another ounce is never found, Euro Sun already owns a potentially extremely robust project."
A recent test of the Euro Sun metallurgical plant delivered an average gold recovery of 73.2 to 81.5% and copper recoveries of up to 94.7%, without using cyanide. That's very favorable compared to industry averages.
Their 2019 PEA estimates Phase 1 mine production of 108,000 ounces of gold and 13.3 million pounds of copper per year, worth $172,054,000 annually.
It also projected all-in sustaining costs ("AISC"), on a gold-equivalent basis, at $742/oz. Current gold prices are around $1,300 an ounce. This gives Euro Sun roughly $558 of cash flow per gold-equivalent ounce.
Reason #4 - Their $1.4 Serbian Billion Neighbor
Another project, the Timok, developed by Nevsun Resources, is just a few hours away, in the same geological belt. It's one of the most promising copper-gold porphyry deposits in the world. And it could tell prospectors a lot about what
might be sitting on.
Production estimates for the two properties are similar. According to their 2010 PEA, Eurosun estimates a 310,000-ounce gold equivalent production over a 19-year mine life versus 455,000 over 10 years for Timok. That's 5,890,000 ounces GE compared to 4,550,000.
For Eurosun, that's $7.6 billion worth of copper and gold. In terms of Net Present Value, they're virtually identical at $1.197b and $1.198b respectively.
In late 2018, China's Zijin Mining Group turned that NPV estimate into reality. They agreed to buy Nevsun Resources Ltd. for a stunning $1.41 billion. Like Timok, Rovina Valley has the size, scale, and grades that are attractive to large-tier and mid-tier gold and copper miners. But, Rovina also has another major edge over its Serbian neighbor.
Reason #5 - The First Romanian Mining Permit Since 2003
When Zijin acquired Nevsun, they didn't have mining or environmental permits for the Timok property. In some jurisdictions, that might not matter. But this is Europe we're talking about. Environmental issues are serious.
That's where Euro Sun (ESM, CPNFF) stands out. In November 2018, they were granted a 20-year mining license for their Rovina Valley project. It was fully approved by six senior cabinet ministers and the Prime Minister of Romania.
This is the first mining permit issued in the country since 2003 when Gabriel Resources faced extensive protests over their plans to use cyanide for heap leaching. There have been no new mines in the country since then.
These Factors Could Make Euro Sun A Prime Acquisition Target
In 2011, gold peaked at a historical high of $1,917 per ounce. When it collapsed, it took the junior mining industry with it. Exploration dried up. Today world gold reserves are shrinking. If Goldman Sachs is right, there may only be 20 years of production left.
For the world's gold majors, that's a life or death problem. Euro Sun's (ESM, CPNFF) Rovina Valley project could potentially be a "crown jewel" asset for any of the majors. It's the #1 copper/gold project in Europe, with robust economics. The property could be mine ready, with permits and a bankable feasibility study in 12 months.
Today Euro Sun might represent an excellent takeover candidate.
Other companies to watch in the gold-sphere…
Seabridge Gold Inc. (NYSE:SA) (TSX:SEA)
Seabridge owns four core assets in Canada; the KSM project, which is one of the world's largest underdeveloped projects measured by reserves, Courageous Lake, a historically renowned property, and Iskut, a product of a recent acquisition by Seabridge.
Recently, Seabridge closed a major extension deal to continue expansion at its KSM project. CEO Rudi Fronk stated: "We are pleased that our EA Certificate has been renewed until 2024 under the same terms and conditions, reaffirming the Government of British Columbia's support for KSM and the robustness of the original 2014 EA."
Teck Resources (NYSE:TECK) (TSX:TECK)
: Teck could be one of the best-diversified miners out there, with a broad portfolio of Copper, Zinc, Energy, Gold, Silver and Molybdenum assets. Its free cash flow and a lower volatility outlook for base metals in combination with a potential trade war breakthrough could send the stock higher in H2 of this year.
Teck Resources recently received a favorable investment rating from Fitch and Moody's, and will likely benefit from its upgraded score. "Having investment grade ratings is very important to us and confirms the strong financial position of the company," said Don Lindsay, President and CEO. "We are very pleased to receive this second credit rating upgrade."
Teck Resources (NYSE:TECK) (TSX:TECK)
is a mid-cap Canadian mineral exploration and development company headquartered in Vancouver, British Columbia. Its focus is on the Pacific Rim where it is in the process of developing several large mines
Turquoise has seen its share price languish last year, and the successful development of its world-class Oyu Tolgoi project in Mongolia is of utmost important to the future of this miner.
In the short term, investors can expect the share price to come back somewhat as the company looks undervalued by any means. If oil prices break out above $1320 per ounce, Turquoise Hill Resources is poised to profit from it.
Great Panther Mining (NYSE:GPR) (TSX:GPR) Based in Vancouver, Great Panther is active in Brazil and Mexico where it explores for silver, gold, lead, and zinc ores. The second half of 2018 has been tough for the midcap miner, but its share price doubled last month, shortly after the acquisition of Beadell resources, which ads another 200,000 gold equivalent ounces to its reserve base.
According to a recent statement in the press, the focus in the near-term will be on the integration of the Brazilian operations, the continued optimization of the Tucano gold mine, and advancing an exploration program to unlock the significant exploration potential of Tucano."
Endeavor Silver (NYSE:EXK) (TSX:EDR) operates three silver-gold mines in Mexico, but it's also got three attractive development projects. Production has dropped and all-in sustaining costs have risen, leading to a negative cash flow. But the company has significantly reduced its debt, so its future is anything but bleak.
2019 could be a bit of a mixed bag for Endeavor Silver as earnings expectations remain negative for Q1. Its three mines in Mexico and a planned fourth mine in the Mexican state of Zacatecas are expected to see their output increase this year while the company has managed to keep AISC at reasonable levels last year, the question remains whether they can keep the costs low this year.
By. Joao Piexe
IMPORTANT NOTICE AND DISCLAIMER
PAID ADVERTISEMENT. This communication is a paid advertisement. Oilprice.com, Advanced Media Solutions Ltd, and their owners, managers, employees, and assigns (collectively "the Publisher") is often paid by one or more of the profiled companies or a third party to disseminate these types of communications. In this case, the Publisher has been compensated by Euro Sun Mining Inc. to conduct public awareness advertising and marketing for Euro Sun Mining. Euro Sun Mining paid the Publisher fifty thousand US dollars to produce and disseminate this and other similar articles and certain banner ads. This compensation should be viewed as a major conflict with our ability to be unbiased.
Readers should beware that third parties, profiled companies, and/or their affiliates may liquidate shares of the profiled companies at any time, including at or near the time you receive this communication, which has the potential to hurt share prices. Frequently companies profiled in our articles experience a large increase in volume and share price during the course of investor awareness marketing, which often ends as soon as the investor awareness marketing ceases. The investor awareness marketing may be as brief as one day, after which a large decrease in volume and share price may likely occur.
This communication is not, and should not be construed to be, an offer to sell or a solicitation of an offer to buy any security. Neither this communication nor the Publisher purport to provide a complete analysis of any company or its financial position. The Publisher is not, and does not purport to be, a broker-dealer or registered investment adviser. This communication is not, and should not be construed to be, personalized investment advice directed to or appropriate for any particular investor. Any investment should be made only after consulting a professional investment advisor and only after reviewing the financial statements and other pertinent corporate information about the company. Further, readers are advised to read and carefully consider the Risk Factors identified and discussed in the advertised company's SEC and/or other government filings. Investing in securities, particularly microcap securities, is speculative and carries a high degree of risk. Past performance does not guarantee future results. This communication is based on information generally available to the public and on an interview conducted with the company's CEO, and does not contain any material, non-public information. The information on which it is based is believed to be reliable. Nevertheless, the Publisher cannot guarantee the accuracy or completeness of the information.
SHARE OWNERSHIP. The owner of Oilprice.com owns shares and/or stock options of the featured companies and therefore has an additional incentive to see the featured companies' stock perform well. The owner of Oilprice.com will not notify the market when it decides to buy or sell shares of this issuer in the market. The owner of Oilprice.com will be buying and selling shares of the featured company for its own profit. This is why we stress that you conduct extensive due diligence as well as seek the advice of your financial advisor or a registered broker-dealer before investing in any securities.
FORWARD LOOKING STATEMENTS. This publication contains forward-looking statements, including statements regarding expected continual growth of the featured companies and/or industry. The publisher notes that statements contained herein that look forward in time, which include everything other than historical information, involve risks and uncertainties that may affect the companies' actual results of operations. Factors that could cause actual results to differ include, but are not limited to, changing governmental laws and policies, the success of the companies' drilling excursions and mining operations, the size and growth of the market for the companies' products and services, the companies' ability to fund their capital requirements in the near term and long term, pricing pressures, etc.
INDEMNIFICATION/RELEASE OF LIABILITY. By reading this communication, you acknowledge that you have read and understand this disclaimer, and further that to the greatest extent permitted under law, you release the Publisher, its affiliates, assigns and successors from any and all liability, damages, and injury from this communication. You further warrant that you are solely responsible for any financial outcome that may come from your investment decisions.
INTELLECTUAL PROPERTY. Oilprice.com is the Publisher's trademark. All other trademarks used in this communication are the property of their respective trademark holders. The Publisher is not affiliated, connected, or associated with, and is not sponsored, approved, or originated by, the trademark holders unless otherwise stated. No claim is made by the Publisher to any rights in any third-party trademarks.
DISCLAIMER: OilPrice.com is Source of all content listed above. FN Media Group, LLC (FNM), is a third party publisher and news dissemination service provider, which disseminates electronic information through multiple online media channels. FNM is NOT affiliated in any manner with OilPrice.com or any company mentioned herein. The commentary, views and opinions expressed in this release by OilPrice.com are solely those of OilPrice.com and are not shared by and do not reflect in any manner the views or opinions of FNM. FNM is not liable for any investment decisions by its readers or subscribers. FNM and its affiliated companies are a news dissemination and financial marketing solutions provider and are NOT a registered broker/dealer/analyst/adviser, holds no investment licenses and may NOT sell, offer to sell or offer to buy any security. FNM was not compensated by any public company mentioned herein to disseminate this press release.
FNM HOLDS NO SHARES OF ANY COMPANY NAMED IN THIS RELEASE.
This release contains "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E the Securities Exchange Act of 1934, as amended and such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. "Forward-looking statements" describe future expectations, plans, results, or strategies and are generally preceded by words such as "may", "future", "plan" or "planned", "will" or "should", "expected," "anticipates", "draft", "eventually" or "projected". You are cautioned that such statements are subject to a multitude of risks and uncertainties that could cause future circumstances, events, or results to differ materially from those projected in the forward-looking statements, including the risks that actual results may differ materially from those projected in the forward-looking statements as a result of various factors, and other risks identified in a company's annual report on Form 10-K or 10-KSB and other filings made by such company with the Securities and Exchange Commission. You should consider these factors in evaluating the forward-looking statements included herein, and not place undue reliance on such statements. The forward-looking statements in this release are made as of the date hereof and FNM undertakes no obligation to update such statements.
e-mail: [email protected]
U.S. Phone: +1(954)345-0611