Gold and gold stocks finished the week strong with excellent one-week performances. This was driven by a fall in the 10yr treasury yield and the technical picture. Earnings season kicked into high gear this week, which should remain the case next week as well. Please visit Goldseeker.com and sign-up for our free email list or sign up for a free 30-day trial of our premium subscription service.
$AR, $BTG, $GOLD, $BRC, $BSR, $CXB, $EQX, $AG, $FNV, $HL, $IAG, $KL, $PVG, $SAE, $SSRM, $NFG, $NGD, $RGLD, $WPM.
Argonaut Gold: While the company is in a transition period as it builds its flagship asset, Magino, Argonaut achieved record quarterly output in Q1 of 59k AuEq oz. Argonaut generated $27.7m in operating cash flow, which seems low given prevailing gold prices but reasonable considering Argonaut's operating assets are currently all-high cost. AISC came in at $1,313/oz. Aside from Magino, costs will come down for Argonaut, notably at its Florida Canyon mine (post-construction, installation, and operation of a new conveying and stacking system), as well as the potential for significantly lower cost production at depth below the El Creston Pit at its La Colorada mine. Recent drill highlights include 12.2m @ 98.9 g/t Au and 21.3m @ 44.6 g/t Au and 275 g/t Ag.
B2Gold: Reported strong Q1 2021 production, totaling 220k oz. Au (inclusive of 15k oz. attributable from the company's equity interest in Calibre) @ AISC of $932/oz. The company generated operating cash flow of $146m, which increased its cash position to $513m on March 31st, 2021. B2Gold remains well-positioned to achieve its 2021 guidance of 910-980k oz. Au excluding its interest in Calibre at cash costs and AISC of $500-$540/oz. and AISC of $870-$910/oz. Fekola continued to outperform, and with the completion of the expansion to 7.5mtpa, production will move higher in the second half of the year.
Barrick Gold: Reported Q1 2021 operating and financing results. Gold and copper production is on plan, and the company is positioned to achieve its annual guidance. Production is more heavily weighted towards the second half of the year due to mine sequencing at Nevada Gold Mines, the commissioning of the new leach pad facility at Veladero in Argentina, the ramp-up of underground mining at Bulyanhulu, and higher anticipated grades at Lumwana in Zambia. With Q1 production of 1.1m oz. Au @ AISC of $1,018/oz., Barrick generated operating and free cash flow of $1.3b and $800m. Barrick’s net cash position increased by $500m. Barrick also announced the first $250m ($0.14/share) return of capital tranche and quarterly dividend ($0.09/share). This follows the approval by shareholders at Barrick's Annual and Special Meeting on May 4th, 2021, of the total $750 million return of capital distribution. The remaining distribution of $500 million is expected to be effected in two equal tranches to shareholders of record on dates to be determined in August and November 2021. Assuming there is no dividend increase throughout the year, Barrick has a 2021 yield (using today's stock price of $22.20/share) of 3.50%.
Blackrock Silver: Announced high-grade gold and silver intercepts from its core and RC drilling program at Tonopah West. Highlights include:
- 4.5m @ 6.56 g/t Au and 743 g/t Ag on the strike extension of the Merton vein, which now has 1.5Km’s of mineralized strike.
- 3m @ 3 g/t Au and 310 g/t Ag
- 7.6m @ 2.13 g/t Au and 230 g/t Ag
- 0.8m @ 1.93 g/t Au and 203 g/t Ag
- 2.2m @ 1.53 g/t Au and 141 g/t Ag
Bluestone Resources: Reported additional assays from its infill drilling program in the south zone of the Cerro Blanco project. Highlights include:
- 28.6m @ 11.6 g/t Au
- 217m @ 1.4 g/t
- 111.8m @ 2.1 g/t
- 114.9m @ 2.5 g/t
- 101.4m @ 2.4 g/t
- 21.2m @ 11.2 g/t
Calibre Resources: Calibre Mining reported robust Q1 production and financial results. The company produced over 45k oz. Au, the highest quarterly production since Q3 2016, when B2Gold operated Limon and Libertad. Production was boosted (marginally) by the first ore delivery from the Pavon Norte mine to the Libertad mill. Pavon Norte is an excellent example of Calibre executing its "hub-and-spoke" strategy as Calibre advanced new satellite deposits in less than 18-months.
All-in sustaining costs (AISC) were in line with guidance for the year, with AISC of $1,095/oz. in Q1. Calibre generated $82m in revenue and operating cash flow of $25.5m. Calibre’s financial position improved, with the company having a net cash position of $58.2m. Free cash flow generation was muted in Q1 ($5m) due to expansionary and exploration capital are more heavily weighted in the 1H 2021. During the quarter, Calibre announced a greater than 200% increase in reserves to 864k oz. Au, the largest reserve base since 2010 with the highest grade on record (4.49 g/t). Catalysts through the remainder of 2021 include production growth over 2020, exploration results from its ongoing 80,000-meter, 15 rig, expansion, and discovery drill program, focusing on satellite opportunities, emerging districts, and near mill growth targets. Two sizeable exploration projects include Easter Borosi and the JV agreement with Rio Tinto on the Borosi concessions in Northeastern Nicaragua. The focus for Calibre regarding near-medium term growth is Eastern Borosi, where Calibre has another high-grade inferred resource of some scale (700k oz. Au).
Equinox Gold: Reported Q1 2021 results. As expected, this was a quarter highlighted by lower production and significantly elevated all-in sustaining costs (AISC). The ramp-up at Los Filos was costly, and stripping at Mesquite's Brownie deposit caused costs to be elevated but will result in higher production and much lower costs in the 2H of the year and 2022. Equinox produced 129k oz. Au at cash costs and AISC of $1,141/oz. and $1,482/oz., which includes a $70/oz. and $22/oz. expense related to a write-down of inventory during the ramp-up at Los Filos and a write-down of inventory at Pilar (non-cash expenses). Regardless, Equinox still generated operating cash flow of $62m and $80m after changes in non-cash working capital. Equinox spent $41.3m in sustaining capital and $38.8m of expansionary capital.
Equinox has a net debt position of $230m, but this includes $279m in the money convertible notes. Further, Equinox has over $200m of investments via Solaris Resources/copper and I-80 gold. Equinox also improved its balance sheet after quarter end with the $C75m private placement (announced when the company made a bid for Premier Gold) and the sale of its Pilar mine, which will bring in $10.5m when the deal closes and $27.5m by July 31st, 2021. The company's cash position stood at $350m at the end of April 2021. The Santa Luz mine was 30% complete at quarter-end, with first gold expected in early 2022. Its cash position at quarter-end would have been higher; however, Equinox invested C$24.1m in I-80 gold to maintain its 30% interest and completed the acquisition of an additional 10% interest in Greenstone to Orion Mine Finance for $51m. Despite what looks like a disastrous quarter on the surface, Equinox maintains its 2021 guidance of 600-665k oz. Au at cash costs and AISC of $940-$1,000/oz. and $1,190-$1,275/oz. Equinox has adjusted its sustaining and expansionary cost guidance for 2021 following the close of the Premier acquisition. Sustaining capital cost of $187m is expected, and expansionary capital of $291m. The majority of the latter is primarily related to Los Filos expansion, the Santa Luz mine build, and early construction works at Greenstone. Click here to sign up for our free email list or sign up for a free 30-day trial to our subscription service.
First Majestic Silver: Q1 production totaled 4.54m AgEq oz @ AISC of $19.35/AgEq oz. First Majestic generated operating cash flow of approx. $25m. Cash flow was lower than expected to a 17% increase in AISC over Q4 2020, partially offset by a 95 higher average realized silver price. The increase in cash costs was primarily due to higher ore development and mining contractor costs at Santa Elena to prepare additional ore faces to increase future production. Energy costs were higher at San Dimas due to lower energy contribution from the hydroelectric dam due to dry season, which forced the mine to rely on the public electricity grid and diesel generators.
Costs are expected to come down throughout the year as AISC was elevated at all operations in Q1 ($14.31/AgEq oz. at San Dimas, $25.66/oz. at Santa Elena, and $16.30/oz. at La Encantada). However, higher costs initially at Jerritt Canyon will likely keep companywide AISC elevated. First Majestic maintains a cash position over $200m, positioning the company well as it optimized Jerritt Canyon. First Majestic also announced its inaugural dividend payment of $0.0045/share in Q1, equivalent to 1% of its revenue. This will should move higher with Jerritt Canyon in the mix and increased output at San Dimas, together with higher gold and silver prices.
Franco-Nevada: Q1 was another excellent quarter for the largest royalty and streaming company by market capitalization regarding attributable production, cash flow, and new deals. Franco's attributable production totaled 149.6k AuEq oz., generating $224.3m in operating cash flow. Franco increased its quarterly dividend by 15.40% to $0.30/share and provided updated medium-term growth, with Franco now guiding for 25% revenue growth over 5yrs. Cobre-Panama will drive growth, a variety of smaller royalties on projects like Seguela, Hardrock, etc. Growth will also come from the recently acquired Vale Royalty debentures ($538m investments in iron ore) and its energy assets. Franco also updated 2021 and 2025 guidance with 2021 guidance increased to 580-615 AuEq oz. and $115-$135m in revenue from its energy assets, and 2025 guidance increased to 630-660 AuEq oz. and $150-$170m in revenue from its energy assets.
Hecla Mining: Hecla generated operating cash flow of $55m and free cash flow of $16.5m from the production of 3.5m oz Ag and 52k oz. Au. Greens Creek greatly outperformed with production of 2.584m oz. Ag and 13.26k oz. Au. and AISC of just $1.59/oz. Ag. Hecla also increased its silver-linked dividend at $25/oz. threshold by 50% to $0.03/share annually, and the BOD also increased each level of the silver-linked dividend by $0.01/share annually.
IAMGold: Reported Q1 results. During Q1, the company sold 153k oz. Au @ AISC of $1,210/oz., generating operating cash flow of $63m. Like Argonaut Gold, it is constructing its flagship asset, Cote, that will transform the company from a higher-cost producer into a much larger company with lower costs. The company is well-financed to complete the construction of Cote (65%) with approx. $1.5B is available liquidity and ongoing cash flow generation, including $970m in cash and equivalents. Cote remains on track to achieve production in mid-2023.
Kirkland Lake Gold: Continued to report exploration success at Detour Lake. Recent results highlight the potential for resource growth between the existing main pit and planned west pit, at depth and to the west. New high-grade intersection near the bottom of the resource pit shell in the Saddle zone highlights the potential for growth in both open-pit and underground resources. Highlights from these areas include: 155m @ 1.13 g/t Au, 13m @ 9 g/t, 70.2m @ 1.56 g/t, 5m @ 31.91 g/t, 26m @ 2.21 g/t and 32.7m @ 1.9 g/t. Drilling in Central Saddle Zone continues to intersect exceptional grades and widths at shallow depths, further demonstrates the continuity of mineralized corridor connecting Main Pit and planned West Pit location. Highlights include: 56m @ 1.08 g/t Au, 2m @ 13 g/t, 10m @ 3.38 g/t, 2m @ 14.76 g/t and 19.9m @ 1.42 g/t.
Drilling in the Eastern portion of Saddle Zone confirms continuity of mineralization to the west and below the Main Pit Mineral Reserve pit shell. Highlights include: 64.8m @ 1.49 g/t Au, 2m @ 23.95 g/t, 64m @ 1.96 g/t, 54m @ 4.83 g/t, 36.3m @ 2.96 g/t, 35.1m @ 2.54 g/t, 23m @ 3.91 g/t and 2m 2 35.66 g/t. Drilling below West Pit Mineral Reserve intersects broad zones of mineralization extending to depth, highlights include; 51.9m @ 2.94 g/t Au, 2.0m @ 31.97 g/t, 36m @ 2.37 g/t and 21m @ 2.26 g/t. Drilling west of planned West Pit intersects mineralization up to 425 m west of existing Mineral Reserves, highlights include: 13m @ 10.66 g/t Au, 3m @ 34.51 g/t, 2.3m @ 23.92 g/t and 78.4m @ 1.14 g/t. Ever since Kirkland Lake acquired Detour Lake Gold, it has had nothing but excellent exploration success. The upside at Detour Lake is excellent regarding both considerable resource expansion and medium and long-term production upside. Detour Lake, once optimized, should produce 800-1m oz. Au annually at low costs for a sustained period.
Kirkland also reported solid Q1 results as expected. The company has a history of beating guidance, and it was no different in Q1 with Kirkland beating guidance on production and costs. Kirkland produced 302.8k oz. Au vs. guidance of 270-290k oz., due to outperformance at Fosterville and Detour Lake. Cash costs and AISC came in at $542/oz. and $864/oz. Guidance had AISC of approx. $900/oz. in the first half of the year (and $1,000/oz. in Q1) and $700/oz. in the second half of the year. Kirkland generated $208.2m of operating cash flow and $42.7m of free cash flow. The company paid out $50.3m in dividends and bought back 1.074m shares during Q1. Kirkland is firing on all cylinders with excellent exploration results at Detour, significant progress at the Macassa #4 shaft project as it is now a month ahead of schedule. Kirkland's cash position at quarter-end was $792m and no debt. Its cash position fell quarter over quarter due to the timing of capital expenditures, capitalized exploration costs, and share buybacks.
Pretium: Produced 82.88k oz. Au in Q1 2020 at AISC of $1,005/oz., generating $51m in free cash flow. The company's cash position increased to $208.9m at quarter-end and, after quarter-end, paid down $38m on the revolving portion of its loan facility. Initial drill results intercepted high-grade gold mineralization and demonstrated the potential to extend the Valley of the Kings deposit directly to the north and at depth adjacent to existing infrastructure. Follow-up drill programs are currently underway, and results are expected in the third quarter of 2021.
Sable Resources: Announced additional results from its active drill program at the La Verde and Fierro Bajo zones within El Fierro Project. El Fierro is an 8 by 4-kilometer historical artisanal silver-rich mining district located 250 kilometers northwest of San Juan city and 120 km north of Sable's Don Julio Project. Sable announced the results from the first drill hole ever at La Verde. The company is awaiting assay results from 17 drill holes currently at the lab, but the first hole intercepted: 9.95m @ 4.29 g/t Au and 110 g/t Ag.
SSR Mining: Reported Q1 production of 196k AuEq oz. at AISC of $1,004/oz., putting the company on track to achieve full-year guidance. SSR generated $145m of operating cash flow and $76.6m of free cash flow. The company's balance sheet remains very strong with $866m in cash and equivalents, little debt, $17.5m of which was paid down during the quarter.
New Found Gold: Announced assay results from an additional four holes drilled at the Keats Zone as part of its ongoing 200,000m diamond drill program. Highlights include:
- 4.65m @ 131.09 g/t Au
- 17.7m @ 124.44 g/t
- 2.5m @ 2.77 g/t
- 2m @ 41.84 g/t
New Gold: Reported Q1 earnings. New Gold remains a company we wouldn’t touch with a 10-ft pole given its history of value destruction. Q1 production totaled 96k AuEq oz. with cash costs and AISC of $1,067/oz. and $1,550/oz. AuEq. New Gold generated $64m in operating cash flow and ended the quarter with $131m in cash and a liquidity position of $435m. Costs continue to remain very elevated relative to the FS at Rainy River at $1,586/oz. in Q1.
Royal Gold: Reported robust revenue and cash flow generation in Q3 of its fiscal year 2021. Royal generated total revenue of $142.6m, of which 68% was from gold, 12% from silver, and 20% from other minerals. The company generated operating cash flow of $92.2m on the sale of 79.5k AuEq oz. Royal's larger peers are growing as Royal Gold hasn't acquired any new assets of scale in some time, excluding the Khoemacau silver stream, which recently increased to 84% from 80%. Royal has the liquidity to complete other deals and, as of April 1st, is debt-free. Its net cash position is approx. $70m. We should see attributable production growth in the 2H of the year and more so from 2022, driven by the Khoemacau silver stream and higher output from its royalties on Cortez/Crossroads. The latter will see production on land covered by the royalty of 350-375k oz. Au in 2021, averaging 415k oz. Au from 2022 to 2026. Golden Star issued a PEA on the Southern Extension of the Wassa orebody. The PEA supports an 11-year mine life with average annual gold production of 294,000 ounces for total gold production of 3.5 million ounces. Golden Star is targeting early calendar 2023 for the completion of a final feasibility study on the Southern Extension. This adds significant value to Royal's gold stream, with production in 2021 forecast at 165-175k oz. Au.
Wheaton Precious Metals: The largest royalty and streaming company by attributable production, revenue, and cash flow reported solid Q1 results. Although attributable gold production was 18% lower relative to Q1 2020 and gold sales were down 25.20%, attributable AuEq oz. remained relatively flat year over year at 175k AuEq oz. Operating cash flow, however, increased over 30% to $232m. Wheaton received first deliveries from both Voisey's Bay and Cozamin, which will ramp up through the year and around mid-year; Wheaton should receive first deliveries from Keno Hill and Pampacancha.
Gold production was 25% lower at Salobo due to lower throughput due to changes in maintenance routines which restricted mine movement. The Salobo phase III expansion was 73% at the end of the first quarter and is on track for start-up in the first half of 2022. Gold production also fell 33% at Constancia, although gold production will increase significantly in the 2H of the year. Penasquito and Antamina performed very well with attributable production of 2.2m oz. and 1.6m oz. Ag.
In addition to generating extremely robust cash flow, Wheaton sold its remaining interest in First Majestic and received $112m in proceeds, which has led to a net cash position of $191m. Lastly, as a result of higher cash flow generation both in Q1 and the previous quarters, the dividend has increased 40% to $0.14/share per Q1.
About the author
Chief Mining Analyst with GoldSeek.com and SilverSeek.com. Author of the Gold Seeker Report weekly newsletter and analyst at the 24K Gold Fund. Previously he was the Senior Mining Equity and Economic Analysis at The Morgan Report. He was a Co-Founder and Director of Lemuria Royalties, before it was acquired in March 2018. He also co-authored The Silver Manifesto with David Morgan in 2015.
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