Gold Seeker Issue #75 ~ This Week In Mining: Beginning of Earnings Season, Has Gold Broken Its Short-Term Downtrend?

It was a good week for the metals and miners, coming on the back of the latest comments from Jerome Powell. He admitted that economic growth still has a lot of catching up to do. He knew the first estimate of Q2 GDP (before it came out) missed by 2.0% (6.50% vs. the 8.50% estimate), providing the ideal environment for gold; inflation, very low nominal yields (even more negative real rates), and economic uncertainty, with the potential for the CV-19 Delta variant becoming widespread. It looks like gold broke out of its downtrend, but this could be a false breakout (as seen by the price action on Friday), while silver remains in a short-term downtrend. We will have to wait and see. Earnings seasons started a bit earlier than usual, as it usually has an August start.

$AEM, $AGI, $AZT, $CDE, $DPM, $EGO, $EQX, $KGC, $KL, $KUYA, $LIO, $MAG, $VZLA, $AUY

Agnico-Eagle Mines: The Company reported strong production and cash flow generation. Q2 payable production totaled 500.7k oz. Au (excluding 25k oz. of production from Hope Bay) at cash costs and AISC of $739/oz. and $1,037/oz. 2021 forecast production remains unchanged at 2.047m oz. at cash costs and AISC of $700-$750/oz. and $950-$1,000/oz. In Q2, Agnico generated operating cash flow of $432m and $847m for the first half of 2021.

Alamos Gold: The Company reported Q2 results with operations continuing to execute. The Company generated $97.2m in operating cash flow on the back of gold production, totaling 114.2k oz. Au. Production at Young-Davidson is expected to increase (marginally) in the second half of the year as the current mining rate of 7,504tpd is expected to increase to 8ktpd before the end of Q3. The Company generated marginal free cash flow as higher capital spending on the development of La Yaqui Grande, which will maintain production at Mulatos at lower costs and extend the mine life. Cash costs and AISC were $791/oz. and $1,136/oz. Alamos ended the quarter with cash and investments of $255m.

Alamos also had exploration success during the quarter at its two cornerstone assets, including the best hole drilled to date at Island gold and mineralization intersected below existing reserves and resources, intersecting higher grades in the hanging wall and footwall. The Company remains on track to achieve production of 750k oz. Au at much lower costs in 2025. However, we believe Alamos will make an acquisition. As we've mentioned before, we believe acquiring Argonaut Gold for its Magino Project would make a lot of sense. It wouldn't cost as much as it appears by looking at Argonaut's market capitalization as Alamos would likely sell off Argonaut's assets in Mexico and its Florida Canyon mine in Nevada.  

Aztec Minerals: Reported intercepts of broad, high-grade Au-Ag mineralized zones at the Tombstone Project. Five holes were drilled under the north-central Contention pit confirmed and expanded the high-grade, near-surface, oxidized Au-Ag mineralization. The 20-hole program continues to expand the width and length of mineralization at the north and central portions of the Contention pit.  Highlights from this release include:

• 96m @ 1.39 g/t Au and 56 g/t Ag
• 39.64m @ 2.09 g/t Au and 47.1 g/t Ag
• 24.39m @ 0.49 g/t Au and 23.1 g/t Ag

Coeur Mining: Reported Q2 financial results. The Company generated operating cash flow of $58m on the back of gold production of 87.25k oz. Au and 2.6m oz. Ag. Production is expected to continue to increase in the second half of the year within the Company's full-year guidance range of 322-367k oz. Au and 9.7-12.2m oz. Ag. During the quarter, Coeur set a record for the most meters drilled (97,675m). Coeur advanced major construction on the expansion at Rochester on schedule, with solid ongoing environmental and safety performance. Overall project progress was approximately 31% complete at the end of the second quarter.

The Company is also increasing its investment in its Silvertip project/mine in the second half of the year to complete several surface projects to support a potential restart of operation in 2023. It also looks like Coeur is looking at acquisitions and could make on before year-end. Coeur acquired a 17.8% interest in Victoria Gold for $118m. Victoria's Eagle mine will see higher production at lower costs in the second half of the year. It has had robust exploration success at the Raven Target, which boasts grades multiples higher than the reserve grade. Victoria is also looking to complete Project 250k in 2023, which will increase average gold production to 250k oz. annually.

Dundee Precious Metals: Dundee achieved record quarterly production in Q2 of 85.12k oz. Au and 10m lbs. Cu. The Company's smelter also performed well with throughput of 59,627 tons of complex concentrate. AISC was exceptionally low at $605/oz., allowing for record free cash flow generation of $67.1m. Dundee ended the quarter with $260m in cash, an undrawn LT credit facility of $150m, and an investment portfolio valued at $77m.

El-Dorado Gold: Reported Q2 results with gold production of 116k oz. Au, and the Company remains on track to achieve 2021 guidance of 430-460k oz. Au @ AIS of $920-$1,150/oz. In Q2, AISC was $1,074/oz. The Company generated $62.8m in operating cash flow but negative free cash flow due to higher capital investment, the timing of tax payments, and the timing of royalty and interest payments. The Company has $410m cash and $150m available under its revolving credit facility.

Equinox Gold: The Company announced the restart of operations at the Los Filos mine. In Q3/Q4 2020, there was a prolonged illegal blockade of the mine by two of three communities in and around the Los Filos land package. That was ultimately resolved in early 2021. Roughly one month ago, the third community illegally blocked the mine. While there are still certain community members illegally camped near the open-pit pits, operations have been restarted, and importantly, the development of the Guadalupe underground can resume.

Kinross Gold: The Company produced 538k AuEq oz. in Q2 @ cash costs and AISC of $830/oz. and $1,069/oz. Kinross is on track to meet its revised guidance [after the mill fire at Tasiast] of 2.1m AuEq oz. However, Tasiast will only be impacted this year, and the Company anticipates 2022 and 2023 production of 2.7m and 2.9m AuEq oz. Tasiast, being one of the Company's lowest-cost operations, Kinross also revised 2021 cost guidance upward to AISC of $1,025/oz. Kinross generated operating and free cash flow of $364m and $182m. Kinross ended the quarter with $675m in cash after repaying $500m in debt. Kinross should get a market rerate over the next two years with significantly higher production at lower costs.

Kirkland Lake Gold: Reported record earnings in Q2. The Company's three cornerstone assets all increased production relative to the comparable period in 2020. Fosterville continues to outperform, and AISC at all operations was below guidance. Kirkland Lake is in the process of transforming Detour Lake into one of the world's largest and most profitable gold mines. Kirkland will expand production over the coming years by developing a super-pit, which should increase average annual production to 800-900k oz. Au at lower costs. Exploration results from Detour this year have been nothing short of amazing, and this asset only continues to get better.

At quarter-end, Kirkland's cash position increased to $858m through gold production of 379k oz. Au @ cash costs and AISC of $431/oz. and $780/oz. Kirkland is now targeting the upper end of its 1.3m1.4m production guidance for 2021. If not for continued share buybacks and an increasing dividend, Kirkland would have $1-$1.2B in net cash.

Kuya Silver: The company reported results of its Phase I diamond drill program at its Bethania Project. Kuya drilled 36 holes totaling 5,000m to improve the quantity and quality of geological data available on the historic Bethania mine. Mineralization intersected below lowest mine workings, confirming the Bethania vein system remains open at depth. Highlights include:

• 2.60m @ 751 g/t Ag, 0.31 g/t Au + base metals
• 1.2m @ 765 g/t Ag, 0.64 g/t Au + base metals
• 6.72m @ 121 g/t Ag, 0.38 g/t Au + base metals.
• 1.23m @ 749 g/t Ag, 0.63 g/t Au + base metals
• 0.87m @ 257 g/t Ag, 0.18 g/t Au + base metals
• 0.75m @ 523 g/t Ag, 0.60 g/t Au + base metals
• 1.12m @ 253 g/t Ag, 1.12 g/t Au + base metals
• 1.18m @ 332 g/t Ag, 1.73 g/t Au + base metals

Lion One Metals: Announced additional high-grade gold intercepts targeting the deep high-grade feeder at Tuvatu. Highlights include: 0.65m @ 18.96 g/t Au, 0.60m @ 437 g/t Au, 1.45m @ 16.14 g/t Au, and 2.30m @ 55.44 g/t Au.

MAG Silver: Reported Q2 production. This isn't of any importance as the Juanicpio mill won't be commissioned until Q4. Until that time, the ore is processed three to four days a month at the Fresnillo mill. MAG's attributable production was 191k oz. Ag and 346 oz. Au. The proceeds of which are used to reduce the remaining capital investment needed to complete the construction of the 4ktpd mill.

Vizsla Silver: Drilled a new vein in Cordon del Oro Corridor at the Panuco project. The Company released results from ten holes at Cordon del Oro, 4.6km east of the high-grade Napoleon discovery. 9 out of 10 completed drill holes intersected a new east-west trending vein on the Cordon del Oro corridor known as the San Antonio Vein. Drill highlights include:

• 1m @ 0.77 g/t Au and 167 g/t Ag
• 2.07m @ 6.64 g/t Au and 705 g/t Ag
• 1.08m @ 1.41 g/t Au and 310 g/t Ag
• 0.98m @ 1.06 g/t Au and 199.8 g/t Ag
• 2.17m @ 2.59 g/t Au and 746 g/t Ag

Yamana Gold: Reported Q2 earnings and provided an asset update. Yamana produced 241k AuEq oz. (217k oz. Au and 1.63m oz. Ag), generating operating and free cash flow of $167.8m and $51.2m (before dividend payments). Cash and equivalents stood at $702m and $750m. $223m of its cash balance is essentially restricted as it is available for use by the MARA Project (formerly the Cu-Au-Mo-Ag Agua Rica project). Jacobina and Canadian Malartic set record quarterly production.

Yamana also reported material progress on the Phase II expansion at Jacobina. The capital costs to complete Phase II have been reduced, and the Company is advancing the Phase III expansion evaluation. During the second quarter, successful trials conducted at Jacobina demonstrate that the processing plant consistently and reliably achieved a daily operating throughput above 8,000tpd, significantly higher than nameplate capacity, and a monthly average of at least 7,500tpd as was achieved in May. The Company will achieve the Phase II rate of 8,500tpd by implementing a simplified approach of debottlenecking and incremental operational improvements without requiring the installation of an additional ball mill. Engineering for the Phase III expansion to 10,000tpd will advance in parallel with the Phase II expansion, with the plant modification initially planned for Phase II now considered adequate for Phase 3. A feasibility study for Phase III is scheduled for completion in 2023, and project commissioning is still on track for 2027. Yamana also continued to advance the recently acquired Wasamac project.