Ongoing Operational Issues Persist = Buy On Weakness...The company continues to struggle with the recovery issues. The circuit continues to be improved upon but it seems to me that they are still installing and commisioniong equipment. I do't expect any great improvements to be evident in Q3 recovery rates. I anticipate they will have a recovery rate of 82%-83% in Q3.
I expect mill throughput to increase to 1850-1975 tpd as they continue to try to increase uptime on the mill. I believe this will be the lone success in Q3. But the company will achieve this goal by using stock piled material that has been sitting above ground.
The underground development issue is going to plague them for many months. I would not be surprised to see that they are a 6-9 months away from underground mining to matching the mill throughput at 2000 tons/day.
It has been a long drawn out process trying to get this mine firing on all cylinders. I think the recovery rate issues are more challenging than the underground development issues. My biggest concern with this mine is that the company never gets beyond 86% recovery. Thats extremely expensive because low recoveries just come off the bottom line.
But the overhanging question for the company, which isn't going to go away is... How long will the gold bull market last and how high will the price go? It would be a real shame if TMR doesn't get to exploit this gold price rise due to ongoing problems.
This hould be a $15-$20 stock if they were operating normally... but its not... so we continue to languish.
One other long term concern I have is with climate changel as Greenland, Arctic Polar Cap and Antarctic Polar Shelf all keep melting. The hope Bay mine is only 47m above sea level and also sits on permafrost. As temperature rise and the premafrost melts:
1) The ground gets less stable and infrastructure could sag/sink.
2) Ground water flow rates increase in the soils/rocks in the area. Increasing groundwater flow rates will penetrate the mine and seek out the lowest points in the mine. This will increase required pumping rates, slow down underground mining and thus increase costs.
3) I don't think the sea level rise will be much of a factor in the near to mid term.
I still think this is a great opportunity with Hope Bay... I just Hope they can keep operational challenges at Bay in the very near future.