Participants:
Mr. Alan Pangbourne, CEO & Director Chesapeake Gold
Mr. Taje Dhatt, Vice President Strategy & Corporte Development
peterhuber91, w.o. / goldseitenforum / stockhouse; private investor
Date: May 20th, 2021, 4-5pm, Video Conference
Alderley was founded in 2019 with a focus on licensing heap leach technology. Mr. Pangbourne was in contact with Mr. Reifel for approximately 2 years after he was licensed to operate the Oxidation Heap Leach technology. After some diagnostic tests that the oxidation process and chemistry worked and the support from the licensor on side, the deal was closed. The negotiation process took about 1 year. Mr. Pangbourne was selected as a specialist based on his experience in heap leach oxidation used in the copper industry. There are many analogies such as minerals or ore bodies. There is currently only one licensee: Chesapeake Gold. Trust in Mr Pangbourne is the reason. Chesapeake has to pay 1% stream when they go into production. Other costs are not incurred. The detailed conditions are not published.
Former CEO of Hycroft mining, Mr. Randy Buffington, will join the board in 2020. He is a specialist in refractory ore and an absolute professional in gold and silver.
The POX approach is no longer pursued under Chesapeake 'New'. According to Mr. Pangbourne, the high capex can at best be financed at higher gold prices with a very high degree of dilution.
A new profitability study with the oxidation heap leach approach is currently in development. The first filling is scheduled for the middle of this year. Some hard facts like Capex will be included. The infrastructure costs will be much cheaper compared to the POX approach. Energy and water can be fed in locally. With this green approach, the probability of permitting increases, resp. the extremely important relationship with local stakeholders.
The Stage1 mission will have a mine capacity of 15-20,000 tpd. This results in a targeted annual production of approx. 100,000 - 130,000 oz after taking into account a targeted recovery of 75%. AISC of approx. 1000 usd are within the realistic range. Thus the project would be economical even with gold prices around 1500 usd. This then gives a first picture of the economic viability under a possible application of heap leach oxidation.
After completing the metallurgical tests, the important figures are then integrated into the PFS. Publication is planned for mid-2022. These will then give a factual overview within the framework of the standardized deviations. With the cash flow from stage1, the massive potential of Metates (20m + AuEq reserves) should then be tapped. The working timetable with the milestones (metallurgical work, PFS, FS, Permitting, Financing) was set with a lot of leeway.
My conclusion:
Mr. Pangbourne is an absolute professional. He is a doer and a problem solver. He doesn't talk about the bush, he answers the questions competently. The business case is the analogous application of the oxidation heap leach technology from the copper industry. I am convinced that in Mr. Pangbourne we have the right man at the helm of Chesapeake to move this project forward, after many years of stagnation, and to lay the cornerstones for an affordable project. Lean production with organic growth is the premise. With a mill feed of approx. 6m t / pa. I calculate with approx. 250m-300m USD inital capex. Would result in a paypack period of around 3 years with a POG around 1850 usd. And that with an almost infinite LOM. The Millfeed could then be upscaled from the FCF in order to siphon off the massive reserve potential. A very good share structure, cash reserves and a strong management commitment enable a healthy increase in Sharholder value. The entry of Mr. Randy Buffington, as a man with knowledge of almost all silver and gold deposits, strengthens my confidence in the business case.
The next possible trigger apart from precious metal prices will be the filling of the first PFS update in the middle of this year.
Peter