RE:Change in managementBeluga2020,
This is not about Blasutti!
The question which I asked was whether gold production at Relief Canyon has been a total disaster? True or False?
As I speculated in my post on the ORV board,
"The second possibility is that Blasutti's gold production at Relief Canyon is far higher than gold sales, and that he is sandbagging for the purpose of making his numbers look good when he adds Relief Canyon to the financial report in Q2 2021. If that is the case, then he doesn't need another gold mine, although Orvana would be an accretive acquisition for Americas Gold and Silver."
So what do we know about gold production at Relief Canyon?
We know that Sandstorm started receiving its first monthly gold shipments in May 2020, and that in Q2, Sandstorm received 984 ounces. In the third quarter, Sandstorm reported 1168 ounces of gold delivered from Relief Canyon, and in the final quarter of the year, Sandstorm reported 1667 ounces of gold delivered by Relief Canyon for a total of 3819 ounces of gold for the year.
2020 Relief Canyon gold sales were reported by USAS as 4836 ounces. So if the Sandstorm ounces are not included in those 4836 ounces then total gold sales were 8655 ounces in 2020.
But what do we know about gold production?
The only solid data was presented in Figure 1 of the October 14, 2020 news release where we learned the pregnant solution grade had increased from 0.002 ounces per ton on August 12 to a little over 0.009 ounces per ton by the end of September. From the August 8, 2020 NR, we learned that 1.3 million tons of ore containing 17,000 ounces of gold had been stacked at Relief Canyon as of that date. If the average stacking rate was 8,000 tpd until the end of the year, an additional 1.2 million tons of ore would have had to be stacked through year end for a total of 2.5 million tons of ore. That amount of ore stacked at a nominal stacking height of 20 meters implies 60,000 square meters under leach by the end of the year. At an application rate of 7.5 kilograms of water per square meter per hour, the implied water usage is 10880 tons per day.
Multiplying by .009 ounces per ton of pregnant leach solution, the resultant daily gold production should be 98 ounces per day or 8812 ounces per quarter as of the end of September.
Since the total gold delivered to Sandstorm was 1667 ounces in Q4 2020, and gold sold by USAS during the quarter was 2376 ounces, the total gold sold during Q4 was 4043 ounces or at least 5,000 ounces less than the implied gold production during the quarter. If the grade of the PLS solution doubled from Q3 to Q4, then the implied gold production for Q4 2020 could have been as high as 12,000 ounces which would leave Blasutti sitting on up to 8,000 ounces of gold in inventory at the end of Q4.
Since Americas Gold and Silver declared commercial production as of January 11.2021, another 1 million tons of ore would have been stacked at Relief Canyon assuming a minimum production of 12,000 tpd stacked during Q1 2021. The additional ore would have increased the water volume going through the stack to 13,600 tpd or roughly 80 percent of the ADR design capacity. Assuming a 25 percent per quarter gold recovery, the implied gold production for Q1 2021 is up to 15,800 ounces.
So my bottom line conclusion is that Blasutti's performance at Relief Canyon is much better than disclosed in the Q4 2020 MD&A, and if I were a shareholder of USAS which I am not, I would be holding on to my shares and buying more. As to an acquisition of ORV by USA, I think it unlikely at this point in time given my analysis of Relief Canyon's implied Q1 2021 gold production.