RE:RE:RE:RE:Change in managementThales42 wrote: Bringing a mine into production ain't what used to be. Even the best miners (and USAS is hardly one of them) are having problems meeting expected production, grades and recovery. As I see it, nothing is working out in favour for the company right now and they need a break. So, I am reluctantly willing to give USAS the benefit of the doubt and the extra time needed to fix expected RC underwhelming results.
Thales42,
If you are a sophisticated investor which you are (along with anyone who goes long in the PM space in the face of bankster price manipulation of the POG and POS), you will realize that there are multiple layers to this story.
1) At the macro level, you see fiat money printing like never before, comex manipulation of fraudulent paper gold contracts to keep the price of real gold as low as possible. So if I were CEO of a mining company like Americas Gold and Silver, I would keep my gold and silver in the ground, too, rather than to gifting it to fraudsters at steep discounts to intrinsic value. This is exactly what Blasutti is doing at Cosala, and quite possibly at Relief Canyon.
2) Then there is the second level of institutional investors versus retail small investors where the game on the part of the institutions is to help the little guy lose money. If you are a long term buy and hold investor in undervalued gold and silver equities, then this factor is little more than market noise.
3.) Then there is the technical layer which is where the rubber meets the road when it comes to mining projects.
For a low grade heap leach operation to succeed, three things are required:
stacked design throughput must be maintained,
gold grade has to meet design specifications, and
the heap leaching system needs to perform in accordance with design specifications.
So let's compare the technical performance of the Lindero mine start up with the Relief Canyon start up:
USAS First Pour NR: Americas Gold and Silver Pours First Gold at Relief Canyon and Provides Other Corporate Updates
TORONTO, ONTARIO - February 18, 2020 - Americas Gold and Silver Corporation (TSX: USA) (NYSE American: USAS) (“Americas” or the “Company”), a growing North American precious metals producer, is pleased to announce that the Relief Canyon gold mine in Nevada has successfully poured its first gold and to provide other corporate updates.
The Relief Canyon gold mine poured its first gold over the weekend. Initial construction was completed nine months after construction formally commenced in mid-May 2019. The initial capital spend is estimated to be within the guidance range the Company provided of US$28 to US$30 million. The ramp up at Relief Canyon is proceeding well with approximately 200,000 tonnes of ore stacked on the leach pad. Twenty-four-hour operation was introduced in late January which will enable the stacking rate to reach its design target of approximately 14,500 tonnes per day.
“We are thrilled to have poured first gold from Relief Canyon and excited as the asset advances toward commercial production in the second quarter of this year. Relief Canyon will provide the Company with significant exposure to gold and increase the Company’s precious metals production,” stated Americas President and CEO Darren Blasutti. “The Relief Canyon employees, contractors and the corporate team have worked diligently over the past nine months to bring this operation on line within a short time frame.”
Relief Canyon – First Gold Pour Initial construction at Relief Canyon is complete and the operation successfully achieved its first gold pour just nine months from the start of construction in mid-May 2019. The initial capital is estimated to be within the budget of US$28 to US$30 million.
Americas began actively mining ore at Relief Canyon in early December 2019. To date, the operation has approximately 200,000 tonnes of ore placed on the leach pad. The ore crushing and stacking circuit is performing as expected and the ADR plant is now fully functioning. Relief Canyon is mining and stacking ore on a 24-hour basis. Production is ramping up and the Company expects to reach design crushing and stacking rates of approximately 14,500 tonnes per day.
Approximately 150,000 tonnes of ore has been stockpiled ahead of the crusher and is waiting to be placed on the leach pad. Waste stripping is ahead of plan with mining activities focussed on the North and Lightbulb areas of the pit. Commercial production is expected before the end of Q2-2020.
So, what is missing from this USAS news release? OK, how much gold was poured in this first gold pour? No details at all! Now, let's compare Fortuna Silver's news release on the first gold pour at Lindero in Argentina. Vancouver, October 20, 2020 – Fortuna Silver Mines Inc. (NYSE: FSM) (TSX: FVI) is pleased to report the first gold pour from its Lindero Mine located in the Province of Salta in Argentina. The pour took place today, on Tuesday, October 20, 2020, and produced 728 ounces of gold. Jorge A. Ganoza, President, CEO and Director, commented, “The first gold pour at Lindero, our third mine in the Americas, is a significant achievement for the Company as we advance the mine’s ramp-up phase towards commercial production in the first quarter of 2021. Lindero is a mine with reserves for a projected life of thirteen years and is a pillar in Fortuna’s asset portfolio.” Mr. Ganoza continued, “I want to take this opportunity to commend our Salta based team’s commitment and hard work in achieving this milestone, especially in the context where COVID-19 related restrictions continue to pose multiple limitations.” Mr. Ganoza concluded, “If conditions permit, we look forward to hosting an on-site inauguration ceremony of Argentina’s newest gold mine with provincial and federal authorities early next year.”
About the Lindero gold Mine, Argentina
In September 2017, the commencement of construction at Lindero was officially launched (refer to Fortuna news releases dated September 21, 2017 and December 21, 2017). Lindero has been designed as an 18,750 tonnes per day owner operated open pit mine with a pit life of 13 years based on current Mineral Reserves. Crushed ore will be placed on a leach pad with the pregnant solution pumped to SART and ADR plants prior to electrowinning and refining where gold will be poured to dor bars. The Company is advancing Lindero’s ramp up phase as per the plan outlined in Fortuna news release dated May 8, 2020. Management reiterates total construction capital expenditures of between US$314.0 million and US$320.0 million as per the updated construction and commissioning schedule (refer to Fortuna’s news release dated May 8, 2020). This represents an increase of 28 percent from the September 2017 feasibility estimate. The technical report of the Lindero Mine is available on SEDAR at www.sedar.com and on the Company’s website.
So, contrast Fortuna Silver's news release where they stated that they produced 728 ounces of gold in the first gold pour and showed a picture of the gold pour! Full transparency! Both Relief Canyon and Lindero suffered a failure of their stacking system with Lindero only being at 23 percent of the 18,750 tpd stacking capacity as of February, 2021. In the case of Relief Canyon, the failure was to the 16,000 tpd radial stacker. At Lindero, the problem was an automation issue with the overland conveyor system where the lockdown in Argentina due to Covid 19 prevented vendors coming onsite to fix the issues.
So what was Americas Gold management response?
Relief Canyon The Company’s radial ore stacker suffered a structural failure in Q2-2020. A temporary stacker was mobilized to site but can only support a throughput of approximately 8,000 tonnes per day versus 16,000 tonnes per day for the larger radial stacker. The Company anticipates that the radial stacker will be repaired in time to coincide with increased stacking requirements in Q4-2020.
With the challenges to date, the Company anticipates commercial production will be reached in Q4-2020, setting the operation up for a strong 2021.
So, the response was to send the broken stacker offsite for repair and mobilize a 8000 tpd temporary stacker, but they didn't fix the fundamental throughput problem. Why didn't they add a second 8000 tpd temporary stacker? (Maybe Blasutti wanted to keep his gold in the ground given the current PM price supression?) Lindero Mine--Argentina Now, let's compare the response on the part of Fortuna Silver's management to their broken stacking system. Very simple! Bypass the stupid broken conveyor and truck the ore to the heap leach pads maintaining full throughput. By passing the HPGR grinding circuit and agglomeration sacrifices about 25 percent of the gold recovery, so instead of getting 75 percent gold recovery from the stacked ore, the expected gold recovery from the course ore stacked directly on the heap leach is only 50 percent. So to compensate for this, extra ore was trucked to the heap leach to maintain the planned gold production.
Furthermore, on the accounting side, Fortuna recognized sales of 10,935 ounces of gold for revenue of $20.3 million USD prior in Q4 2020, so Lindero was profitable even prior to declaring commercial production.
Total gold stacked was 52,000 ounces and gold production was 13,435 ounces, so about 25 percent of the gold stacked was recovered during the quarter. Considering that the SART plant was only running at only 80 cubic meters per hour or 20 percent of design capacity, that is good performance during start up. Copper levels in the Lindero ore are running at 0.1 percent which is as expected, and given that the copper mineralization is in the form of chalcopyrite, only about 5 percent of that copper in the ore is expected to leach out during the leach cycle.