New Found Gold Corp V.NFG

RE:RE:RE:RE:Press release

[eldreco]

Good post, AlwaysLong.
el d

AlwaysLong683 wrote:

Retiredgeo wrote:

1) The majors want huge, multidecade open pit mines with predictable costs, grades and cash flows.  This spiderweb of narrow gold veins has to be mined by underground mining methods meaning costs, grades and cash flow are going to be highly variable.  I just don't see a major being that interested. 

2) Even Kirkland Lake management wasn't all that interested in the narrow vein Fosterville gold mine!!!

3) None of us know what Eric's and Colin's end game is.  I suspect that both want to see Queensway turned into a brand new mining camp worth hundreds of billion of dollars in 50 years time.  If they have to do it themselves so be it.  From the recent appointments they are exploring all options.

1) Open-pit, underground - doesn't matter IMO. I suspect majors want low cost, high margin, long life reserve projects, preferably on virgin land where they can mine all the ounces themselves. Majors think long-term and have the money (or can get the financing) to put up the initial costs and early open pit work if it is highly probably that they will hit one or more jackpots at some point in time. There aren't too many like NFG out there right now. Majors can afford to put in the capital now to reach this goal, especially if current mines they have are showing declining reserves and higher AISCs from one yeat to the next. Further, my guess is Queensway will be much more profitable in the open pit stage than Fosterville was.


2) My understanding of the Fosterville story is the KL CEO at the time (Tony Makuch) was not keen on purchasing Newmarket Gold (which controlled the Fosterville claims). However, Eric Sprott (who was KL's Chairman of the Board at the time) was curious about the underground mining operations that had commenced at the Fosterville mine and sent Quinton Hennigh down there to check it out. Hennigh returned and stated he believed the underground mine would be very lucrative, so Sprott convinced Makuch and the Board to agree to purchase Newmarket. We all know what happened from there, both in terms of KL's share price appreciaton and the money they made (and are still making to this date) at Fosterville. Are you saying that, with the benefit of hindsight, majors such as Newmont, Barrick, Anglogold Ashanti, Gold Fields, Newcrest, and Agnico-Eagle wouldn't have loved to make a bid on Newmarket had they known what Sprott knew via his discussions with Quinton Hennigh.....? Well, Queensway looks very similar to Fosterville, except I think the open pit portion of the mining operation will likely prove to be more lucrative than was the cast at Fosterville given the metal factors near surface.


3) Agreed that none of us can read the minds of Sprott and Kettell, but my hunch is if they get an offer that is quite lucrative, they would agree to sell. Meanwhile, if they hire staff to help locate more prospective targets, prepare for a MRE, or even have mine build experience, my hunch is this will likely pique the interest of majors all the more and possibly extract a higher price per share given NFG is not showing their cards re. whether they will sell or build a mine themselves. Conversely, if it is evident that the management of a junior exploration company is not interested in the least in building their own mine, they can lose some leverage in negotiations since prospective suitors know management is not interested in developing the property themselves. Further, most of those NFG do hire who would be useful in mine development could very well be retained by the new owner to continue their work toward a mine build.


Bottom line: No one knows how things will turn out, but it's tough to see Palisades and Sprott sticking around while a mine is built. Rather, I think they'll bide their time until the iron is hot, then open it up to bids. Meanwhile, they can continue drilling and piling up assay results like GBR did.

We shall see.....should be interesting......