Gold Summary for July 8, 2019

New York spot gold fell $3.20 to $1,395.10 on Monday. The TSX Venture Exchange added 1.25 points to 588.03 while the TSX Gold Index rose 0.30 point to 219.52. Many Canadian gold miners followed bullion lower today. Eldorado Gold Corp. (ELD) dropped six cents to $8.14 on 2.31 million shares and Premier Gold Mines Ltd. (PG) dropped 13 cents to $2.03 on 967,000 shares.

John Burzynski’s Windfall property continues to live up to its name, but the market is unenthused. Mr. Burzynski’s Osisko Mining Inc. (OSK) rose one cent to $3.51 on 1.74 million shares following word that it has drilled an 11.8-metre interval averaging 84.6 grams of gold per tonne from the Lynx zone at its Windfall Lake deposit in the Urban district of northwestern Quebec. The latest assays, from another 10 drill holes and 13 wedges, produced several bonanza-grade hits over shorter intervals from infill drilling at Lynx. Those hits included 429 grams per tonne over 2.2 metres and 149 grams per tonne over 2.2 metres.

Mr. Burzynski, president and chief executive officer, says that he and his crew continue to be impressed by the gold mineralization encountered in the infill and expansion drilling program at Lynx. He says that he is “very optimistic” that Osisko will be able to add significant ounces as the company proceeds with its resource drilling and further exploration of the Windfall project. The most recent resource update, completed late last year, listed 2.87 million tonnes indicated at 8.17 grams of gold per tonne and 10.35 million tonnes inferred at 7.11 grams per tonne, for a total of 3.1 million ounces. Lynx accounted for about one-third of those ounces, a proportion that appears likely to grow in the next update.

Mr. Burzynski, now in his mid-50s, is finding it more lucrative to be top dog with smaller Osisko than as a $375,000-per-year vice-president with the company’s larger sibling: Osisko Gold Royalties Ltd. (OR: $13.37). Mr. Burzynski earned a base salary of $525,000 last year for running Osisko Mining last year and he collected that much again as a cash bonus.

Darin Labrenz’s Pure Gold Mining Inc. (PGM) rose four cents to 58 cents on 356,000 shares. The company, which promotes its “pure and simple” mandate “to dream big, to colour outside the lines…” apparently coloured a bit too far beyond the lines in its spring feasibility study of the Madsen project, near Red Lake in Northwestern Ontario. The changes came at the request of the British Columbia Securities Commission, which objected to Pure Gold mentioning a preliminary economic assessment of fringe parts of the project within the original document. Those dreamy references are removed from the revised version, but the changes do not alter the reserve or resource estimates, or any of the underlying economic projections laid out in the study.

The feasibility study, originally released in February, is based on a reserve of 3.5 million tonnes averaging nine grams of gold per tonne, or one million ounces. The full resource at Madsen lists 6.43 million tonnes indicated at nine grams per tonne and 889,000 tonnes inferred at 8.4 grams per tonne, or nearly 2.2 million ounces. The still valid numbers from the study show that a $95-million mine running at 800 tonnes per day would have a 12-year life, a plan that supports a discounted net present value of $247-million after taxes.

The preliminary economic assessment, which came hard on the heels of the feasibility study, covered just over 760,000 tonnes indicated at 8.3 grams per tonne and 990,000 tonnes inferred at 7.1 grams per tonne across the Fork, Russet South and Wedge deposits, which host an additional 431,000 ounces of gold. That material in the presumably still valid dream sheet — valid so long as it is not mentioned in the same breath as the feasibility study — was expected to add 3.7 years of life to the mine laid out in the feasibility study, at an additional capital cost of $57-million. The additional life would add about $51-million to the discounted net present value of the project.

Alain Bureau’s Toachi Mining Inc. (TIM) jumped 1.5 cents to 6.5 cents on 504,000 shares on word that Fernando Ganoza’s Atico Mining Corp. (ATY: $0.30) is offering 0.24897 share for each Toachi share. Mr. Bureau, president and CEO of Toachi, and Mr. Ganoza, CEO of Atico, say that the friendly arrangement works out to a premium of nearly 50 per cent. Mr. Bureau lauded the “robust synergies” between the two companies as making the merger a “logical step towards building a peer leading and profitable copper-gold producer in Latin America.” Both companies have metals projects in Ecuador: Toachi’s La Mina project received a preliminary economic assessment this spring; Atico’s El Roble mine yields modest profits. Both companies can use all the synergies they can find for their projects.

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