Thursday, September 22, 2011

Gold Companies to Watch from the Yukon to Colombia

Looking for good long term investments in gold there are some very good very knowledgeable, experienced and insightful analyst out there and Dale Mah is one of them.  Any investor in gold would do well to include this in their potential investment inquiries.


Repost from The Gold report

From the Yukon to Colombia, with stops in Nevada and Mexico, Dale Mah, an equity research analyst with Mackie Research, covers the map looking for exciting exploration plays. Mah, a trained geologist with 14 years of experience, shares his calculations and insights into how early-stage exploration plays can be safe and satisfying in this exclusive Gold Report interview.

Companies Mentioned: Agnico-Eagle Mines Ltd. - Amarillo Gold Corp. - AngloGold Ashanti Ltd. - Atacama Pacific Gold Corp. - Eco Oro Minerals Corp. - GMV Minerals Inc. - Goldcorp Inc. - Guyana Goldfields Inc. - ICN Resources Limited - Kootenay Gold, Inc. - Lupaka Gold Corp. - Magellan Minerals Ltd. - Newstrike Capital Inc. - Sandspring Resources Ltd. - Smash Minerals Corp. - Southern Arc Minerals Inc. - Sunward Resources Ltd. - Torex Gold Resources Inc.
The Gold Report: Your recent description of Atacama Pacific Gold Corp. (ATM:TSX.V) paints a picture of what every major producer is seeking: a large oxide resource with simple metallurgy in a mining-friendly jurisdiction with other operating mines. Are brokerages taking a pass on covering vein-hosted gold deposits in favor of lower-grade bulk-tonnage gold projects?

Dale Mah: Analysts have their own criteria for what's worthy of coverage and there are many variables for evaluating a project. The major difference between bulk-tonnage, low-grade versus low-tonnage, high-grade projects is that the former are generally cheaper to exploit, easier to build a resource and, in some cases, easier to market.

Atacama Pacific has a 3.6 million ounce (Moz.) resource. In our model, a 44,000-tons-per-day (tpd) operation could produce more than 200,000 oz. of gold for 14 years. Those numbers make it easier to finance or to find a partner, because you know it has long-term potential.

TGR: Are the large-tonnage bulk operations easier to market on the sell-side?

DM: In my experience, yes. A project with 5-10 Moz. and a 10-to-20-year mine life is a long-term investment. You know what is going to happen in the next 10 to 20 years. You can build your mine plan from a textbook, whereas underground, you have to follow the structure and work off a mine plan that needs to be updated on a regular basis and hope it doesn’t disappear or get faulted off.

TGR: High-grade underground veins are rare. There are many more average-grade veins—say in the 4–6 grams per ton (g/t) range. Are those projects being developed less often, given the lack of financing?

DM: The terminology of high-grade and low-grade is all relative. What used to be high-grade can be considered very high-grade nowadays, conversely, what used to be low-grade can now be high-grade. For example, 1 g/t is low-grade for a decent open pit. Underground, anything high-grade is 4–5 g/t. Double digits, like 9–10 g/t overall, is very high-grade.

As far as operating costs go, you can't beat an open-pit mine for processing thousands of tons per day. We are seeing a shift toward feasibility projects looking at bulk tonnage underground situations. You have a tonnage that doesn't quite support a massive open pit or the grades aren't high enough to support conventional underground mining. So, a lot are considering alternative underground methods such as block caving or sublevel caving to mine bulk tonnage underground.

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