The 57 gpt is good to see, but not shocking given the historic results of the mine at this location. So that’s the positive. The idea of getting to the very location where you had historic results of high grade production achieved its aim. They have been at this spot for a long time and have had access to the original workings for even longer. They should have known the nature of the ore a long time ago. I suspect the ENAMI approach was always the default approach and only a late evaluation of a new option led to the testing and latest delays.
The problem obviously with the ENAMI approach now with high fuel prices is that shipping is quite expensive. They will need the grades to remain high to remain profitable enough to continue shipping.
Questions:
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How much do they have to cherry pick ore to achieve this grade? Set off explosives, scoop the floor, throw it in the truck and go? Or Set off explosives, hand filter by picking around in the remnants, and then throw it in the truck and go? Any manual filtering that was done historically or in this latest effort will limit the ability to ramp up volume because it will take a long time to do. This is the core problem with narrow veins. Cost of production including shipping, all-in-production cost, is a big question.
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So we have high grade confirmed under some type of process they at least know how to do. They can probably apply this to maybe 2 faces at once without too much more development cost. How consistent is the width and grade of this vein going both directions? This historic report indicates variability. Assuming 57+ gpt production across the length of the vein is an unproven assumption. We are going to find out as they go.
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We will soon need to hear a plan on when they are going to start repaying the debt financing owed MC. This will come out of current production. If they start repaying right away this will delay the ability to self-finance higher production and probably push in the direction of some other type of financing.
Most likely they will need to produce for the second half of 2023 to get a feel for how production goes given the current constraints and how much it costs them to produce, investigate the costs and benefits of the various improvement options, and maybe even start some permitting once they have some answers.
Significant risks include increasing production costs and significant very narrow sections of the vein that can not be economically produced.
Lots of questions. Plenty of risk yet. But 57 gpt production will make up for a lot of difficulties if it can be sustained.