Gold continues sideways despite the fact there have been some pretty significant developments in the space revolving around central banks.
Early this week, we learned that the central bank of Singapore had increased its gold reserves by 20% so far this year which represents the first gold purchase by the central bank in two decades.
The gold purchase was made between May and June, totalling 26.35 metric tons, according to the data from the Monetary Authority of Singapore’s (MAS) International Reserves and Foreign Currency Liquidity report.
In addition to that, we learned that the Irish central bank purchased gold for the first time in 12 years in the middle of the week as it has purchased two tons of gold over the last few months.
Overall, global gold reserves rose by 333.2 tons so far this year.
Gold Mountain Mining: (TSX: GMTN)
I continue to be very excited about the developments at Gold Mountain Mining which, for new readers, is a BC-based exploration and development company focused on the Elk Gold Project, a past-producing mine located approximately 57 km from Merritt, BC.
The company recently announced that it had received its mining permit from the ministry of mines, which represents the first B.C gold-mining permit in nearly a decade to begin its phase 1 production, which will see 19,000 ounces of gold produced in the first year with industry-low all-in sustaining costs.
The cash flow from this phase 1 production will fund their proposed ramp-up to 65,000 ounces by 2025.
This structure is fantastic for shareholders as the company is relatively de-risked from further dilution as the reoccurring cash flow will fund operations in addition to its expansion.
Gold Mountain’s management team is a young group of hungry mining entrepreneurs who have routinely delivered on numerous milestones over the past two years.
The group remains focused on continuing the assets exploration by drilling the nine known high-grade mineralized zones while exploring other areas showing exciting potential.
The company recently announced it hit one of the widest intercepts ever recorded at the Elk Gold project during its Phase II drill program. The mineralization was intercepted close to the company’s open pits and recorded a 2.4m width grading 20.2g/t Au.
The phase II drill program is now complete and is still waiting for its results for final drill holes from the Lake, South and Elusive Zones.
With 127,000m of historical drilling on the property, management is confident the Elk is still home to significant, untapped mineralization as management has set a goal of delivering a resource estimate of 1 million ounces.
The company recently graduated from the TSX-V to the big board of the TSX with ambitions to add a second asset and up list to either the New York Stock Exchange or the NASDAQ.
I will be doing a deep dive in the coming weeks on the company, but today I am pleased to be joined by Gold Mountain’s CEO Kevin Smith to provide another update for Gold Telegraph readers.
Alex Deluce:
Thanks again Kevin for providing Gold Telegraph readers with an update on Gold Mountain.
Firstly, congratulations on officially receiving your mining permit from the Ministry of Mines. Can you touch on the significance of this and the last time a mining company went into production in British Columbia?
Can you also touch on the material you will be mining for year 1 and the type of profits investors should expect this year?
Kevin Smith:
Thank you for covering our story and this milestone. Receiving this permit is a major accomplishment and marks the first authorization of its kind in nearly a decade. There were a lot of doubts surrounding our ability to get this across the finish line and receiving it is without question the biggest de-risking milestone for Gold Mountain.
We’re now transitioning into production which will allow us to scale up to 19,000 oz per year in years 1-3. Our partnership with Nhwelmen-Lake LP will see us mining and delivering ore to New Gold Inc at a fixed cost-per tonne of US$554/oz.
Come the new year, we will begin the Environmental Assessment process with the project’s surrounding Indigenous Communities to increase our production profile to 65,000 oz per year beginning in year 4.
Alex Deluce:
When should assays from the Phase 2 diamond drill program be reported and also is the phase 3 program commencing right away… if so, how many metres of drilling will be completed for this program?
Kevin Smith:
Phase II is all wrapped up and we anticipate a steady stream of assay results coming back from the lab. First results that have landed are showing more of that ultra high-grade mineralization that the Elk is infamous for. We anticipate more of the same, as this exploration program picked up right where we left off in Phase I, where we infilled and stepped-out of our well-established vein systems near our open pits in the Siwash North Zone.
What’s exciting about Phase II is we started exploring three of the other eight drill tested zones on the property, with a goal of declaring maiden resources. All of the current 810,000 ounce resource is in Siwash North Zone, we think adding new zones will show the market scalability of our project as we look to develop multiple open pits to compliment our open pit and underground scenario being developed in Siwash North.
On top of Siwash and Satellite drilling, we’re also taking a crack at the Elusive zone which is located 10km away from the company’s open pits and is arguably the most untapped, prospective region on the property. This area of the project recorded the second highest gold-in-soil anomaly when the asset was discovered in the 1980s but for whatever reason, previous operators never took the time to drag a drill out there. Gold Mountain will be the first to execute a drill plan in this highly-prospective set of claims in hopes to uncover a new discovery and add a whole new dimension to the Elk.
Alex Deluce:
The company recently announced the conditional approval to list on the Toronto Stock Exchange. Can you touch on why management decided to make this exciting transition to the big board at this time?
Kevin Smith:
With our permit now in hand and the company moving towards commercial production we felt this was the right time to up-list to the Toronto Stock Exchange. We have a really strong treasury and have recently filed an AIF for our Base Shelf Prospectus, so figured while we had all of these requirements checked off, we may as well take the leap. By up listing to the big-board, we will increase our ability to attract institutional investors and increase our exposure to mining index funds.
We hope this sends a clear message on Management’s intention to build a larger Gold producer. Beyond scaling the company’s resource and portfolio of assets we thought it was important to continue building the public profile of the company as well. In 2022, once we are able to show initial revenues from mining, we will look to upgrade our US listing to either the NYSE or NASDAQ.
Alex Deluce:
The company’s executive team has shown they are fully aligned with shareholders with how active you all have been with regards to buying stock on the open market. Can you touch on this and why being aligned with shareholders is so important?
Kevin Smith:
I come from a very entrepreneurial background and have always bootstrapped businesses to get them into cash-flow. Mining typically has a bad reputation of bloated salaries and blown timelines, which ultimately leaves shareholders frustrated. From very early on we have taken the opposite approach at Gold Mountain and really tried to take that lean start-up approach in order to show the market what we are building is not your average junior mining company.
Management has committed to not take any salary until the mine is in production and we’re currently compensated solely through the equity we own. To date, management has purchased north of $1,100,000 in the public market, we think this shows the market that we lead by example and reassures our shareholders that we have a vested interest to grow long term shareholder value.
Alex Deluce:
What is your current take on the gold market right now in a time where inflation is running high all over the world?
Kevin Smith:
It’s been a wild ride for Gold this year. Everyone understands that Gold is an excellent asset to hedge against inflation, but there are other indicators and metrics that Gold correlates to that determine how rocky its upward trajectory will be.
With CPI recently reaching 6.2%, its highest level since 1990, real rates are declining quickly which is the ideal environment for Gold. I believe annual growth begins to slow down in 2022 and Macro 101 teaches us the Fed won’t be able to raise interest rates when they’re in or on the cusp of a recessionary landscape. This will lead to a stagflationary environment which is a macro-environment Gold thrives in.
I think you’re seeing people position for it now with this recent move in Gold, US10Y and USD. There’s fear creeping into the market and we believe we’ll be primed to capitalize on this move as we transition into commercial production. I think we have lost a lot of investors, juniors especially, to the Crypto sector as Bitcoin is in the bull run of it’s 4-year halving. I am a fan of Bitcoin, but we all know what happens after the bull run ends. When things cool off in the crypto space, I expect you will see a lot of money rotate back into the juniors and that is when I believe the bull will really be back on.
Our current PEA that’s based on a long term $1,600 Gold price has our Year 1 mine plan delivering $40M in revenue and $10M in after tax profit, which is really exciting considering our $9M Capex to get the project up off the ground.
Overall we’re well positioned to ride the next bull run, but the big key for Gold Mountain is to start generating cash flow, so we can self fund our aggressive growth plan and not be at the whims of the market.
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